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To Ease PERS Problem, Oregon May Use Mix Of Rewards And Punishments


Oregon Gov. Kate Brown’s task force on paying down the state’s big public pension debt is looking at presenting the state’s 900 governmental agencies with a deal.

If those agencies step up their payments on the $25 billion debt in the Public Employees Retirement System, the state would agree to pick up a share of those extra payments.

That’s the big idea that emerged out of a Friday meeting of the task force charged by the governor with coming up with recommendations for how to pay down the PERS deficit by up to $5 billion.

In previous meetings, the seven-member task force has floated a number of ideas for raising that $5 billion. They range from putting a surcharge on fees to wringing more profits out of the state-owned liquor monopoly and a state-owned workers compensation insurer.

Don Blair, a former top Nike financial officer and the chair of the task force, sketched out a plan on how to use some of the proceeds from those actions to give public agencies throughout the state an incentive to more quickly pay down their PERS liability.

“It really is the thing that touches the most employers,” said Blair, adding that it “really builds that collaboration to get everyone working at the issue.”

Blair added that the key to this approach is coming up with the big ideas that provide enough money to produce the “fuel” for prodding schools, cities and other local and state agencies to participate.

For example, Blair said, if the state can come up with $500 million for a 25 percent match, that could produce $2.5 billion in eventual reductions to the PERS debt.

At the same time, task force members also discussed whether to punish government agencies that don’t take steps to more aggressively deal with the PERS debt. One idea: force them to more quickly jump up to the higher employer contribution rates that are expected in future years.

Lawrence Furnstahl, the top financial officer at Oregon Health & Science University and another task force member, said pressuring agencies is one way to get them to take a harder look at paying down the PERS debt.

“It’s fairly harsh, I agree,” he said, “but I think it’s the type of thing that’s going to pay this down early and mitigate the impact” to the state.

This was the task force’s final meeting and it now plans to present a report to the governor at the start of November. 

The group is purely advisory and Blair said it will be up to the governor to pick and choose from among various options. And many of the ideas would require legislative approval.

Gov. Kate Brown Visits businesses in Hood River on Sept. 29, 2017.

Gov. Kate Brown Visits businesses in Hood River on Sept. 29, 2017.

Ericka Cruz Guevarra/OPB

Brown, a Democrat running for re-election, has come under repeated fire from Republicans for not doing more to reduce the PERS debt. Employer rates average now almost 21 percent of payroll and are projected to eventually rise to more than 35 percent absent any changes.

Brown has opposed legislation pushed by Republicans and business groups that would make major cuts to PERS benefits, although she has said she is willing to consider some benefit reductions as part of a larger budget deal. 

Because of court decisions, the Legislature can’t reduce benefits for retirees or for benefits earned by prior work.

The governor has portrayed her search for a $5 billion pay-down of the PERS debt as an out-of-the-box way to help tackle the problem.

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