Reforms to PERS were needed, but Oregon leaders still shy from discussing pension issues

Legislators in 2019 put limits on public employee pensions to ensure new tax revenue produced services to Oregonians

April 4, 2022 6:00 am
Oregon State Seal Capitol

June 1 is the deadline to apply for the Translation Advisory Council. (Amanda Loman/Oregon Capital Chronicle)

For decades in Oregon, the Public Employees Retirement System (PERS) has been the source of much-debated fiscal problems for the state, its school districts, cities and counties.

But now that the rising costs of the system have finally stabilized, at least temporarily, the politicians who helped to craft its much-needed course correction don’t want to talk about it. Or, if the subject comes up, they try to pin the blame on others for what they accomplished.

That was evident in a gubernatorial debate hosted by the Oregon AFL-CIO earlier this month between Democrats Tina Kotek and Tobias Reed. When asked about her role in co-sponsoring and then muscling through enactment of a modest set of PERS adjustments as House speaker in 2019, Kotek deflected attention from her accomplishment. Instead, she blamed former state Senator Betsy Johnson, a likely competitor for the governorship in the general election, for forcing her hand and tying the PERS package to a deal for new revenue.

PERS was always a difficult issue that governors and legislators tackled at their peril. And, like many tough issues, it generated its share of denial, buck passing and hypocrisy.

The deniers were wishfully blind to the system’s claims on budgets and services. The buck passers were happy to blame the courts for their inaction. But the honors for hypocrisy belonged to those who would whisper their support for reforms in private but speak against them in public.

When push came to shove in the 2019 Legislature and the PERS package became joined at the hip to a major revenue-raising tax on businesses, Democrats were forced to deal with the reality of PERS’ impacts on budgets. To make the case for more funding, they had to ensure that PERS would not claim the lion’s share of that funding for schools and other services.

Republicans, with a few notable exceptions, were happy to let the Democrats take the lead – and the heat. In fact, one Republican senator who had previously told me that he supported the PERS package then confided that he’d be voting against it to let the Democrats “stew in their own juices.”

(Disclosure: I was involved in making the case for controlling PERS costs on behalf of the Oregon Business Council in 2019, with the understanding that any PERS savings would remain in public budgets for services and staffing. I testified in favor of the final package in committee hearings and had conversations with lawmakers on which I base my observations here.)

All but three Republicans voted against both the PERS package and the business tax. So, I shouldn’t have been surprised when the Republican Senate candidate in my district deluged voters with mailers blaming the Democrats for gutting PERS.

Meanwhile, there were Democrats who voted for the PERS package for all the right reasons – not just as part of a deal for new revenue but as a necessity to ensure that more of our tax dollars would stay in school classrooms. But those legislators had to overcome challenges from their left in the 2020 primaries. They prevailed, which makes the reluctance to talk about what the 2019 package accomplished all the more disappointing.

This wasn’t a matter of half a loaf for public employees. They got a large helping of new revenue, budgets that can better support staffing and pay increases and a more sustainable pension system. In exchange, they had to give up future benefits earned on salaries above $195,000 per year (one source of those high-six-figure pensions that The Oregonian cites every year) and divert amounts ranging from 0.75% to 2.5% from future contributions to a separate retirement savings fund to help pay down the pension plan’s liabilities.

I get it that the public employee unions see things differently. I heard that loud and clear when I testified in support of the package. But what bothers me most is that their opposition continues to fester in a way that pre-empts any honest discussion of the issue. Even now, three years later, when some of the unions’ staunchest political supporters should be taking credit for fashioning a compromise that was long overdue and has bolstered school budgets at a critical time for our kids, the denials and buck passing continue.

PERS is now more sustainable and more defensible, but it remains an issue that defies honest discussion.

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Tim Nesbitt

Tim Nesbitt, a former union leader in Oregon, served as an adviser to Governors Ted Kulongoski and John Kitzhaber and later helped to design Measure 98 in 2016, which provided extra, targeted funding for Oregon’s high schools.