Outgoing Oregon Investment Council chairwoman Katy Durant sent a plea to Gov. Kate Brown and the Legislature, asking them to make substantial changes to the Public Employees Retirement System, sooner than later.
Durant, who last week ended her 11-year tenure with the investment council, told the Statesman Journal Editorial Board that the state is in deep denial of the magnitude of problem at PERS.
Durant didn’t mince words.
Oregon lawmakers, including Gov. Brown, are clinging to optimistic economic predictions, she said.
And Durant said they only consider two timeframes – the current budget cycle and the next election cycle – failing to plan for 20 years in the future when the PERS unfunded liability could explode.
Durant, whose agency is charged with investing money, not fixing pension problems, sent a letter to the governor, saying she and others are frustrated that the state is not dealing with the unfunded PERS liability.
“It’s like paying the minimum amount due on a maxed-out credit card and then going shopping for new furniture,” said Durant, a commercial real estate lawyer. “It’s not possible to solve this problem in two or even 10 years. But if you don’t start to pay down the unfunded liability soon, it’s going to get worse.”
Durant said depending on calculations and assumed rates, the unfunded liability for the state could range from $22 billion to $36 billion over the next 20 years.
Classroom size and law enforcement staffing, to name just a couple of the essential services the state provides, will suffer iunless the state reins in PERS, she warned.
Public agencies in places such as Orange County, Calif., Detroit, Mich., and Central Falls, R.I., have declared bankruptcy in the past, mostly due to unfunded pension obligations. Federal bankruptcy laws don’t allow states to declare bankruptcy but they can become insolvent when they don’t pay their bills.
Some lawmakers claim Durant’s economic predictors are inaccurate. But between Legislative Days last week and the snowpocalypse after it, no one at the Capitol returned calls to explain why Durant’s predictions are off.
The letter Durant wrote to the governor outlined eight solutions, some big, some small. She knows none of them are likely to be popular with state workers, past and present, union stewards, or taxpayers.
We agree with Durant that pension reform is necessary if the state is to pay its retirees and uphold its moral promises to the rest of its residents.
“Everyone wants to keep their job, I get that. And I don’t want to hurt anyone’s retirement,” Durant said. “But I also don’t want to hurt future generations of learners and teachers, and state police and others. How is it fair to our students to cut current teachers to pay for retired ones?”
We don’t know what it would take to get taxpayers riled up enough to tell their elected officials to deal with this issue and deal with it now.
But we have obligations to state workers until they die, along with obligations to Oregonians who live and work and pay taxes who aren’t on the state’s payroll.
It’s time to upset the status quo.
6:23 p.m. PT Dec. 17, 2016