Oregon PERS: Best Fiscal Condition in Nation

Chuck Sheketoff


A study of public sector retirement benefits by The Pew Charitable Trusts' Center on the States found that "Oregon currently has the best-funded pension system in the country, and it is one of just six states on track to fund its modest retiree health benefits as well." (PDF - Oregon summary)

Touted by the Center on the States as "the first 50-state analysis of its kind", the report's findings include:

By 2006, only five states — Florida, New York, North Carolina, Oregon and Wisconsin — had pension funding ratios at a 100 percent or greater level.

At the end of fiscal year 2006, just six states — Arizona, North Dakota, Ohio, Oregon, Utah and Wisconsin — were on track to have fully funded their non-pension obligations [primarily health care] during the next 30 years.

Here's the story from the New York Times (PDF).

Here's a link (HTML) to the report, Promises with a Price (PDF).

Isn't it time for the loudmouths like Lars Larson and the "let people fend for themselves for their education and against drug companies, polluters and loan sharks etc" libertarian ideologues to stop complaining about PERS?

They may have pension envy because private sector pensions have been eroded and/or may not appreciate everything the Oregon public servants who are part of PERS do for Oregonians every day, but this report makes clear that they shouldn't be complaining about the fiscal condition of the program.

The next time you hear someone complain that Oregon's PERS has fiscal problems, tell 'em Oregon's public employee retirement system is the best funded system in the country and to read Promises with a Price.

Discuss.



Ocpp_final_1 Chuck Sheketoff is the executive director of the Oregon Center for Public Policy.   You can sign up to receive email notification of OCPP materials at www.ocpp.org

Comments

  • Liar Lars (unverified)
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    Lars won't care about this study at all.

    If you call into his KXL talk show to provide him with accurate and verifiable facts about the subject of his current rant, you won't be put on the air.

    Facts get in the way of the propaganda.

  • dartagnan (unverified)
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    The attacks on PERS are part of the Repugnican divide-and-conquer strategy. The idea is to make working people resentful of the benefits, such as PERS, that unionized public employees have won so they will fight other working people instead of organizing to win the same benefits for themselves. The Repugs are geniuses at getting working people to believe their friends are really their enemies and vice-versa.

  • djk (unverified)
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    When did loudmouth ideologues ever concern themselves with trivial stuff like "facts" or "accuracy?"

  • (Show?)

    Chuck... how much of PERS's current fiscal condition is the outgrowth of the controversial reforms made by Governor Kulongoski and Rep. Greg Macpherson? Did they save PERS? Or was it always OK? To whom does credit go for these high marks?

  • dddave (unverified)
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    Financially sound, because we are all paying through the freaking nose? No one, and I mean NO ONE, deserves the pension rates PERS provides. 108% at 30 years means we could be paying pensions for 40 years, and I am really sorry, but public servants on the public dole DO NOT deserve this kind of compensation. Period. The FACTS of the situation are that Oregon has managed to take enough money from it's citizens for the PERS system to be "healthy". Why dont we have an initiative that grants ALL workers the same benefits that PERS folks get? Yes, it's because we would all go broke. Justify this giveaway any way you like, but again, no one on the public dole have ever done anything to deserve this level of benefit. You blueheads raged about the two classes of folks when it came to property ownership and rights, but not one word about the HUGE class difference of PERS vs. non pers.

    signed dddave, working til I'm 70 so you can retire at 55 at a level of income I could only dream about. THIEVES.

  • (Show?)

    "Why dont we have an initiative that grants ALL workers the same benefits that PERS folks get?"

    Uh, because all workers don't work for the public sector?

    All workers don't get the same benefits PERS folks get--because they get MORE. That's why PERS exists, to attempt to equalize public and private sector work, given that private sector workers earn much more in salary for the same types of jobs.

    I know the free marketeers aren't really this dumb; they just think WE are.

  • (Show?)

    All workers don't get the same benefits PERS folks get--because they get MORE.

    Citation please TJ.

    Please bear in mind that I'm a huge fan of the work done by Rep McPherson in fixing the PERS mess, but as a private sector drone for my entire life.........

    The most I ever got from an employer in terms of "pension" contributions was the 6% matching on my own 401k contribution.

    As for private sector employees earning more than their public sector counterparts, that may be true for attorneys and brain surgeouns, but I've seen zero evidence that this is true for the vast majority of private sector workers who are non-union employees in a so-called "Right to Work" state.

    Publicly employed janitors make way more than I ever did as a fabricator welder.

    Doesn't mean I wish they were earning less, just means that I don't see how your claim of public employee poverty could be accurate.

  • LT (unverified)
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    May I just remind people that a paycheck comes from a specific entity (school district, state agency, business, etc.) and not from "the public sector" or "the private sector".

  • (Show?)

