PERS needs reform to restore fairness

Oregon Senate Republican Office

Salem, OR – New data available for the first time Monday brought to light individual monthly pension payments made to Public Employee Retirement System retirees, some totaling more than $100,000 per year.  However, despite these outlying numbers, the real inequity in the system lies not in the amount of a member’s retirement benefits, but in the 6% monthly contribution that the taxpayer continues to shoulder on behalf of public employees.

“Ending the six percent pick-up last session would have freed up hundreds of millions of dollars to pay for state services that will be on the chopping block this February,” said Ferrioli.  “Rolling back the pickup by just a few percent would enable us to restore the senior property tax deferral program, for example.”

Seventy percent of state employees have their six percent retirement contribution “picked-up” by Oregon taxpayers¹, costing the state $750 million every two years².  Meanwhile in the state’s beleaguered private sector, employer sponsored retirement contributions are becoming increasingly rare.

“Private sector employees feel a great sense of injustice when they learn they are picking up the tab for a public employee’s retirement, while the private sector employee doesn’t have the space in their budget to make retirement contributions in this weak economy,” said Ferrioli.  “Making changes to how much the state ‘picks-up’ makes sense if we are going restore fairness and equity to the system.”

Last session Senate Republicans introduced Senate Bill 897 which would have ended the statutory requirement that a six percent contribution be made to public employees’ retirement accounts.  This solution was voted down by Democrats in the Senate.

“No one should begrudge a public employee the retirement that they have worked hard to secure,” said Senate Republican Leader Ted Ferrioli (R-John Day).  “However, the six-percent ‘pick-up’ demonstrates a lack of fairness between private and public retirement plans and continues to place tremendous strain on an unstable state budget.  It is time that state employees, including legislators, started picking up part of the contribution to their retirement accounts.”

The six percent pick-up is not the only additional PERS related cost taxpayers are paying.  Unfunded liabilities in the PERS system have caused employer rates charged to state and local governments in the system to more than double.  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.

¹ http://www.oregonlive.com/business/index.ssf/2011/05/pers_state_pension_reform_fall.html

² http://www.oregonlive.com/opinion/index.ssf/2010/08/reforming_pers_would_strengthe.html