Sal Peralta - Don't circle PERS wagons

As the 77th Oregon Legislature heads into its second month, battle lines have been drawn over Gov. John Kitzhaber’s effort to rein in the cost of the state’s Public Employees Retirement System.

State and local governments face an $800 million shortfall in the current biennium as a result of increased PERS costs, which ballooned from 9 percent of the state’s payroll in 2001 to 21 percent in 2012.

These increased costs have contributed to cutbacks, including unpaid furlough days for state workers, a shorter school year, fewer teachers and a litany of other problems for state workers as well as for Oregonians who depend on the services provided by teachers, state police officers and other civil servants.

The governor’s budget proposes to address these shortfalls and contain system costs. It would apply cost-of-living increases to only the first $24,000 in annual retiree benefits and eliminate, for PERS retirees who leave Oregon, a 9 percent payment intended to cover state income taxes. These two seemingly small changes will save the state of Oregon more than $870 million in the next legislative biennium.

The fact that these proposals are controversial may be a surprise to Oregonians who have spent their careers in the private sector, where raises and cost-of-living adjustments are predicated on the health of the company providing the benefits.

But in the world of state government, addressing retirement costs for state employees presents significant challenges for reform-minded elected officials.

With more than 340,000 active and inactive enrollees, those whose lives are affected by PERS constitute a massive voting bloc in a state with just 2 million registered voters, and lobbyists representing unions hold dominant positions in state government.

During the past 10 years, the state’s two largest public employee unions — the Oregon Education Association and Service Employees International Union (SEIU) — together have spent more than $25 million in state and local elections, making them easily the two largest political contributors to Oregon campaigns. Almost all the money has flowed to Democratic candidates and causes.

The last Democratic governor to take steps toward containing the cost of PERS drew a primary challenger endorsed by SEIU. The union also spent roughly $500,000 to defeat Greg Macpherson, a Democrat with a leading role in negotiations on the governor’s behalf.

Naturally, the first impulse of these lobbyists, so accustomed to getting their way, is to circle the wagons to protect their members’ benefits. There’s good reason to question the wisdom of that impulse. Although the governor’s plan is a bitter pill for state workers, it also is an essential first step toward turning the state of Oregon around.

Oregon ranks 35th in per capita income, 30th in K-12 education spending. Returns on that investment aren’t great. Oregon ranks 47th in high school graduation rates and student-teacher ratios. We are in the bottom 10 percent of student instructional hours.

These poor rankings indicate our state is trailing the nation. They suggest our economic problems likely will worsen over time and will continue trends of the past. Forty years ago, Oregon workers earned 108 percent of the national average; today, their wages have fallen to 91 percent of average.

These problems are bigger than PERS, but they underscore the challenges Oregon faces.

We need more teachers but cannot afford to hire them. As PERS costs grow, they will take a bigger and bigger bite from state services. As that happens, we can expect voter frustration to increase.

One need only look at what happened in Wisconsin, once a reliably Democratic state, where benefits had similarly grown out of control. The state has shifted solidly into the Republican camp largely because public employee unions refused to make concessions.

Voters will tolerate declining services and increasing costs for only so long before they take action. Unions and their allies in the Legislature would be wise to take steps now, before voters take matters into their own hands, resulting in a costly, divisive fight.

The governor’s proposed reforms will enable the state to control costs and hire 500 additional teachers without affecting the lowest-paid retirees.

Gov. Kitzhaber wrote the right prescription for Oregon.

Guest writer Sal Peralta is a media consultant for the News-Register and secretary of Oregon’s Independent Party. He lives in McMinnville with his wife, Tanya, daughter Bella, and two dogs. When he is not working or thinking about public policy, he can usually be found playing the violin or in his man cave learning how to produce videos.



The PERS issue is interesting. The Legislature will do nothing but make a show that will look like they are doing something about PERS. The real push will be an attempt to raise taxes to cover the PERS costs.

The real problem is that PERS is now affecting both ends of the membership. Tier II (1995)and OPSRP (2003) members are paying the price for the extravagance of Tier I retirees who are happy to receive as much as they can regardless of the effect.

Don Dix

"and lobbyists representing unions hold dominant positions in state government."

Now there's a good place to start. If they are 'representing' a union, then that's their actual job. Some of those are not elected positions, so kick their entitled butt out the door. If they want to represent the union, then let the union care for them, not us.

Don Dix

The governor may have written the 'right prescription' (for Oregon), but when the 'patient' (public employee unions) refuses the treatment (and they will), who gets left with the bill? Not the governor, not the unions, but once again the taxpayers.

The only avenue out of this mess is to boot the union out of policy-making positions and Demo pockets. Otherwise, nothing will change but the ever-increasing amount of PERS liability to taxpayers.


That is the "stickler". In normal times the taxpayer (mostly Democrats) would be willing to go along with union/Democratic persuasion. In this economic era, I don't think the taxpayers are eager to fund the excesses of PERS. The people who will suffer most are Oregon students, those who need public services and Tier II and OPSRP employees who will take the brunt of reforms.

So, what is the end game? Our "leaders" don't have a clue, but it won't be good.

Don Dix


As a former Demo legislative candidate, you know the unions will do anything to protect their gold mine. It has never been about fairness, and with the players all on one side (PERS recipients), it's highly unlikely to expect real reform.

Sal Peralta

Don, yes there is reason to be skeptical, but I was pleasantly surprised to read that the co-chairs initial budget, released yesterday, includes about $470 million in PERS cost containment along the lines proposed by the Governor. They did not go as far as I would have preferred,but they went farther than I expected.


Only direct public pressure on all legislators, not just the R in our district, will act as a counterbalance to the influence of both the unions and the PERS beneficiaries. Despite the money the former invests in the legislature and the voting bloc represented by the latter, there remains a majority of Oregonians who will be increasingly, painfully affected by the cuts in services and schools that will result. We simply have to act more like voters and less like bystanders and start demanding more concrete action.
Everyone in the legislature can see the math problem, it's not like they don't know what has to be done, they just need to know voters have their back - or not - if they side with their contributors and not their constituents.

Don Dix

B.Muse -- The cuts to services and schools could come from many areas. The state chooses to cut the programs that get the most notice and effect the most people (so next time they ask for more taxes, fees, etc., those previously cut programs can be used as examples to increase the budget).

And if one could actually find a politician that represented the voters (and not special interests) -- you're looking a a one-termer, for sure.

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