    "All workers don't get the same benefits PERS folks get--because they get MORE.

    Citation please TJ."

    The whole of modern employment history in the US doesn't suffice for you?

    How are janitors and welders doing similar work? And if you're not working now, why are you comparing your salary then to what people make now?

    I never claimed anything for "poverty." That's your attempt to reframe and skew the discussion. The idea that public sector workers receive both less salary compensation and less potential for salary compensation than private workers, I would have thought didn't need explaining. My boss runs a shop of over 700 people, and runs it well. His salary is about 1/3 that of the head of ODS, {pdf} an Oregon company with about 700 employees. And that's just salary; after bonuses and other compensation he tops out of $500,000.

    I would probably agree that the lower the skill performed, the less likelihood that public sector employees are worse compensated. But it doesn't take long before private sector employees doing similar work--particuarly in professional sectors--begin to get paid far better than their public brethren.

    As a programmer in Virginia in the 90s, I got about 20 bucks an hour while the City charged around 38. I switched to a private consultancy organization and immediately made about $10K a year more in salary...and the company was charging about $75 an hour for my services. (I myself made that amount in freelance work, as well).

    If you've been working for any length of time and haven't figured out the formula, I have to wonder about how closely you're paying attention:

    public sector--lower wages, better deferred compensation, better stability, lower ceiling

    private sector--higher wages, less deferred compensation, higher perks and fringes, higher ceiling, less stability.

    I think most of us don't need a citation for that.

  • (Show?)

    And heck, that ODS number is 2 years old...

  • max (unverified)
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    It's worth remembering that back in the early '80's when many in the private sector (particularly tech) were receiving double-digit pay boosts, public sector employees were not receiving enough to cover cost-of-living increases. During those years, many public employees had a pathetic "retirement program" in which four to six percent of earnings were placed into a "stable fund" account - which meant they earned diddly. Recognizing that they couldn't match the pay rates that private sector employees were receiving, a number of public agencies (such as Metro) moved their employees into a different program - the PERS program.

    Initially, PERS simply guaranteed an 8% return on investment. Over time, that approach appeared less and less tenable over the long-term, and so PERS then allowed individuals to direct a percentage of funds into the stock market - with NO guarantee as to rate of return. A surprising number of folks chose to do just that, which in itself acted to reduce the strain of the 8% guarantee.

  • PMG (unverified)
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    No one, and I mean NO ONE, deserves the pension rates PERS provides. 108% at 30 years means we could be paying pensions for 40 years, and I am really sorry, but public servants on the public dole DO NOT deserve this kind of compensation.

    Try 83% and falling toward 50% over the next few years. See here:

    http://tinyurl.com/y3933l

  • (Show?)

    The whole of modern employment history in the US doesn't suffice for you?

    I'll take that as a "no". It's certainly not a citation of any actual.....you know........numbers. Like this:

    Retired government workers are twice as likely to get a pension as their counterparts in the private sector, and the typical benefit is far more generous. The nation's 6 million retired civil servants — teachers, police, administrators, laborers — received a median benefit of $17,640 in 2005, according to the Congressional Research Service. Eleven million private-sector retirees covered by traditional pensions got $7,692.

    andthe Bureau of Labor statistics sez:

    • Total compensation costs for private-sector employers in September 2004 were $23.76 per hour worked, up from $13.42 in 1987. Since March 1987, total compensation costs have increased at an average annual rate of 3.3 percent, according to data from the Bureau of Labor Statistics (BLS).

    • Total compensation costs for state and local governments were $34.72 per hour worked in September 2004, up from $22.31 in March 1991, according to data from the U.S. Bureau of Labor Statistics (BLS). Since March 1991, total compensation costs in the state and local government sector have increased at an average annual rate of 3.3 percent.

    So in 2004 private sector employees averaged seventy cents for every dollar earned by state and local public sector employees.

    How are janitors and welders doing similar work?

    They're not. Any shop I've ever worked at, the custodial staff makes the lowest wages, Layout welder fitters make the highest wages, and burn table guys and line welders make the middle income on the blue collar side of the company.

    So it's pretty much based on skills required for the job, and in each category they make wa-a-a-a-ay less than state or federal guys doing the same job.

    And if you're not working now,

    Actually, I worked for "the man" until about two years ago and currently contract to a firm here in Sandy. Only now I get to work from my own shop......

    why are you comparing your salary then to what people make now?

    I didn't lose my capability to understand current wages in my industry when I quit my job in Canby.

    My boss runs a shop of over 700 people, and runs it well. His salary is about 1/3 that of the head of ODS, {pdf} an Oregon company with about 700 employees. And that's just salary; after bonuses and other compensation he tops out of $500,000.

    Again, what's your point? This one example of manager compensation is totally irrelevant to this assertion.

