How do we solve the PERS crisis?

by Dan Lucas

Oregon PERS Crisis 101 – Part 3: How do we solve the PERS crisis?

Previous PERS reforms have made major strides in making PERS sustainable, but the excesses of the past still leave PERS vulnerable to downturns in the market. The significant PERS reforms in 2003 were spurred on by the bust of the Dot-com bubble, and the 2008 market collapse has once again exposed the vulnerabilities hard-wired into PERS by past excesses.

Without reform, PERS will continue to eat away larger and larger portions of government budgets across Oregon, including school budgets. Gov. Ted Kulongoski’s 2010 Reset Cabinet report warned that if it wasn’t reformed, PERS could add more than $1 billion by 2015-17 to the general fund costs for state and school employees. The total state general and lottery fund budget is $14 billion to $15 billion, and so adding $1 billion just for increased PERS costs is a major problem.

The problem with the additional reforms needed for PERS isn’t a lack of ideas; it’s a lack of political will.

To pay for the PERS funding problem, there are three general options:

  1. Increase taxes
  2. Further reduce services (cut school days, lay off more teachers, etc.)
  3. Reduce the costs of government (reduce PERS costs, reduce other government employee benefits, find government efficiencies, etc.)

Increasing taxes is going to be a tough sell to pay for past PERS excesses. How can we ask those who have already taken a beating in the economy to pay even more so that PERS retirees can be insulated from the downturn in the economy? It’s not fair to ask someone who lost their job and had to cash in their IRA or everyone who saw the values of their 401(k)s drop, to now double-down on their economic pain just so PERS retirees don’t have to feel any pain.

It’s just as unfair to continue reducing services. Our schools and other essential government services need to have their funding restored, not cut further.

The first option that needs to be pursued then, is reducing the costs of government, and specifically reducing the cost of PERS first. There are well thought out and reasoned proposals for reducing PERS costs in places like the 2011 report on PERS by the City Club of Portland, and there are other ideas for reducing the costs of government in places like Gov. Kulongoski’s 2010 Reset Cabinet report.

What we need now is the political will. There are intrinsic forces that will oppose reducing PERS costs and reducing other costs of government, and there will be tough battles to fight.

We need to vote for representatives and officials who will fight those fights. We then need to strongly encourage and support those representatives and officials to reduce PERS costs and other costs of government. We can support them with emails, phone calls, letters to the editor, participating in town halls, etc.

The cost of not fighting these fights is too high. We can’t continue to stand by and watch as our schools continue to make cuts we can’t afford.

Part 1 of this three-part Oregon PERS Crisis 101 series looked at “What is the PERS crisis?”, and Part 2 looked at “What’s causing the PERS crisis?” – Click here for a PDF that contains the entire 3-part series: Oregon PERS Crisis 101.



Post to Twitter Post to Facebook Post to LinkedIn Post to Reddit

Posted by at 05:00 | Posted in PERS, Public Employees Retirement System | 17 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    How about selling off the state’s forests and other assets? If government mismanages its finances as it did with PERS for decades, seems only reasonable the Government bureaucracy do the sacrificing. Maybe most of government should be privatized. A lot of just want the government to provide police, fire, roads and a judicial method for resolving disputes including those with demonstrated, absolute negative externalities. Actually even roads can be privatized, especially with new tracking technologies.

    • 3H

      If you sell off the forests, it’s not the bureaucracy that is sacrificing, it is the people of Oregon, who own the forests.

      If you have private roads, think of the logistical nightmare for businesses having to account for various tolls, etc… The added cost to goods since the costs of roads will not be socialized anymore. Not to mention the change in buying habits. People will be lessing willing to travel to shop if they have to pay to use roads. Stores might end up having more, and smaller, outlets which will most likely raise their costs and, consequently, prices.

      • johnfairplay

        Privatizing roads would be a trade – new tolls for the elimination of gas taxes and registration fees – so businesses wouldn’t have any increased costs to pass on. The “out of pocket” for businesses and individuals would be identical to the current take – just a lot more visible which is the best of all possible worlds for taxes and fees. Have a little faith in people – they are smart enough to make decisions on where and how much to drive without your paternalism

        • 3H

          I simply raised some points to consider. No need to be judgmental or rude about it. Unless you have a problem with people having different ideas than you? In which case the problem is purely yours.

