Retirement account cuts of more than 12% released today. PERS Coalition Statement: Protect member benefits or get ready for lawsuit

May 10, 2019

A PERS cuts bill released today would slash individual account programs for PERS members from 7 to 12.5% according to analysis submitted by PERS from the agency’s consultant Milliman.

The analysis shows that the proposed cuts in SB 1049 would impose significant and damaging cuts to the Individual Account Programs that are an essential part of retirement security:

  • Tier 1employees would see a 7.8% reduction.
  • Tier 2 employees would see a 12.5% reduction.
  • OPSRP employees would see a 7.1% reduction.

If the Oregon legislature were to move forward on SB 1049-1, PERS members will sue and the state will find itself in another lengthy and expensive lawsuit. Under the cuts released today, the dollars that PERS members contribute to their own retirements would be taxed. In addition to this new tax, the state would renege on the promises made to older workers who are closest to retirement by changing the rules late in their careers.

After several of the benefits cuts passed in 2003 and 2013 were found illegal, PERS members sued and the state had to return more than $7 billion.

These court rulings already established that lawmakers cannot cut benefits already earned, as the new proposal does. In addition, as part of the benefits tax, a new system would be created to skirt the constitutional prohibition against requiring PERS members from paying for the state’s existing unfunded liability. Legal analysis has already shown this opens up a new and risky legal challenge to the state.

Instead of cutting the retirement benefits of hardworking people, lawmakers should look to the $2 billion in unnecessary corporate reserves sitting in the workers compensation system.

Here are statements from Oregon’s labor leaders about the proposals released today:

”Our members have kept up their end of the deal. They show up and do their job and were promised a secure retirement. Lawmakers should reject any and all proposals to tax their retirement benefits,” says Stacy Chamberlain, executive director of AFSCME. Oregon AFSCME member and corrections officer Greg Clouser was one of the plaintiffs in the 2013 Moro v. State of Oregon case.

“Oregon educators have shown time and time again that they will stand up for their students,” says John Larson, OEA President. “If lawmakers turn their backs on educators and cut retirements, we will see them in court.”

“Public sector nurses keep communities safe and care for the most vulnerable while earning substantially less than those in the private sector,” says Bruce Humphreys, RN, President of the Oregon Nurses Association PAC Board. “We will join any and all efforts to protect the secure retirements they have earned.”

“It’s only May and there have been three big fires in Oregon already. Even as fire seasons get longer and more difficult, some lawmakers apparently believe we are overcompensated and don’t deserve a secure retirement,” said Karl Koenig, President of the Oregon State Firefighters Council. “The proposed 12.5% cuts are illegal, unfair, and will send the state back to court.”

“They’re asking working families to shoulder a large part of the burden while other options go unexplored,” said Melissa Unger, Executive Director of SEIU Local 503, Oregon’s public services and long-term care union. “We challenge the Legislature and the Governor to consider bolder ideas that protect working families, such as selling the State-owned SAIF Corporation to pay down the pension debt. In its current form, we cannot support this proposal.”


About the Keep Oregon’s Promise Coalition
The Coalition is made up of the people who teach our children, protect our life and property, repair our roads and bridges, and keep our communities healthy and safe. Members include:

Oregon Education Association, SEIU Local 503, Oregon State Firefighters Council, Oregon Nurses Association, AFSCME Local 75, American Federation of Teachers, Oregon School Employees Association, Teamsters Local 223, District Council of Trade Unions, Association of Engineering Employees, American Association of University Professors, Oregon State Police Officers Association, Association of Oregon Corrections Employees, Portland Police Association, Oregon PERS Retirees, Inc., Professional and Technical Employees Local 17