Former Oregon Gov. Wants To Reduce PERS Benefits To Offset Mounting Costs

By Jeff Mapes (OPB)
April 4, 2019 7:18 p.m.

Former Oregon Gov. Ted Kulongoski is leading a new initiative drive that would ask voters to reduce some public employee retirement benefits to help reduce the costs of the financially troubled pension system.

Kulongoski, a Democrat, and former Republican state Sen. Chris Telfer of Bend are the chief sponsors of a pair of initiatives filed with the Oregon secretary of state on Thursday.


Tim Nesbitt, a former Kulongoski aide and one-time labor leader, said he received a grant from the Oregon Business Council to mount the initiative effort.

Nesbitt said he hopes the measures spur the Legislature to take action on pension costs. But he said he is also working to assemble a broad coalition that could take the issue to the 2020 ballot.

“We want to make sure that legislators and public service advocates – and the public – understand that there are reasonable solutions,” said Nesbitt, a former president of the Oregon AFL-CIO.


Nesbitt said his group is looking at different wording and could draft additional versions. But essentially, the proposals focus on asking state, local and school employees in Oregon to contribute to shoring up the pension system.

This would happen by diverting all or some of the benefits that now flow into a 401k-type of savings plan that supplements their regular pensions.

The Oregon Public Employee Retirement System now faces an unfunded liability of more than $25 billion, forcing big increases in costs for schools and other public employers. Legislators are looking at a variety of tax plans to provide more funding for schools – but have faced pressure to reduce those rising PERS costs.

Public employee unions have been fighting hard against benefit reductions that they say unfairly target public employees, particularly younger ones who already do not get the same benefits that flow to workers who have been on the job since before 2004.

Aruna Masih, a Portland lawyer representing the PERS Coalition of Unions, testified last week at the Legislature against Kulongoski's approach. She questioned whether his proposals would pass legal muster and actually produce the intended savings. She said the "public responsibility to properly fund schools and public safety" should not be used "as an excuse for why PERS benefits 'must' be cut."

Oregon Business & Industry called the initiatives "an important step forward in the statewide conversation on how we should finally address the pressing PERS problem."

As governor, Kulongoski led action in the 2003 Legislature to revamp the pension system. Some of the changes were blocked by the Oregon Supreme Court, but the law was changed to provide a lower level of benefits for new workers.

“I believe the unsustainability of the Public Employees Retirement System is a critical issue and the time to change it is now,” Kulongoski said in a statement.

“I and other colleagues are offering necessary and responsible changes to PERS, and our proposals are fair to the taxpayers and to the PERS beneficiaries.”