PERS reform is essential
Reform of the public employee pension system is the only way to ensure new school dollars reach the classroom.
Earlier this month, Oregon Gov. Kate Brown signed House Bill 3427, Oregon's "Student Success Act," into law.
This legislation will send nearly $2 billion in additional revenue to Oregon's schools, per biennium, through a new gross receipts tax on businesses starting next year. Clear passage for the bill was secured after legislators reached agreement with Oregon Business and Industry, the state's largest organization representing the voice of business in Salem.
On Wednesday, May 15, the Portland Business Alliance hosted a panel of four Portland area superintendents who explained the harsh budget reality they are facing even with new revenue.
Beaverton Superintendent Don Grotting explained that he's faced with making $35 million in cuts alone this year, despite a booming economy and record state revenue. New revenue from the School Success Act tax on business will result in approximately $37 million more next year for Beaverton schools, but without PERS reforms, a shrinking share of that will actually fund programs for kids.
As a parent with kids in the Beaverton schools, this concerns me. But it's not just Beaverton kids who will suffer. It's David Douglas, Gresham-Barlow and Portland Public Schools, too. In fact, Portland Public Schools is facing a $17 million cut next year.
It is widely understood that without changes, PERS liabilities will continue to eat up a growing share of the new revenue for schools. In fact, according to Oregon PERS Solutions for Public Services, a whopping 91% of the new revenue will go to pay for PERS liabilities as early as 2025-27, unless changes are made.
Just days after passing the statewide business tax on gross receipts, House Speaker Tina Kotek and Senate President Peter Courtney followed through and introduced Senate Bill 1049, a package that will protect PERS benefits already earned and reinstate employee contributions to support the future of the pension system. Their proposal caps high-dollar pensions and corrects costly add-on benefit features for future service. It also extends the repayment schedule for the PERS pension debt, further easing PERS cost increases for public employers.
This proposal should be what finally breaks the deadlock on the issue of PERS reform and provide a framework for further improvements in the years ahead.
We have an opportunity to fix what we can and help the generation of learners sitting in the classroom today. The PERS reform proposal legislators are discussing may be enough to restore as many as 1,850 teaching positions or seven days of school statewide, and could relieve the budget pressures driving up tuition in our community colleges and universities.
The Alliance continues to work with partners such as Oregon Business & Industry and PERS Solutions, who are deeply committed to solving this urgent problem. Oregon PERS Solutions is actively working with state leaders to advance cost-sharing reforms to the state's pension system that will reduce the taxpayer impact of PERS on public services and ensure competitive retirement benefits and working conditions for public workers.
As Tim Nesbitt, executive director for the group has shared, though we hoped for more in the proposed PERS reform package proposed by legislative leaders, if this is the best Oregon can do right now, we should do it. This is not the end for PERS solutions, Nesbitt points out. But if SB 1049 passes as proposed, it will make a real difference for kids in today's classrooms and for Oregonians in all walks of life.
As a business community dedicated to collaboration and bringing everyone to the table, we applaud Gov. Brown, Speaker Kotek, President Courtney, and all legislators for stepping up to address Oregon's chronic underfunding of public education this session. We haven't agreed with everything, but their leadership in keeping everyone at the table resulted in a better business tax package then originally proposed.
Now they need to finish the job, and help our school district leaders add school days, reduce class sizes, hire new teachers and fund programs we know close achievement gaps and help kids graduate on time.
That will only happen with the PERS solutions like those proposed in SB 1049. It is time to contact your legislators and encourage them to act now.
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