Hello, young Oregonians. This editorial is for you. House Speaker Tina Kotek and Senate President Peter Courtney have a surprise party planned for your future. And the present will be billions in debt.
The Kotek/Courtney plan will reduce the high rates that school districts, cities, the state and other public entities have to pay into the state pension system in the short term. But you know how it does it? It passes much of the $27 billion in unfunded liability of Oregon’s Public Employees Retirement System on to the future.
Almost two-thirds of the reduction in rates is financed by stretching out the finance period. It’s like stretching out a car payment so long your kids get stuck with it.
Without the Kotek/Courtney plan, the state’s unfunded liability is projected to be zero in 2035. With their plan, it would still be about $12 billion in 2035.
Their plan does attempt to make some other good changes to require cost sharing by public employees. For instance, public employees who joined the PERS system before 2004 and enjoy better benefits than newer hires would get 2.5% of their salaries diverted into paying down PERS debt. Newer employees would only divert about 0.75% percent. That’s an important change that has been long sought by many trying to truly reform the PERS system.
But guess what? Oregon labor unions have vowed to fight in court almost any change that would affect their benefits. We can’t predict what may happen in court, though the only part of the Kotek and Courtney plan that may be immune to a court challenge could be extending the finance period. Young Oregonians, get ready for the billions in debt some Oregon policymakers and unions want to pass on to you. It truly is a plan for the children.