Posted on 07/31/2017 12:54:02 PM PDT by Twotone
Salem, Ore.-Taxpayer-funded pension systems are combustible by nature, but Oregon's ticking time bomb known as PERS is on the brink of exploding. Among the impending disaster's collateral damage, Republicans say, will be public workers and kids if so-called "progressive" Democrats are allowed to dodge the hard work of diffusing the PERS bomb. Under Oregon's one-party-rule taxpayers are now on the hook for an estimated $52,100,000,000 in taxpayer-held pension debt. Simply put, to avoid getting smacked with an Illinois-like credit rating of near "junk" status, late last Friday the PERS Board adjusted the taxpayer funded-pension system's (PERS) assumed investment earnings rate, lowering it by three-tenths of one percent, down to 7.2 percent from 7.5.
"Tinkering with the PERS rate won't solve the long-term problem of solvency. It's another failed 'progressive' strategy like selling off public lands and temporary accounting gimmicks aimed at diverting attention from the need to increase PERS savings directly by capping the final average salary included for PERS benefit calculations and by eliminating 'pension spiking' by extending the final average salary calculation to the last five years of public employment," said Senate Republican Leader Ted Ferrioli, of John Day.
"Currently, public employees, with the collusion of agency directors and managers, are allowed to forego the use of sick days and vacation and are assisted by management in amassing the most overtime possible to 'puff' annual gross income, the basis on which PERS benefits are calculated. Unused sick time, overtime and unused vacation time are rolled into the gross, producing an increase in final average salary that gets baked into the retirement formula. It's another way to cheat the system and ultimately, to cheat taxpayers," added Ferrioli. "Oregon Democrats need to get their act together, drop the politics, and start governing."
The newly set assumed earnings rate is not as low as Oregon Investment Council's moderate recommendation of 7.1 percent, but it is still much higher than Oregon actuary Milliman's realistically estimated 6.7 percent earnings rate over the next two decades. The Brown administration's action, in the span of just seconds, flooded the PERS debt another $2.1 billion dollars. Now according to modest estimates, the total taxpayer funded-pension system's liability has risen to $24.1 billion dollars under Brown's direction.
Per The Oregonian though, "many contend public funds ought to be using what's known as a risk-free interest rate to value pension liabilities, one that might be in neighborhood of 5 percent today." Using more appropriate calculations then, PERS's unfunded actuarial liability would be closer to $50 billion instead of the $22 billion based on current assumptions, meaning with the new rate assumption the unfunded PERS debt could now be $52.1 billion.
Sinking the assumed earnings rate means while Brown likely will stave off getting smacked with a credit downgrade for a little longer, that school districts will again be forced to make up the difference and siphon more taxpayer dollars into the PERS system, diverting much-needed public dollars away from the classroom and toward former union members, rich OHSU doctors and former university football coaches, who can receive over half-a-million dollars a year in payouts on the backs of taxpayers and workers.
One PERS recipient, an OHSU professor, even received $55,280 a month in taxpayer-backed payouts. Meaning the OHSU professor earned over a thousand dollars more in one month, than the average Oregonian household earns in an entire year, which is also nearly two thousand dollars lower than the national average.
The Pew Center on the States reports that states faced a pension gap of $757 billion in fiscal year 2010. However, some say the pension crisis raging across the country is worse than that. Harvard University researchers Thomas J. Healey, Carl Hess, and Kevin Nicholson note that over the last decade, estimates have ranged from $730 billion to $4.4 trillion. The Harvard researchers add that "many financial economists believe that the true size of the total unfunded liability lies closer to the larger estimates than it does to the smaller."
Republicans say that contrary to claims made by Democrats, not addressing PERS hurts public employee retirees the most. And they have the evidence to prove it. In Aug. 2011, Central Falls, Rhode Island, filed for bankruptcy protection and went into receivership. Following, some retirees witnessed their monthly payments get chopped in half.
In Oct. 2000, a United States bankruptcy court directed the pension board of Prichard, Alabama, to hack pension benefits by 8.5 percent. Then, thirty-five percent of Prichard residents lived below the poverty level, and 85 percent were African-Americans. In Sept. 2009, the Prichard pension board stopped all payouts entirely and the city reentered bankruptcy court the next month. Prichard workers did not receive any payouts for nearly two years and only under a final agreement did some retirees start to receive payouts one-third of the size they were promised. At least 11 retirees, including a fire marshal, died waiting without receiving any more of the checks they were promised and owed.
