Home Opinion Editorials Never too early to worry about PERS
Never too early to worry about PERS
So why are we pleased by the news that Baker City’s personnel costs will rise by $70,000 next fiscal year?
Because PERS is involved.
And although $70,000 is no trifling sum — that’ll get the city a police officer or a firefighter for a year — it’s a much more shallow gouge in the city’s general fund than some people had predicted.
PERS is Oregon’s retirement system for public employees.
And for workers who were hired before 1996, it’s a shockingly generous system.
Unfortunately, that generosity, at least for those long-term employees, is guaranteed even if PERS investments implode.
Which they did, along with much of the rest of the economy in 2008-09.
Although the stock market has rebounded considerably since, some analysts still predict that for the state, along with the cities, counties and school districts that keep PERS solvent, the worst days lie ahead.
For instance, Phil Keisling, the former Oregon Secretary of State, wrote a report late last year that within five years, some public agencies could have their PERS bill double.Baker City, at least for the period 2011-13, won’t have to deal with anything like that disastrous situation.
The $70,000 figure — a worst-case scenario, according to Jeanie Dexter, the city’s finance director — is an increase of less than 10 percent in the city’s annual PERS payout.
Nonetheless, as Mayor Dennis Dorrah acknowledged last week, “There are increased labor costs, PERS costs and material costs and it’s going to be more difficult for the city to come up with money to provide the services.”
We hope the City Council will be able to absorb the $70,000 increase without laying off any employees or making other significant cuts.
But even if that’s feasible, city officials must at least start discussing the possibility that the PERS tab will rise much more as soon as 2013.
In that case the city would have to either slash spending elsewhere, or find a new source of money.
Neither option is a good one.
Although PERS payments to retirees are locked in, another expense is not.
That’s the 6 percent of salary that each PERS employee is required to contribute.
Baker City, in common with most public agencies, pays that 6 percent for its employees.
We’re not convinced, though, that the city will be able to afford to continue doing so after the current five-year contracts with the city’s three unions expire in June 2013.
The so-called “6 percent pickup” should be a prominent topic for discussion when city officials negotiate new contracts.
Sure, 2013 might seem far in the future. But considering the potential scale of the PERS predicament, even today isn’t too early to start pondering ways to deal with the dilemma.