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Kicking the PERS Can

Down the rabbit hole

The mood in Salem’s Hot Air Society took a turn for the worse this week as Democratic leaders opened up hearings last Tuesday on PERS (Public Employees Retirement System). I was hoping that Speaker Tina Kotek and Senate President Peter Courtney would form a special joint committee dedicated to PERS alone. Instead, they combined the House and Senate Rules into a joint committee for the purpose of taking testimony on the various PERS measures out there. Diane Rosenbaum, Senate Rules chair, informed the joint committee that a PERS bill would move out immediately out of Rules and down to the Ways and Means rabbit hole quickly. 

 Sending a complex and unformed substantive PERS bill to the Ways and Means budget process this soon simply means there will be no further meaningful public discussion in the Capitol after these hearings. Now PERS becomes part of the back-room budget deal at the end of session.

 The Democratic measure, Senate Bill 822, creates a tiered approach to applying the COLA (cost-of-living adjustment), different than the governor’s proposal, and with less savings. It cuts costs to school districts by lowering the employer contribution rate to the PERS account by $350 million over the biennium. I guess you can call that a savings but saying that the money goes to schools now and to PERS accounts later kinda kicks the can — these 30 year actuarial projections are deep hobgoblin voodoo math to me anyhow. In any case, to any extent that the solution is to cut the rate for public employers just for this biennium, it doesn’t cut the unfunded liability of PERS into the 30 year future. It simply hedges our bet on doing better than the 8 percent guarantee going forward.

 SB 822 should get tweaked to make one change in the COLA calculation, I don’t know what the savings would be, but they’d be considerable. I recently got to share a meal with my friend, former House member Greg Macpherson. We worked together on PERS reform in 2003, and he was subsequently defeated in the attorney general race by the totally-forgotten-by-now John Kroger and SEIU’s $300,000 — all because of his courageous work on PERS reform. 

 Greg thinks the COLA is fine for retirees who go out under the defined benefit formula. It makes sense, your benefit is a percentage of your salary based on years worked and your final pay, fixed in time when you retire; the cost of living increases as you retire, so a COLA is appropriate. But for folks who retired or will retire under the money-match formula, it has to be better than the defined benefit formula (because in Tier 1 you get the better of the two). So those folks were higher risk-takers and took the public employer along for the ride. They got the defined contribution feature, they have an annuity. Annuities don’t usually have COLAs, unless you artificially built one in over time when you initially set it up. Retirees shouldn’t get the benefit that accrues to the lesser of the two formulas if they’ve received the greater of the two. I agree with Greg that the Oregon Supreme Court might see the logic of that as well.

 

Speaking of dull and boring, I’m getting a little nervous. Apparently, according to responses received by EW, both Jack Roberts and Jerry Ritter are reading this column. Now Jack is an intellectual heavyweight, I’m not gonna take him on just yet. But any of you who know Mr. Ritter know that, while I’m sure he’s personally a paragon of Christian virtue, he’s also a single-issue, anti-annexation, libertarian conspiratorialist wackjob. I think he’s probably relatively reasonable about most other issues — if we only knew what they were.

 Jerry chided me for paying attention to “trivial stuff such as guns, the budget, etc.” —  apparently ignoring my outrage over the legislator/lobbyist leash law. Anyway, he suggested I mention another fine example of how our Salem Hot Air Society single-mindedly pursues progressive public policy without political distraction each session. He’s talking, of course, about HB 2352. Maybe Jerry doesn’t think it’s important, but I think matching the sister cities of Boring, Ore., and Dull, Scotland — while sounding kinda New Age, blended family, civil uniony, almost lesbianish — is an idea whose time has come. But, secretly, what disturbed me the most about Ritter’s letter is that we were thinking alike; I already had HB 2352 on my radar for a future column! Alas, that worries me. In hindsight, HB2352 makes my famous Irish Famine school curriculum bill seem trivial. (Dennis Shine made me do it.)