Some of the problem is with overpriced employees. We have small town city managers and department heads with salaries like congressmen. With small towns vying for top employees using salary size as bait it's no wonder the pensions are out of control. It often is exacerbated by settlements to convince someone it's time to leave. There needs to be salary and retirement pay control built in, ideally at a state level to control the different categories of top employees whether municipal, county, or state.
While the federal system isn't perfect it limits annuity size and allows employees to pay into a sort of 401-K with matching to 5% by the government agency. This provides a control on pension size.
10
Pensions need to be replaced by 401ks with a government match. Then the risk of underperformance is out of the political realm and on the retiree, where it belongs.
10
There are abuses to public pension plans everywhere. And there are outliers such as cited here as well as pensioners who can barely scrape by. The looming total bill will be high as most governmental pensions are not fully funded.
However, it is a normal political maneuver to divide and conquer, in this case, public pension employees and everybody else. While pension funding needs to be fixed, we need to be careful to not let some politicians divert our attention to further pick our pockets in some other way.
The problematic issue with public pensions is that the negotiations were usually between the public employees' unions and their boss, a politician. The latter is most likely interested in getting re-elected/re-appointed and that, to a certain extent, depends on the former for support. Where is the line for a fair and ethical politician to push back versus to be generous? See the problem? That politician probably won't be there in 20 years. Another question would be, where were the watchdogs of government when these negotiations were being conducted? The citizens?
Municipalities and states have all sorts of laws, enacted decades ago that are generous and about to come due. Many have started to address these challenges now that endgame is approaching. What will be fair?
This problem demonstrates a good reason to be civic minded and vigilant, and to analyze what our representatives do in our name. Get involved so that it does not happen again.
11
Yes, Oregon cities and counties are facing a crisis in funding infrastructure, education, social programs and paying public pensions. First, most public employees, of which I am one, do not get large monthly payments as those written about in the article. Most get a modest amount and it is very helpful in retirement. But what the author doesn’t discuss is our tax structure that relies solely on property and income taxes. There is no sales tax in Oregon. With no sales tax all services and infrastructure projects must be funded with these other taxes. Plus we have a cap on property tax. Almost all residents suffer from bond and levy fatigue- increase in property tax to pay for everything. If Oregon had a sales tax, we would not have a pension funding crisis.
Emily
15
Many chose teaching because they wanted to be teachers, but not because they wanted to be poorer than their educated and able counterparts in the business world. They accepted lower salaries in exchange for better benefits.
The government of CT underfunded teacher pension funds for years after being warned time and again that they were not meeting the mandatory amount.
Other than some of the ludicrous pension outliers mentioned, articles such as these turn anti tax people against teachers instead of the recognizing government needs money to make up for the tax breaks for the 1%. They should focus their anger. at the tax breaks for the 1%.
Blaming teachers for lack of funds for arts and sports programs will not improve the quality of those wanting to entering the profession. Put the blame where it belongs.
20
A $913,00+ annual pension IS a "tax break for the 1%"!
8
Why isn't it common sense to cap publicly funded pensions? No one needs $76000 a month as retirement income. If you earned so much money while working that your calculated pension is this high, you totally do not need the pension and all you are doing is basically fleecing the system.
18
For all members hired since 1996, there is an effective cap placed on pension payouts. The internal revenue service limits tax deductible contributions on salary above (currently) $270,000 per year. This was implemented initially for private pensions, but not public pensions in the 70s. It it adjusted periodically when aggregate inflation since the last adjustment results in the exempt amount increasing in $10,000 increments. The only Oregon public employees exempt from this IRS limitation are those hired prior to 1996.
1
i get angry every time i read an article like this because it reminds me of someone i know who works for texas state government, with bare minimum qualifications, knows how to manipulate people, promoted to manager, six figure salary, brags about his retirement benefits, while i read other articles about how his department totally mishandled software installation, so now he can use overtime to fix the software problem and boost his retirement package, similar to other texas politicians who are receiving both salary and retirement benefits. the voters left the foxes (politicians) in charge of the chicken coop and now the voters are stuck with the bill. i think there was a big scandal in a california city a few years ago where the city politicians had given themselves major compensation which the voters were able to cancel. i think we should do the same here, cancel or reduce all of these pensions.
