Those of us who follow public sector pension crisis news occasionally feel as though we’re watching a contagion, or perhaps a zombie apocalypse, spread inexorably across the country.
The latest kerfuffle to catch our attention comes out of Oregon’s capital city, Salem, where legislation aimed at stemming pension plan bleeding ran into a predictable wall of opposition. As The Oregonian reports:
(Public employees and union leaders) urged members of the Senate Workforce Committee not to “raid” the retirement plans of newer employees to pay off a $22 billion deficit that is mostly attributable to the generous and unfunded benefits promised to retirees. They claimed such moves would be illegal, unfair and extreme, and exhorted the Oregon Legislature to focus instead on raising business taxes.
We’re never going to solve the pension crises infecting state after state, and many cities, unless we get to the point where everyone agrees to share the pain. That’s not a happy thought, but sometimes reality carries with it the flavor of a mouthful of mud.
In Oregon, school districts in particular are already feeling the pension pinch:
Cheri Helt, a Bend restaurant owner and member of the Bend-La Pine School Board, said the higher pension costs the district is being asked to absorb in the next two years alone would equal 54 teachers. Projected increases in the subsequent two budget cycles would add up to another 154 teachers.
“We can cut teachers, and we are still missing 25 teaching staff from the last recession,” she said. “We can cut days … Or we can cut programs. If we cut teachers every year or hold open vacant positions, I do not know how we will be able to educate out students.”
Two bills legislators are proposing sound reasonable, making the screams of protest a bit out of proportion to reality. One bill would “redirect members’ required 6 percent contributions to support the pension fund, rather than depositing them in a supplemental retirement account that belongs to employees. That move could offset employer contributions to the fund and save as much as $1.2 billion per biennium.”
The second bill would “redefine the final salary used to calculate a member’s benefits from a three-year average to five, which will tend to lower employee benefits.”
Tim Nesbitt, consultant to a local business council and a former union leader, injected perspective into the legislative hearing where the bills were debated.
“We have to manage the unfairness,” he said. “To say that none of its should fall on employees is to ignore the fact that the cost will fall entirely on state and local budgets, so there’s less money for staffing, for health benefits and raises. Employees are still going to absorb the impact.”
“Manage the unfairness.” That kind of says it all, doesn’t it?