Register Guard
August 16th, 2015
The financial hydraulics of Oregon’s Public Employee Retirement System are simple: If more money goes out, more must come in — and if less money comes from one source, more must come from another. Similar principles govern the politics of the pension system: If nothing is done to control the cost of PERS, public frustration will be directed at other targets.
State and local governments will see both types of cause-and-effect sequence soon. The courts and the pension system’s actuaries have delivered a double whammy that will increase the cost of PERS by $1.7 billion per biennium starting in 2017. To soften the blow, the initial cost will be reduced, resulting in even larger increases later on. As pension costs soak up revenues, public resentment will rise: Voters won’t be easily persuaded to pay more for public services if they have reason to believe that PERS is first in line for every tax dollar.
So far, Gov. Kate Brown and the Legislature have responded to this threat with a shrug of resignation. The attitude seems to be that nothing can be done: The 2013 Legislature passed a package of PERS changes, but in May the Oregon Supreme Court tossed most of them out, ruling that only pension benefits earned after the effective date of the legislation can be altered. That decision will add $790 million to the cost of PERS in the 2017 biennium, and an additional $250 million in subsequent biennia.