Brian Steffel - Some are unworthy of PERS pensions

Oregon’s Public Employees Retirement System (PERS) is getting a lot of attention lately.

The state, cities, counties and school districts across Oregon have no alternative but to cut staffing in order to pay the skyrocketing PERS assessments needed to fund public employee retirements. Legislative reform of PERS is overdue, and one reform should address the betrayal by a few who commit serious crimes in their roles as public officials.

An Associated Press story in the Feb. 5 News-Register reported a guilty plea by the city manager of Dallas, Ore., to charges of theft, official misconduct and falsifying business records. The article reported that the city manager would not have his PERS pension reduced because there is no pension forfeiture law in Oregon, and “federal law prohibits tapping a pension.”

The article was half correct. Oregon doesn’t have a pension forfeiture law of any kind. However, 25 states and the federal government have some form of pension forfeiture. If a federal employee is convicted of offenses listed in 5 USC 8312, that person is permanently barred from receiving a pension.

Why doesn’t Oregon have a pension forfeiture law?

I have lived in Oregon for 30 years, and I am proud of the state’s reputation for “clean government.” We are the beneficiaries of many great public servants who, long ago, had the foresight to protect watersheds, build bridges that are engineering marvels, and create the country’s best system of state parks.

But occasionally we have some rotten apples that need to be dealt with. The former city manager of Dallas is only the latest example.

Last year, we learned of massive kickbacks demanded by the City of Portland’s parking director in exchange for “no-bid” contracts. A few years earlier, we learned of corruption by a Department of Corrections food service procurement official who was leading a luxurious lifestyle at taxpayer expense. Both these officials used their offices for illegal purposes at the expense of taxpayers.

The most egregious offense doesn’t involve money, but rather exploits something far more precious – our kids. Last year, Michael Montgomery, who had taught Spanish for years at Salem’s Sprague High School, pleaded guilty to sexual abuse of one of his students and was sentenced to five years in prison. He’ll be eligible for full PERS pension payments when he is released.

Regrettably, Montgomery’s case is not unique. These crimes occur with too much frequency. Appropriately, Penn State Assistant Football Coach Jerry Sandusky lost his $59,000-a-year pension for molesting children due to Pennsylvania’s pension forfeiture law. Pennsylvania law even provides for victim compensation out of members’ pension contributions.

PERS provides every member with an annual account balance consisting of the member’s contributions. In most cases, employee contributions have been made by their public employers — a holdover from labor negotiations decades ago when the employers agreed to cover the employee contributions in lieu of salary increases. This needs to change, but that is grist for another article.

When a PERS member retires, the account balance of that member may be matched by employer funds to calculate an annuity for the duration of the member’s life.

Public employees who are convicted of serious crimes in the course of their duties should, at a minimum, forfeit the employer match to their account balance when calculating pension benefits. We should redirect the forfeited matching funds to victim restitution.

This step will inform public employees that the public trust is precious, and that betrayal of that trust will bring financial consequences. And it will remove the bitter pill taxpayers have to swallow when crooks and predators are paroled and then collect pensions unequaled in the private sector.

Guest writer Brian Steffel of McMinnville is president and CEO of Oregon Mutual Insurance, where he has worked since 2006.

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