PERS problem calls for multi-pronged solution
As most students, parents and teachers can attest, class sizes in Oregon's public schools are increasing annually.
How this trend affects educational outcomes is debatable, but here's something that isn't: Average class sizes are about to get even bigger due to the coming explosion in costs for the Public Employees Retirement System.
A governor's task force has added new ideas to the PERS discussion, but even more must be done to avoid a full-blown crisis in the schools.
Because PERS has an unfunded liability of around $25 billion, school districts and other public agencies in Oregon must set aside large sums of money to meet future retirement obligations. Already, the state's PERS board has advised that rates for school districts will jump from just under 14 percent of payroll in the current biennium to more than 20 percent of payroll in the 2019-21 biennium.
In other words, for every dollar paid to an employee, school districts will have to kick in 20 cents for PERS. This is an extraordinary cost that isn't going away anytime soon. The monumental increase two years from now will mean a $1.4 billion jump in PERS costs for all Oregon governments.
What it will mean for schools is more staff reductions, which lead inevitably to larger class sizes and less help for teachers. As recently reported by Portland Tribune reporter Shasta Kearns Moore, teachers in the Portland area already are frustrated by the number of students per classroom. They point to bulging class sizes as a factor in student absenteeism.
The research that's been done on the link between class sizes and absenteeism is inconclusive. Nor is there a lot of research showing that student achievement suffers simply because of large class sizes.
However, there's no doubt that having too many students in one room will lead to teacher burnout. Discipline problems become harder to correct and classroom management becomes difficult. And despite the research, we fear that without relief, Oregon is about to test the outer limits of class size — jamming more students into each room than has ever been tried before.
For that reason, the Nov. 1 report from the governor's task force was timely. Gov. Kate Brown had asked the group to look for ways to trim the unfunded PERS liability by $5 billion. Some of the group's recommendations, such as selling off state universities, were immediately dismissed — even by Brown herself. But we aren't so quick to criticize the entire effort.
The group — officially working under the catchy title, "PERS UAL Task Force — presented ideas worthy of further inspection. For example, raising more state revenue from alcohol sales could bring in $453 million over a five-year period — money that could be dedicated to PERS.
A particularly appealing suggestion was the idea of setting up a state incentive program that would match 25 percent of the money paid by non-state public employers (such as school districts) toward their PERS liability. Districts or other jurisdictions would work with the state on an PERS liability reduction plan, and have greater motivation to fund the plan.
Overall, the task force looked for pockets of money that could be pooled together and used to pay down the unfunded liability. Several state-owned institutions, such as public universities and SAIF, hold substantial amounts of cash on their balance sheets to cushion themselves in case of an emergency. The task force suggests this money, with some protections in place, could be pooled and used to bring down the liability.
Similarly, state agencies hold money in reserve for cash-flow purposes, and the task force recommends looking at whether that cash would be better utilized to pay down the PERS obligation.
Taken in total, the more plausible recommendations from the task force would only make a dent of a few billion dollars in the unfunded liability. But the PERS problem can't be addressed with one gigantic solution. The proponents of Measure 97 tried that in the November 2016 election, and Oregon voters said they couldn't afford the price.
Instead, Oregon's lawmakers must take several smaller steps that at least mitigate the worst potential effects. These could include some of the task force's suggestions. In addition, the Legislature must continue to look for ways to reform PERS that don't violate guidelines established by the state Supreme Court. And yes, new revenue beyond alcohol taxes should be on the table.
All of the alternatives require sacrifice — including PERS-covered employees who are still in the work force. In many ways, that's unfair. But the alternative is to divert more and more money away from services and into PERS. If that happens, today's resentment over unwieldy class sizes will grow into something even uglier.