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Record retirements hit PERS

By Dave Hogan, Oregonian

May 28, 2003

Oregon - Racing to beat legislative changes in the state pension system, a record number of public employees have turned in their retirement papers before the year is half over.

A total of 7,720 teachers, road workers, police, clerks and other public workers have submitted forms to retire in 2003, surpassing the single-year record of 6,843 retirements in 1999, figures released Tuesday show.

The Legislature and Gov. Ted Kulongoski have overhauled Public Employees Retirement System laws this year, trying to close a $17 billion shortfall in the system. They have updated the life expectancy tables used to compute PERS benefits, suspended cost-of-living increases for recent retirees, and made other changes that will slow or stall the growth of members' PERS accounts for several years.

PERS officials have said the changes could reduce benefits for some future retirees by 25 percent or more.

Some of the changes will begin taking effect July 1, and the new retirees say they are getting out now so the changes won't affect their retirement checks. But they will not entirely escape the changes. One bill temporarily suspends annual cost-of-living increases for members who retire from April 2000 through March 2004.

Many say they are retiring earlier than planned.

"If you'd have asked me in September, I would have said, 'Oh, I'll teach five more years,' " said Irene Barnard, a kindergarten teacher at Edwards Elementary School in Newberg. Barnard, 56, is retiring after teaching in Newberg for 34 years.

The surge of retirements also is affecting employers. Some school districts and state and local governments say they will save money on payroll because longtime employees will be replaced by less-experienced, lower-paid workers. But those employers will be losing some of their most experienced and knowledgeable people.

The retirements are straining the PERS staff, who have had to keep up with the new retirements while the agency's backlog grows in other areas, such as record-keeping and processing changes because of deaths or divorces.

It is not known what effect the surge may have on the agency's long-term finances, said Dale Orr, administrator of the PERS fiscal services division

Dozens of retiring public employees interviewed recently made it clear they resent the changes but think public employee unions will succeed in getting many of them overturned in court.

Public employees say they feel unfairly penalized by legislators trying to address concerns about the high benefits some retirees receive. PERS reported this year that more than 2,300 retirees get at least as much in benefits as they made in working salary.

"We are impacting 100 percent of the people for problems that are being blamed on 10 percent of the people," said BethAnne Darby, a lobbyist for the Oregon Education Association, the state's largest teachers union.

Many retirees said they were underpaid and looked to their retirement benefits to help make up for the lower pay. Instead of being thanked for years of hard work, they say, they are frequently criticized by the news media and by residents who don't differentiate between the relatively few people who get large pensions and the majority of public employees who will receive much smaller checks.

"It's like having a bank statement and then having them say, 'Oh, we made a mistake' and take it back," said Linda Heldstab, 55, a Department of Corrections employee from The Dalles who is retiring after 30 years working in employment, mental health and corrections offices.

As teachers, police chiefs and community college presidents retire across Oregon, the face of school districts, local governments and state agencies is changing.

In Beaverton, 174 teachers and other employees retiring this year exceed the combined total of 147 who retired in the two previous years, spokeswoman Maureen Wheeler said.

The Newberg school district, whose 27 retirees this year almost match the 29 from the previous two years, figures the retirements will save about $300,000 in its next budget because the less-experienced replacements will be paid less.

"It does save us money, there is no doubt," spokeswoman Claudia Stewart said. "Someone with less than 25 years of experience is going to cost us less money. But we're losing tremendous talent. It comes at a price."

Officials expect retirements to reach 8,000 to 10,000 before the year is out, executive director Jim Voytko told the PERS board in mid-May. History also suggests the numbers will climb substantially. Over the past decade, public employee retirements in the second half of the year have averaged more than 2,500 annually.

At the start of this year, about 40,000 PERS members were eligible to retire. That's about one-fifth of the 215,000 people who are active PERS members or who previously worked for a PERS employer but haven't yet retired.

For many workers retiring now, it is a bittersweet decision. Although they have looked forward to retirement, many said they love their jobs and want to keep working, but they don't think it makes financial sense to wait and have their benefit checks shaved.

Many also said it has been stressful to have the legislative changes force their decision before they were ready to make it.

Karen Madden, 62, is one of five people retiring from the 25-person office of the state Commission for the Blind. She has worked there for 13 years and has been a PERS member for 19 years.

"It would all be easier if we hated our jobs," she said, "but we don't."