"Oregonians will drown financially because unions and their Democrat allies are more concerned with short-term interests and re-election than in governing sustainably. It's high time our citizens should ask why Oregon Democrats refuse to do anything meaningful when it comes to fixing our state's broken pension system."
Senate Republicans pointed out that Oregon Democrats are not only out of touch with most Oregonians, but that they are out of touch of their own political party by refusing to address the serious issue of fixing PERS.
The Rhode Island Legislature experienced similar problems with their taxpayer-funded retirement system and Democrat Gina Raimondo, the state's treasurer, led pension reform in the state, defending it as a "moral imperative," saying fixing the state's pension system was "about doing the right thing."
Another Democrat, Rahm Emmanuel, the mayor of Chicago, said that rejecting pension system fixes, forces taxpayers to "choose between pensions and police officers, pensions or paved streets or pensions and public health." Emmanuel warned that "without pension reform, we'll be forced to mortgage our children's future to pay for our past," predicting the size of classes in Chicago public schools could surge to 55 students. When Emmanuel introduced his slate of pension reforms he said, "the moment of truth has arrived."
"Oregon's moment of truth arrived a long time ago, but you wouldn't know that from the way Democrats have mishandled their duty to govern," added Ferrioli.
Another, Rep. George Miller, D-Calif., a staunch liberal and union ally, said if nothing was done to fix pension systems across the country, "retirees have a very high likelihood of losing all of their benefits." Miller and a bipartisan group of congressional members supported a provision in the 2014 federal omnibus spending bill allowed reforming retirement benefits if the fixes were necessary to prevent the entire retirement program from going bankrupt.
"Fixing a broken pension system to protect retirees, workers and taxpayers, isn't a partisan issue unless Democrats continue to make it one," concluded Ferrioli.
Govt employees = the New Slavers.
Dump the gov pensions. Let them eat cake on social security with the rest of us.
Just raise taxes. That always works.
That is approximately $40,000 per household JUST FOR THE DEFICIT funding. Does not include current funding, other taxes, federal income taxes, etc., etc.
>>Dump the gov pensions. Let them eat cake on social security with the rest of us.<<
They do. FWIU, there are no current classes of taxpayer exempt from SS.
However, many have pensions in addition to SS. The problem is the formulas for those pensions can be ridiculous and unsustainable. I think that he government should transition to 503(b) for all workers.
I get a modest pension from California - I paid into it and it isn’t based on a crazy formula. California’s problem is it just had and has too damn many employees and also allows double-dipping (people who retire and then also work as employees while getting the retirement $).
But when you look at the Dallas police pension that GUARANTEES 8% growth per year if you leave the $ in, that is insane.
The liability will spread to even fewer taxpayers if birth rates remain low and/or people start leaving the state.
It’s not like it’s Oregon’s leaders’ money so spend, spend, spend.
Doom and gloomers are laughed at, but, honestly, I think where they are wrong is in the timing. The world’s economy is like a car careening down a hill without brakes, ever increasing in speed. “Doom and Gloomers” say, “That next corner, we’re goin’ off the cliff!” But the car makes it. Then the next one and maybe the next.
But we all know it’s not going to end well. It just depends on when the speed is high enough and the corner tight enough.
The speed is getting crazy though, and the corners tigher, and the cliff taller. I don’t know when it’s gonna happen, but when it does, it will be fast and it will be devastating. And it will STILL catch everyone off guard.
these people have gouged the system and the should make up for it....
with their high wages, they get the top SS rate as well....
Wherever the Democrat (in name only) party has gained control over all branches of government steady stream revenue sources intended for certain purposes, such as taxes for maintaining roads and highways, those funds will get diverted and directed towards employee salary and pension benefits. How are the roads in this state ?
>>the double and triple dippers are the reason I think we will go to index SS and probably Medicare too....<<
I paid into SS. I also saved like a maniac and have built up a considerable retirement portfolio, which I intend to start using in a few years.
I am to have my SS money taken away from me as a punishment for being thrifty and wise?
Don’t conflate SS and pensions. They are different.
