People of Northwest Public Radio
Tue March 12, 2013
Pension Adjustments Would Bring Mixed Impact To Oregon Retirees
Originally published on Mon March 11, 2013 5:54 pm
SALEM, Ore. – Republicans and Democrats at Oregon's capitol want to balance the state budget by taking aim at the pension system for public workers. Both parties as well as Governor John Kitzhaber say changes to the retirement system would help prevent more cuts to schools. But retirees claim the proposals would break a promise.
Andy Porter has been teaching high school math for nearly three decades in Lake Oswego, Oregon. When he heard about the proposals to limit cost of living increases for retired public employees, he figured he had the mathematical know-how to calculate what the impact would be on him. Porter says he expects to retire in a few years. So he ran the numbers on his anticipated $41,000 annual pension.
Porter says, "It was kind of eye-popping."
He found that if he lives until his mid-80s, he would lose out on nearly $200,000 in pension income. That's under a cost-of-living cap floated by Democratic Governor John Kitzhaber and legislative Republicans.
Porter says he feels betrayed.
"If this proposal rolls out, and it becomes the law of the land, all the planning I've done for 27 years is basically washed away, with respect to my pension."
Majority Democrats have also proposed a cap but haven't specified an amount. But it's increasingly clear that lawmakers intend to act this session on reigning in costs for the Public Employee Retirement System, or PERS.
Peter Buckley of Ashland is the lead Democratic budget writer in the Oregon House. He says he knows lawmakers are asking current and future retirees to make a financial sacrifice.
"This is not just numbers on a page," Buckley says. "When people talk about PERS reform, we're talking about people, we're talking about their retirement, people on fixed incomes. So we take this very seriously."
But Buckley and other lawmakers say government agencies at both the state and local level can no longer afford the cost of paying into the pension system. Buckley says bringing down pension costs would free up money for human services and education.
That message resonates with retiree Charlie Lange. He maintained streets for the city of Eugene for 35 years.
"I'm still kind of on the fence on that one, whether that's good or bad. I mean, I'm all for more money for education and stuff because I know they've had to trim way back and had to let teachers go and enlarge class sizes."
Lange says his pension is relatively modest. It means the proposed cap on his cost of living increases would also be modest.
"For me, approximately 15 bucks a month or something less. I suppose I could live with that."
Some other retirees aren't so ho-hum. John Hawkins worked 33 years in the juvenile justice system in Linn County, Oregon. His pension: about $32,000 a year. The Governor's proposed limit to cost-of-living increases would only trim his check by about $8 a month, at first. But, Hawkins says, "PERS is two-thirds of my income."
And Hawkins says over time that money would add up. That's because future cost of living increases would be based on a smaller amount. Hawkins is caring for a brother with chronic health problems and Hawkins says he's worried that he and his wife will run through their savings. But he says he's pretty resigned to the idea that some sort of change is on the horizon.
"PERS is always going to be a lightning rod for a lot of different things. It's not just a pension system. It's a lightning rod for how people feel about government, government employees, compensation for government employees."
And Hawkins is likely right that something will happen this session. It's just a matter of which ideas prevail.
Republicans like Representative Dennis Richardson of Central Point say they'll hold out for a more aggressive cut to public pensions than what the Democrats are proposing.
"We have to make a rational adjustment in PERS," he says. "Not something to just make it look like you're doing something to reform PERS."
All told, lawmakers have introduced more than two dozen bills that would change the public worker pension system one way or another. And if any of those measures do pass, public employee unions say there's a good chance they'll challenge them in court.
On the Web:
Oregon Public Employee Retirement System - official site