16
In New York, many government pensions are based on total earnings the last few years - and using seniority and lack of supervision, certain workers (think MTA leading the charge) work more hours than humanly possible, work their pay their last few years into a few hundred thousand, and then retire. Purely sick and corrupt. And I thought that was the worst until this mention of Oregon. I believe in pensions - fair pensions, but these are beyond absurd.
15
Public Employee pensions very greatly. I was a Public Employee for 22 years and get approximately $1,200 a month my state employee pension. No $76,000.
15
I would think that what will happen is a declared State bankruptcy with a basic settlement finally agreed to. So many times employees like school district teachers took additional retirement benefits in lieu of an immediate pay raise and it is not fair that the rug is pulled from underneath that arrangement, but the outrageous bases you have described are simply unsustainable.
9
So is the answer not to pay them?
3
Sorry, but the US Constitution prohibits states from declaring bankruptcy.
6
Sorry but under federal bankruptcy laws, states cannot file for bankruptcy protection from creditors.
1
How is it possible to even remotely justify payouts like this? Answer: it’s not.
9
So basically, the boomer generation have paid themselves tons of money, cut taxes to get even more, and let the next generations hold the bag?
And everything is legal and nothing can be done about it?
19
A complex issue such as retirement provisions for public servants is not served well by "click bait" headlines of "$76k/month pension payments!!!!"
Ms. Walsh reports as if all municipal and state pensions are the same and all public endeavors are funded on a yearly pay-as-you-go checkbook. So the article is misleading and feeds a narrative that out of control public employee pensions are the reason for a myriad of unrelated government problems. The two reported pensions were obviously anomalies but why is not really explained. Very poorly researched and written.
Ms. Walsh, properly structured pensions are based on a deferred compensation model, the employee and employer contribute a set amount each paycheck and that money is invested to pay the future pension obligations. Usually the employee's pension pay out is based on the years the employee contributed (years of service) X some average of contributed dollars (salary average) and a pension factor. 50% to 75% of final salary average is a typical result. Wisely investing the pension contributions for the full time period before they are needed is the key to having enough money to fund the pension. I read carefully but is unclear whether the pensions which are in trouble were FUNDED with the pension contributions back when they were earned and why the INVESTMENTS of those funds haven't kept up with obligations. The S&P 500 has risen 70% in the last 5 years.
Ms Walsh, please do some more research and try again.
13
This article seems to be well researched, Oregon's public employee retirement system is exactly as this article describes. I am a lifelong Oregon resident and I can tell you, it is a huge burden on Oregon taxpayers.
14
Sorry, but it isn't as described. The two examples are extreme outliers, which occur in every pension system. There are 130,000 PERS retirees. If you sort recipients in the opposite order than they are published, you'd have to scroll through 128,000 individuals before you hit the higher compensated individuals. 98.5% of recipients receive pensions that wouldn't even raise eyebrows. Focusing on two individuals, or 2000 as exemplars of the system is highly misleading.
18
This is the New York Times. Did you expect a serious public policy question (state and local government budgets being taxed by out-size pension benefits) to not include some click-bait that would appeal to a progressive readership? There are plenty of egregious examples of people retiring at age 50 with lifetime annual pensions of $100,00 or more (inflation adjusted, naturally and with healthcare benefits to boot). In the aggregate, those are the real problem, not a few outliers like the retired football coach. You can read about the problem posed by the 50 year old $100,000 retirees elsewhere (in the Wall Street Journal, among other places), but don't look for them here.
5
So this year, Oregon will be returning tax revenue to its citizens, because of the kicker. Our actual revenues were more than 2% higher than our projected revenues, so everyone gets a tax refund of 2016 taxes. Sure we have bridges ready to fall down, a pension problem, and a 1.6 billion dollar deficit, but laws law. When are we going to admit the following: if we want things we have to pay for them. To balance a budget, democrats say raise taxes, Republicans say cut programs, but the reality is we have to do both. People want tax relief, because they are tired of suffering: survival is getting too expensive. It's easy to blame taxes, but really the average Joe just needs to be paid more money (for the same work). More income, more taxes, more public bills paid.
