By Jeb Bladine • President / Publisher • 

Bladine: Local budget talks ignored PERS cost

It’s budget approval time for local governments, as numbers for 2022-23 have been crunched and published as legal notices for all (who care) to see.

It was a rocky road for the city of McMinnville, which opened budget season hoping that major utility fee increases would cover growing revenue/spending gaps. After hearing strong opposition, including threats of legal challenges, the City Council replaced most of those fee increases with a portion of the city’s one-time American Rescue Plan Act funds – a temporary solution to an ongoing problem.

No one, along the way, even mentioned continued skyrocketing costs for city contributions to the Public Employees Retirement System.

We long ago gave up on the decades-old fight for adequate PERS reforms. We haven’t even bothered, in recent years, to augment our cataloged website database of articles and commentary about PERS, but here’s another piece of historic perspective for that collection:

City costs this fiscal year, rounded off, are $17.47 million for wages and $5.5 million to PERS; the city’s 2022-23 budget includes $19.2 million in wages and $6 million for PERS. For you statisticians, those PERS costs equal 31.36 percent of city wages this year, and 31.25 percent next year.

In addition, the city pays about $400,000 per year to redeem a 12-year bond approved in 2016 to finance a major PERS deficit that year.

Rounded-off school district numbers for 2021-22 are $51.25 million in wages and $12.55 million in PERS costs (24.5 percent). For 2022-23, District 40 costs will be $54.9 million in wages and $14.05 million for PERS (25.6 percent). Those payments to PERS include annual costs, currently $3.45 million and ending in 2028, for past bonds approved to limit the district’s PERS rate increases.

District 40’s PERS costs are reduced because classified and confidential staffs pay their own 6 percent contributions to PERS, while the districts pays that share for licensed and administrative staffs.

Since its creation in 1945, Oregon’s PERS has morphed into investment and benefit structures too politically entrenched, too complex to understand and discuss, and with excessive benefit levels and resulting costs. PERS finances depend on investment returns, and the impact of our plummeting 2022 stock market is an ongoing story that could turn today’s high cost of PERS even more skyward.

Even last year, Eric Fruits of the Cascade Policy Institute wrote, “Desperate times call for necessary measures. These are desperate times for PERS, and the board must at least consider a near-zero assumed rate of return.”

Now 77 years old, the controversies of Oregon PERS are far from over.

Jeb Bladine can be reached at jbladine@newsregister.com or 503-687-1223.

Comments

Don Dix

Jeb,

Another reason PERS is so costly is the way retirement benefits are figured. Only the last 3 years of employment are used to calculate the monthly payments.

Example -- Margaret Carter served in the Oregon legislature as a rep. and in the senate. Those positions paid $25-30K annually (approx. 14 yrs. in house and 8 in senate). In 2009, Carter resigned to take the position of Deputy Director for Human Services Programs at the Oregon Department of Human Services, a job she held until her retirement in 2014 (that position wasn't available prior to her retirement -- it was created for her). And that new position paid upwards of $120K annually. So she retired with a pension that was figured on an average salary that was 4 times the true average over 27 yrs. That's incredibility overpriced and borders on deceitful and should be abandoned immediately.