The bill is moving quickly by any measure, but especially quickly for a Public Employees Retirement System bill. On Tuesday, May 21, it was voted out of the Ways and Means Committee; on Thursday, it passed the Senate. Next stop is the House, where a vote should come this week. Should it prevail there, Gov. Kate Brown is expected to sign it.
The bill represents the Legislature’s cost-containment plan for this session. It will make meaningful cuts to public employee benefits to control rising system costs. The bill redirects employee Individual Account Program contributions to fund the PERS system, caps salary calculations at $195,000, lengthens the time over which PERS debt is calculated, and makes several other significant changes.
OSBA’s ongoing coverage of the bill has details, and a bill analysis produced by legislative committee staff is also available.
This bill has upended traditional political positions, with some Democrats voting in favor of PERS cuts and some Republicans voting against.
The Senate achieved the bare minimum of 16 ayes, with Republicans and Democrats on both sides. No senator seemed totally happy with the content of the measure. Proponents wanted more cuts, and opponents wanted none.
Projecting the House vote is challenging, because backroom politics sometimes leads to strange bedfellows.
Normally Republicans are in favor of PERS cuts, and Democrats are against. There has been talk, however, that this vote could be a demonstration of the minority Republican Party making the majority Democrats “own” the cuts to public sector employees. Democratic leaders who have spent legislative careers as champions of public sector labor associations, including House Speaker Tina Kotek and Speaker Pro Tempore Paul Holvey, could vote yes on a bill to cut public sector employee benefits.
This unusual vote underscores the grave nature of the PERS crisis. PERS’ unfunded actuarial liability demands are untenable for school district budgets. If unchanged, base PERS rates could exceed 30% in some districts. SB 1049 would change the calculation and save districts hundreds of millions of dollars in reduced PERS rates. The bill does not lower the total costs, however. It gets most of its cost savings from taking longer to pay off the debt. In the end, PERS will get paid.
OSBA has long endorsed a two-prong plan to address education funding: revenue reform and cost containment. The recently passed Student Success Act and passage of SB 1049 would move us closer to exploring a new horizon in Oregon education with more resources available.
If the Legislature and governor can take the necessary steps to fund schools and cut costs, it will be our turn to demonstrate exactly how much these changes can mean for Oregon’s students.
