Throughout the 1990s and into the early 2000s, Bill Sizemore wreaked havoc in Oregon by putting simplistic initiatives on the ballot to address complex issues. Sizemore’s success at the ballot box has left a lasting negative impact on our state, including property tax limitations that allow construction without building permits. These measures transferred the bulk of school funding from local property taxes to Oregon’s general fund. Sizemore targeted workers, too, by requiring them to contribute 6 percent to their pensions (despite public employers pushing employees to pay pension costs to save money, at the expense of public worker raises). The Oregon Supreme Court overturned that measure.
The initiative process is one of the pillars of Oregon’s democracy, but the initiative can be manipulated when Sizemore-like drafters address complex problems with simplistic solutions at the ballot box. Championed by Tim Nesbitt and Ted Kulongoski, two PERS initiatives were recently filed that would reduce pension benefits for Oregon public workers to address the PERS unfunded liability by reducing pension benefits for Oregon public workers.
The problem with PERS isn’t that Oregon is providing overly generous benefits. The average PERS retiree receives approximately $29,500 per year, or about 44 percent of final average salary. And of the 175,997 active PERS members, 119,469 are in Tier 3. Tier 3 members are required to work longer and are paid a lesser benefit than Tiers 1 and 2. The PERS problem is the legacy costs of Tier 1 and Tier 2.
Nesbitt’s proposal to move public workers from their current defined benefit plan to a 6 percent employer funded 401(k) is sponsored by the Oregon Business Council. Such changes are severe and unfair. For example, the average 35 year-old teacher would see a 57 percent cut in their retirement benefit. Nesbitt’s scheme would shift all the retirement risk from the employer to the worker and do little to nothing to reduce the PERS Tier 1 and 2’s unfunded liability. Another smoke screen is Nesbitt’s requirement that all public workers pay 6 percent into PERS. Most public workers already pay 6 percent of their wages into an individual account, and those who don’t have negotiated it with their public employer instead of a pay raise.
If the goal is to pay down Oregon’s PERS unfunded liability, then that should be the focus — not reducing benefits for active Tier 3 employees whose costs are not associated with the unfunded liability. I am discouraged that many in corporate Oregon refuse to pay their fair share of taxes to fund Oregon services, but are quick on the draw to line up public worker pensions as targets. I find it troubling that Kulongoski and Nesbitt enjoy PERS retirements that have contributed to the system’s unfunded liability, yet advocate for reducing benefits for workers who have a smaller pension benefit than what they enjoy.
Polls say 57 percent of Oregon voters think that public workers’ benefits should not be cut to pay for PERS Tier 1 and 2 unfunded liability. Nesbitt and Kulongoski’s ill-conceived ballot measure is another Sizemore-ian attempt to address a complex problem with a simplistic ballot measure that is unlikely to pass and sidesteps the real issue of funding debt for Oregon. It’s time to stop scapegoating public workers and roll up our sleeves and find a solution by working together. Isn’t that the Oregon way of governing?