The Associated Press

PORTLAND — School districts across the state pay teachers, administrators and staff 55 percent more in health insurance and retirement pay than schools across the nation, according to an analysis by The Oregonian newspaper.

The paper found that if the state's school districts did conform to the national rate, schools would save about $500 million next year.

"Taxpayers in Oregon are pumping money into the public education system that doesn't benefit the learning environment in classrooms one bit," Jim Green, senior legislative advocate for the Oregon School Boards Association, told the newspaper.

As of July 1, school districts must pay 17 percent on top of salaries for state pension costs, up from 12 percent the past two years.

With more than 55,000 full-time workers in Oregon schools, the costly employee benefits add up to more than $2 billion over two years.

All the spending on benefits has limited how much schools can put into popular initiatives like reducing class sizes, an especial concern for many parents since Oregon's class sizes are nearly 30 percent larger than the national average.

Kris Kain, president of the state teachers union, the Oregon Education Association said money should be saved by trimming health insurance costs, creating a statewide school insurance pool, closing corporate tax breaks and having Oregonians invest more money in schools, not by cutting teacher benefits.

"Your public school employees are working really hard. They deserve to be adequately compensated. They don't deserve to be the bad guys," she said.

But economists say that spending more on teacher salaries, or on creating smaller classes, are more likely to directly raise student achievement.

School boards may not be able to do much about the issue, because they don't directly control pension costs — a state pension board and the Legislature do. And courts have ruled against attempts to scale back retirement benefits that were promised to workers.

But big pensions aren't the key factors attracting promising teachers, who are more likely to be lured by high starting salaries and the chance to do meaningful work, said Michael Podgursky, economics department chairman at the University of Missouri.

Traditional public pension programs were designed to deliver 60 percent to 65 percent of a worker's final salary after 30 years on the job, with Social Security expected to cover another 20 percent to 25 percent.

Oregon's public pensions were initially set up that way, but ballooned during the go-go stock market in the 1990s. The average PERS member who worked at least 30 years and retired between January 2000 and November 2004 got a pension averaging 107 percent of final salary, an analysis of PERS reports shows.

Then, in 2000, the recession and retirements collided. Oregon's economic downturn triggered cuts in schools as policymakers began to see that PERS costs were skyrocketing.

Now, six months into the current legislative session, Oregon lawmakers are only $50 million apart on a schools budget for 2005-07, but they still can't agree. The Republican-controlled House insists it should be $5.22 billion; the Democrat-controlled Senate is holding out for $5.27 billion.

Kain, the teachers union president, says teachers and other school employees have played by the rules and earned their health insurance and pensions.

"Teachers should not have to take something less than what they were promised to balance the state budget," she said.