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Legislature gets serious
It looks as though the Oregon Legislature has finally tired of merely talking about the unsustainable cost of fringe benefits for state workers and other public employees.
Lawmakers are now proposing ways to cut that expense.
A $3.5 billion budget shortfall has a way of clarifying matters, apparently.
Republicans in the House have introduced House Bill 3218. It’s a good first step, and we hope it becomes law.
The bill would limit the state and other public employers, including cities and school districts, to paying 3 percent of their employees’ required 6-percent contribution to their retirement accounts.
The legislation would save an estimated $132 million during the next two-year budget cycle, according to a report compiled last year for former Gov. Ted Kulongoski.
The current governor, John Kitzhaber, has endorsed cost-cutting changes to what’s known as the “PERS pickup.”
Over the past 20 years or so, most state and local government agencies have agreed, in lieu of salary increases, to pay the full 6 percent that employees must contribute to their PERS accounts.
But neither the state nor other public employers can afford to keep doing so, in part because of the rising cost of PERS benefits.
In addition to paying employees’ 6-percent contribution, government agencies pay a certain percentage of their total payroll each year to cover PERS commitments. Those payments will increase by about $1.1 billion over the next biennium — about half from the state government and half from school districts, cities and counties.
Legislation isn’t the only avenue the state should pursue in trying to trim its personnel costs, though.
We hope Gov. Kitzhaber can also extract meaningful concessions from the state’s public employee unions during labor talks that are under way.
Specifically, the governor should push for state workers to begin paying a share of their medical insurance premiums when the new fiscal year starts July 1.
It’s not merely unsustainable, but also unconscionable, that the state picks up the entire premium, a benefit exceedingly rare in the public or private sector.
According to an estimate from last year, the state could save $211 million over the next biennium if state employees paid the same amount for their insurance that public school teachers in Oregon, on average, contribute to their policies.
That’s eminently fair.
Even union employees in Wisconsin, the epicenter for the debate over public sector benefits, have agreed to similar modest cuts in their compensation package, both for retirement and medical insurance.
A key difference is that, unlike in Wisconsin, Oregon’s governor isn’t trying to limit unions’ rights to collectively bargain. Nor has Kitzhaber ever given any hint that he wants to do such a thing.
Which means, ultimately, that state workers in Oregon will likely find that the public has little sympathy should they refuse to accept the sort of reasonable compromise that their counterparts in Wisconsin have already conceded.