SALEM — A sheaf of ideas to shave the nearly $25 billion shortfall between estimates of what public workers are owed in benefits and money available to pay the bill was sent to Gov. Kate Brown on Wednesday.
The Public Employees Retirement System Unfunded Actuarial Liability Task Force has a name as long and knotty as the problem it tackled.
Brown created the panel of seven public and private policy experts to brainstorm ways to find one-time and ongoing untapped revenue. The money would then go to shore up the retirement system.
Brown thanked the task force for leaving “no idea unexamined and no rock unturned.”
The 64-page report contained 24 ideas, ranging from innovative financial risk pooling to unlikely acts, like privatizing public universities such as Oregon State University-Cascades. The panel underlined that it was giving Brown “options,” not “recommendations.” It would come up with the where and how, but Brown and the legislature would have to figure out the why or why not.
If all the options were adopted, the panel said the state could cut up to $8.4 billion off the deficit over five years.
PERS employers include state and local governments, schools and special districts. The unfunded liability is the difference between the projected amount of benefits to be paid and the projected amount of revenue expected to come in.
The 2016 forecast is that PERS is only 75 percent funded — a shortfall of just under $20 billion. The task force said that is equivalent to more than $5,000 for every Oregon resident. More recent estimates have forecast the deficit at just $25 billion.
The panel said its sometimes draconian options were also tied to the fate of PERS investments, for better or worse.
“Financial markets can be volatile and investment returns rise and fall,” the report said, adding, “From 2000 to 2014, the system ranged from 82 percent funded to 111 percent funded.”
But in the meantime, the billowing liability has government and schools paying hefty amounts of money into the system. The money has to come from somewhere, usually programs or new hires.
In a move criticized by Republicans, Brown limited the task force mandate to the revenue side of the equation. No changes in retiree benefits or contributions were to be considered. The governor said she was interested in looking deeper at the keystone idea of the panel: Creation of an Employer Incentive Fund of up to $1 billion that would match additional savings by PERS employers at a rate of 25 cents to the dollar.
If the more than 900 entities that are part of PERS all took part in the program, an additional $2 billion could be saved.
That money would come from a special state fund created by revenue from a menu of options: $1.1 billion over 10 years in combined new lottery and liquor revenue, a 5 percent increase in licenses and fees, selling vacant or underutilized state property, shifting money from funds with a surplus to PERS, and other actions.
On the flip side, Brown expressed “serious concerns” about the task force’s proposals to privatize public universities and sell SAIF, the state-chartered nonprofit workers’ compensation insurance company.
The report was immediately critiqued from all sides.
C. John Larson, president of the Oregon Education Association, issued a statement that the unfunded liability was due to a previous program that ended in 2003 and that the current public schools retirement program was not a cause for the shortfall.
“The responsibility for paying those legacy costs should not be shifted to employees who had no role in creating the issue,” Larson said.
While praising the task force members for their work, many Republicans have faulted Brown for limiting the scope of the panel’s review. Rep. Knute Buehler, R-Bend, the GOP front-runner to run against Brown for governor next year, said in a statement that relying on taxes and the sale of state assets was bad policy.
“The governor’s pawn shop politics won’t fix PERS, and schools and our kids shouldn’t have to pay the price,” Buehler said.
— Reporter: 541-525-5280, email@example.com