Panel finds ways to reduce PERS unfunded liability by $5B

SALEM, Ore. -- A task force convened to consider ways to pay down the Public Employees Retirement System's unfunded liability published its final report Wednesday, identifying more than a dozen routes to raise up to $5 billion over the next five years.

Among the seven-member group's proposals include two that generated "serious concerns" from Gov. Kate Brown — privatizing public universities and selling SAIF, the  state's workers compensation insurance agency.

Read the report

A statement accompanying the report said that Brown, who set up the task force, has instructed her staff to continue looking into proposals to pool excess funds and create an incentive fund to match employer payments to PERS.

When assembled, Brown directed the task force to find assets that could be monetized, funding streams that could be redirected, investment or loan opportunities or funds from other PERS employers. The directive focused on creativity and comprehensiveness.

The "unfunded liability" is the difference between what actuaries expect PERS to pay out to beneficiaries and what funds are available. That number is around $20 billion, according to the report.

File: PERS reforms sparks protests

File: PERS deficit rises to $21B

"We did not endeavor to reach a consensus recommendation, but have included in our report those options we judged were not unreasonable public policy, likely could be implemented and might deliver a material reduction in the PERS (shortfall) over the next five years," the task force wrote in a letter introducing the report.

Among the more profitable proposals is increasing revenues earned from alcohol by making a variety of changes to the administrative and marketing side of the Oregon Liquor Control Commission and increasing beer and wine taxes.

Oregon's beer and wine taxes are among the lowest in the nation at $0.08 and $0.67, respectively. Increasing the rates to the national average of $0.35 and $1.03 would raise $61 million per biennium, according to the report.

All told, the report estimates at least $453 million would be raised by introducing all the alcohol-specific changes.

This proposition, as well as the suggestions to use $200 million of the "rainy day" fund, adding market-based fees to water rights sales and increasing private landowner payments to support fire suppression costs, caused some consternation from gubernatorial candidate Rep. Knute Buehler, R-Bend.

"The governor's pawn shop politics won't fix PERS, and schools and our kids shouldn't have to pay the price," Buehler said in a statement. "The only solution is a change in leadership."

Senate Republicans put the onus of coming up with a serious proposal on Brown and her fellow Democrats.

"Regardless of the solutions proposed by the task force, we are not optimistic about (Democrats') commitment to finding long term solutions to the PERS problem," said Tayleranne Gillespie, acting communications director.

Spokespeople for the House and Senate Democrats did not respond to requests for comment Wednesday evening.

Other big ticket suggestions include: selling SAIF or directing its excess capital to the liability ($500 million per biennium), privatizing public universities ($250 million - $1.5 billion per biennium) and dedicating excess capital gains tax revenue to the liability ($350 million per biennium).

Even the smaller proposals prompted some rebuke from stakeholders.

Jim Green, executive director of the Oregon School Boards Association, said the report is a good first step, but he had concerns about money being moved away from schools, as was proposed.

The task force suggested at least $22 million per biennium could be raised by directing "rebalance" funds to the liability instead of to schools that underestimated enrollment and funding needs.

“Our statewide PERS debt is putting a chokehold on school budgets,” Green said. “We have already seen estimates that schools will face an additional PERS bill of $530 million two years from now. That is money that belongs in the classroom instead.”

Contact the reporter at cradnovich@statesmanjournal.com or 503-399-6864, or follow him on Twitter at @CDRadnovich.

© 2017 KGW-TV


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