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PERS cuts quickly clear state senate

They send the proposal posthaste to Gov. Kulongoski.

Statesmen Journal, May 9, 2003

The Oregon Senate rushed passage of the most sweeping reform plan for public employees’ pensions on Thursday, hoping to get the bill to Gov. Ted Kulongoski before the weekend.

Passed 19-10, the proposal would save school districts and state and local governments $678 million over the next two years.

Along with other pension reforms, House Bill 2003 would cut in half the $16 billion shortfall facing the Public Employees Retirement System over the next 25 years.

It would do that by sharply cutting the pension benefits of future retirees and freezing the cost-of-living increases of some recent retirees.

The bill was carried on the floor by Sen. Tony Corcoran, a Cottage Grove Democrat and a public-employee union organizer. “None of us — especially me — takes pleasure in the action we’re about to take,” he said.

Other lawmakers praised Corcoran, who long has supported unions, for bringing this bill to the floor. “It’s statesmanlike leadership,” said Sen. John Minnis,

R-Wood Village. “This is one of the most difficult bits of legislation in all my years here.”

But public employees, including state workers and school district employees, are in opposition to the bill, claiming that it won’t stand a court challenge.

“It’s clear that this is an illegal violation of our members’ contract rights,” said Jessica Stevens, an organizer of the Service Employees International Union.

She added that many union members are upset that Corcoran took the lead on this issue. “People are disappointed in Tony. We hope this hasn’t hurt his role as a (union) leader.”

The bill returns to the House at 8:30 a.m. today, where it already has been passed, to get approval of minor Senate amendments. Kulongoski is expected to sign it sometime before he leaves on a Japanese trade trip Sunday. There will be no signing ceremony, according to the governor’s spokeswoman.

Pension system actuaries fueled the Senate’s haste because the legislative changes must be made by early May to be included in the new charges to employers that take effect July 1.

Lawmakers also are anxious to get the central piece of PERS reform to the Oregon Supreme Court, where they say the final decision will be made.

The unions that represent many of the 294,000 people in the pension system have argued that the reforms are a breach of contract, and they are planning to file lawsuits.

“To my friends in the labor movement who say this bill goes to far, I say the cost of doing nothing is too great,” Corcoran said.

He said there is no way to cut back costs without cutting benefits.

Salem Republican Sen. Jackie Winters voted for it, even though her district has a high number of public employees. “It’s the toughest vote in this chamber, this year,” she said. “I personally want to keep a pension system and I don’t want the system to go broke.”

Senators voting against the proposal argued that it didn’t make sense to pass reforms that the courts likely would overturn.

“I can’t move forward knowing this is unlawful,” said Sen. Vicki Walker,

D-Eugene.

Walker cited testimony by Legislative Council Greg Chaimov, who said many of the reforms in the bill would breach contract rights.

Many lawmakers said they voted “yes” because they know it will go to the Oregon Supreme Court.

PERS is “a train wreck in the process of happening,” said Sen. Rick Metzger, D-Welches. “It’s clear there’s no way to save PERS without some judicial intervention.”

The bill aims to slow the growth of accounts and recoup excessive payouts to those accounts in the stock market boom of 1999.

The pension board estimates that under the bill, people who retire in 2010 after working 32 years would see their monthly benefit drop from $6,951 to $4,987.

Those cuts have unions preparing for lawsuits.

Rob Wagner of the Oregon chapter of the American Federation of teachers said the haste may backfire on lawmakers.

“This is rushed and could come back to bite them and cost the state more,” he said.