Senate Democrats kill PERS reform – will cost taxpayers $750 million

Republicans offer leadership on PERS problems

Oregon Senate Republicans

Salem, OR – Senate Republicans filled a leadership vacuum Wednesday by forcing PERS reform legislation to the Senate floor.  Senate Bill 897, which would eliminate the requirement that employers pay the six percent employee contribution to their Public Employees Retirement System account, failed on a party line vote.

“It is obvious to everyone but the state legislature that something must be done about the PERS problem,” said Senator Chris Telfer (R-Bend).  “Ignoring looming deficits and skyrocketing rates only means less money to spend on classrooms, police officers, services for seniors and other vital priorities.  This bill could have been one piece of the solution to the PERS problem.”

Senate Bill 897 would end the statutory requirement that a six percent contribution be made to employees’ retirement accounts.  More than 70 percent of PERS members have this six percent contribution “picked-up” by their employers.  This solution, endorsed by The Oregonian, would save taxpayers $750 million every two years.

Recent studies have shown that PERS has an unfunded liability of $13.6 billion.  As a result, rates charged to employers in the system have more than doubled.  State agencies, school districts and local governments were all forced to shoulder an additional $1.1 billion in expenses this budget cycle alone, for a total of almost $2 billion in PERS charges. Additional rate increases are looming.  Every rate increase comes straight out of state and local budgets and means fewer dollars to pay for teachers, police officers and other services.

“PERS costs are eating school districts and other core services alive,” said Senator Alan Olsen (R-Canby).  “Ignoring this problem won’t make it go away, it makes the problem that much worse for future generations.  Ending the requirement that employers pick up all 6% of an employee’s PERS contribution is one thing we can do to increase funding for education and other important state priorities.”

Senate Republicans also introduced Senate Bill 970 to help stem the bleeding in PERS.  Senate Bill 970 would require employers to make yearly payments to fund projected liabilities in 25 years or less.  Many public employers know how much will be needed to pay for promised post-retirement benefits, but choose to spend money on more immediate needs instead, leaving future administrations to pay for the promises.