As Senate Bill 822—which includes what legislative Democrats are currently willing to do to address the $14 billion unfunded liability of the Public Employees Retirement System—heads for a vote, three groups are circulating a floor letter expressing unhappiness with the measure.
The groups—the Oregon Business Association, Stand for Children and the Oregon School Boards Association—say the expected $405 million savings over the next biennium from cutting the costs of living allowances for retirees is far too small. They don't like a proposal to defer another nearly $400 million in PERS contributions over the next biennium, either.
As The Oregonian pointed out yesterday, the system continues to be hamstrung by the "money match" option available to retirees. Under that option, PERS matches the employee's retirement account at date of retirement and then pays out the total either in one lump sum or in the form of an annuity. The unpaid balance of the annuity continues to compound at an 8 percent rate, which is very lucrative, as the floor letter shows.
Here's the letter the three groups are circulating:
SB 822 is Inadequate and Does Not Fix the Problem
Oregon's Public Schools Need Additional PERS Reform
Without more PERS reform than SB 822 provides, school districts across Oregon will have to layoff teachers, cut school days and increase class sizes even as revenue increases. SB 822 barely makes a dent, and the delayed payments that it relies upon just push costs into the next biennium.
SB 822 doesn't address the source of PERS costs and unfairness: Money Match. Oregon's PERS problem is because of Money Match. There are fair and legal solutions that have been put forward to fix it that both honor the promise of the original retirement formula, and protect take home pay for current employees. If the legislature doesn't address Money Match, Oregon's schools and other public services will be decimated and Oregon's current Tier 2 and Tier 3 employees will continue to face layoffs and other concessions in order to finance the unfair and unsustainable Money Match benefits.