Editorial: PERS problems don't end with action by board
Published: August 17, 2002
An antiquated bromide, "Better late than never," applies perfectly to the Public Employees Retirement System board and its 24-year-old life expectancy tables. But that shouldn't excuse the board's delay, which caused almost 20 percent of the $8.5 billion PERS deficit.
The board acted Monday to start updating those life expectancy tables. New tables won't go into effect until 2004, which provides time for the Oregon Supreme Court to rule on the threatened lawsuit from public employee unions. PERS board members not only turned down the phase-in proposal from the unions, but moved their own proposed schedule ahead.
The reported response from a representative of the American Federation of State, County and Municipal Employees was infuriating: "If I'm a firefighter, why would I want to run into your burning house tomorrow if I could retire today?" She envisions an avalanche of resignations from public employees who can retire in the next 16 months under the current pension plan or work a few more years to obtain the same amount.
Unfortunately, this move is only one element in the PERS plan that needs reform. Those have been well chronicled, but they cannot be repeated enough times to a disbelieving Oregon citizenry:
"Tier 1" public employee retirement accounts are guaranteed to grow by 8 percent annually, even when there are huge losses in the PERS investment fund such as occurred the last two years. And when the stock market boomed, that board took the unconscionable action of placing most of the gain into pension accounts instead of salting away enough to weather the inevitable stock market downturn.
Now, the reserves are gone, and public employers will have to foot the huge bills. That means either taxpayers pony up more money or government cuts services.
Government officials, all receiving PERS benefits, made these decisions. Our Legislature re-established the "money match" program that doubles individual PERS accounts upon retirement; then, lawmakers compounded the problem by enacting the 8 percent guaranteed annual return. The PERS board made decisions that were almost criminally negligent. Judges have ruled against changes in the PERS, no matter what the cost to taxpayers.
Monday's board action was a welcome sign, but that alone won't solve the woes of PERS.