Employers, employees address proposals to curtail PERS cost increases
Ways and Means Co-Chairs Sen. Elizabeth Steiner Hayward (from left) and Sen. Betsy Johnson and Senate President Peter Courtney are on a subcommittee considering cost-containment changes to the Public Employees Retirement System. (Photo by Jake Arnold, OSBA)
The Legislature continued work Tuesday night on a promise implicit in passage of the Student Success Act: public pension cost containment.
A Public Employees Retirement System proposal introduced Friday could lower PERS rates 6.33 percentage points from current projections, according to Oregon PERS Director Kevin Olineck.
The bill’s changes would flatten the cost curve by reducing some benefits and drawing out PERS debt payments over a longer period.
The Joint Ways and Means Capital Construction Subcommittee invited testimony and let public members weigh in Tuesday on amendments to Senate Bill 1049. Public employees opposing the changes packed the hearing.
The subcommittee includes Senate President Peter Courtney, House Speaker Tina Kotek and Sen. Betsy Johnson, who tied her vote for the Student Success Act to a promise of significant PERS reform.
Republican opposition to the Student Success Act, which will devote an additional $1 billion a year to education, included concerns that PERS cost increases would devour much of the new money. The Student Success Act walls off the new money from PERS costs, but school districts would still have to deal with PERS’ bite out of classroom spending.
Invited testimony Tuesday highlighted the difficulty of PERS reform. Public union representatives questioned the proposed changes based on past court rulings that said the Legislature couldn’t alter benefits already accrued. Any changes would likely face more legal challenges.
The bill’s proponents said they support good pensions for public workers but that must be balanced against the state’s ability to pay. Average PERS base rates are predicted to go above 30% of payroll for the next decade, crippling school, city, county and state budgets.
“If we do nothing, we are going to see severe reductions in public services,” testified Rob Bovett, legal counsel for the Association of Oregon Counties.
OSBA Executive Director Jim Green highlighted for legislators the impact on Salem-Keizer School District, where he is a board member. The district’s PERS costs will increase $14 million this year, equivalent to about 112 teachers, according to Green. He said PERS costs are cutting into the district’s ability to hire teachers to lower class sizes and counselors to help with student mental health and suicide prevention.
Green said something must be done to bend the cost curve.
“It’s a $27 billion problem,” Green said. “That’s not going to go away.”
- Jake Arnold, OSBA
jarnold@osba.org