Gov. Kate Brown and the Democratic legislative leadership have been looking the other way while others have fashioned proposals to address the state’s public pension crisis.
It was never a wise position. But now that Measure 97’s disastrous tax proposal has been soundly defeated, Brown and other leaders need to face reality, even if doing so means upsetting their union supporters.
Sens. Betsy Johnson, D-Scappoose, and Tim Knopp, R-Bend, have offered a series of options to reduce the Public Employees Retirement System’s $22 billion shortfall. Before the election, Brown told us she hadn’t even read them, because her experts said no significant reforms would survive legal challenge.
Meanwhile, Johnson and Knopp got a positive nod from the nonpartisan Office of Legislative Counsel, which said their proposals had a good chance of court approval.
The state is facing an estimated $1.35 billion shortfall for the upcoming biennium. Local governments are facing increases in their PERS payments of as much as 20 percent. The Bend-La Pine school district has said 20 percent could mean 60 fewer teaching positions.
It’s no time for the state’s leadership to look the other way.
The Johnson-Knopp proposals would change several factors that determine the amount of a PERS pension, including not allowing unused sick leave and vacation time to be included, capping the final average salary used in the calculations, using market rates to calculate annuities and creating a defined contribution plan for new employees.
Private sector workers who pay their own share into their pension plans might be surprised to know that many PERS employees don’t pay their own 6 percent, and restrictions limit some aspects of negotiations on the issue in contract talks. The Johnson-Knopp plan would loosen those restrictions, as well as redirect the funds in a way that would reduce the shortfall.
These and other items on the Johnson-Knopp proposal are a starting point for a bipartisan effort to cope with the state’s pension obligations. Other ideas will likely come out of a concerted effort with leadership from the top. Knopp was at the forefront of an earlier reform in 2003, without which the situation would be far worse today. The mostly failed 2013 effort must not be used as an excuse to give up now.