Oregon's Public Employees Retirement System has been at the center of the state's tumultuous financial debate for several years. Created in 1975, the pension plan for state and municipal workers offers two methods of calculating retirement benefits, one of them tied to investments.

The plan's liabilities exceed its estimated assets, putting pressure on Oregon's budget. In addition, state and local governments have to contribute more money to the plan every year. The program also has been the subject of a lawsuit, initiated by the Eugene Water & Electric Board, in which the rate of employer contributions was challenged. Both the city of Portland and Multnomah County joined in the suit.

The investment-market boom of the late '90s created return rates that have not continued. In addition, in 1995, the Oregon Legislature approved a benefit increase designed to offset a policy change in which previously untaxed benefits would now be taxed.

Benefit liability has doubled since 1995. A shortfall that in 1999 was estimated to be roughly $971 million has grown in the four years since to a currently estimated $15 billion.

Last week, the Oregon House of Representatives voted to change the way benefits are calculated; the bill is now in the state Senate.

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