In Oregon’s current 2009-11 Budget, more than $825 million will be paid in benefits for the Public Employees Retirement System (PERS.) In the next budget the State’s PERS expenses will increase to $1.3 billion – a 60% cost increase in one budget. In a time of prosperity, the public employee unions were able to talk the State into an unrealistic contract where PERS would have a guaranteed 8% growth each year regardless of an economic downturn. In times like these, where the economy cannot sustain 8% return on investments, the PERS program creates an unfunded mandate. This unfunded liability will not sustain, and, eventually, will bankrupt the State if we do not reform. While giving money to PERS, we are taking away funding from our children’s education.
As Governor, John Lim wants to overhaul PERS so that government employees and taxpayers are given a fair deal. John Lim’s ideas are:
• Create a PERS special commission with an emphasis on financial experts, taxpayers, labor, and all stakeholders. There is no other option; we have to resolve.
• Address double dipping and golden parachutes
• Public employees enter into a shared responsibility model
• 8% guarantee of return has to be renegotiated
• Create a new tier for future employees
As the Oregonian said in a Sunday editorial (February, 6, 2010,) if we cannot resolve PERS, simply, it will “fall off the cliff.”