    All workers don't get the same benefits PERS folks get--because they get MORE

  • David Wright (unverified)
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    Isn't it time for the loudmouths like Lars Larson and the "let people fend for themselves for their education and against drug companies, polluters and loan sharks etc" libertarian ideologues to stop complaining about PERS?

    Chuck, as dddave pointed out above (albeit a bit shrilly), the typical complaints about PERS aren't related to whether the PERS fund is financially sound.

    The typical complaints are about how much the PERS fund costs the taxpayers, which is a completely separate issue.

    It's a nice attempt on your part to try to change the subject, though. ;-)

    Whatever your feelings about PERS, we should all be glad that it is fully funded and financially sound. That's one less unfunded pension obligation to worry about.

    But that's not a justification for the existence of the system in the first place. This does not change the arguments against PERS (whether you agree with them or not) one iota. Those arguments are philosophical, not technical, in nature.

  • Steve (unverified)
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    "whether the PERS fund is financially sound"

    It sure is sound, why do you think most of the 20% increase in the bduget for schools went to benefits and not reduce student-teacher ratios?

  • (Show?)

    the typical complaints about PERS aren't related to whether the PERS fund is financially sound.

    Sorry, David, you're just flat wrong that. Ron Saxton's 2002 campaign for Governor was entirely predicated on the notion that PERS was going to bankrupt Oregon's state and local governments.

    And to be honest, he wasn't wrong about that. (His solution was wildly off-base - fire them all, and re-hire at lower benefits.)

    As I understand it - and I'm no public pension expert - PERS was financially very unsound.

    Now, some people believe that the benefits paid out were too high. But for the most part, those complaints were based on anecdotal and extreme examples - not the median or average experience of public employees.

    I'm impressed and thankful to hear that PERS is now financially sound. Governor Kulongoski and Rep. Macpherson deserve some substantial credit for fixing the mess.

    (Again, I'm no expert, so I may have misunderstood some things along the way. I'll trust Chuck to provide some well-researched facts here.)

  • mrfearless47 (unverified)
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    I have refrained from this discussion up to now. Of course, I'm thrilled to have a fully funded pension system to back up my monthly benefit. The study reported on contains some significant factual differences than those used by the Legislature and by Judge Lipscomb to justify the benefit reductions applied to current workers and to post 1999 retirees. At the time the Legislature convened, the argument was that PERS' funding had dropped below the 80% level - the level actuaries consider to be fiscally sound for a pension system. In fact, if the PEW numbers are correct, PERS never dropped below 90%, a number considered by most as optimum. So while the Governor, Representative MacPherson, and the rightwing libertarians were screaming that the sky was falling and that PERS should be changed, or better, eliminated, the facts now available suggest they were blowing smoke. They used some unsound numbers to take earned benefits away from retirees and those much closer to retirements.

    Hopefully, the courts will finally rule in a clear way on this whole matter. The Oregon Supreme Court already told the Legislature that one major change implemented in 2003 was unconstitutional (reducing the annual earnings on the regular account below the actuarially assumed interest rate), while the Court also ruled that PERS could not legally withhold a COLA from retirees. Moreover, the Court found that the Legislature, in its haste, created a new benefit for "window retirees" (go to my blog for an explanation of that term), that cannot be said to contain errors. Thus, if PERS finally agrees to implement the Supreme Court's decision, there will be some big checks going out to people who retired between 2000 and 2004.

    The Oregonian also took an unusual view of some of Oregon PERS' funds for things other than retirement benefits. They (the Oregonian) construed them to be for Retiree Health Benefits and suggested that the Oregon PERS Plan pays for full retiree health benefits. That is an outright fabrication, a lie, and another attempt to stick it to public employee pensions. The benefits PERS offers to retirees for health care are ALL paid by the retiree from monthly pension benefits. The Legislature authorized a small stipend to offset the cost of health insurance, but the last time I looked, the stipend was around $75 per month, while the insurance costs about $800 per month. Few retirees arrange their health benefits through PERS as it is way more expensive than the insurance retirees can get by staying on their former employers' plan and paying for the insurance out of pocket.

    The true facts can be found in the annual 'PERS By The Numbers", issued annually by PERS starting in 2005. You can obtain a copy from the PERS website, or by going to the Oregon PERS Document Library (http://oregonpers.info). You can also find all the relevant CAFR documents, court documents, testimony in the legislative cases, legal rulings, and status reports of extant cases.

    For those who don't follow PERS litigation, there are still a bunch of cases in varying stages. The one you're likely to hear about soonest is the Arken et al v PERS case, and the Robinson et al v PERS case. Both are in their final stages in Multnomah County Circuit Court and await a final ruling from Judge Henry Kantor. PERS has pressed its luck with Judge Kantor and I suspect - and indeed hope - that PERS gets the living sh*t kicked out of it when Judge Kantor issues his final ruling.

