By BRAD CAIN
The Associated Press

SALEM — The Oregon Senate narrowly defeated a bill Thursday that would have scrapped the Oregon Public Employees Retirement System and directed the 2003 Legislature to enact a new retirement program.

The bill, which failed on a 15-15 vote, is backed by Senate President Gene Derfler and others who said the current retirement system is facing runaway costs that could bankrupt local and state governments.

"It is a crisis now, and what this bill says is that the next Legislature has to address the issue," said Sen. Roger Beyer, a Mollala Republican who is chairman of the Senate's PERS committee.

The measure went down to defeat after opponents said the Senate would be acting in haste to abolish PERS during a special session that's supposed to be focused on erasing the state's $482 million budget hole.

Sen. Joan Dukes, D-Astoria, also said that under the bill there would be no guarantee that the next Legislature could agree on a replacement system for PERS.

"It's a lousy way to treat our employees," Dukes said.

PERS, which covers 294,000 retired and active employees, has become a hot-button issue this election year because of estimates showing the system's financial shortfall rising to $8.5 billion.

Critics long have argued that PERS is an overly generous system in which the average pension benefit for a person who retires after 30 years in public service is 105 percent of his or her final salary.

In pushing for the PERS bill, Derfler said lawmakers shouldn't ask Oregonians to pay higher taxes to help erase the state's budget gap without also making moves to rein in the costs of PERS.

Thursday's Senate action didn't close the door on the PERS bill, however.

After the bill failed 15-15, Senate Majority Leader Dave Nelson, R-Pendleton, moved to have it shipped back to committee. That means it could be brought up again if Derfler and other backers can find another vote or two for the bill.

A supporter of the measure, Sen. Gary George, R-Newberg, said PERS needs urgent attention from lawmakes.

"PERS is a train that is about to wreck," George said. "We've got to deal with reality."

But a Republican who voted against the bill, Sen. Lenn Hannon of Ashland, said the bill is an overreaction to the financial problems facing PERS.

"Should the system be changed? Absolutely. But you don't abolish something to fix it," Hannon said.