What others say: Bad state decisions can haunt communities

  • By Oregon) Gazette-Times editorial
  • Friday, April 20, 2018 8:25pm
  • Opinion

Over the weekend, The New York Times ran a long story about how states across the nation (not just Oregon) are struggling with the mounting financial obligations of their public pension systems.

The story caught our attention because it’s a topic of considerable interest to Oregonians — and also because the story focused, naturally, on Oregon.

The story didn’t break any new ground or offer any new revelations, but it’s a good primer for someone new to this issue.

The story hit some familiar notes for anyone who’s been tracking Oregon’s woes with its Public Employees Retirement System: It started by noting the $76,111 monthly pension that Joseph Robertson, the eye surgeon who retired last fall as president of the Oregon Health &Science University, receives. (That’s the state’s largest government pension, by the way.)

The story also talks about how the costs of Oregon’s pension system have grown in part because of how it calculates pension benefits as a percentage of salary: Some pension recipients, such as former University of Oregon football coach Mike Bellotti, are benefiting from a decision by lawmakers to redefine “salary” as including remuneration from any source. So Bellotti, and the assistants who worked under him, can collect on money made from licensing deals and endorsements.

The Times reporter, Mary Williams Walsh, journeyed to Southern Oregon, where governments are feeling a particularly fierce bite from rising PERS premiums and have no recourse but to deeply slice into the services they offer their constituents. The same story is playing out, to different degrees, all through the state.

If it’s any consolation, Oregon is not alone in this misery. Colorado, for example, trimmed its pensions in 2010, but faces a new $32 billion shortfall. Similar problems face New Jersey, Connecticut and Kentucky, the Times reported. The economy is growing in all those states, but not at a rate sufficient to cover rising pension costs.

And here’s part of the reason why the Times elected to focus on Oregon, a sentence that you may need to reread a couple of times, just like we did: Oregon, the paper reported, “is not the most profligate pension payer in America, but its spiraling costs are notable in part because Oregon enjoys a reputation for fiscal discipline.”

This made us think that perhaps the Times reporter had visited a different Oregon, but never mind. The very next sentence in the story is worth highlighting: Walsh wrote that Oregon’s experience “shows how faulty financial decisions by states can eventually swamp local communities.”

That’s worth keeping in mind.

As is this point: This is not the fault of the people collecting these pensions. They played by the rules that others determined. In some cases, lawmakers and state officials bolstered PERS benefits because of a sense that state employees were working for less than they could earn if they were in the private sector.

Eventually, the state began dialing back pension benefits for new hires. “The cost of this pension system is not caused by the people we are hiring today,” Steven Rodeman, the retiring director of PERS, told the Times.

The other striking thing about the Times story is that it reflects a deep gloom about the prospects for the near future: “Across Oregon, local officials have been told to brace for 15 to 20 more years of rising pension bills,” Walsh reported. “That’s when the current generation of retirees will start dying out.”

“All we can do is wait,” Jay Meredith, the finance director in Grants Pass, told Walsh.

Well, there is something else: Remember that sentence from Walsh we highlighted, the one about how faulty financial decisions from the state can haunt communities for generations? Every elected Oregon official should cut that sentence out and tape it to their desk.

— (Corvallis, Oregon) Gazette-Times,

April 18

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