Op-Ed: PERS Reform A Must

Ron Saxton is a Republican candidate for Oregon's Governor seat.

Ron Saxton

(PORTLAND) - In his 2003 Inaugural address, Governor Kulongoski declared reforming Oregon’s PERS “a test of leadership for the legislature and me,” and said the system was “bordering on crisis.” While I disagree with many of Governor Kulongoski’s positions, he was right when he said the aforementioned words. I supported the Legislature’s subsequent efforts to reform the system.

Unfortunately, the Oregon Supreme Court gutted many of those reforms, and now the PERS crisis continues but the political leadership has disappeared. In fact, the Governor not only called the Court’s opinion “balanced” but also said it “puts PERS on a sound fiscal path”.

That is an unacceptable defense of the status quo, and worse, it is misleading.

Anyone who doubts that PERS is still broken and requires reform needs only to look at the numbers. As a recent newspaper article stated, “State government now pays the equivalent of 23% of workers' salaries for state pension benefits. That's projected to rise to 28% of salary by mid-2007.”

Those numbers make PERS the most expensive public employee retirement system in the nation (Washington State pays 6% by comparison) and four times as expensive as most private pension plans. Moreover, the PERS system is so complicated that no one—not even PERS’ own experts, can tell how much PERS will cost in future years.

What we do know is that the PERS system is broken and too expensive, and that changes are needed regardless of the political obstacles.

I recently proposed two options for reform: public employee contracts could be renegotiated to include a less expensive pension program, or if renegotiation failed, non-essential government contracts could be terminated in order to conserve taxpayer resources for what’s needed most; teachers, policemen, and assistance for those in need.

The goal of either action – whether renegotiation or the elimination of non-essential government contracts – would be to reduce the cost of PERS.

Unfortunately, a number of individuals and organizations have since ignored that goal, and further, have suggested that my proposals would rob public employees of their retirements rather than reform the system.

So let me be clear: Oregon’s public employees should be fairly compensated and under no circumstances should they be left without fair pensions. The pensions coming to those who have already retired and the benefits accrued to date by current employees should remain untouched.

But future benefits must be more realistic and fair, both to taxpayers and PERS recipients alike.

It isn’t fair or realistic to maintain a system that guarantees its members an 8% return on investment regardless of what the market bears. It isn’t fair or realistic to pay a Tier I retiree more for not working than for working, especially when taxpayers and Tier II public employees are being asked to retire on far less. And it isn’t fair or realistic to suggest nothing should be done.

I don’t claim to have all the answers but I know that to maintain our quality of life we need to find a fix for PERS.

Why, because without a sustainable solution Oregonians will endure the same old debate about higher taxes versus fewer services – and that’s a debate nobody wins.