Misjudgments Haunt PERS
The misjudgments of the past continue to haunt Oregon’s Public Employees Retirement System (PERS). Days ago the Oregon Supreme Court issued the last word on years of litigation that goes back to 2000, when the PERS board tried to credit member accounts with outlandish 20 percent earnings.
PERS was originally created in 1945 to provide retirement benefits to Oregon’s public employees. Now legislators had changed the law so that they could retroactively join PERS and judges automatically became PERS members. This represents a possible conflict of interest to PERS reforms. To compound this conflict of interest, essential services from local municipalities such as prison beds, law enforcement, and school days, are being sacrificed while PERS expenditures skyrocket.
Public employers objected and a court later set the earnings at slightly over 11 percent. But the higher credited earnings already had been deposited in the accounts of more than 28,000 people who retired between 2000 and 2004, and these “window retirees” had fought ever since to keep for themselves the overpayments that now tally more than $150 million.
However, on Dec. 30, the Supreme Court ruled again that PERS is obliged to recoup the overpayments. Starting in April, the retirees have to give the money back, either in lump sums or through deductions from their monthly benefit checks. That’s as it should be. The money was never theirs to begin with. A PERS error in their favor is still an error — not an opportunity to pocket additional benefits at taxpayers’ expense.
Oregon’s Public Employee Retirement System is between $14 and $16 billion underwater. The future unfunded liability to Oregon’s public employees in excess of current investments is so large that it exceeds Oregon’s biennial general fund budget. Worse still is that, at the behest of the public employee unions, the Oregon legislature adopted a provision that requires that payments to the PERS system be made before any other money is spent. For taxpayers this means that before any service is delivered by the State of Oregon, current PERS obligations must be funded.
But $156 Million is nothing to sneeze at. Okay, it’s only about one percent of the unfunded future liability, but it’s $156 Million that PERS didn’t have last week. That is if PERS actually collects it. When the Legislature convenes in February, PERS advocates are planning to pressure it to respond to recent rulings by arguing that they should be able to keep the overpayment of benefits.
Beyond pressuring the 2012 Legislature, the public employee unions are ready for the 2012 elections. Under the guise of their unified political arm – Our Oregon – the unions have taken a page from Bill Sizemore’s political playbook and flooded the initiative process with THIRTEEN separate ballot measures. But whereas Mr. Sizemore had to go out to the general public to find signatures and funding for his efforts, the public employee unions, with their nearly $130 Million biennial war chest – collected for them by the State of Oregon and its political subdivisions – have more union members than signatures required to qualify for the ballot. Mr. Sizemore would take six to nine months to collect signatures while the public employee unions can do it in less than a week as the union stewards walk through government offices pressuring their members in the workplace.
The most pernicious among the thirteen Our Oregon initiatives are Measures 42 and 43 which embed in the Oregon Constitution the right of public employee unions to utilize the payroll check off system for their political activities. While the unions widely criticized Mr. Sizemore for trying to burden the Oregon Constitution with matters better left to the legislature, those same unions apparently think it’s just fine to embed their issues in the Constitution.
In addition to the $130 million available to Oregon’s public employee unions from mandatory member dues each biennium, unions have the vast resources of their sister public employee unions on both state and federal levels because national public employee unions move money to and between states to support and oppose political issues.
Public employee unions represent their members, not the public or taxpayers. You can understand their motivation. But the Legislature and Oregon voters must answer a different question: What’s in the public interest?
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