    One final note. For those who wish to continue to bandy about the fiction that PERS retirees are grossing more in retirement than they did while working, a careful examination of the "PERS by the Numbers" documents should completely disabuse you of that notion. There was exactly one year when 30+ year retirees had an average pension exceeding their average working salary, but the median pension for the same year was only about 92%. Numbers do not lie, but there are a lot of people out there who don't have a clue about statistics and use them to pick and choose their lies.

  • (Show?)

    "So in 2004 private sector employees averaged seventy cents for every dollar earned by state and local public sector employees."

    Compensation costs paid aren't the same as dollars earned. I never said public employees weren't more likely to have pensions.

    I also did not assert that that all public sector workers do worse than all private sector workers; to the contrary, I said the lower you go the smaller the gap is and deferred compensation may put public sector workers ahead. I was repeating the phrase "all workers" and denying what was said about "all workers." Inartful, not inaccurate.

  • (Show?)

    OK TJ.

    I've understood from your argumentation re the US senate primary that you never, ever admit that you've been wrong about anything, even when directly confronted with your own previous quotes and with sourced information to the contrary.

    <hr/>

    Since sliding out from under your own positions is your only real tactic here, I'll leave it to any readers to decide accuracy and relevance.

  • (Show?)

    Without bothering to cut and paste a bunch of public & private sector numbers, I wonder if the numbers referring to "employees" includes the CEO's and upper management folks in the private sector? I am ASSUMING that a bigwig CEO's salary is way bigger than a department head in a gov't organization. Does the CEO of lets say Waste Management count all his annual compensation as "employee pay", like the head of DEQ or some other presumably well-paid top-level public position? After all he get s stock and dividends and all that stuff in his package, stuff that State Police Chief so-and-so does not enjoy. And is there profit sharing in a public employee job? If you average all the annual "pay" values in public and private posistions is there much disparity before retirement is factored in?

  • (Show?)

    "I've understood from your argumentation re the US senate primary that you never, ever admit that you've been wrong about anything, even when directly confronted with your own previous quotes and with sourced information to the contrary."

    Now THERE'S an ad hominem attack out of left field, unsubstantiated and left like a turd on the greaseboard.

  • (Show?)

    PERS's fiscal condition — unfunded liabilities after the market dropped — is what prompted the Legislature to act and what drove many of the decisions. The Legislature clearly was trying to improve the fiscal condition.

    Today, PERS is healthy - so there's no need for more changes to PERS.

  • David Wright (unverified)
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    Ron Saxton's 2002 campaign for Governor was entirely predicated on the notion that PERS was going to bankrupt Oregon's state and local governments.

    A couple of points.

    First, I didn't say all complaints had nothing to do with the fiscal soundness of the fund. So a single counter-example doesn't exactly prove me wrong.

    Second, and I'll admit that I'm not intimately familiar with everything said by the Saxton campaign (of 2006, I assume you meant), arguing that PERS would bankrupt state and local government isn't the same as arguing that PERS itself is bankrupt, rather that the expense of keeping PERS fiscally sound (or making it so, if it wasn't) is an onerous burden. It is an extension of both of the arguments I'll cite below.

    When I said "typical", I meant "typical", and while I don't have an exact count to back that up, that is still my general perception. When I see or hear criticisms of PERS, in a wide range of venues, the overwhelming number of complaints that I hear have to do with the expense of the system as regards two related factors. First, the percentage of public service budgets that are dedicated to PERS funding (i.e., money that goes to benefits instead of other things). Second, the relative generosity of said benefits compared to equivalent benefits in the private sector. I'm not arging the merits of either case, I'm simply saying that those are the real issues raised, not the financial soundness of the fund.

    We've seen both arguments just in this thread already.

    My original point still stands. If you ask 100 anti-PERS folks what their actual complaints are against the system, I strongly suspect that far fewer than 50 of them will say "We haven't adequately funded the promised benefits". Perhaps none of them would.

    So the fact that those promised benefits have been fully funded simply does not address the most common complaints about the system. It's good to know, but not particularly relevant.

    So, to Chuck and others I would simply say, if you actually want to develop an argument to counter the concerns of the anti-PERS crowd, find some other angle to press.

    And if you simply want to ignore the concerns of the anti-PERS crowd, that's fine too. But ignoring the concerns doesn't make them go away, and won't win you any more support than you already have.

    And thinking that you've addressed concerns that aren't really concerns just shows a certain disconnect from the conversation.

  • LT (unverified)
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    Without bothering to cut and paste a bunch of public & private sector numbers, I wonder if the numbers referring to "employees" includes the CEO's and upper management folks in the private sector? I am ASSUMING that a bigwig CEO's salary is way bigger than a department head in a gov't organization. Does the CEO of lets say Waste Management count all his annual compensation as "employee pay", like the head of DEQ or some other presumably well-paid top-level public position? After all he get s stock and dividends and all that stuff in his package, stuff that State Police Chief so-and-so does not enjoy. And is there profit sharing in a public employee job? If you average all the annual "pay" values in public and private posistions is there much disparity before retirement is factored in?

