The Public Employees Retirement System has Oregonians in a hammerlock. A scandalous matchup of legislative irresponsibility and head-in-the-sand management by the PERS board has state and local governments wrestling with an $8.5 billion shortfall in the amount needed to pay future benefits.
There are solutions, but they will require political courage.
What started out in 1946 as a responsible plan to provide decent retirement benefits to public employees has been contorted into an incomprehensible mishmash that allows employees to retire with more pay than while working.
The board has been dominated by public employee interests, with campaign clout that swayed legislators into poor decisions. As pointed out in a Viewpoints column today, the Legislature enacted minimum growth and an expensive "Money Match" system for retirement accounts; the PERS Board ignored independent advice and put more money into employees' accounts that should have gone to a rainy day fund.
By law, any deficit in that reserve fund must be made up within five years, beginning this March. That translates into fewer programs in schools and the state, fewer services in cities and counties.
Higher costs will come unless legislators have the will to fix what went wrong. Gov. Kitzhaber has appointed and heads a task force to recommend solutions. It's a mixed group, representing business, labor and public employers, with experts on board for technical advice. The Legislature has its own task force going.
A critical key to reform and solvency is ending the Money Match option. Legislators eliminated it in 1967, reinstated it in 1969, and in 1981 thought it was gone when a new PERS program was installed. It can be done.
State officials must immediately update actuarial tables used by PERS, replacing the 1978 version that greatly underestimates the length of time pensions will be paid.
District by district, city by city, county by county, officials must consider elimination of the "6 percent pickup," a policy whereby many governmental agencies make the 6 percent pension payment that is required of employees.
Those actions, and more, are required to maintain the 8 percent growth that state officials guaranteed to most PERS accounts.
In the private world, stockholders would be demanding retribution. In the world of PERS and the Legislature, stakeholders - the taxpayers - are simply expected to acquiesce to fewer services and/or more taxes. No more, unless there is significant PERS reform.