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About The nugget. (Sisters, Or.) 1994-current | View Entire Issue (Dec. 23, 2015)
24 Wednesday,December23,2015The Nugget Newspaper,Sisters,Oregon PERS reform a priority for business By Ted Sickenger The Oregonian PORTLAND (AP) — Reforms to Oregon’s public pensionsystemtookapromi- nentpositionintheplaybook business leaders unveiled at theirannualeconomicconfab withlegislators. OrganizersoftheOregon LeadershipSummitidentified soaringpensioncostsasone of the main headwinds that couldstallorderailfiscaland economicprogress. But Democratic leaders whospokeatMonday’ssum- mit gave the issue a wide berth. Gov. Kate Brown didn’t mention it. Nor did House Speaker Tina Kotek. And Sen. President Peter Courtneygaveitanoblique referenceasacontributorto thebudgetaryCivilWarthat hesayscouldunfoldin2017. Awayfromthemaincon- vention ballroom, however, the state’s looming pension problems took center stage atasparselyattendedbreak- out session late in the day. Apanelofexpertsdissected theirhistoryandtheirloom- ing impact on government budgets. They urged lawmakers not to ignore the problem: an $18 billion-and-growing fundingdeficitinthePublic E m p l o y e e s R e t i r e m e n t System.Inordertobailitout, requiredpaymentsfromgov- ernmentemployerswillgoup by20percentineachofthe nextthreebudgetcycles,said SteveRodeman,PERSexec- utivedirector. By 2021, that means schools, municipalities and governmentagencieswillbe dedicating almost one-third oftheirpayrolldollarstothe retirementsystem. JohnTapogna, an econo- mist with ECONorthwest, saidlegislatorshaddesigned an “unusually exotic” and expensivepensionsystem.He calleditagenerationalmis- take,andsaidthestatecontin- uestodealwithitsaftermath. In May, the Oregon Supreme Court threw out mostofthepensionreforms enacted by the Legislature in 2013. In the process, it putanyreductionincurrent retiree benefits off limits. That eliminated the reforms lawmakers felt were most equitable, because retiree benefits comprise the bulk of the system’s unfunded liability. Yet panelists on Monday discussed several ways in which the cost increases expected in coming years could be more equitably absorbedorminimized. Chiefamongthem:requir- ing public employees to contribute to the pension fund, absorbing some of the expense currently being borne by public employers andtaxpayers. Panelists said Oregon is the only state in the nation that requires no contribu- tion to its public pension system from employees. Thathasbeenthecasesince 2004,whenpreviouspension reforms redirected public employees’6percentretire- ment contributions out of thepensionsystemandinto a supplementary retirement accountownedbyemployees. Putting some or all of thosecontributionsbackinto the retirement system could offset as much as $1.2 bil- lioninrequiredcontributions from employers every bien- nium.That’sabouthalfofthe incremental cost increases expectedtokickinoverthe nextsixyears. EugeneattorneyBillGary recently delivered a legal opinion on the issue to the Oregon Business Council, whichorganizesthesummit. He said such a move would almostcertainlybedeclared legalbytheOregonSupreme Court. There are various mechanisms out there to establish cost sharing and increased employee contributions, and that’s what we’ve put out there in concept — Tim Nesbitt “Therearevariousmecha- nisms out there to establish cost sharing and increased employeecontributions,and that’s what we’ve put out there in concept,” said Tim Nesbitt, an advisor to two past governors and former labor leader who served as aconsultantonthebusiness plan. It needs to be fixed. It will devastate public budgets if we don’t act. — Tim Knopp The business plan’s pol- icyplaybookalsosuggested that the state could reduce theinterestrateituseswhen calculatingmembers’annuity payoutsunderitscontrover- sial money-match formula. The system currently uses itsassumedearningsrateon investments – 7.5 percent – inthatcalculationinsteadof a market rate, which would beseveralpercentagepoints lower. That not only inflates members starting benefits, but is compounded as retir- ees earn annual cost-of-liv- ingincreasesinfutureyears. Usingamarket-basedinterest rateinthecalculationcould save more than a $1 billion overtime,thepanelistssaid. Senator Tim Knopp, R-Bend and a veteran of Oregon’spensionwars,plans tointroduceabillwithsev- eral cost-cutting measures intheupcomingsession.He said it would include both thefixesoutlinedinthebusi- ness community’s policy playbook, along with a few more. Knoppsaidtherewouldbe plentyofpoliticalpressureto ignoretheissueintheupcom- ing legislative session, and it would take both political courageandpublicpressure tomakeanyprogress. “Itneedstobefixed,”he said.“Itwilldevastatepublic budgetsifwedon’tact.” SISTERS HABITAT FOR HUMANITY Thrift Store ReStore – REMINDER – 50% OFF We will be closing EVERYTHING at 2 p.m. on Christmas Eve IN THE STORE! and open again Each item must cost at least $1. regular time on Don’t delay e ! I B t IG ’s ! av the 26th. time to s 541-549-1740 541-549-1621 141 W. Main Ave., Sisters 254 W. Adams Ave., Sisters Hours: Mon.-Sat., 9 a.m.-5 p.m. Sunday, 12-4 p.m. Donations accepted Mon.-Sat., 10 a.m.-4 p.m. Hours: Mon.-Sat., 9 a.m.-5 p.m. Closed Sundays Donations accepted Mon.-Sat., 10 a.m.-4 p.m. You still have time to make a e l b i t c u d e d - x a t year-end donation! Furry Friends Foundation oper year-round to p ates rov spay/neuter ide FURRY FRIEND S 501 ( c )( 3 ) FOUNDATION ...and pet food to low-income families as well Donate as medical help online! for pets on an emergency basis. Please remember Furry Friends in your 2015 year-end giving. FurryFriendsFoundation.org