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Week of hearings spotlight depth of PERS problems

The Public Employees Retirement System has a growing liability that is affecting the ability of cities, counties and school districts to provide services. PERS payments are dollars that schools will not get to spend in the classrooms.

The Senate Committee on Workforce, chaired by Sen. Kathleen Taylor (D-Milwaukie), held hearings this week on two bills related to PERS.

Two school board members from the Bend-La Pine district came to Salem to testify Monday.

“I urge you to make some very difficult choices by making these changes to our current Public Employees Retirement system,” Cheri Helt said. “If you choose to look the other way and keep this system as it is today, we know our students will receive cuts to their education for at least the next 10 years.”

Peggy Kincaid, the other Bend-La Pine School Board member, also addressed the committee.

“We should be talking this legislative session about how we’re going to spend new revenue, but instead we’re trying to figure out how to cut programs and increase class sizes so that we can absorb looming PERS increases for the foreseeable future,” she said. “It’s incredibly frustrating and demoralizing. I’m looking for lawmakers who are bold and creative enough to tackle the problem.”

Cheri Helt  

< Cheri Helt
   Bend-La Pine School Board member   

 

Peggy Kinkaid >
Bend-La Pine School Board member  

  Peggy Kinkaid 

The committee opened its first hearing Monday by inviting PERS Executive Director Steve Rodeman to present an overview of the system, including its legislative history and financial status. Senior Deputy Marisa James, legislative counsel, gave an overview of PERS case law and the most recent 2015 Moro case that challenged the 2013 reforms passed in the regular and special sessions, overturning much of the reforms.

Sen. Tim Knopp (R-Bend) led off testimony, saying, “It’s in the best interest of all of us to work together to get the best solution.”

Knopp spoke on two bills: Senate Bill 559 would change the final average salary calculation and Senate Bill 560 would redirect the employee contributions that are currently going into individual accounts. The money saved by these two bills would directly impact the burgeoning PERS liability, resulting in the eventual reduction of the PERS rates that school districts pay monthly. 

The Capitol building was flooded Monday with PERS beneficiaries who spoke in a marathon committee meeting about reductions in their pensions.

Controlling costs is a priority for OSBA’s members, as is recruiting and retaining quality staff. OSBA will continue to push for changes in the PERS system that bend the cost curve and help maintain a stable and adequate retirement system for current and future PERS retirees.

The committee took no action on SB 559 and SB 560 during the hearing.

The committee heard from the Oregon State Treasury on Wednesday about the state of Oregon’s investments. John Skjervem, the treasury’s chief investment officer, told the committee that Oregon is No. 1 among its peers for its returns, making it unrealistic to point to better returns on investments as a solution.

Knopp added three more recommendations that could become bills aimed at reducing the unfunded liability. Knopp will propose lowering the multipliers used to figure benefits to 1 percent or 1.2 percent. Currently those multipliers range from 1.5 percent to 2 percent, depending on area of service. Knopp will also propose changing the interest rate for money match, as well as eliminating vacation and sick leave payments that increase the final average salary, known as “spiking.”

- Lori Sattenspiel
Interim director of legislative services
lsattenspiel@osba.org

Sen. Kathleen Taylor  < Sen. Kathleen Taylor (D-Milwaukie) chairs the Senate Committee on Workforce, which held hearings this week on what to do about the Public Employees Retirement System. (Photo by Jake Arnold, OSBA)