Oregon PERS retirees net better benefits than in neighboring states, PSU study finds

As Oregon legislators debate PERS reform, Portland State University came out Monday with a new study comparing retirement benefits for public employees in Northwest states. 

Public employees in Oregon earn richer retirement benefits and contribute far less toward them than counterparts in neighboring states, according to a new study from the

.

The study has not been finalized, but the executive summary is circulating in Salem and its conclusions could add fuel to the ongoing legislative debate over the

. Budget shortfalls are forcing lawmakers to consider new ways to rein in rapidly increasing pension costs. Gov. John Kitzhaber has proposed three pension reforms, and legislators have introduced a host of bills to tackle the problem.

Debate so far has centered on which of the proposed reforms would pass legal muster with the Oregon Supreme Court. But legislators also have stressed the importance of what's fair to public employees, who are some of the most influential voices at the state Capitol.

Comparisons of the public employee benefits are notoriously difficult to make given the many flavors of retirement formulas, contribution policies and rules governing the treatment of unused sick leave, vacation time and overtime in benefit calculations. The PSU study attempted to hold most of the equation constant to get a reasonable basis of comparison.

Public employee unions did not return calls for comment on the study Monday, but the executive director of the

, Heather Conroy, did send an emailed statement:

"For decades, Oregon's public workers have paid for their PERS benefits through every paycheck by way of markedly lowered wages," Conroy wrote. "A secure retirement through PERS is the promise the state of Oregon has made year after year; to revoke that promise when retirees most need it is irresponsible and immoral."

Employers groups said that while they weren't surprised by the study's general conclusions, the magnitude of the differences were stark.

"What this shows is that Oregon has the richest benefits and employers are bearing the cost," said Jim Green, deputy director of the Oregon School Boards Association. "Employees have no financial skin in the game."

The study took three representative sets of public employees -- an accountant, a teacher and a policeman -- and ran them through the retirement systems for the states of Oregon, Washington and Idaho and the cities of Portland, Seattle and Boise.

It assumed each employee had final base pay of $66,000 at retirement, worked a full career and lived until age 85. And it included Social Security contributions and benefits, as those contributions can be considerable and eligibility varies based on each plan.

The output is a comparison of the present value of projected benefits under each system, and the source of the contributions toward those benefits as the plans are structured today. The comparisons were made both for employees who retire in 2013 and those that start work in 2013.

In almost all cases, the study found that Oregon public employees earned higher retirement benefits than their counterparts in the other states.

The difference was dramatic for retirees in 2013 under Oregon's money match formula. The present value of retirement benefits for teachers and accountants eligible for that formula is $1.7 million, 40 to 80 percent higher than retirees under the Washington and Idaho systems.

Reforms to Oregon PERS in 2003 had the effect of gradually phasing out the money match formula. But about half of current retirees still use it, and the percentage is much higher for employees with lengthy service.

Moreover, the study found that public employees who start work this year and retire under the state's new plan -- the Oregon Public Service Retirement Plan -- will still earn benefits as good or slightly better than their counterparts in Washington and Idaho.

That conclusion is reinforced by the relative size of employee contributions in each state. The study found, for example, that employees in Washington and Idaho contribute between 2.5 and 4.5 times more toward their benefits than those in Oregon.

Oregon PERS members are required to make a contribution to the system each year of 6 percent of their pay. But 70 percent of PERS members have that paid, or picked up, by their employer.

That collective bargaining concession was originally negotiated three decades ago in lieu of wage increases, and has since become a standard piece of most public employees' compensation. Among the reforms being considered by Oregon lawmakers are eliminating the "employer pickup" or allowing employers to negotiate something between 0 and 6 percent.

As it stands, the lack of employee contributions in Oregon adds up over the course of a career.

The study found, for instance, that for a benefit stream with a present value of $1 million, an employee in Oregon would contribute $160,000, all of it consisting of their social security contributions. Their counterparts in Washington and Idaho, meanwhile, would personally fund between $400,000 and $560,000 of it, the study said.

Phil Keisling, executive director of PSU's Center for Public Service, said the study made no attempt to compare wage scales in different jurisdictions, or different policies that could allow employees to spike compensation used in benefit calculations.

He said the study held everything constant except for which retirement system the employee participated in.

-- Ted Sickinger

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