    This is the crux of the debate. If people wanted to run on "public employees have pay packages that are too generous", that would be one thing. Public employees have just as much right to vote as anyone else. And the Tiernan/Sizemore "the public should vote on public employee pay packages" (Measure 8?) was eventually thrown out by the courts. Did that measure say we should vote on agency head pay packages, or only unionized public employees? I recall a Republican state rep. being very vocal about such issues, but when asked if those with salaries higher than the Gov. salary (head of SAIF, for instance) should have their pay packages scrutinized, said "The Governor deals with public employee unions". HUH?? Since when are administrators members of unions?

    There have been "golden parachute" scandals in both the private (Home Depot was one, as I recall) and public sectors (Portland Public Schools and Willamette ESD, for instance). Are all those deals bad, or only the ones in the public sector?

    Where were the complainers when the PERS decisions were originally made? For instance, back in the 1980s recession, were those like Saxton saying to public employees "Oregon can't offer you a pay raise, you don't deserve to have a stable retirement, and if you don't like it, feel free to find employment elsewhere"? Saxton ran those PERS=ENRON ads in 2002 and in 2003 was nowhere to be seen in the capitol. Did he approve of what Rep. Macpherson did? Did he propose an alternative? Or is he all bluster while avoiding the hard work of solving problems?

    Initially, PERS simply guaranteed an 8% return on investment. Over time, that approach appeared less and less tenable over the long-term, and so PERS then allowed individuals to direct a percentage of funds into the stock market - with NO guarantee as to rate of return. A surprising number of folks chose to do just that, which in itself acted to reduce the strain of the 8% guarantee.

    When "PERS then allowed individuals to direct a percentage of funds into the stock market ", was anyone sounding the alarm? If not, why complain later-- just to have a good anti-government rant?

  • mrfearless47 (unverified)
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    Chuck Shetekoff wrote:

    "RS's fiscal condition — unfunded liabilities after the market dropped — is what prompted the Legislature to act and what drove many of the decisions. The Legislature clearly was trying to improve the fiscal condition."

    Chuck. That was the baloney that the Legislature was being fed by a group of liberatian legislators led by Tim Knopf of Bend. This group has been trying to reform PERS since 1994 and have been tripped up by the courts every single time.

    If you analyze the actual numbers, you find out that the UAL was considerably smaller in 2003 than all were led to believe. As a result, about 90% of the improvement in PERS' fiscal condition can be attributed to the stock market and the fiscal acumen of the Oregon Investment Council. The remaining 10% of the improvement stems from the legislative reforms. As a result, the claims by Macpherson that he and the governor led the effort to reform PERS are true on their face, but the practical effect of what they did was vastly more limited than they would have you believe.

    The most significant reforms are those that could have been made without all the sturm and drang. They wouldn't have risked as the expensive litigation if they had simply decided to limit Tier 1 earnings to the assumed rate. Nothing in statute required more, and a well-written statute wouldn't have been challenged by the unions. The change in mortality tables was something the unions had been nagging PERS about since 2000. They had already offered a reasonable solution about 2001, but both the Board and the Governor (Kitzhaber) declined, effectively arguing that it was a solution in search of a problem. So, the 2003 Legislature got its knickers in a twist over some well-massaged numbers and managed to get some reform, along with 18 (so far) lawsuits. PERS hasn't managed to win one significant case. Even the famous Lipscomb decision has not only been mooted by the Supreme Court, it was then vacated.

    When the current legal cases are over, the gains from the reforms will account for less than 5% of the improvement in PERS' position.

    You too have been suckered by the UAL argument. It was inflated by at least a factor of 2 in 2003, and it magically disappeared about 2005. If the UAL had been that large, there is no way it could have vanished by 2005 no matter what the reforms or how well the stock market did.

    The improvement occurred because the investment situation during 2003 - present has vastly improved over the situation in 2000 - early 2003. End of story.

  • LT (unverified)
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    "Chuck. That was the baloney that the Legislature was being fed by a group of liberatian legislators led by Tim Knopf of Bend. This group has been trying to reform PERS since 1994 and have been tripped up by the courts every single time."

    That would be the same Tim Knopp who led the fight to put the kicker in the Constitution, wouldn't it?

  • (Show?)

    the Saxton campaign (of 2006, I assume you meant)

    For the record, I meant 2002. Saxton's gubernatorial campaign in 2002 was largely based on fixing PERS. By 2006, the problem had been fixed. By Governor Kulongoski.

  • (Show?)

