PERS Problems

If you prefer reading material that prickles the back of your neck and prompts you to sleep with the lights on, forget Stephen King.

Get a copy of Phil Keisling’s report about Oregon’s public employees retirement system.

Keisling, the former Oregon Secretary of State, didn’t rely on fictional monsters to scare readers.

He didn’t need to.

The reality of PERS is far more frightening than any beast even a master storyteller like King could conjure.

Imagine an entity with a voracious appetite for tax dollars.

And not a penny of that money will shorten the lines at the DMV or reduce class sizes at your local school or put a fresh layer of asphalt on a highway.

In fact, every penny will go to retired public employees and so won’t be available to provide any of those vital “services” we heard so much about during the Measures 66/67 campaign.

With PERS, most of the relevant figures are in billions of dollars.

PERS is the retirement plan for state workers as well as most city, county and public school employees — more than 300,000 people all told.

As Keisling shows in his report, PERS — and in particular the version of the pension plan that was bestowed on about 190,000 public employees hired before 1996 — guarantees retirees benefits so ridiculously generous that, within five years, some public agencies could be spending almost one of every four dollars of payroll costs not for current employees, but for retired workers.

And that projection, made by a consulting firm PERS hired, assumes that the pension plan’s investments in financial markets will grow by an average of 10.5 percent per year.

If markets implode as they did in 2008, the tab for the state, and for cities, counties and school districts, could be steeper still.

Baker City paid $730,000 into PERS during the fiscal year that ended June 30, 2009. Doubling that bill, as Keisling contends could happen by 2015, could force the city to make severe cuts.

$730,000 is more than half the annual budget for the fire department, and almost half the police budget.

The obvious question, then, is what can be done to stave off a PERS-spawned disaster?

There is, sadly, no simple answer.

PERS is a legally binding deal — egregious though the benefits are, the state is obligated to pay them to retirees.

As Keisling points out in his report, any effort to make even modest changes “will have its fierce opponents.”

When, for instance, the Legislature decided in 2003 to stop guaranteeing that about 110,000 retired workers would realize at least 8 percent gains on the portions of their pensions invested in the stock market — even if those investments lost money — the retirees sued. And they won.

Nonetheless, Keisling lists several ideas that could help public agencies, among them requiring employees, not employers, to pay the 6 percent worker contribution to PERS that’s required by law.

Speaking of requirements: Keisling’s report should be required reading for every legislator and public official in Oregon.

You can read the report here: www.bakercityherald.com/images/pdf_files/22519207-pers-in-crisis-the-sequel.pdf