SALEM, Ore. - On the Oregon Legislature's last day of the "short session," the Senate passed Senate Bill 1566 and concurred with changes to Senate Bill 1529. These Public Employees Retirement System-related bills take an important step towards paying down PERS unfunded liabilities and buying down PERS rates, said Sen. Tim Knopp, R-Bend.
"This is a huge victory," Knopp said in a news release. "For the better part of two decades, Oregon Republicans have said that PERS' unfunded actuarial liabilities are a big problem. Now, we are seeing action from the governor that shows we were right. This is a drop in the bucket, but when you're paying down debt, you have to start somewhere."
SB 1566 establishes the Employer Incentive Fund to help local governments buy down PERS debt, captures windfall revenues and dedicates the proceeds towards buying down PERS debt specifically for K-12 education, and makes other changes to equip PERS employers with additional investment tools.
SB 1529 is a component of the funding mechanism to SB 1566, dedicating repatriated corporate tax revenue to the above funds - $25 million to the Employer Incentive Fund and $115 million to K-12 school districts.
Meanwhile, Oregon lawmakers gave final approval Friday to HB 4046, which prevents higher education public employees from using outside compensation to artificially inflate the final calculation of their public employee retirement payout. Proponents of the bill said they hope it is just the first in a series of PERS-reform bills that will pass in the next few legislative sessions.
“This is exactly the kind of bill that should be considered in a short session,” said Rep. Gene Whisnant (R-Sunriver). “This legislation had bipartisan support and implements small but meaningful controls to the way we calculate government employee pensions. By preventing employees of higher education institutions from incorporating outside compensation into their final annual payout, we can take a much-needed step to ensure that our pension system is more equitable and accountable.”
The bill, which received bipartisan support in both chambers of the Legislature, included a host of sponsors, including: Rep. Jeff Reardon (D-East Portland); Rep. David Gomberg (D-Lincoln City); Sen. Bill Hansel (R-Pendleton); and Sen. Arnie Roblan (D-Coos Bay).
In the 2017 session, SB 206 passed to allow community college professors to join OHSU and 4-year professors to have outside employment. “While working the bill in the House Higher Education & Workforce Development Committee, we discovered that the outside income could possibly be added to the employees’ retirement pay,” Rep. Reardon, committee chair stated.
‘We tried to prevent this possibility in the 2017 session but time ran out on a late priority bill I introduced,” Rep. Whisnant commented. “When I reintroduced this bill as my 2018 session priority bill the other chief sponsors joined me to support passage through both chambers on unanimous votes on this common-sense legislation.”
”This is a small step toward reforming our broken PERS system,” said Rep. Knute Buehler. “Loopholes like these allow for pension spiking and compromise the fairness and stability of the system.”
The original bill was amended to clarify the policy is not retroactive and retirement pay will be based only on payments from the education universities.