No family would save a large amount for retirement if it left them without food, shelter and other basic necessities. Yet for the last several years Oregon has done just that because of some poorly understood quirks in the Public Employee Retirement System (PERS). Many Oregonians have said they would not support the devastated state budget, and the services it supports, until PERS is fixed. Most of the work is now done for this biennium. The courts have yet to weigh in, and for now, the legislature is down to considering the system we will have for new employees hired after this year. It is time to get on to the budget and save our schools.

The House passed two bills last week that altered the PERS system. I voted against both, HB 2003 because of my concern about its constitutionality, and HB 2020 because it will give a raw deal to new hires and will cost the state and other public employers more money in wages and training costs (to deal with high turnover) than it will save up front.

HB 2003, the omnibus PERS bill, is very likely unconstitutional. If it is found to be unconstitutional, costs to the state and other public employees will increase, not decrease.

This bill treats PERS members quite differently depending upon the time they began work. A fair bill would result in similar pensions for similar work over a similar period of time regardless of when the employee began work. Is one big virtue is that it will save a lot of money from inflated pensions and reduce PERS costs by hundreds of millions of dollars a year.

I support legislation to reduce PERS costs to provide a fair, not excessive, pension for retirees. For this reason, I voted at the beginning of the session with the rest of the House to prevent the PERS Board from crediting Tier One accounts over the 8% guaranteed rate of return until very stringent conditions are met. I also supported a bill to reform the method of calculating life expectancy for the PERS system. The old mortality tables from the late 70's underestimate retirees' likely life span by nearly 5 years. The effect of this error is to increase monthly checks and raise the taxpayer's costs. The bill applies only to those who retire after June 30 and protects them from getting lower payments that retirees on June 30 receive. These two bills will save taxpayers over $4 billion in payments over the next 20 years or so.

What remains left to do is devise the new system for employees who have not yet started work. That system needs to result in pensions similar to those PERS paid before the big run up in the 90s, half pay after 30 years. It was fair, economical to the taxpayer, and encouraged workers to stay on saving the training costs incurred when there is too much turnover among employees. This bill will be the result of a compromise and I expect it soon.

Now, finally, the legislature needs to get on to the budget. By this time two years ago we had passed over 40 budgets. This year, none. The budget cannot be adopted as is because it will devastate the schools, health care, and public safety. Next time I hope to talk more about the budget and how to deal with it. Stay tuned...