Fifteen years ago, Oregon dramatically reduced pensions and retirement benefits (PERS) for newly hired public employees. But in the 2008 recession, the pension fund lost money and today there is a $22 billion difference between what the state owes for retiree pensions and what’s in the fund. While this is a very large liability, the state has taken several actions to address it. In 2013, Oregon cut benefits again, to the legal limit allowed. The state also has a plan to pay off the liability within 20 years. That’s why Oregon still has the 11th best funded pension in the country.
Oregon spends less on public employee pensions than the vast majority of states. Washington, Idaho, California and over 35 other states spend a higher percentage of state and local dollars on public pensions compared to Oregon. [source: NASRA]
Today’s PERS system is markedly different than before 2003. The average pension is about $2,400 a month or about 44% of final salary. Even with these reduced benefits, PERS is an essential part of a total compensation package for teachers, firefighters, and all public employees serving our communities. The public sector generally pays less and is less competitive than the private sector, and the benefits make up the difference. For example, a report out last year showed Oregon teachers earn 22% less per week – not per year – than their private sector counterparts in salary. Retirement benefits help narrow that gap to 9% less. No one in the public sector goes into to get rich, but these are difficult jobs and a secure retirement is part of the deal.
Unfortunately, corporate interests are calling on state leadership to renege on that deal and further slash the PERS retirement benefits of teachers, firefighters, and public employees
These unfair and potentially illegal reductions to PERS being pushed by Oregon Business Council (OBC) and Oregon Business Industry (OBI) are severe, unfair, and will face legal challenges. The Oregon Supreme Court has already ruled that benefits already earned by retirees and working people cannot be cut, but these business groups keep trying to find loopholes to cut benefits.
How would the cuts proposed by business groups drastically reduce the retirements of people working today? By taking away public employees’ 6% contributions to their own retirements and diverting them to pay the state’s pension obligation. Testimony to the Oregon state legislature in March, 2019 showed why this proposal raises new and serious legal questions and will force another lengthy and expensive court battle that could end up costing more in the long run.
Oregon is already facing severe shortages in science and math teachers, 911 operators, child welfare workers and other critical positions. Further cuts to PERS will make recruitment and retention even more difficult and could create a crisis in Oregon’s public workforce.
We promised workers a certain salary and retirement benefits in exchange for their service to the public, and a deal is a deal. Frontline workers who have devoted their careers to providing Oregonians with vital services shouldn’t have that agreement broken as they approach their golden years.
CLICK HERE to email lawmakers to urge them to protect PERS retirement benefits for public employees.