          Would there still be public roads? Or would they all be privatized? One road at a time? Blocks of roads? If it’s electronic monitoring, would all owners be required to use the same monitoring system?

          I see huge problems with fencing off the commons. Travel will be circumscribed for a great many people… more than it already is. Why make it more difficult for the working poor to hold down a job? Will mass transit be given an exemption, or will that, as I suspect it would be, privatized as well?

      • guest

        Toll roads – just what Oregon needs as a catalyst for the much touted tourism. Blue Book’em Dano!

        https://en.wikipedia.orgwiki/List of toll roads#United

  • Marvin McConoughey

    This is an excellent and thoughtful paper with sensible recommendations. I add the further thought that the Oregon Supreme Court past decisions can be seen as identifying what will not pass muster with the court. The decisions should be seen as leaving open other approaches which the court has not yet reviewed.

    It is long past time for the legislature to serve the public by accomplishing major PERS reform. One of those reforms should be to remove judges from the PERS system, permanently. Some less compromising retirement system will resolve the questionable ethical practice of having justices who benefit from PERS, ruling on PERS.

  • Making Oregon a Right-to-Work state will result, over time, in a more affordable government.

    • 3H

      And, make for a poorer state.

      • How so?

        • 3H

          The major goal of Right To Work legislation is to keep wages and benefits down. Weaken Unions, you weaken their ability to negotiate a better contract (or a contract at all). People making less… a poorer state.

          • conservatively speaking

            @3H – The ILWU, must love your ‘slate’ of mind.

            Witness their ‘troll’ on the Columbia thuggery: This mob is no better for Oregon’s economic future than the OEA, AFSCME, SEIU along with their judiciary/legislative co-snorts – all with greedy grubby hands in a silk PERS with a gaping hole in the bottom larger than the fiscal funnel on top.

  • JHammers

    Tom Cox, who is running for State Treasurer, has been talking about this for many years now. No discussion on PERS reform should happen without considering his reforms.

  • Rupert in Springfield

    I would suggest mob action. The courts have ruled and there is no legal way to avoid the fact that Oregonians got ripped off by their representatives cutting sweetheart deals to greedy unions. How to counter this? Cut school back. School is a joke with how many days off there are. Cut school back further and people will get really mad and start to ask themselves what the hell they are paying taxes for. Teachers will also get mad with their hours being cut. They will start to ask why their careers should be sacrificed to pay for gold plated hammocks for the retired. Eventually people will get sick of it and work out a sleezy legal wrangling to get out of PERS commitments.

    Immoral? Yes, absolutely. Gaming the political system to elect judges to figure out a sleazy legal work around to invalidate legal commitments is sleazy as hell. However let’s not forget how we got here. Sleazy as hell negotiations with fat cat unions.

    To take the high road when you opponent has taken the low road is always the best course. However when such a course is not possible, and the alternative is devastation, to sink to the level of the opponent who brought you to such a dilemma is no vice.

    People need to face that fact, That there is absolutely no way to deal with the PERS ripoff other than the same gutter tactics that brought us here.

    • 3H

      Cut school back further and people will get really mad and start to ask themselves what the hell they are paying taxes for.

      Or, they very well take a look and see which representatives made the cuts, and take the anger out on them. Especially when they are reminded that it is nothing more than an immoral, cheap, sleazy trick.

  • Oregon Engineer

    Without reading
    the other reforms I am willing to bet that one consideration to reducing PERS HAS
    NOT been considered. Removing all
    elected officials from PERS. Elected
    positions by their very nature are temporary not to be careers with benefits. All of the benefits have been conferred to the
    beneficiaries by themselves. It has
    become government by the government for the government. These were initially
    considered Public Service of a temporary nature. We have lifetime career politicians in Oregon. Nearly all have or
    had private careers jobs business etc. It is not likely they would be “unemployed”
    after public service.

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)