New K-12 money means little without real reforms to PERS
The historic $2 billion tax increase approved by the Legislature this month is supposed to produce a flood of money for K-12 education.
But that amount will look more like a trickle unless lawmakers also take meaningful steps to rein in costs for Oregon's Public Employees Retirement System.
Superintendents for local school districts already are cautioning that $2 billion per biennium — while helpful — will not produce a transformation in the K-12 system. Reynolds School District Superintendent Danna Diaz told a Portland Business Alliance gathering recently that the new funding establishes "a floor," not a ceiling. At the same forum, Beaverton Superintendent Don Grotting noted that "almost a third of every dollar coming in right now is going to support the PERS program."
And Portland Public Schools Superintendent Guadalupe Guerrero pointed out that Oregon is still far away from fully funding the Quality Education Model, which is supposed to be a guide for determining how much the Legislature should allocate to schools.
Meanwhile, Oregon's businesses — and by extension, its residents — are being asked to pay $1 billion per year more in taxes, thanks to the passage of House Bill 3427. People will, and should, expect results from that type of investment.
And that's exactly why the Legislature cannot adjourn without doing one additional favor for schools: passing legislation to curb PERS costs so that the new money coming into K-12 education can be utilized to improve learning, and not just to backfill rising retirement expenses.
The most immediate action needed is passage of Senate Bill 1049, which would be a solid first step in addressing PERS. The bill is supported by Democratic leaders — despite the fact they will take heat from their union backers.
Senate Bill 1049 would require public employees in Oregon, for the first time, to contribute to their retirement plans. These contributions would be higher for Tier 1 and Tier 2 employees, who have more generous retirement benefits. But even at that, they would be paying a relatively modest 2.5 percent of their salaries toward PERS. Tier 3 employees would pay 0.75 percent.
These employee contributions would be directed toward the $27 billion unfunded liability for PERS. The bill also would extend the payoff period for the unfunded liability by another eight years. This would save money in the short term, but cost taxpayers more in the long run. Nonetheless, it's a compromise worth making in order to gain the other cost-saving benefits of SB 1049.
Reforming PERS is not an attack on public employees or the agencies they serve. State-funded programs actually will benefit from the dollars that don't have to go toward PERS.
Consider this one statistic, from former union leader Tim Nesbitt, who was chief of staff for former Democratic Gov. Ted Kulongoski: If Senate Bill 1049 passes in its current form, the money saved per biennium will be the equivalent of 1,850 teaching positions.
Legislators pushed hard to get more money for schools via a tax increase that may yet be referred to the ballot. If they want to make the argument that they did it for the students, they also need to approve Senate Bill 1049 and ensure the additional money really makes it into the classroom.
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