    Mr Fearless... I think you, and I, and Chuck can agree on three things:

    • The Lege was trying to improve the fiscal condition of PERS. Whether it needed improving is still up for debate.

    • The fiscal condition of PERS today is A-OK, best in the nation.

    • PERS doesn't need any more "fixing" - at least for the purposes of it's fiscal stability.

    I think it's fair to argue about what was and wasn't the condition in the past, but as far as going forward... it's all good.

  • Mister Tee (unverified)
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    I agree with DDDave: public employee pensions are far more generous than the vast majority of what is available in the private sector.

    The pension payments to public retirees are not "free money", and I certainly don't believe that excellent investment returns are going to reduce the burden on future generations of Oregon taxpayers.

    You can call it "Pension Envy" if you like, but those 108% payouts should be closer to 70%: the difference is money that could have spend on roads, bridges, schools, and more active duty State Troopers.

  • LT (unverified)
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    "You can call it "Pension Envy" if you like, but those 108% payouts should be closer to 70%: the difference is money that could have spend on roads, bridges, schools, and more active duty State Troopers."

    Let's say that a random sample of 100 public employees who retired around the turn of the century(before 2003) are in an auditorium. How many of that random sample got over 100% of their last salary, how many got 100%, how many got 80%, how many got 70%, etc? Does anyone know for a fact?

    I know some PERS retirees who worked in other jobs--became substitute teachers, started a new career, etc. I also know military retirees who have done the same thing.

    But according to the propaganda which Saxton tapped into in his 2002 campaign, 100% of the PERS retirees around the turn of the century were richer than they ever had been, moved to resort areas to live the high life, and never again had financial worries for the rest of their lives.

    I am not convinced that every public agency secretary, every public sector education or public safety retiree, etc. never had financial worries after retirement.

  • Robert Harris (unverified)
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    Someone argued that government attorneys were paid less than private practice attorneys. Perhaps in some areas, but in one particular area thats far from correct.

    Criminal defense attorneys doing indigent defense get paid approximately one third less in salary than similarly qualified Dep DA's and Assist AG's on average. (Oregon State bar compensation study) And while criminal def attys may get a 3% IRA match and health insurance for themselves, gov't attys are getting PERS and full family coverage, making the disparity even greater. The hourly rate for court appointed lawyers is $45. Though that is an increase from $40/hour which they've been getting since 1992 or so. That doesn't even cover overhead.

    One day defense attorneys will actually refuse to work for these rates. Since a court must appoint an attorney to anyone held in custody, when that occurs, the jails will be emptied as courts release people and dismiss charges for lack of available counsel.

  • mrfearless47 (unverified)
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    Kari writes:

    "Mr Fearless... I think you, and I, and Chuck can agree on three things:

    • The Lege was trying to improve the fiscal condition of PERS. Whether it needed improving is still up for debate.

    • The fiscal condition of PERS today is A-OK, best in the nation.

    • PERS doesn't need any more "fixing" - at least for the purposes of it's fiscal stability."

    I would agree with point 2 and point 3, but point 1 is where I keep getting hung up. What the Legislature ended up doing by accepting the baloney being dished out was to hurt a lot of retirees and near retirees who had been promised one benefit and then had the benefit changed just as the approached, or crossed the finish line. They weren't trying to "fix" PERS, they were trying to harm the unions and diminish their power. That would be the same unions who got Ted elected in the first place. Macpherson would have won no matter what. He didn't run on pension reform but was dragged into the act as soon as he was elected.

    For those of you who haven't heard, PERS has refused to comply with the Supreme Court's decision on retirees. You can read it for yourself at oregonpers.info . PERS still insists that I am getting too much in benefits and recently - two months ago - cut my benefits by $55 per month and sent me an invoice for nearly $15,000, an amount that PERS contends I've been overpaid so far as a result of the Legislature's decision (which the court struck down). The benefit adjustment also came as a result of PERS' interpretation of the decision in Strunk (the Supreme Court case) and in the City of Eugene case (which the court mooted and vacated). Much of the litigation still active is a result of PERS' refusal to implement the plain language of the Supreme Court's ruling, which denies them the right to do exactly what they are doing. Like the Hughes case in 1991 (about Oregon income tax on PERS pensions), it may take 5 - 6 years before PERS finally gets it right (in that case, it finally took Legislative intervention instructing PERS to follow the court decision, and a mechanism for separating service time prior to 1991 and after. They came up with HB 3349, which adjusts benefits higher to compensate for time served prior to the Hughes decision. The farther away we get from 1991, the less the effect on most people. By about 2010, the impact of HB 3349 will diminish and employer costs will drop again by about 2%.

