Give Gov. Kate Brown credit for 1) acknowledging that something has to be done about the enormous financial burden on Oregon that the Public Employees Retirement System has become and 2) convening an advisory panel to come up with new ideas to reduce the unfunded PERS liability — which currently stands at $22 billion — by $5 billion.
Credit Brown also for telling the task force that their mandate includes looking at "uncomfortable" options such as selling state lands and privatizing state agencies.
All of this, however, is a drop in the seemingly bottomless PERS bucket. And it won't solve the major structural issues that have created the large, and ever-growing, financial threat PERS poses to the state.
At the heart of this issue are benefits for Tier 1 PERS beneficiaries that far surpass anything in the private sector, and most, if not all, public employee retirement systems in the country.
PERS was designed, approved, modified, expanded and adjudicated by public employees — in other words, the people who benefit from the system. This is not to impugn their actions, or motives, or to imply unethical behavior, but to point out that checks, balances and critical thinking have been sorely lacking throughout much of PERS' history. It is also to point out that it is highly unusual that most of the development and control of a program as large as this — particularly one funded by taxpayer money — be vested in people who, as beneficiaries, have an inherent conflict of interest.
Had some more outsiders with a critical eye been involved in decision making at the start of PERS, or as alterations were made to the system, some proposals probably would have died in their infancy. This would include the requirement that taxpayers pony up additional funds if the return on PERS investments is below the unrealistic levels set for the system, but no counter-balancing mechanism if returns are higher than expected.
Some previous attempts at meaningful PERS reform have resulted in public employee unions promptly filing suit, arguing that a contract is a contract. The unions have generally won these lawsuits.
This — plus the political clout wielded by unions and their members — has had a chilling effect on talk of further attempts at PERS reform.
This is not to say there have been no attempts. A bill introduced in the last legislative session would have required public employees to contribute a tiny amount of their salaries — starting at 1 percent next year — to the pension fund, as is done in most states.
Senate Bill 1068 died in committee, but it was a tiny step in the right direction. Most importantly, it didn't prompt threats of lawsuits from public employee unions.
Unrealistic burdens placed on the state by unrealistic PERS benefits are hurting everyone. Even when tax revenues grow, money that would have gone for uses such as education instead is sucked into PERS. It's time for all the parties — unions, lawmakers and taxpayers — to come to the table and start working on meaningful reforms that everyone can live with. The PERS can has been kicked down the road for far too long.