Kulongoski should keep PERS promise
It's hard to get past the inflated rhetoric that dominates the Public Employees Retirement System debate.
PERS has been blamed for everything from shortened school years to rising crime. Public sector retirees have been cast as wealthy freeloaders instead of hardworking people who protect and teach our children, keep our communities safe and provide health care to elderly and disabled Oregonians.
Against this backdrop of hyperbole and distortion, it's easy to forget that most state employees have very modest incomes. A secretary at the Department of Human Services is typical. Her starting pay is $19,800. After seven years, her pay will top out at $26,500.
It's also easy to forget other, larger contributors to the state's budget problem. It's simpler to blame PERS than to address the effects of years of tax rollbacks, generous corporate tax exemptions and skyrocketing health-care costs.
The worst thing about the anti-PERS rhetoric is that it fuels the agenda of extremists who advocate the complete elimination of PERS and the substitution of an inadequate, 401(k)-type retirement plan. It allows us to forget that 401(k) plans were originally designed as tax shelters for the affluent, who used them to supplement other sources of retirement income. It ignores the millions of private sector workers who retire on employer-sponsored 401(k) plans and end up relying on public assistance. Their paltry pensions, eroded by stock market losses, are exhausted long before their basic needs are met.
If nothing else, Enron and other corporate scandals should remind us that using the private sector as the model for public-sector labor relations carries enormous risks.
Exaggerated rhetoric also distracts us from the important debate over responsible PERS reform. This debate should focus on how best to slow the increases in the cost of PERS without violating the legal and moral promises made to public workers, for whom retirement benefits are one piece of an overall compensation package.
Public employee unions have endorsed a number of constructive changes in the PERS system. We support implementation of new mortality tables as soon as possible. We support the creation of a new retirement plan for employees hired in the future that would cost less than PERS while still providing a stable, defined-benefit pension. We will accept the capping of earnings for PERS members at 8 percent so that PERS can rebuild its reserves. These, and other similar steps, will stem the growth of employer rates without breaking faith with hardworking public employees.
What we won't accept is broken promises. Imagine that you need a new roof. You hire someone to replace your roof for $8,000. Then, your finances worsen while the roof is under construction. Would you expect to pay less than $8,000 when the roof is complete?
That's what many politicians are trying to do to PERS members, through House Bill 2003. This bill would change the terms of the deal under which public employees were hired. The benefit cuts would be drastic, particularly for employees hired between 1980 and 1995.
Think about your own retirement plans. Imagine that your employer suddenly announced that your pension would be cut by almost 50 percent! That's what HB 2003 would mean for some PERS retirees.
If Gov. Kulongoski and the Legislature want the confidence of Oregonians, they need to make sure this state honors its promises. By eliminating future contributions to retirement accounts and halting cost of living increases for many current and future retirees, HB 2003 would renege on the state's commitments.
During his campaign, Gov. Kulongoski repeatedly told public employees that he viewed PERS as a moral promise to public employees. Last fall, he wrote, 'The PERS system is the result of agreements fairly negotiated, and I believe that a deal is a deal.'
That means opposing, and if necessary vetoing, House Bill 2003.
Leslie Frane is the executive director of SEIU Local 503, which represents 35,000 state, city, county, private-nonprofit and long-term care workers throughout Oregon. She lives in Salem.