15
PERS does NOT pay any medical benefits for retirees. If you retire after thirty years and are not yet eligible for Medicare, you will have to buy your own. Last time I checked, it was over $700 a month to purchase medical insurance through PERS. The taxable $2100 monthly pension I’ll earn after thirty years should cover medical insurance, my school loans I took to get my MA to keep my job, and my utilities...hopefully.
7
The comments before mine referring to problems with pension obligations in Oregon, California, and Connecticut also apply to Colorado. The state under-contributed to their portion of the plan, leading to the plan being underfunded. The legislature addressed this in 2010 by suspending, then reducing, the annual increase that was part of the benefit package contract. The cost for the adjustment was borne completely by retirees. Now the are back to making more cuts, because the plan is even less funded now than it was during the “crisis” in 2010.
I worked for 26 years in local government there. I was reminded constantly, both inside and outside of government, that public employees should expect (deserve?) less compensation during their careers, because their retirement benefits serve as a form of deferred compensation.
For the state to unilaterally change the rules now is a betrayal to those who relied on its promises all during their years of service, staying with their job rather than going elsewhere. Do most people really believe that government has no responsibility to keep the commitments made to their employees?
13
Like you, I am a Colorado resident and taxpayer. To answer your question, no, most Coloradoans don't believe government should renege on commitments made to the State's employees -- so long as those commitments were made honestly and in good faith. On the other hand, Coloradoans expect their state and local government officials to negotiate wage and benefit programs aggressively and honestly, and we are outraged when we discover that many of the deals appear to have negotiated not in good faith -- but rather as a quid pro quo with public employee unions. One political party promises outsized benefits to public employees if its candidates are elected. Not surprisingly, public employee unions (teachers' unions being the most egregious example) then campaign aggressively for that party in every national, state and local election. After the union's preferred candidates are elected, the elected public officials then negotiate lucrative benefit contracts with public employees unions -- with most giveaways taking the form of deferred compensation so voters doesn't see the cost in the form of tax increases during the elected officials' term in elective office. And so it goes, on and on and on. Frankly, it's an outrage and many taxpayers have had enough, thank you very much.
9
An eye surgeon at a top teaching hospitals makes FAR MORE than than the average state resident? Imagine that! Someone with far more invested in education and great technical skill is making more than your average John Doe? I wish the author of this piece could see more clearly!!!
It is so easy to throw stones at public employee retirement systems. Sow seeds of discontent! Divide people! Make them angry!
Many mistakes made by those who managed the Oregon Public Employee Retirement System, and no doubt, in other states. Serious budgetary mistakes were made by earlier Legislatures that pushed funding obligations into the future. But the most serious mistakes were made by officials at the federal level who failed abysmally to protect the public from greedy CEOs, bankers and stock-market speculators.
The problem of growing extreme economic disparity needs to be addressed before it destroys our nation. Finding fault with people who WORK for a living is NOT the answer. The biggest threat comes from money changers who play games with our nation's wealth. Restoring a small tax on those who engage in market speculation (as I also do) is one response we need to pursue.
The inadequacy of most retirement plans to protect our older citizens needs to be addressed.
Public employee retirement systems need to be addressed. But using outliers to give the erroneous impression that all retired public employees are milking the state dry is WRONG! They are not the problem.
8
The problem with pensions isn't in principle, it's in practice. You can't say that you "value education" and support pensions but then complain about the lack of school funding, quality of schools, property tax rates, etc.
The reality is that politicians on the whole can't be trusted to be responsible when it comes both to setting public pension rates and also in properly funding them.
In Illinois, we have property taxes that are strangling the middle class - you can very easily pay more in taxes than principal + interest - and it's all because the burden of funding education is falling on municipalities...and that's because the state is broken paying off pension obligations.
So how am I supposed to feel about pensions? Do I want teachers and other public workers to have comfortable retirements? Obviously. But to put that entirely at the expense of the public is clearly, again in practice, not working.
We should pay public employees more up front and significantly cut back on public pensions, because it simply isn't sustainable. And as much as I sympathize with a retiring teacher or public works employee, I care much more about my kids' ability to go to a decent school and get a decent education without bankrupting ourselves or our public entities.
That, or just cut military spending by 5% and adequately fund public education.
