If you read the history of PERS in Oregon, you read a chronology of fiscal irresponsibility and self-serving behavior by elected representatives (ERs) — legislators, governors and judges. On multiple occasions they have used the legislative and judicial processes to benefit themselves from the public treasury — and all without taxpayer approval. On one occasion, when the taxpayers used the referendum process to modify the benefits, it was overturned by judges (members of PERS).
On some occasions the ERs carved out special exemptions and provisions for themselves that did not apply to regular PERS members (e.g. retroactive membership) and they manipulated the system so they could not be challenged.
How does this happen? It is the natural result of placing two parties to a bargaining process on the same side of the table. “You give me something and I will give you something.”
In this case you give me a vote and I will give you some benefits. This is particularly egregious when the party paying for the benefits does not get a seat at the table. To take it one step further, judges are included on the same side of the table so the absent party can’t even challenge the agreement in an unbiased hearing.
When a process like this is established, it practically begs for corruption and misuse. It is particularly susceptible when the public treasury is involved, but it happens in the private sector as well. We have seen it happen again and again that when ERs have access to public funds, they cannot resist the temptation to help themselves. In most cases, of course, they justify the whole process as being well earned. We are all aware of the very generous retirement benefits and other perks members of Congress voted for themselves under the same conditions.
What is the end result of this flawed process? In Oregon today, it is resulting in shorter school days, terminated teachers, reduced services and a public that is more at-risk. To make matters worse, the system rewards high-end earners disproportionately to those at the bottom of the pay scale. And to make matters still worse, unless something is done to change the system, it is going to get much, much worse.
If you doubt this, read Phil Keisling’s white paper on the subject and pay attention to the Pension Obligation Bonds that are coming due. You may be surprised and shocked.
Can the system be changed? James Dalton, the recently retired head of PERS, has indicated that the system cannot be sustained and he has recommended several changes. These recommendations can be found on the PERS website.
Will the system be changed? Not very likely. Whenever changes are proposed, the beneficiaries claim past ironclad promises and the matter(s) wind up in the courts where the judges are PERS members. Talk about conflict of interest. Never mind that these “promises” can be compared to a promise between Sam Legislator and Joe Public Employee to have Charlie Tax Payer fund the benefits to Sam and Joe. The legal aspect of this cozy arrangement has been challenged for years by Bend attorney Dan Re, who has published a very thorough history of how the system evolved in a book titled “The PERS Problem.” Every taxpaying Oregonian should read this book.
What if the system is not changed? The rising PERS costs together with the increasing funds needed to retire the Pension Obligation Bonds is a pretty frightening picture. In his white paper, Keisling presents an overwhelming amount of data and graphs to illustrate the problems.
Are our ERs listening? Probably not.