Gov. John Kitzhaber is pushing for modest changes to the Public Employees Retirement System for two reasons. First, he wants to reduce the pension program's cost to state and local governments, freeing funds for other uses. Second, the governor wants to detoxify PERS as a political issue to improve his chances of reforming Oregon's tax system. Neither aim would be served by a legislative proposal to exempt retirees' pension records from public disclosure.
Kitzhaber's PERS proposals are modest by necessity: The state can't unilaterally break a contract with current and prospective retirees, which means beneficiaries have a legal right to the benefits they've been promised. With most of the pension system's features off the table, the governor is calling for an end to a state tax benefit for PERS beneficiaries who have moved out of Oregon and a limit on cost-of-living adjustments. Even these tinkerings are likely to be challenged in court, presuming they are approved by a reluctant Legislature.
The governor said in his Jan. 14 State of the State address that his budget would increase per-pupil funding by $1,000 — and of that increase, $500 would be soaked up by PERS. Pension costs are constricting Kitzhaber's ability to achieve his goals in education and other areas. At the same time, the cost of PERS stokes resistance to any changes in the tax system, because opponents argue that increased revenue or greater flexibility in budgeting would feed the pension system rather than improving state services.
Against this background comes Senate Bill 369, a proposal by state Sen. Alan Bates, D-Medford, to drape a cloak of invisibility over individual PERS benefits. In 2011, then-Attorney General John Kroger decided to release information about beneficiaries' checks. The decision ended a decade-long public records dispute with Oregon newspapers contesting a move by PERS to withhold the information from the public. SB 369 would reverse Kroger's decision, preventing the public from finding out the size of a PERS beneficiary's pension payments.
A number of prominent Oregonians found themselves the subjects of unwanted attention when Kroger raised the curtain two years ago. Among them was former University of Oregon athletic director Mike Bellotti, who received the biggest PERS pension of them all — $41,342 a month. No. 4 on the list was Steve Goldschmidt, who represented the Eugene School District during a 1987 teachers' strike, whose monthly check was $21,517. Former UO President Dave Frohnmayer came in at No. 5, with $21,207.
These are outliers. The average PERS benefit is $2,263 a month; 72 percent of beneficiaries receive monthly pensions of less than $3,000. It's a generous program — at the end of a 30-year career, beneficiaries can expect PERS to replace 74 percent of their final salary — but the biggest checks distort public perceptions of the whole system.
Withholding information on individual PERS benefits would make it harder for the public to evaluate the cost and fairness of the pension system. It would also cloud the coming debate over Kitzhaber's reform proposals.
Currently, PERS beneficiaries receive cost-of-living increases of up to 2 percent a year. Kitzhaber proposes applying cost-of-living adjustments to only the first $24,000 a year in benefits. Most pensioners would feel little or no effect. Those most affected would be the winners of the PERS jackpot — and knowing who they are is helpful in evaluating the fairness of the COLA cap.
PERS benefits are an important part of public employees' compensation — indeed, the generosity of the pension system is often justified by presenting it in the context of total pay and benefits. SB 369 would make a primary component of state and local employees' pay secret.
PERS is going to be an important issue for the 2013 Legislature in its own right, and will be a factor in all debates over state spending and revenues. Adding a layer of secrecy would get those debates off to a bad start.