Lawmakers settled at least one question about Oregon’s troubled public pension system on the opening day of the 2017 legislative session: They will be delving into its problems and looking at their money-saving options.
It was not clear that would be the case going in, as the pension system is political kryptonite for Democrats, who control most of the levers of state government. The system didn’t get much if any airtime in the 2015 and 2016 legislative sessions, even as its funding deficit soared to $22 billion and Republican lawmakers introduced bills to head off a crisis that will result in budget-busting cost increases for public employers and taxpayers over the next six years.
But the Senate Workforce Committee put PERS front and center Wednesday during its first meeting. And the committee chair, a freshman Democratic senator from Portland, Kathleen Taylor, pledged that the panel would openly consider any pension reform concept that fellow legislators bring forward.
“All bills will be treated equally, and all will be brought out into the public light so everyone can see what we’re grappling with,” she said.
Taylor and her co-chair, Sen. Tim Knopp, R-Bend, have already invited members of both houses to submit their money-saving proposals, along with any relevant legal and economic analysis, by the end of the month. They posted that memo on the committee’s website, which includes the criteria by which any proposal will be judged.
They include the measure’s constitutionality; the potential savings; the impact on employer contribution rates and state and local budgets; the effect on employee benefits; the impact on the workforce; the equitability of costs and benefits to employees, and the administrative feasibility.
The memo said professional staff, including the legislature’s lawyers, fiscal advisers, and PERS staff will analyze each proposal and provide the committee with a summary for its consideration.
Knopp has already submitted two bills of his own, Senate Bill 559 and 560. The first would change the calculation of members’ final average salaries used in their benefit calculations to an average of five years’ salary instead of three. The second would redirect employees’ required 6 percent retirement contributions, which go into supplemental retirement accounts owned by the employee today, to pay for their pensions.
Steve Rodeman, executive director of the Public Employees Retirement System, gave the first of two scheduled presentations Wednesday to review the system’s design, history, current funding issues and legal background.
Rodeman emphasized that the Supreme Court had created a very clear line in its 2015 decision that rejected most of the Legislature’s last batch of pension changes: Employee retirement benefits earned up to the date of any PERS bill passed by the Legislature cannot be changed. Benefits can only be changed prospectively.
“The only way you’re going to reduce the total costs of the retirement system is by reducing benefits to be paid,” he said. Retirees, who comprise the biggest chunk of the system’s deficit, are untouchable. And that means reducing future benefits of current employees to pay the more generous benefits of past employees.
He stressed another point: “Any reduction of benefits will be challenged in court.”
– Ted Sickinger
tsickinger@oregonian.com
503-221-8505; @tedsickinger
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