Public employees union owns the statehouse and its leaders
Here are two numbers that should send shock waves through the state Capitol: 2021 and 33 percent.
By 2021, the Public Employee Retirement System burden on school districts and municipalities will become almost one-third of their payrolls. In other words, a school district like Astoria will be devoting one-third of its payroll expense not to teachers, but to retirees. The practical outcome will be layoffs, fewer teachers.
Those two numbers emerged from the Oregon Leadership Summit last December, as reported by Ted Sickinger of The Oregonian. Governing bodies such as school districts and city governments contribute to the PERS system. Steve Rodeman, executive director of PERS, told a panel of economists that government contributions to PERS will rise by 20 percent in each of the next three budget cycles.
Sickinger reported that, “John Tapogna, an economist with ECONorthwest, said legislators had designed an ‘unusually exotic’ and expensive pension system. He called it a generational mistake, and said the state continues to deal with its aftermath.”
At the Leadership Summit, Gov. Kate Brown said nothing about this storm on our horizon.
Oregon is the only state that requires no contributions from employees to their pension fund. If a contribution were required — as is common in private sector defined contribution retirement plans — it would defray a significant future expense.
When asked explicitly what Gov. Brown thinks of the concept of requiring employees to contribute, her press secretary gave us this statement: “Proposals to offset the significant deficit will likely be discussed during the February short (legislative) session. Unfortunately, that’s a constrained time frame to resolve such a complex policy issue, and the recent court decision that struck down significant elements of the prior effort to address PERS costs leaves policymakers with few viable options that might result in meaningful savings. Needless to say, this is a pressing issue that will need to be considered as we prepare the budget for 2017-19.”
Gov. Brown’s response is a disappointment, because it contains no leadership. She sounds more like a lawyer or a news anchor — stating the obvious — than a governor. Where is Brown’s amazement that Oregon is the only state that requires no employee participation in retirement funding? Where is her anger about the pending horror in which school districts and cities will be decimated to pay for a phantom workforce of retirees?
Brown’s neutered response is a symptom of what sets Oregon apart.
The Wall Street Journal on Dec. 29 reported that in several states Democratic leaders were at odds with their traditional ally, organized labor, on pension reform. “The erosion of Democratic backing for conventional retirement benefits prized by teachers, firefighters and police officers is a sign of how strained government budgets are as obligations for 24 million public workers and retirees continue to mount,” reported the Journal.
But not in Oregon. And here’s why. We are a one-party state. And increasingly the nominal Democratic party — embodied in the legislative majority and the current governor — is the Public Employees Union Party. As Republican state Rep. Dennis Richardson told us in 2014, “The public employees union runs the statehouse.”
It is no secret that the gross receipts tax which the union will place on the November ballot is about bailing out PERS. That is what permits Gov. Brown to shun the mantle of leadership.