No PERS Member Left Behind

Daniel Re is an attorney in Bend who has undertaken a one-man fight to restore sanity to Oregon Public Employees Retirement System (PERS).  He has begun a series of lawsuits to demonstrate that the current state of PERS affairs are a direct result of politicians and judges who are direct and substantial beneficiaries of the system that they created, regularly enhance and protect against taxpayers.

Periodically, I turn this column over to Mr. Re for his well researched and documented reports.  The following report is stunning in its clarity and its demonstration of a system that is corrupt from top to bottom:

“On August 2, 2011, the Oregon Department of Education issued a news release with the headline “Student Achievement Increases but Fewer Oregon Schools Meet Federal Standards Under New Adequate Yearly Progress Targets”.   Those targets were formerly part of the law known as No Child Left Behind.  The latest tests fell far below the target, only 54% (645 of 1200) of Oregon schools met the standards, compared to 71% in 2009-10.  Those statistics, however, do not tell the real story.  The fact that more than half of Oregon’s school met the standards is actually a remarkable achievement because in the 1970’s the Oregon legislature adopted another plan that has been given the state’s top financial priority.  That plan, No PERS Member Left Behind, always gets funded first.  In financially difficult times, money that could have been used to educate Oregon’s children must instead go to PERS. 

“Governor Kitzhaber’s 2011 – 2013 proposed budget shows the consequences of No PERS Member Left Behind.  That budget included $7.5 billion for PERS.  That represented a $1 billion increase from the prior biennium.  That extra billion was needed to make up for the PERS stock market losses in 2008.   That same proposed budget allocated $5.5 billion for the K–12 education, approximately the same amount as the prior biennium.  The Superintendent of Public Instruction stated that the $5.5 billion was $1 billion less than what was required to maintain the instruction Oregon’s children had received during 2009-2011.  Unfortunately, there was nothing the Governor could do about that.  No PERS Member Left Behind mandated that $1 billion go to PERS and that meant it was not be used for  K-12. 

“The objective of No PERS Member Left Behind is simple.  It guarantees PERS members that they will receive their retirement benefits, no matter what.  If governmental agencies are forced to cannibalize themselves in order to make their PERS payments then that is what they must do.  No PERS Member Left Behind made PERS payments their primary function.   Providing the services that those agencies were originally created to provide became a secondary function.  At the end of 2010, the PERS fund held approximately $56 billion.  If every last cent of the $56 billion is lost through bad investments or any other reason, No PERS Member Left Behind requires the people of Oregon to repay it, with interest. 

“The No PERS Member Left Behind program was created by Oregon legislators who joined PERS after they were permitted to do so by an Attorney General opinion in 1971.  These are a few of the actions taken by those PERS legislators that made No PERS Member Left Behind the successful program that it is today:

“1.   In 1975 the PERS legislators gave anyone who had ever served in the legislature the right to retroactively join PERS and then they kept that retroactive right open for the next sixteen years. 

“2.   In 1979 they created the PERS pickup which allowed PERS members to require non-PERS members to pay their employee PERS contributions for them.  Originally, the pickup was intended to last for just two years but by 1981 those PERS legislators enjoyed having other people pay their PERS contributions for them so much that they made it permanent.  PERS estimates that during the 2011–2013 biennium, the pickup will cost $874 million.

“3.   In 1983, 84 of the 90 legislators were PERS members and they forced Oregon’s judges to become PERS members and they gave the judges a larger PERS Pick Up benefit than any other PERS members.  The pickup amount for judges was 7% of salary, while other PERS members received a 6% pickup.  In 1994 the people of Oregon passed Ballot Measure 8 which eliminated the PERS pickup.  In 1996, the PERS judges on the Oregon Supreme Court decided that the elimination of the PERS pickup was unconstitutional, by a 4 to 3 vote.  Since January 1, 1995, the effective date of Ballot Measure 8, billions of dollars have been used to pay pickup contributions rather than to provide services to all Oregonians.

“4.    In 1989 they increased the sanctions against public employers who do not pay their PERS assessments on time.   This law, the keystone of the No PERS Member Left Behind program, clearly established PERS funding as Oregon highest financial priority.

“No PERS Member Left Behind was created by PERS legislators who have financially benefitted from it.  It is a major reason why all Oregon schools have cut school days and have fewer teachers.  Multnomah County School District No. 1J’s 2011/12 Budget Overview, page 83, shows that the district will pay PERS almost $5 million more than it did for the 2010/11 school year.  In order to pay that extra $5 million, the district must make additional service reductions.  

“Oregon’s schools did the best they could during the 2010-11 school year to prepare Oregon’s children for the new Adequate Yearly Progress Targets.  While those results were lower than hoped for it is doubtful that anyone could have done better when faced with the insurmountable obstacle of No PERS Member Left Behind.  And besides, that’s not the primary objectives of the schools anyway.  During 2010-11, the schools fully paid their PERS assessments so it was a good year, a very good year.  Oregon’s children and, therefore, its future may have been shortchanged, but no PERS member was left behind.

“Daniel C. Re”

For those wishing to learn more about the work of Dan Re, you can visit his website at Inrethepeople.com/.