City Club throws support to PERS reforms
Overwhelming vote means group must try to influence policy
Portland City Club voted by a strong majority June 3 to endorse a report calling for dramatic rollbacks in Oregon Public Employees Retirement System pension benefits.
The club adopted the 49-page report on a 120-22 vote, according to Tony Iaccarino, City Club research and policy director. Under club policies, when a report gets more than 80 percent support at a meeting, as occurred last week, the club will form an advocacy committee to promote its recommendations. That likely would mean briefing state legislators, the state PERS Board and other groups, Iaccarino says.
The full City Club has about 1,300 members.
The report's main recommendations:
• For workers joining PERS before fall 2003: redirect annual payments now going to their individual account program - a 401(k)-style plan that gets the equivalent of 6 percent of their salaries - and use the cash to reduce PERS' $7 billion long-term deficit. That would save Oregon state and local governments $312 million a year, while reducing worker pensions.
• For workers who joined PERS after fall 2003: reduce the guaranteed portion of their pensions so it equals 30 percent of their final salary after 30 years, instead of 45 percent.
• Raise the retirement age by two years for workers hired since fall 2003.
• For all future retirees: Reduce the money match benefit, one of two methods used to set worker pensions, so it's calculated based on worker accounts growing by 6 percent a year, instead of 8 percent. That could save state and local governments $1.7 billion long-term. Many workers would get reduced pensions.
• For about 15,000 retirees who settled in Washington or other places that don't charge state income taxes: Eliminate the added pension benefits granted so retirees would come out even when the state started taxing PERS benefits. The extra benefits are a windfall for those who don't pay Oregon income taxes. This would save the system $72 million a year, or $450 million overall.
None of the recommendations appears likely to pass the 2011 Legislature, despite skyrocketing PERS costs that are forcing belt-tightening throughout Oregon's public sector.
The main PERS reform being discussed in Salem is at the bargaining table. Gov. John Kitzhaber went into bargaining with state employees seeking to halt or reduce government payments of the 'employee contribution' to PERS, which equals 6 percent of workers' salaries.
However, last week's vote means the city's foremost public policy group, often accused of tilting to the liberal side, is taking an aggressive position in favor of reduced public employee pension benefits.