by PAMELA HULSE ANDREWS Cascade CBN Editor

The Oregon Business Plan aptly stated that “the biggest failure of the legislative session was, by far, the lack of meaningful reductions to Oregon’s PERS debt.” Oregon entered the legislative session with a $60 billion PERS liability, $14 billion of it unfunded. We have the same size pension liability as the State of Washington, but Oregon’s economy – our ability to pay for it – is only half the size of Washington’s. This debt is excessive and it is challenging Oregon school districts, local governments and taxpayers.

The Legislature did reduce the PERS liability by $2.6 billion with COLA reductions and temporary relief by skipping payments into the system. However, even with that reduction PERS actuaries forecast that school district PERS rates will rise above 28 percent of payroll by the end of the decade and remain at that level until 2029. PERS costs are a significant reason why Oregon’s class sizes are so large, school years are so short and tuition at universities is so high. The costs are simply unsustainable and the increases expected in 2015, 2017 and 2019 will swallow any new revenue that comes in from a growing economy.

Fixing a broken PERS system is the most effective way to infuse classrooms and core services with millions of dollars of new resources, not just this in this budget cycle but for decades to come. Unfortunately, though there was every reason to believe compromise was possible, no deal between Republicans and Democrats was allowed to come to a vote. Senate Republicans universally voted for a $7 billion K-12 budget, but Democrats rejected it and the associated PERS reforms.

Senate Republicans went into the 2013 legislative session with the goal of leveraging major PERS reforms into record resources for Oregon classrooms and providing small businesses with tax certainty. Months of bi-partisan work and consistent compromise led to numerous agreements that seemed destined to accomplish these goals, only to be constantly stalled by Democrat power brokers.

Along with advocacy groups like Oregon School Boards Association, Stand for Children and the Oregon Business Plan, Senate Republicans focused on the $11 billion deficit in Oregon’s public employee retirement system and the significant rate increases it was forcing on local school districts, police departments and county governments.

While Governor Kitzhaber praised the Legislature for a what he saw as a productive session for children, families, jobs, education and health care he expressed his disappointment in its failure to find agreement on additional PERS savings.

We are disappointed that the Legislature chose not to confront this problem head on. While SB 822 created some temporary relief, Oregon schools, cities and counties cannot afford the rate increases that are expected next biennium. The problem will not go away.

Legislation Geared to Financial Stability

OPPORUNITY INITIATIVE

Treasurer Ted Wheeler’s signature legislation is the Oregon Opportunity Initiative, which envisions a permanent and dedicated fund that will reduce skyrocketing student debt and improve access to higher education and vocational training. Voters will decide in November 2014 whether to establish the new fund. (SJR 1)

“Oregon’s future competitiveness depends on a highly educated workforce, and the Opportunity Initiative will put college and technical training within reach for more Oregonians,” Treasurer Wheeler said. “I look forward to having a conversation about building Oregon’s future.”

The Opportunity Initiative is part of the Treasurer’s blueprint to help Oregon families be more financially secure. In addition, every Oregonian benefits when the state is on solid financial footing, he said.

OREGON INVESTMENT ACT

Increasing Access to Capital for Small Businesses: The Oregon Investment Act, made permanent by the 2013 Legislature, will consolidate economic development incentives, set clearer priorities for investments and find new ways to partner with the private sector to support business growth in Oregon, particularly solutions that help small businesses access the necessary capital to grow and thrive.

OREGON TRIBES

Supporting Oregon tribes: Tribes will be able to deposit money alongside other governments in the interest-earning Oregon Short Term Fund, and analyses of ballot initiatives will be able to formally note the potential fiscal impact to tribes.

 

WEST COAST INFRASTRUCTURE EXCHANGE

Upgrading Oregon infrastructure: The state can become a full partner in the West Coast Infrastructure Exchange, which is managed by the Oregon Treasury and brings together the states of Oregon, Washington, California and the province of British Columbia to reduce the costs and improve the quality of transportation, energy, water systems and other vital public works projects.