Failed policy. Put liberal Democrats in charge and keep kicking the financial can down the road until the road ends. Hell, sounds just like Illinois strategy.
Here’s how it worked in Cal.
When unions came in signed into law at midnight before Jerry Brown left office the first time, unions that represented Corrections said to Brown and the legislators after they went into power. We want the same pay as the CHP (at the time, the elite in cal). After they started building prisons, the correctional officers union was the biggest in the state and their lobbyists could go into legislator’s offices and write bills onto the state system and that legislator would sponsor it. I saw that happen personally.
So corrections wanted parity with CHP and they got it and they had 25,000 employees paying $42 a mont fees.
So the COs got pay parity with the five largest law enforcement agencies, CHP, LAPD, LASO and so forth. They were already in the same retirement program. 2.5% at age 55 times the years of work times highest year’s salary.
Then Gay-give me 100,000, and you can come into my office for coffee-Davis gave all state peace officers 3.0 at age 50 because they dummied up the projected value of the retirement fund POFF for cops and fire fighters. So LA gives 3.0 to their people and the SO needs to give 3.0 to theirs and so forth because it’s a big recruiting issue and every cop and fire fighter in every podunk agency in the state got 3.0.
Then all of a sudden, after Davis, the value of the fund which was based on false projections of future income, went down. Now you see the results of that with the huge projected deficit.
The man who started it all is back in power building trains to nowhere and leaving the door unlocked at the border and mocking Trump while extending his other hand for federal money and signing a budget each year with 20 billion in services t illegals. Has he done anything about the retirement mess. Uh, no. Did he start new people in a more fiscally sound program, uh no. Will he answer questions about why not. Not on your ass, he doesn’t. And people who raise the issue are conservative extremist and those crazyHoward Jarvis fanatics.
unions raise dues to have more bribe money. more bribes get them more bennies, more bennies including higher salaries means they can raise the dues and increase the bribes see how sweet the system is. Union members who get a 200 a month pay raise don’t mind giving another 25 of it to the union whose bribery got them the raise. And we tried to best to stop with the initiative process, but fake adds convinced a majority to vote no on the initiative. So here we are locked in a cycle of bribery and debt.
Solution? No public unions or no unions ca n donate money to a candidate who can vote on their benefits. isn’t that a direct conflict of interest your honor? Oh you say you are a liberal democrat judge. never mind. Business as usual and the next democrat governor will do the same with the super majority in the legislature.
One day it will all implode but don’t ask me to care much anymore. I’m on the payroll (under the old retirement formula) and riding into the sunset.
The Republican post got one thing wrong. The ability to roll sick leave into a retirement ended was eliminated years ago. I knew a lady who had perfecf work attendance. Once Oregon state made that change, she began taking a lot of sick leave.
I am no expert but check this out.
The homes in much of the region in S.CA rent for about $2,600 per month for a $600,000 home. If one multiplies 2600 x 12 months, that comes to $31,200 per year. 10x that is $312,000. This is what the home should actually be selling for...Not 550k++!
I'll quote from those who know.
"Typically, the rents that landlords charge fall between 0.8% and 1.1% of the home’s value. For example, for a home valued at $250,000, a landlord could charge between $2,000 and $2,750 each month. But the problem is, there are no homes for 250k in S. CA! LOL! They average being instead about 500k to 600k. For those homeowners or investors with low equity, they'd have to charge about $5,000++ per month and UP, depending on equity. But the average priced home won't rent for that!
Uh oh.
I'd guess there is trouble on the way. My bet would be like the bloated pension system, look for big adjustments in the not too distant future.
There were two methods to compute retirement pay. One included using unused sick leave. Of the two the other one always turned out better for the employee. One was money-match. Can’t remember the other.
In Cal unused sick time was formulated in as work time. so if you worked 20 years and had 1 year of sick leave, the one year of sick leave made your work experience 21 years.
Rentals are in short supply in LA county especially. That is driving up the cost of rent. Illegals flooding the area contribute. 6 illegals working can pay 3000 a month in rent and that also keeps the cost high. Don’t know how many rentals are formuled out the traditional way.
Most the illegals are in hiding out west. This isn’t the 90s or early 2k when illegals were so emboldened they were buying homes. Those days are over, even for CA.
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