When Oregon’s public pension board agreed Friday to reduce its assumed earnings rate, it was acknowledging the reality of reduced investment earnings.

Facing up to that reality — at least partially — is a crucial first step in addressing the critical issue of public pension obligations. Oregon’s problems are not as serious as bankrupt Detroit’s, but the underlying factors echo nationwide.

Governments across the country have promised public employees more than they can deliver without severely limiting funding for critical public purposes, such as schools, roads, courts, health care, etc. Years of high investment returns lulled negotiators into making unrealistic commitments. Actuarial assumptions may have helped to obscure the extent of the future problems.

The board of Oregon’s Public Employees Retirement System is expected to formalize the rate change at its Sept. 27 meeting, lowering its investment return assumption from 8 percent to 7.75 percent. The effect will be to cut some returns to retirees and increase the amount school districts and other governments must pay into the system.

It’s a move in the right direction to align calculations to the current investment climate, but it could wipe out the modest savings in PERS contributions approved in the recent legislative session. Although the effects won’t be felt by governments until the next biennium, that fact only exacerbates the increases to come.

Gov. John Kitzhaber tried to broker an agreement for a “grand bargain” of tax increases and further PERS reform during the 2013 legislative session. After the effort failed in the waning days of the session, he said he’d keep working on it and would call a special session if he could find the votes.

In pursuit of the “grand bargain,” the governor held a “listening session” in Hillsboro last week and a Salem session is planned today, according to a report in the Statesman Journal.

It’s the right focus for the governor’s attention. Comprehensive PERS reform may be the most critical issue facing the state, determining the state’s ability to address most of its other concerns.