PERS Fix Delays Action, Costs Public Employees

Oregon Senate Democrats are pushing a bill designed to ease the state’s $25+ billion public pension debt by giving public employers more time to pay and increasing costs to public employees. 

PERS reform was forced onto center stage after Oregon Senate Republicans staged a walkout, taking with them just enough members to prevent the Senate from doing any business until their demands were met. As part of the agreement made with Republicans in exchange for their return to the Capitol, including negotiating away two of their recent legislative achievements, Democrats promised to make “substantive” efforts to paying down the large unfunded liability in the PERS system. 

Senate Bill 1049 (SB 1049) seeks to save money in the short term by extending the repayment period for public employers, effectively allowing those employers to offset planned rate increases beginning in 2021. Public employer will pay 25% of salary in retirement costs, increasing to 30% in the mid-2030s.  

Some reporting indicates this extension is a way of “kicking the [can] down the road” on the PERS debt, as short-term offsets do little to address the long-term financial issues with the system. Around 70 percent of the savings from the bill would account for the planned increases to PERS rates.  

Senator Betsy Johnson (D-Scappoose), co-chair of the Ways and Means Committee, stood with Republicans in demanding “substantive” PERS reforms, asking for an end to “magical thinking” about the debt, and then voted “yes” twice on SB 1049, in two different committees. Johnson did not return reporters’ questions about whether she considered the bill to be “substantive” reform. 

The bill has drawn more ire for a cost-sharing provision, which redirects a portion of the income public employees automatically pay into their retirement accounts instead toward paying off debt. Of the 6 percent automatically paid by these employees, between .75 and 2.5 percent would be redirected to account to pay off the debt. 

“The folks who are being asked to take on the role of solving this issue for the state are the very employees who have worked so hard to keep to try to keep the state afloat over the past few years,” said Sen. Lew Frederick (D-Portland), who intends to vote against the bill. 

Public employees, from firefighters to teachers’ unions, have declared the proposal a “non-starter,” and stated their intention to lobby against the law as well as potentially fight it in court. 

By Ian MacRonald