Ted Sickinger of The Oregonian has written a series of revealing articles about the Public Employees Retirement System (PERS), which his latest story calls the “defining issue” of the 2018 Oregon gubernatorial race.
“Perhaps few issues more starkly delineate the views of Kate Brown and Knute Buehler in this fall’s gubernatorial election than Oregon’s public pension system,” Sickinger wrote.
“Though PERS has been a hot-button issue in the state for decades, the political pressure may never have been higher,” he continued. “Schools, municipalities and government agencies are panicking as their required PERS contributions spiral to historic highs to help dig the system out of its $22 billion unfunded liability. There is no rescue in sight, and contribution rates are slated to jump again in July, pulling another $550 million a year out of public budgets statewide.”
Republican challenger Buehler has used the issue as a political club to criticize Governor Brown’s leadership. Brown has searched for ways to buy down the unfunded PERS liability and insists she won’t punish hardworking public employees.
As Sickinger describes it, Buehler has promoted a set of PERS reforms closely paralleling those backed by Oregon’s business community. Brown dismisses Buehler’s “threats and bluster” and says she will concentrate on “actual solutions that solve the problem.”
In reality, the window of possible changes isn’t very wide. “There is a limited menu of changes to the pension system considered economically meaningful and legally viable in light of past decisions by the Oregonian Supreme Court,” Sickinger says. “None would erase the pension deficit, though it is possible to make cost reductions that would help [public] employers.”
Sickinger walks through ideas on the table – public employee cost-sharing, which Oregon public employees already do, a $100,000 salary cap to limit large pension payouts and a transition to a 401(k) plan.
Sickinger’s article touches on incentives and investments, including Brown-backed legislation to entice public employers to make an extra contribution to PERS and have the contributions matched by 25 cents on the dollar. Buehler calls the idea “political theater” with minimal impact on the unfunded liability.
Brown touts professional changes in the state treasurer’s office to achieve a higher rate of return. Buehler dismisses this, claiming the Oregon PERS portfolio has been one of the best performing funds in the nation.
Regardless of your politics or gubernatorial preference, Sickinger’s reporting on a major state issue is informative and cast illumination on claims, counter-claims and outright inaccuracies.
For starters, there were 145,963 Oregon PERS retirees through December 2017 – 127,687 of whom are considered Tier 1, the group with the most court-tested retirement benefits. Another 67,840 Oregon public employees are eligible to retire – 22,300 of whom are in Tier 1.
For the rest of the story, read Sickinger’s story, including a YouTube video on how Oregon got $22 billion in the hole.