The Five Myths of PERS

By Knute Buehler —

Last week’s education rallies raise important questions about our K-12 education system. Despite years of growing frustration, little progress has been made. This is due in large part to the misinformation being spread, especially about PERS, that prevent constructive solutions. There are five big myths about PERS which Oregon government employees’ unions propagate because they do not want you to know the truth:

Myth #1:  Oregon PERS is better funded than most state pensions.

Oregon is in better positionthan other statessystems as measured by the percentage of pension debt that is funded, but the unfunded portion is still hugefor such a small state. We are one of the worstfunded states when you look at our ability to pay our debt – the ratioof our unfunded liabilities to the size of ourincomes, tax base or  per capita. In fact, studies showthat per capita we are worse off than debt heavy California. As the editor of the Bend Bulletin put it, “It’s like towing a yacht with a Prius.”

Myth #2:  Our PERS problems were caused by a singular event – the financial meltdown in 2008 – and is not a sign of structural flaws. 

Rates have been increasing unsustainably for a decade and will continue to rise until 2035.This means the worst is yet to come.  For an example, look at Bend-LaPine School district.  Their net PERS contribution plateaus in 2025 at nearly $60M but then spikes again in 2029 at over $80M (increase equivalent to 100 new teachers) due to expired investment side accounts. It then steadily increases until 2035.  And keep in mind, this assumes very optimistic year after year returns of 7.2%, which most actuaries believe is unrealistic.

Myth #3:  The Oregon State Supreme Court has ruled and there is nothing more we can do to lessen our PERS obligation.

In 2015, the Oregon Supreme Court recognized its previous misinterpretations of contract law and overturned its position that PERS obligations could not be changed once employment was initiated.  In its new position, outlined in the case Moro v. State, benefits and who pays for those benefits can change until the time of retirement.This opens many more possibilities for PERS reformsuch as transitioning government employees to a 401(K) type plan, requiring all government employees to contribute to PERS, and eliminating pension spiking. 

Myth #4:  Most of the burden is generated by PERS Tier 1 and 2 retirees, who have already retired so there is nothing we can do.

Tier 1 and Tier 2 beneficiaries have generated most of the unfunded liability. But Tier 1 and 2 members still comprise more than 40% of payroll in the current workforce. A lot of costs to school districts could be offset current employees would contribute (Tier 3 at a lower rate since they have lower benefit structure), to the cost of their PERS pension.   It is long past due, since we have been the only state in the nation where our government employees have not contributed to their pension fund. It’s true that about 70% of the PERS debt is attributable to those already retired, and there are limited ways to recover these legacy costs. But one is the work back/pay back proposalwhere limits on post retirement work would be lifted in exchange for former retired employees paying back 6% of their new salary towards the PERS debt.

 Myth #5: PERS reform “break the promise” made to retired government employees.

PERS reform should not and cannot, based on court decisions, take away benefits from government employees who have already retired and are counting on the earned benefits.  We owe these benefits, both legally and morally, that have been constitutionally promised.  However, some of the past contracts have been excessiveand cannot continue without change for those who have not yet retired.  A lack of PERS reform for current employees will perpetuate a classroom funding crisis in Oregon that has gone on for much too long.

This issue is complex and has vast implications for our kids and our shared future as a state. It deserves robust debate – but it needs to be based on truth, not information carefully crafted to protect the status quo. 

Knute Buehler is a former State Representative from Bend and the 2018 Republican nominee for Governor of Oregon.