anticipated, the Oregon Public Employee Retirement System (PERS) Board of
Directors recently announced a deficit that will require an increase in
employer contribution rates — and in return, the regular media
immediately began a series of "the sky is falling" commentaries and opinion
Political Coordinator Mary Botkin, the union's primary PERS lobbyist, notes
that "everybody" knew employer rates were going up in 2010.
"It wasn't a
secret," said Botkin. "We've been talking about it for several months."
attorney Greg Hartman said the shortfall to the Oregon retirement system's
coffers isn't unique.
"Just like every
other pension fund in the United States, both public and private, PERS had a
disastrous investment year in 2008," said Hartman. "That correspondingly causes
employer contribution rates to increase. Fortunately we are having a good
investment return year so far in 2009, though it will admittedly take a number
of good investment years to make up for 2008."
As if to
validate Hartman's assessment, within days of the Oregon PERS announcement, the
carried a story from Washington state outlining problems with the Evergreen
State's pension system, and noting that Washington
lawmakers will have to double
yearly payments in its two oldest public employee pension plans to keep them
solvent. Doubling such payments is of course equivalent to a 100 percent
increase; the problems with Oregon PERS are nowhere near that level.
"Even in this time of 'crisis,'
people need to understand that [Oregon] PERS remains
a very well-funded pension plan, probably the best-funded public pension plan
in the United States," said Hartman. "Yes, employer contribution rates will go
up, but it's clear that PERS is already exploring options which may limit the
immediate increase in contribution rates."
that PERS has the ability to "smooth" rate increases, essentially averaging
them out over time to lessen the immediate impact to employers. Such smoothing
can cut the anticipated rate jump almost in half.
"The message for
everyone — our members, PERS personnel and perhaps especially the media
— is to take a deep breath, recognize that PERS is still very
well-funded, and while employer rates will increase, the PERS Board will likely
develop some alternative policies which will allow for more moderate increases
in employer contribution rates at least
in the near term," said Hartman.