Modified PERS legislation to move to Senate floor for vote

May 21, 2019

Today SB 1049 passed through the final budget committees and is headed to the Senate floor for a vote (if successful, will then move on to the House). We are hearing from lawmakers that your emails are starting to have an effect and we have a chance to stop this bill. But lawmakers need to hear from you right now in order to keep the pressure on.

We need you to call and email your senator and state representative. Here’s how:

PHONE. Time is running out so right now phone calls are more powerful than emails CALL your senator and state representative right now and deliver a message that they need to hear. It’s a fast and easy call. Important messages to share are included below. Find lawmaker phone numbers here:

“I am a JOB TITLE in LOCATION. Public employees like me earn less than they would in the private sector in exchange for secure retirements. Lawmakers should vote NO on Senate Bill 1049, that pulls the rug out from under us. This unfair and illegal bill will send the state back into another expensive and lengthy lawsuit. Please vote NO on SB 1049. Thank you.”

EMAIL: Keep up the email pressure! Email your lawmaker using this quick tool:

IN PERSON: PERS members are holding a PERS Protection Day of Action at the state capitol tomorrow – Wednesday 5/22. Meet us on the capitol steps at 2:00!

Here’s SB 1049’s budget report and measure summary followed by the full text:

And here’s some of why this legislation is bad news for all of us:

Protect retirement security. Requiring employees to still contribute 6% of their salary but taking it away from their Individual Account Program will drastically reduce retirement security. Based on an actuarial analysis, losing the 6% contribution to their IAP would reduce member accounts as much as 75% and total retirement benefit in the double digits.

Don’t force the state back into another expensive and lengthy lawsuit. Proponents of reducing employee retirement benefits claim they have found a way to make legal cuts, but they have provided no legal analysis to prove it.

● According to legal analysis in testimony provided this year to the legislature, reductions to IAP accounts are legally risky. “The diversion of the 6% from the IAP to the new “contribution account” comes with no new benefit to members. Whether that is legal is a question that the Supreme Court has not addressed.” Testimony of Bennett Hartman, Mar. 29, 2019, Joint Ways and Means Capitol Construction Committee.

● More than $7 billion in benefits have been restored to public employees after the 2005 Strunk ruling and the 2015 Moro ruling.

Reducing the unfunded actuarial liability (UAL). Again, a long-term look at the UAL, as well as a comparative analysis with other states, Oregon isn’t in bad shape. Unfortunately, democratic legislators are obsessed with reducing the UAL but do not have any good solutions to actually do so. None of the proposals by the “PERS Solutions” group actually reduces the unfunded liability. Without that, employer costs are at risk of increasing further in the next downturn.

Don’t make the problem worse. One radical change to PERS that has been proposed would completely eliminate the defined benefit and offer only a defined contribution (401(k)-style) plan. The PERS agency has analyzed whether there is a benefit to shifting to this proposal and says that shifting to a 401(k) plan does not reduce employer costs or the unfunded liability and will create management problems. Here’s why:

● Doesn’t reduce employer costs. Every new hire and OPSRP costs 8.49% of payroll today. The unfunded liability adds 14.21% (July 2019 rates.) Whether the employer is contributing to a defined benefit of defined contribution plan, those costs will stay the same. The unfunded liability is a legacy cost. More than 70% comes from people already retired or inactive. Employer costs for the UAL will remain high until they leave the system.

● Are more expensive to administer. According to the PERS analysis, defined contribution plans are 48% more expensive to administer. Those costs would be passed on to public employers.

● Will increase turnover in public service. PERS provides a powerful incentive for a stable workforce. If public service no longer provided a secure retirement benefit, public employees will be more likely to leave and take their skills and expertise to the private sector where they can earn a higher salary.