We Can Fix PERS Now!

We’ll let you know when action is needed in Salem.


  • Ask lawmakers to lower school districts' pension costs

    School district pension costs have doubled in the last four years and will not come down for more than a decade. We must do everything we can to lower school districts' pension costs, right now.

  • Oregonians pay price for deeply flawed PERS

    William Gary, The Register Guard

    “The biggest flaw in the Public Employees Retirement System is not that its benefits are too rich. It is that its benefits are arbitrary, inequitable and irrational.”

    Read the Article

  • PERS: It’s worse than you think

    Oregon’s unfunded PERS liability is already 16 billion dollars and about to get worse. Tim Nesbitt, the Former President of the AFLCIO and Sue Levin, Stand with Children, talk with Sheila Hamilton about what it means to your kids’ schools and the state's future.

The time is right to fix PERS

Oregon’s pension debt, when compared to the size of its economy, is among the highest in the nation. This forces school districts and other public employers to pay sky-high costs to maintain the retirement system—and it is only going to get worse. In school districts for example, retirement costs will account for nearly 27 percent of payroll costs starting next year.

The current solution proposed by legislative leadership is merely a temporary fix that kicks the can down the road, much like skipping a mortgage payment. We must make meaningful reform to PERS and we can do it in the current legislative session. Fix PERS Now is a coalition of concerned groups—parents, school board members, business leaders and others—dedicated to making meaningful change that is fair and affordable during the current legislative session.

Analysis: Disparity in pension costs between Oregon, Washington translates to thousands of teachers

OR v WA Data

On May 2, we released a comparison of pension costs of Oregon and Washington for the next 15 years, conducted by ECONorthwest and based on analysis by the actuaries of the states' respective pension systems.

The analysis shows that the even with Senate Bill 822, the PERS reform bill passed April 24 in the Oregon House of Representatives, pension payroll rates for Oregon school districts will be more than double the rates for Washington's school districts for the next 15 years. SB 822 includes cost-of-living adjustment reforms and skipping payments into the PERS fund, but does not create the long-term relief needed to avoid more significant cuts to schools and other public services.

If Oregon's PERS rates were similar to Washington's, Oregon could hire thousands of new teachers or add weeks to the school year. At its peak, the difference in rates between the two states amounts to 34 instructional days or nearly 8,000 teachers.

View the data released by ECONorthwest.

We invite you to watch this video by John Tapogna, president of ECONorthwest, as he explains the PERS paradox.

While Oregon has done a better job of responsibly funding its pension system than most states, our total debt is simply too large for an economy as small as ours. In short, we are living beyond our means. This equation leaves us with too little money to pay for education and other necessary public services.

The stock market crash isn’t the only problem, and investment returns alone won’t fix PERS

The “Great Recession” of 2008 did not cause the current PERS crisis, although it did compound the problem. Ironically, the market booms of the 80s and 90s also had a lot to do with how we got into trouble. In a nutshell, when the stock market was hot, the PERS board chose to credit employee’s accounts with far more than the 8 percent guaranteed by law. Accounts received many years of these excess credits, sometimes growing by as much as 20 percent. As a result, all through this period employees received more than the system had been designed to provide for them.

In addition, because the better-than-average returns were not set aside in reserves, the PERS fund had no cushion during the market downturns of 2001 and 2008. When the market was down double digits, recipients’ accounts were still credited the guaranteed minimum of 8 percent. All of this adds up to far more debt than was anticipated. This practice of giving all of the upside of the market and none of the downside has proven to be a tremendous mistake. And the cost of making payments to maintain the funds to pay retirees—which is required by law—is now far higher than anyone ever expected.

Despite the experience of the past 20 years of up and down stock markets, some people still say that the stock market will get us out of this mess. They believe that if we wait, the stock market will provide enough income so that school districts and other employers won’t have to pay as much into it. This type of speculation is very dangerous—and it comes at a time when most other states are lowering their expectations for what investment returns will bring in over the next decade.

What is Money Match and why is it a problem?

Alternative Pension Outcomes for Hypothetical Members Who Start Careers in 1983, Work a Specified Number of Years Without Interruption, and Leave Public Service in Oregon

[bar chart] Source: Calculations provide by Bob Winthrop and assumes employee earns $17,192 in 1983 and salary increases at an annual rate of 3.75%. The 30-year employee retires in 2013 with a final salary of $50,000.

In addition to the excess crediting that happened in the 1980s and 90s, Oregon’s pension system suffers from another major flaw.

Oregon offers retiring employees two options: Formula, and Money Match. The standard Formula, which works much like retirement systems elsewhere, is not contributing to today’s problems. Under Oregon's unique Money Match system, employees earn a guaranteed 8 percent return on their retirement accounts while employed. And as explained above, these accounts received far more than 8 percent during the 80s and 90s.

At retirement, the Money Match retiree’s pension account is doubled by their employer (school district, city, county or state government), and then that pension is converted into an annuity (annual payment) that continues to grow at 8 percent annually regardless of market performance. In addition, people who retire under either option receive a cost-of-living (COLA) increase of up to 2 percent annually. All of this is true whether you worked for the state for 5 years or 30 years.

Oregon's money match program is the only such program in the country and has made Oregon PERS one of the most expensive in the nation.

The result is that PERS behaves more like a lottery than a retirement system: Two retirees with similar careers will have vastly different incomes based solely on whether they retired under Money Match or Formula. And worse, someone who worked for the state for a short time and retired under Money Match may receive a benefit many times higher than someone who worked 30 years, but chose to retire under the standard formula. Add it all up, and you have a program that is both unfair and unsustainable.

Who is paying the price for these flaws in the design of Oregon’s government employee retirement system? Today’s students and teachers.

Students pay with larger classes, short school years and far fewer course offerings. Current teachers are seeing their pay reduced by furlough days and salary freezes, all while teaching larger classes each year.

Unless we FIX PERS NOW, the cost increases for school districts, cities, and counties will continue for the next decade or more.