Editorial: Keep bipartisan PERS bill on track
As the 2017 Legislature limps toward the finish line, there are far more agonizing defeats than thrilling victories to tally.
But there is still time for lawmakers to make one small step that has both symbolic value and tangible financial benefits.
Senate Bill 1068 is aimed at slowing the runaway costs of the state's Public Employees Retirement System. Sponsored by Sen. President Peter Courtney, D-Salem, and Sen. Mark Hass, D-Beaverton, it would bring Oregon PERS in line with virtually all other public retirement systems in the country by requiring newer public employees to kick some of their own paycheck into the state pension account.
Currently, state and local governments in Oregon are on the hook for the entire PERS fund, which has a gap of $22 billion (and growing) between what's needed to pay expected benefits and what's in the bank.
There are a variety of historical, political and economic reasons for the massive unfunded liability, and court rulings have severely limited what lawmakers can do to fix it.
But there are a few options, and the Courtney-Hass bill would implement one of them, by forcing some newer state workers to divert a portion of their paycheck currently going to individual retirement accounts into the state pension fund.
Those new employee contributions to PERS, common in most states, would help offset the ballooning payments that state and local government employers are struggling with in Oregon.
Some critics of the proposal say it doesn't go far enough. They're right.
The employee contributions would start at a mere 1 percent of pay and cap out at 4 percent. What's more, they wouldn't kick in for a year, meaning the effect on the upcoming biennial budget would be only $100 million.
So, this legislation won't offer much help to the current budget woes or provide the key for solving the PERS puzzle.
But it still should become law. Here's why:
The legislation would offer proof that incremental PERS reform is possible, countering a perplexing attitude among many lawmakers that "nothing can be done."
While the employee contributions to PERS are small, they would build over time, much as the unfunded liability has grown.
While this is state legislation, local governments — including school districts — also are burdened by rising PERS liabilities. This would help their budgets, as well.
It's politically feasible. Republicans have said the employee contribution should be higher, but this bill is basically forcing a pay cut of roughly 2 percent on public employees, which is a tough political sell — particularly for labor-friendly Democrats.
In fact, despite the legislation's modest goals, it is politics that is likely to trip it up. Courtney offered the PERS bill as part of a big package that would include a hike in corporate taxes. With that plan shelved, he has now said PERS reform will have to wait.
Meaningful pension reform should be a bipartisan goal. Just because Democrats couldn't craft a tax plan doesn't mean they should hold back on a bill that will allow state and local governments to put more funds back in classrooms, social services and other project that benefit all Oregonians.
The Courtney-Hass bill is good legislation, which was on track to get a hearing before the tax proposal tanked. There's no reason to prevent it from getting that hearing and pushed across the finish line before lawmakers adjourn.