5
Was publishing the names of the people receiving these huge pensions really necessary to the story? Seems like a pretty clear violation of the SPJ Code of Ethics to me.
"Journalists should balance the public’s need for information against potential harm or discomfort. Pursuit of the news is not a license for arrogance or undue intrusiveness."
The first individual named in this story is inevitably going to receive a torrent of abuse and death threats as a result of being named here.
6
All public employee compensation is public record in Oregon. It should be everywhere. If you are feeding at the public trough the public has the right to know what you are being fed. If only hush money payouts for Congressional sexcapades were subject to the same rules...
13
Although pension benefits were determined to be public record by a short-time Attorney General, there is still an unanswered legal question of whether Oregon public records law actually requires public disclosure of the information current on display. Prior Attorneys General for more than 20 years interpreted the same law as inapplicable to the pension system.
The older generation is the real issue here. They told us to work hard and pull ourselves up by our bootstraps while they were siphoning off money that should be invested in children. You're on your way out, accept it, and stop pilfering the future of this country so you can buy more antique furniture and Florida vacations. The entitlement is unreal. No one's pension should ever exceed their salary; it should be a portion of the salary averaged out over the length of the entire service. You're not supposed to be able to become a millionaire as a public servant - ever. This greed is disgusting.
16
This article omits important information about this system, most significantly that the average monthly pension paid to the 134,000 current retirees is under $2,500. Clearly Dr. Robertson and Mr. Belotti are extreme outliers, and it was a foolish decision to allow outside income -- paid by a private entity that did not contribute to the pension reserves -- to be included in the calculation of government employees' pension. That indefensible decision should not be used to undercut the legitimate pensions of thousands of teachers, social workers, police, fire, prison, tradespeople, and others who kept their part of the "employment/compensation contract" by providing valuable services for decades. The other important omission here is how often the voters in some Oregon counties have voted down bond levies and other revenue measures to modernize schools, keep libraries open, improve local roads or fund the sheriff's office.
18
Just as the extreme examples that lead the article are outliers, the article itself is the point of a spear (one of many) being aimed at public sector employees. I’m seeing the same rhetoric in California-based publications. This bulge in fiscal obligation due to legacy pension costs can be financed by bonds—not cheap but not catastrophic.
The real point is that public sector retirees are being scapegoated for states’ failures to cover their obligations. Who is behind this sudden “concern?”
6
Great idea -- our public employee pension systems are underfunded and underwater because we over promised the benefit levels and underfunded the payments to finance them. So let's make the problem worse (for someone else) and kick the can down the road further. We can issue bonds, thereby not solving the problem at all, but rather deferring it for another ten or twenty years. Many of us won't be around then, and who cares about today's 30 and 40 year olds who will be stuck with the tab?
2
In CT the teachers pay seven and a half percent of their salary to the pension plan. The state was supposed to match those contributions. Instead the legislators wrote IOU's to the plan, and even had the audacity to borrow from the pension plan. Now they cry the teachers are greedy. I worked as a teacher for 42 years in CT and the state never forgot to take the pension deduction from me; how am I responsible for their financial ineptness?
21
This article highlights exactly what is wrong in our country today, in our federal, state and city governments.
First, the unions have waaaaaaayyyyy too much control over our government. Just because they got something negotiated in a weak moment, we as taxpayers are forced to live with it into bankruptcy?
Second, this type of egregious management of our tax coffers has created a have and have not society. You know who the haves are. The have nots are the rest of us suckers.
Third, police and firefighters should not come into the discussion at all. They should be compensated MORE during their work years for their work, and receive a reasonable pension upon retirement. A pension should never have been designed as a get rich scheme.
Lastly, and this is perhaps the most important point, what ever happened to doing what's right? These government workers making this much money, obviously have no integrity or they would refuse the compensation. Or donate it to the schools and streets departments. They are greedy takers who have no scruples or idea of what it means to be a good human being.
It really makes me sick.
9
Please don’t mention the $2 billion subsidy that the highly profitable Nike extorted out of Oregon by threatening to move its headquarters. Billionaires on welfare get so embarrassed when these things are mentioned.
14
76K is a bit much. Maybe 6K
I wonder how much this guy was making before he retired. No one should draw that kind of monthly income from a public retirement system. I am a retired college professor. I was making around $76,000 a year (not in a month) at the mid-point of my career.
