Senator Knopp Calls For Immediate Action on PERS Following Supreme Court Decision, Representative Knute Buehler Says PERS Ruling Reinforces Need for Growth-Focused Policies

In response to the Oregon Supreme Court ruling on the legislature’s attempt to fix PERS, Representative Knute Buehler released the following remarks:

The Oregon Supreme Court announced their decision to overturn major PERS reforms from the 2013 Grand Bargain that would have saved the state close to $5 billion in unfunded liability.

“We lost 95 percent of critical savings from PERS reform,” said Senator Tim Knopp (R-Bend). “That means larger class sizes, fewer school days, teacher layoffs, eliminating programs like art, music and PE in schools, tuition increases at community colleges and Oregon universities, fewer police officers, firefighters and prison guards, fewer resources for fixed-income seniors, cuts to community mental health services, park closures, a reduction in sustainability and community development programs and significant reduction in other critical services.

The legislature must take immediate action to streamline bloated government, create jobs and seek legal PERS reform without raising taxes before Oregon falls off this looming fiscal cliff.”

Beginning in 2017, local governments and school districts will face PERS rate increases of around 5.5 percent of payroll, crippling budgets and forcing cuts to critical services. Meanwhile, the legislature will face the challenge of filling a nearly $5 million hole in the state budget from unfunded PERS liabilities.

“We have to end the cycle of placing the bandaid of higher taxes over bloated state government and ballooning liabilities,” said Senator Knopp. “The legislature cannot burden our schools, local governments and working families any longer. Because of years of one-party of rule in Oregon, it’s time to find a legal route to PERS reform and create jobs to strengthen the economy and provide a stable revenue stream for the next generation of Oregonians.”

Senator Knopp introduced Senate Bill 782 and Senate Bill 785, proposing the following constitutionally viable pathways to reducing unfunded PERS liabilities:

• Re-direct the 6 percent IAP Member Contributions
• Set amortization rates for Money Match at a level that reflects competitive private sector rates
• Place new employees in defined contribution plans similar to those in the private sector

“The only long-term solution to eliminating crippling PERS liability is to establish a market-based fair retirement plan for new public employees that mirrors retirement plans found in the private sector,” explained Senator Knopp.

In response to the Oregon Supreme Court ruling on the legislature’s attempt to fix PERS, Representative Knute Buehler released the following remarks:

“The state Supreme Court decision to overturn much of the cost-saving PERS reforms, regrettably, will result in more tax dollars funding retirement costs and less tax dollars for educating and learning in Oregon. Class sizes will likely go up and the length of the school year will likely go down. This is a terrible situation for our school districts and local governments in Central Oregon and across the state.

Given the legal limitations we now have on meaningful PERS reforms, it is now more critical than ever for Oregon to grow its economy so we can better afford the government that past policy-makers and the courts have enshrined in law. We need policies that foster growth – economic growth, private sector job growth, wage and family income growth. We need to restore Oregon’s shrinking middle class. A combination of stimulating economic expansion and restraining out-of-date and unnecessary state spending – setting priorities – can help us meet the challenge of PERS costs, which continue to cannibalize funding for education, health care and public safety. We need to work smarter, not just bigger.

I remain committed to supporting policies that allow all forms of businesses to thrive in Oregon – from start-ups to major corporations; I remain committed to policies that can help grow family incomes and Oregon’s middle class. More people with good paying jobs in Oregon will create more revenues to fund state services, including previously-promised retirement benefits.

Unfortunately, the current priorities in Salem – under this Governor and legislative leaders – are focused far more on placing new burdens on employers than making it easier for them to invest, expand and hire. Our challenge is simple: we need to grow the size of economy if we want to maintain and improve both the level and quality of government services we need as a state.”

HOUSE SPEAKER TINA KOTEK COMMENTED:
“Two years ago, we were given an incredibly difficult task: to pass the most fair and legal PERS adjustments possible in order to stabilize the system and fund basic services at the end of the Great Recession. We agonized over the knowledge that workers and retirees would be affected by these changes. The Supreme Court has now ruled that some of those changes will stand, but gave clear direction that others were unconstitutional, leaving the legislature with no other options to pursue.

“This decision does not impact the 2015 – 2017 budget. Our priorities remain the same: strengthen our schools, protect vulnerable Oregonians, boost local economies, and keep our streets safe.”

Governor Kate Brown issued this statement in response to the Oregon Supreme Court ruling on PERS: “I will be reviewing the ruling and assessing next steps, including the short and long term fiscal needs of PERS, and I will be working with the PERS Board to determine what next steps they will take.”