Kitzhaber budget trims PERS costs

COLA cap highlights spending preview

By Lauren Dake / The Bulletin / @LaurenDake

Published Nov 30, 2012 at 04:00AM

SALEM — Oregon Gov. John Kitzhaber’s proposed 2013-15 budget includes more than $800 million in assumed savings by making cuts to the state pension system.

Today, the governor will unveil more details of his $16.2 billion proposed budget for the upcoming biennium.

But a preview of the budget released Thursday shows a push for curtailing pension costs by capping cost-of-living increases and curbing an out-of-state credit some retirees receive.

Rep. Jason Conger, R-Bend, who pushed for pension reforms in the 2011 and 2012 legislative sessions, called the move by the Democratic governor “a major step in the right direction.”

The $865 million in proposed cuts to the Public Employees Retirement System would affect not only state government, but local governments and schools.

About $253 million of the biennium spending plan is tied to K-12 education.

The governor’s budget is considered a road map; lawmakers use it as a starting point for negotiations.

PERS faces a $16 billion unfunded liability.

School districts in general are expected to see a higher increase than other public employers in contributions imposed by the PERS Board of Directors.

Public employers, such as school districts, pay into the system to fund pensions for their retirees.

Another move applauded by the Central Oregon delegation was confirmation that the $16 million the Oregon State University-Cascades campus needs to become a four-year university is also included in the budget.

The overall budget is an approximate 10 percent increase over the 2011-13 budget. About $6.15 billion of it is reserved for K-12 schools.

Bend-La Pine Superintendent Ron Wilkinson said he hopes, as the budget makes its way through negotiations, that K-12 schools receive a larger chunk of general fund dollars.

What the governor has proposed, he said, would require cuts.

“We know that level of funding doesn’t get us to the level without making additional reductions,” he said.

Wilkinson said he’s hoping the figure gets much closer to $6.4 billion, which would maintain current spending.

The governor’s budget also eliminates furlough days for state employees.

It has another $600 million in assumed savings from keeping state prison populations flat and by barely increasing the number of prison beds.

Rep. Mike McLane, R-Powell Butte, who was elected to serve as House Republican Leader in the upcoming session, said he worries the budget contains lot of “big assumptions on cost savings.”