1
His final average salary was mentioned in the article. It was $1.9 million; his pension is slightly more than half that, which is what the standard formula would predict for someone who worked in the system for 38 years. While the final average salary is slightly more than the average of his final 3 years' salary, it isn't significantly higher. Physicians (even physician administrators) have salaries and clinical income that produces revenue for the hospital, the University, the medical group, and the physician. Dr Robertson's total compensation is not out of line for a highly trained, nationally ranked eye surgeon, who also happens to have been the President and CEO of a multi-billion dollar research and training Health Sciences complex employing more than 20,000 people.
3
$1.9 million
It is so interesting that state & local governments have not followed the lead of the federal government. Back in 1985, under Reagan, the feds went to a dual system. Employees were allowed to either stay in the Civil Service(CRS) system or transfer to the Federal Employee Retirement(FERS) system.
CRS is based on number of years of service & a percentage based on high three salary. FERS is based on a very small percentage of salary/years but allows for a 401k style savings plan with a match by employer & puts employees in SS(& they contribute SS tax).
Advantage for employees is that FERS is mostly portable so if you leave service your SS & 401k go with you.
Think of it...feds did this 33 yrs ago...all employees after 1985 are automatically entered in FERS.
You may have seen the brouhaha over Andrew McCabe’s lose of pension...valued at around $51,000 annually...as Director of the FBI...his pay scale would have placed him over $150,000 per year....but his FERS guarantee is the $51,000. At 54 yrs old(I recall) he can’t take his SS until 62 & his taxable 401k would require minimum distribution at 70 1/2...can withdraw $$s from 401K at 59 yrs old without additional penalty.
I can’t understand why the states/local governments are so far behind! But wait...
My discussions with retirees from “up north” reveals that states are paying all of the Medicare monthly costs for retiree & partner PLUS 100% of backup...with no deductibles!
Insane! (CRS pay $600 per month for same)
Good luck!
1
For 9 years I was an elected trustee of a county public pension trust in California. I also have a modest retirement from that fund. During the 2008 Great recession we went down $680, largely because of heavy stock investment. The county had to make up that shortfall which put the county in debt and enraged taxpayers. I believe your story only addresses part of the problem: overgenerous pensions. The other big factor is I believe it is unethical and fails the suitability test to allow public pensions to invest in risky assets such as stocks, because the public has to bail that out when things go badly. Anyone who forecasts smooth sailing in the stock market into the future is a voodoo economist. It's a tough choice to restrict risky investments but it has to be done to prevent the next blow up. Also, painting all the hard working teachers, firefighter, and other public servants with the same brush as the obscene pensions of those who make $76,000/ month is a disservice to the vast bulk of pensioners who make a modest pension.
8
I am troubled by the replacement of humans by technology here. Physical education in elementary school is so much more than watching along with a video for exercise. I realize this is not the teacher's fault. She's also lost her planning period as well.
2
The problem, as always with final salaries pensions is that they are incredibly expensive and nobody pays for them at the time. Due to compounding interest today's "savings" spiral out of control as tomorrows costs.
I would appreciate a follow up article looking at the funding going towards the new final salaries obligations of today's workforce - are they at least being adequately funded to avoid the same problem when they retire?
2
As a person on the Left with most issues but independent minded, I always brace for the kickback when I reveal to others that I think there should NOT be a pension for municipal and government workers. My only exception at this point is for police and firefighters as they literally put their lives on the line.
It is especially galling that our representatives in the House and Senate get them even if they serve for just one term. This should stop asap.
8
There should be some form of windfall clause. Retirement windfall for one shouldn’t mean misery and bankrupting expense to another.
I’m surprised Republicans do not legitimately point to this as bad government. High salaries should not come with a fantastical pension too. But I am sure the wealthy pensioners have Republicans in their pockets to keep the tax payer paid gravy going.
Like Social Security, there have to be limits.
6
This is not the only mismanagement idea Oregon has had, it was also one of the states which received the most money from the Obama Administration to set up an insurance exchange and it was never able to get it functioning. Oregon has a capped annual enrollment for its Medicaid plan and to that extent, it is fiscally conservative, which is not reflective of all programs.
