Making Promises

The current Oregon Legislature has spent an inordinate amount of time figuring out how to screw over PERS retirees already drawing benefits.  From the beginning, starting with Governor Kitzhaber's budget that proposed to cap the retiree COLA at 2% of the first $24,000 of benefit, the legislature has been doing pretzel twists in an effort to second guess what the Oregon Supreme Court might allow as a change to a benefit that has been enshired in statute for more than 40 years with no change.  Both the Legislative Counsel and the AG's office have independently concluded that a dollar cap on the COLA isn't likely to persuade the Supreme Court of its legality.  For the past month, a group of fiscal analysts, the Legislative Counsel(s), and various highly placed politicos have been meeting secretly to find a legal way to reduce the future benefits paid to current retirees.  It is a no brainer legally if they want to go after those who haven't yet retired, but the issue of stealing future benefits from those already retired has been problematic.  The issue the Legislature and the Courts confront is that of ALL the benefits paid to PERS retirees, the COLA is the most clearly articulated, longest standing, and most direct promise made to retirees.  And that promise has existed since the day every retiree retired, if not from the first day they were hired.  So, the Legislature faces the daunting prospect of trying to alter a benefit that has been etched into the annals of the state statutes since 1971, and in its current form since 1973.

After weeks of meetings, the Legislature seems to have hit on their "solution" to the problem.  They will settle for a lesser reduction and lesser savings in exchange for something that will keep PERS' programmers up nights and days trying to figure out how to comply with the typical byzantine rules of the Legislature.  While no one knows exactly what those mental giants in Salem have come up with, it is pretty clear that they've decided that they *might* get away with a graduated COLA.  The idea is that lower benefits would reap the highest (2%) COLA, while the COLA percentage would decline with income.  One can imagine a COLA with 4 cut points - 2%, 1.5%, 1%, and 0.5% depending on the benefit level of the individual.  At the moment no one has a clue about where the cut points might be, but we do know that the savings estimated are around $400 million per biennium, which is half what the Governor's proposal would have raised if it survived (unlikely) a court challenge.  The notion of a inversely regressive COLA will give the Oregon Supreme Court fits, because the court loathes discriminatory statutes.  This one, however it works out, is discriminatory on its face since the statute would, in effect, provide a higher benefit increase (possibly dollars, definitely percent) for people who have worked shorter periods of time.  The career employee (30+ years) probably earns the greatest benefit primarily because he/she chose to make his/her life's work in the public sector.  The short timer (a generalization to be sure, but probably more true than false) will end up with a higher percentage increase in benefits for working  a shorter period of time and, possibly, having multiple retirement accounts to draw upon.  I have no problem with the career employee who draws lower benefits receiving a higher benefit increase, but I object to the discrimination that arises from spending an entire career working for a single public employer that makes me out to be the "bad guy" in the state's current budget woes.

Lest anyone forget, any reasonable examination of the history of PERS for the past 20+ years will find case after case where the employers have complained about rate increases and have gotten the PERS Board to capitulate in ways that, combined with legislative action, resulted in lower benefits than were promised.  No one wants to address the imperative question of where the savings from every previous set of changes to employer rates have gone.  The employers treat this as a zero-sum game.  Rate reductions must require benefit reductions and so every problem that this state faces automatically requires employees, and PERS beneficiaries to give back something that the employers promised in exchange for both salary and lower employer rates.  When is someone going to call "buillshit" on the employers and ask where all the savings from previous rate cuts have gone.  Because saving them seems to be an alien concept.  If one wants to compare greed, lets pit employers and employees and see who has better husbanded money.  I bet employees win every time.  I wouldn't give employers another dime unless someone can PROVE they are spending their resources wisely and saving properly for a rainy day.
For retirees, I suggest that you assume the position and get ready for another screw job brought to you by the "fiscal analysts", the Legislative Counsel, and the "wide boys of Salem".  Bend over and prepare to enjoy it!