PERS – A Symbol of Government Corruption

A recent national survey indicated that nearly eighty percent of the American public would favor getting rid of the president and all of the members of Congress. Those favoring removal believe that the politicians do what is in their (the politicians’) best interests and not what is in the best interest of the people.

Webster’s Ninth New Collegiate Dictionary defines “corrupt” thusly:

“1.a: to change from good to bad in morals, manners, or actions; also: BRIBE b: to degrade with unsound principles or moral values 2: ROT, SPOIL 3: to subject (a person) to corruption of blood 4: to alter from the original or correct form or version. . .”

The original intent of government in the United States was to serve the people. Over time, and with the growth in the size and reach of government, the primary intent of government has become the preservation of power and benefits for those who run the government.

While most of the disgust and distrust of our politicians has crystallized around the recent passage of the massive healthcare bill — including both the vote and the backroom deals to secure the vote — the foundation of people’s anger can be found in a hundred different actions (or inactions) by all levels of government. In Oregon, no better example exists than the manipulation of the political process by the government class and the public employee unions with regard to the Public Employees Retirements System (PERS).

The PERS system is provided at no cost to the employees. The benefits cannot be reduced. And the cost of sustaining PERS must be paid before any other program expenditures can be made by any agency of the state and local governments.

The recent history of the corruption of PERS is, in actuality, a history of recent corruption of government itself.

Originally the PERS system was set up so that employees paid up to six percent of their salary as a contribution towards their retirement. During a period of fiscal constraint the public employee unions bargained for a “phase in” of the government paying that contribution in lieu of pay raises. That was during a period of time when, as former California Speaker of the House and San Francisco Mayor Willie Brown, described the grand bargain for public employment existed:

“The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life,” Brown asserted. “But we politicians “” pushed by our friends in labor “” gradually expanded pay and benefits . . . while keeping the job protections and layering on incredibly generous retirement packages. . . . “

Now according to a report by the Oregon Department of Employment public employees, even after excluding their generous benefits packages, make one-third more than their private sector counterparts. And yet the state continues to make those public employees’ contributions to the PERS pension plan. Why? Because they can. Because those making the decisions are also beneficiaries of the PERS system and they are insuring their own security at the expense of Oregon citizens. (Please note that I did not say Oregon taxpayers because the burden falls on those who are denied benefits and services because of the costs of PERS as well as the taxpayers who pay the costs of PERS. )

When the abuses of the PERS system first came to light during the 2002 gubernatorial campaign, the legislature sought to mitigate the problem by a series of reforms. The public employees unions challenged those reforms and the Supreme Court tossed out most of the major reforms. The Supreme Court found that Oregon’s constitution requires that a right or benefit once given to a public employee can never be reduced or eliminated during the employee’s term of employment. Of course, no such right is actually set forth in Oregon’s constitution and the Supreme Court had to “divine” the intentions of the framers of the constitution by reading between the lines. More important that the courts ability to “divine” the intentions of the framers is the fact that the members of the Supreme Court are all PERS beneficiaries and thus they have insured their own security at the expense of Oregon’s citizens.

The decision of the Oregon Supreme Court places Oregon’s public employees in a unique and superior position vis-à-vis every other employee in Oregon, or for that matter in all of America. For everyone else, the law simply says that a benefit earned to date cannot be reduced or eliminated; however, future benefits can be altered changed or eliminated. But then, not every other employee in Oregon works for the government of Oregon — at least not yet.

The last report issued by the PERS administrators indicated that the future unfunded liability for PERS was $16.5 Billion — that is an amount that rivals the entire biennial general funds budget for Oregon. It is an amount that places a number of smaller counties, communities and school districts in a position of technical bankruptcy.

It is also an amount that commands a first priority in government spending. In 1989, the Oregon legislature enacted new laws to make sure public employers paid their PERS contributions promptly. Those new laws provided that if a public employer did not pay its PERS assessment, it must pay interest on the delinquent amount and, after the deficiency is certified to the Oregon Department of Administrative Services by the PERS Board, all funds in the State Treasury that the delinquent public employer is legally entitled to must be withheld until the PERS deficiency is paid. (See: ORS 238.705) That legislation made PERS funding Oregon’s highest financial priority, more important than public safety, public education, or any other service provided by the State. By giving first priority of payment to PERS, the governor and legislators, all of whom are eligible beneficiaries of PERS, secured their own interest at the expense of the citizens of Oregon.

Today in Oregon, welfare payments are reduced because PERS must be funded first. Staffing levels for schools, law enforcement and prisons have been reduced because PERS must be funded first. Payments to child welfare agencies and the developmentally disabled have been reduced because PERS must be funded first.

When Oregonians look around as to why public services have been reduced or eliminated it is not because they don’t pay enough taxes, it is because the mandatory benefits to public employees have become too great — not only too great, but, apparently, beyond remedy.

Oregon government no longer exists for the benefit of the people, it exists primarily for the preservation of its own power and the benefit of its own government class.

It is corrupt — and in this instance corrupt at all levels.