    So, I do agree that PERS is in great financial shape today. I don't agree that the Legislature needed to fix PERS back in 2003 as it wasn't broken. A few minor tweaks would have done the trick. Finally, I agree that no further legislation is required, but there will be litigation until 2010, 2011, or 2012 - however long it takes to get PERS to obey current law. A strong governor with some backbone would have simply ordered PERS to obey the law; Kulongoski just ignores it all and will leave office letting the whole matter resolve itself however it plays out. Macpherson won't be able to do anything either if he's elected AG as the Legislature effectively wrote the AG's office out of being PERS' lawyer. In addition, Macpherson would have a conflict of interest. Kroger might be willing to go after PERS. Given his history with corruption, most of my PERS friends will be voting for him in the primary in hopes that he will do to much of the current PERS Board and senior staff, what he did to many of the Enron folk - send 'em to the slammer.

  • rural resident (unverified)
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    Demonizing people who work in public jobs is as natural to the "government can do no right" crowd as is breathing. PERS's problems earlier in the decade were the result of external forces relating to the securities markets; they weren't then -- and are not now -- structural problems with the system. Almost anyone who looked at the situation objectively knew that, when the market bounced back, the PERS shortfall (such as it was) would disappear.

    It's also interesting to see how anti-PERS advocates conveniently forget history, or at least interpret it selectively. Back in the 1980s, there wasn't enough money to pay for cost of living increases. Unions and management struck a bargain: in exchange for accepting lesser pay increases, employees would have a chance to share in gains in the PERS system's investments by DOW was having trouble breaking 1,000. There appeared to be little chance that investment earnings would ever be large enough for this provision to be of use to PERS members. After employees agreed to this, those bargaining for management let it be known that they thought the unions and their members were fools and ridiculed them. Anti-union politicians were thrilled to have gotten something for "nothing." It has been interesting to watch the reaction of those same people when the stock market went crazy.

    However, a bargain is a bargain. Or, at least it should be. Now that the system is back in balance, Tier 1 employees should once again be able to share in earnings beyond the 8% guarantee -- at least insofar as additional reserves can also be set aside on a current basis to pay for the additional benefits that result. Contrary to the "hate public employee" crowd, the PERS system exists for the benefit of members -- not for the State of Oregon and its component jurisdictions, not for the PERS Board, and certainly not for conservative politicians who want to score points by bashing public employees.

    The answer to excellent PERS benefits is not downgrading PERS; it is applying the structure and methods used successfully by the Investment Board and PERS managers to private-sector pensions. There is no good reason that there can't be a "Private Employees Retirement System" built on the same model. Employees and employers would both contribute on a statewide basis, resulting in large pools of capital to be invested. If those in the private sector are so much smarter, as the anti-government folks say they are, those investing the private funds should do far better than the "stupid, clueless idiot losers" they believe are working for the OIC. (No reason that is other than the desire of private sector executives to hoard as much of the profits as possible for their own compensation.)

  • mrfearless47 (unverified)
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    One final comment. Anyone who suggests that Saxton of 2002 was significantly different than Saxton of 2006 wasn't listening closely. Saxton's comment about shutting PERS down, firing all public employees, and then rehiring them was a theme that reappeared late in his 2006 campaign. He still ran his campaign in 2006 on the premise that the 2003 Legislature didn't do enough to "fix" PERS, despite evidence that there was nothing in PERS broken then or in 2006, and most certainly now.

  • Greg C (unverified)
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    So I am going to tell you all a way for you to make a little bit of money on this subject. Next time someone tells you that PERS employees got pensions of 108% of their salary tell them they are wrong. In fact offer to bet them 20 bucks that PERS retirees never got a pension of more that 50% of salary. Because in fact that is the truth.

    Under PERS Teir 1 & 2 PERS employees received either a "pension" based on their years of service or an "annuity" based on the size of their investments with PERS. Now the "annuities" were sometimes quite large based on the number of years left in the employees life but it's not a "pension".

    Greg C

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    rural resident has hit the nail on the head, and I think her/his suggestion is something OCPP maybe should do a study and report about as a possible future progressive platform.

    Thanks to the people who have brought up the history that the relative strength of public employee retirement compensation is the result of collective bargaining in which workers traded salary for benefits.

    In case people don't remember, the late 1970s and early 1980s were a period of double digit inflation coupled with a stagnant economy -- "stagflation."

    Unfortunately, recent destruction of private pension systems negotiated by workers through their unions shows that it is not only in the public sector that employers get to renege on deals they made.

    Funny how conservatives see contracts as sacrosanct, except when they're not.

    Still, what the difference really shows is that private sector workers need to form unions and negotiate better deals for themselves. U.S. productivity per worker has expanded massively in the past three decades, but non-managerial workers have gotten almost no share of that expansion. This used to be known as exploitation, though in today's through-the-looking-glass world of conservative politically correct euphemism, pointing that out is considered "class warfare," while the actual denying of a fair share to workers isn't. Go figure.

