STREAMING NOW: Watch Now

Dems propose pension reform to appease revolting Republicans

Democrats unveiled a plan to rein in Oregon's rising pension costs in an attempt to coax protesting Republicans back to the state Capitol.

Posted: May 10, 2019 12:25 PM
Updated: May 10, 2019 2:56 PM

By SARAH ZIMMERMAN Associated Press

SALEM, Ore. (AP) — Democrats unveiled a plan Friday to rein in Oregon's rising pension costs, a peace offering to Republicans who have shut down the Senate this week demanding reform to a system that's racked up over $25 billion in debt.

The proposal, which has been in the works for around two months, relies on mitigating employee contributions and refinancing the state's pension debt to shield public employers from facing the brunt of upcoming rate hikes.

"It is putting money into the system, which is allowing us to not have to pay such high rate increases," said Speaker of the House Tina Kotek following a hearing on the proposal.

The proposal was released less than an hour after Republicans skipped a Friday Senate vote on a $1 billion a year increase in classroom funding, which would be paid for through a half a percent tax on some of Oregon's most affluent businesses.

This marks the seventh time in four days Republicans have denied the chamber enough members to formally conduct business. Republicans say the unusual move, which was last employed by Democrats in 2001, is the only tool they have to air their grievances.

Republicans say they refuse to vote on any new education funding that doesn't address the state's Public Employment Retirement System, known as PERS. Teachers are just some employees covered by the system, and Republicans claim that any new funding will be diverted to pay down rising pension costs.

For years, PERS has been paying out more in benefits than it has taken in in contributions, causing debt to skyrocket. That has caused rate hikes, forcing public agencies to pay more into the system each year.

Senate Democrats are proposing redirecting some employee benefits to help pay down the funding liability. Employees currently pay 6% of their salary into a 401(k)-type retirement plan, a separate account from the public pension fund. Under the Democratic plan, 2.5% of the 6% in contributions would be used to help fund PERS. Employees on the plan known as OPSRP, which has less generous benefits and makes up the majority of active public employees, will only have to mitigate .75% of their contributions.

That idea would mean less money for employees' individual pension accounts, but it would also lower PERS costs for school districts and other public employers who pay into PERS.

But that's a no-go for unions, who said it would cut retirement benefits anywhere from 7 to 12.5%. A coalition of public employee unions said it's willing to sue the state if the legislature moves forward with the plan.


CLICK HERE for more on the tax bill for education funding that led to the current stalemate.


"Oregon educators have shown time and time again that they will stand up for their students," said John Larson, president of the Oregon Education Association. "If lawmakers turn their backs on educators and cut retirements, we will see them in court."

Employers face a significant 5.5 percentage point rate increase in 2021, but Kotek said Democrats' plan could mitigate the rate hike's impact possibly all together.

"Not only would there be any increase, it might even provide rate relief," she said.

She added that the cuts only target one aspect of an employee's retirement benefits, and the overall impact on employees would be less than that 7 to 12% range.

That's a difference from the governor's plan, which would have only insulated educators from rate hikes by requiring more contributions from employees and siphoning cash from other accounts for one-time payments.

Democrats are also suggesting restructuring repayments for employees on the Tier 1 and Tier 2 pension plans, which enjoys the most generous benefits and is one of the main contributing factors to the state's unfunded liability. The plan would extend repayment from 20 to 22 years, lowering the state's yearly payments but at the expense of incurring more costs in the long run.

It remains unclear whether the plan is enough to coax Republicans back to the Senate when it reconvenes on Monday. Kotek said that crafting the proposal was a "bipartisan conversation," but wouldn't detail the main players at the negotiating table.

Sen. Tim Knopp, the Republican from Bend who has acted as a liaison for conservatives, said he hasn't seen the plan but that, on its face, the ideas presented are "constitutional and move us in the right direction."

A public hearing for the proposal is set for Tuesday.

Oregon Coronavirus Cases

Data is updated nightly.

Cases: 191405

Reported Deaths: 2530
CountyCasesDeaths
Multnomah37970584
Washington25360229
Marion21814306
Clackamas17186209
Lane12838145
Jackson10733135
Deschutes870374
Umatilla814084
Linn482867
Yamhill442275
Klamath433061
Polk371052
Malheur350461
Josephine330868
Douglas322570
Benton303919
Jefferson217034
Coos204933
Columbia171526
Union144423
Lincoln137120
Wasco137028
Hood River118130
Morrow110115
Crook107320
Clatsop9728
Baker94614
Curry6459
Tillamook6403
Grant5065
Lake4447
Harney3388
Wallowa1825
Gilliam621
Sherman581
Wheeler281
Unassigned00

California Coronavirus Cases

Data is updated nightly.

Cases: 3758137

Reported Deaths: 62314
CountyCasesDeaths
Los Angeles123565124022
Riverside2990644587
San Bernardino2965964707
San Diego2779493725
Orange2707445008
Santa Clara1189012085
Kern1090311373
Sacramento1042081672
Fresno1016761684
Alameda876331545
Ventura808421011
San Joaquin730091391
Contra Costa68582803
Stanislaus619161055
Tulare49554839
Monterey43563382
San Mateo41871568
San Francisco36642543
Santa Barbara34317456
Solano32752249
Merced31743458
Sonoma29984318
Imperial28373721
Kings22971246
Placer22550290
San Luis Obispo21282260
Madera16442242
Santa Cruz16188206
Marin14037228
Yolo13894209
Shasta12071226
Butte11962199
El Dorado10111113
Napa985381
Sutter9413111
Yuba622146
San Benito604863
Lassen569824
Tehama556362
Nevada471675
Tuolumne412364
Mendocino406149
Humboldt393939
Amador365247
Lake347043
Glenn238225
Colusa223016
Siskiyou218123
Calaveras212153
Inyo142638
Del Norte13678
Mono12804
Plumas7066
Modoc4954
Mariposa4457
Trinity3995
Sierra1120
Alpine880
Unassigned390
Medford
Clear
79° wxIcon
Hi: 75° Lo: 38°
Feels Like: 78°
Brookings
Clear
72° wxIcon
Hi: 78° Lo: 48°
Feels Like: 72°
Crater Lake
Partly Cloudy
79° wxIcon
Hi: 54° Lo: 26°
Feels Like: 78°
Grants Pass
Partly Cloudy
79° wxIcon
Hi: 75° Lo: 42°
Feels Like: 78°
Klamath Falls
Partly Cloudy
67° wxIcon
Hi: 66° Lo: 36°
Feels Like: 67°
Warmer days ahead
KDRV Radar
KDRV Fire Danger
KDRV Weather Cam

Community Events

Latest Video

Image

Monday, May 10 morning weather

Image

Sunday, May 9th Morning Weather

Image

Saturday, May 8th Evening Weather

Image

Saturday, May 8th Morning Weather

Image

Friday, May 7th Evening Weather

Image

Oregon Dept. of Education: Grants Pass SD

Image

Friday, May 7 morning weather

Image

Oregon Dept. of Education: Phoenix-Talent SD

Image

Medford Police Livability Team begins the process of cleaning up the Greenway

Image

Thursday, May 6th Evening Weather