  • andy (unverified)
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    PERS should be in good shape after a solid 4 year bull market. Any pension fund that is in bad shape in this market deserves to be closed down.

    But that doesn't answer the real question which is why does PERS even exist? If you drive over to Tigard you'll find a big new building full of PERS employees all busy with mounds of paperwork. Why exactly does the State of Oregon even bother running their own pension fund when all kinds of alternatives exist in the marketplace? Most private employers are smart enough to outsource the activities that aren't core but evidently the folks who run the State of Oregon aren't that bright. For some reason they think they still need to run their own pension plan.

    PERS is nothing more than extra deadweight on the State's books. There isn't any reason to carry those employees or the liability of managing our own pension fund. Move everyone over to 401K plans or their equivalent and shut the whole thing down. That would free up a few million bucks that could be put to better use.

  • mrfearless47 (unverified)
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    Andy suggests closing PERS down and moving everyone over to a 401-K to save a few million bucks from the cost of operating PERS itself.

    Andy, you must not have a clue how things work. The state has been in the pension business since 1946. The unions have been involved with decisions involving the pension system since the mid-1970's and starting in 1978, the Oregon Supreme Court has consistently ruled that the pension system itself is a contract between employees, employers, and PERS itself. The cost of shutting down PERS is non-trivial. Because of the IRS qualification and the contract element, PERS would have to make everyone absolutely whole in switching to a 401-k. During the 2003 session, the actual cost of shutting down PERS and moving ALL members into a 401-K was estimated to be somewhere in the vicinity of $30 Billion (note the "B"), about three times the state's bienniel budget. They would also have to liquidate all of the assets held in trust and figure out how to convert benefits from their current form to what the IRS would require. In the end, even the most libertarian of legislators decided that this wouldn't be practical.

    So, the idea of shutting down PERS is dead. It isn't going anywhere and the savings of ridding the State of PERS staff and its building are a dead issue. Not only that, PERS' costs are generally covered by fund earnings and the net savings to the state (assuming we could get by the actual costs of doing this) would be chump change.

    Get over it. It ain't gonna happen. You aren't going to convince anyone that this is a practical idea, much less a doable idea.

  • pdx632 (unverified)
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    RE: comments about people letting facts interfere with their opinions.

    It seems to me that no one who holds deep seated opinions about any topic allows contradictory facts to get in their way. You can see it here and for that matter, at any blog on a daily basis.

  • Robert Harris (unverified)
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    Whenever I hear someone say that anyone who criticizes PERS hates pubic employees I disregard anything that person has to say thereafter.

  • M (unverified)
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    Whatever the haters might think, there are many talented hard-working people who have chosen to work in public jobs. A large part of the reason they're attracted to these positions is because, although the immediate awards are not as great, there is some long term security to make up for more immediate gains. Contrary to popular opinion the pension benefits for most current public employees will be very modest. And in my work, at least, employees must contribute six percent of their salary in order to participate in PERS.

  • Tom Civiletti (unverified)
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    It's inevitable that many people will disdain public employees. Sizemore, McIntyre and their ilk have made a career of publicly attacking Oregon's government workers. Just as many Americans still blame Saddam Hussein for the 9/11 attacks, many Oregonians cannot rid themselves of false impressions of public employees.

    There is some famous quotation about the power of a lie repeated many times.

  • iamastateworker (unverified)
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    I used to be so cynical about government workers and the PERS system. So I developed an "if you can't beat em so join em" mentality. I left my low paying $20 an hour private sector job in downtown Portland that had no benefits, and moved to a rural area outside Salem. I am now making $38 an hour -- way more than I did at my Portland job and the PERS, generous vacations and slow paced work is a wonderful change. Now every day as I drive my giant SUV to and from work on my 30 mile commute into town I thank God that I was given this great opportunity to live in paradise, no longer cramped in a 800 square foot "luxury" condominium riding toy trains in the Pearl District and working a more satisfying job with awesome benefits. PERS is wonderful and so is a government job. THANK YOU EVERYONE AND MERRY CHRISTMAS!!

  • Curt (unverified)
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    Out of curiosity, what do you do for the state that pays $38 an hour when you used to get $20/hr (for what I assume was similar work)?

  • Curt (unverified)
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    Mmmmmmm hmmmm. Didn't think so.

  • byard pidgeon (unverified)
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    Why argue with the right wingers, on a progrssive website? They won't listen...they won't accept any facts...they will continue to disrupt any actual work that might get done here. Facts on how many PERS retirees make how much are readily available, but not to those who won't make the slightest effort to find them.

  • Tom Civiletti (unverified)
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    <h2>The value of engaging rightists here is that their arguments are same ones they disseminate in public discourse. Exposing rightist misconceptions is valuable to folks reading here who do have an open mind.</h2>

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