1
so pensions are bad because the guys making the rules get a lot of money? I have an easy fix make a hard limit on maximum pension allowable. But dont use this type of argument to limit the pensions that teachers and professors , or police or firemen get. Because they aren't making 6 figures a year in their pensions.
5
Maybe where you live cops and firefighters aren't making "6 figures a year in their pensions," but in NYC they certainly are. There is a lot of geographic variation.
5
Allowing someone to calculate their pension benefits based on income that was never used to calculate a payment into the pension system is crazy.
I just started working in the the public sector after many years in private employment. I was shocked to hear that people who work for 20 years (in some instances 30) can retire with lifetime financial and health benefits That might have worked when people only lived to be 50 or 60, but it doesn't work with today's lifespans. I see a lot of people who spend far more time retired than they ever did working. We just had someone retire at age 48 with free lifetime health insurance benefits and a lifetime pension that equals 50% of his highest salary--with cost of living increases.
8
What makes you certain that pensions are based on "income that was never used to calculate a payment into the pension system..."? These outlier cases all come from Higher Education and Public Medical Schools. These outside payments are all run through the University system, taxes deducted, and pension contributions made on all income paid to an individual. This is the concept known as "overhead" and in Oregon, for example, nearly 55% or more of excess compensation from outside sources resulting from work on University properties go to the University itself to cover things like Social Security payments, Medicare payments, pension contributions, health benefits, and effectively rental and use of University facilities (including the name) to receive this money. Of course, the overhead is built into the payment structure, but all payments for "outside" income (Robertson performing eye surgery is part of his actual job) are subject to pension contributions. There is no additional taxpayer money funding the pension. Remember that this outside income also benefits the employer since they get a cut of it as well.
I don't begrudge public employees their pensions. But, as one who has to fund her own pension by saving in a 401k (with no match from her employer), I wonder how I'm supposed to save for my retirement, pay my ever rising taxes, and pay my daily expenses.
In the mean time the services that taxes should pay for are cut left and right because pension costs are so high. In my small city, the residents passed a 30 year bond to pay for road repairs that were sorely needed but should have been paid for regular taxes. As a result, our taxes (already at the millage limit) are now increased for 30 years to pay for this bond. I voted against it. Its simply not fair or sustainable to ask tax payers to do this.
11
Shouldn't we look at how states calculate the pensions that are promised
...$76,000 per month seems outrageous. In addition, look at how States set aside capital to fund pension obligations, how the funds are invested, and when the funds are transferred into stable financial instruments so they are ready for withdrawal? Companies are faced with the same challenge. We need to make sure that promised pensions are reasonable and that when promised, people can rely on them.
8
I hope the NYTimes follows up on this theme. I live in NJ and we are in deep trouble. It is a complicated issue. Please include the range of pension payouts for states like mine. It is clear that pensions of the size you are showing are not sustainable. If we know the range of payouts we can see if some minor tweeks such as raising the retirement age or capping payouts like in social security would help.
Also I would be interested to see the size of federal pension payouts. Obviously legislators have no problem threatening to cut the social security of those of us without pensions. I am curious to see how hypocritical they might be.
Oregon must immediately fix the problem with using outside income to inflate a salary. This should violate public trust and be illegal for all states to use that form of calculation.
9
In 1946 when the system was set up the returns were tied to what bonds or banks paid in interest. This was before the era of voodoo economics when we went off the gold standard to allow printing of money to finance the war in Vietnam, before the voodoo economics of Milton Friedman became the norm. Before the days when people running pension plans were themselves part of the revolving door from government to Wall Street, before the dot com bubble, before the various bubbles in housing markets, before the borders were opened up to unfettered immigration and the costs, before affordable housing was torn down to make way for luxury condos for a Wealthy Chinese who don’t live here and don’t pay taxes here, before the states were giving tax breaks to any large company willing to open shop in our state, before corporations were allowed to State Shop, now Country Shop for not only the cheapest taxes but the cheapest labor, before the country was run by Wall Street Banks like Goldman Sachs. The ruse also continues among the one percent of corporate management and apparently extended to University Presidents and coaches as well(although the revenue generated by T.V. Pays for the coaches) “we have to pay these salaries to remain competitive and hire the best”, please, there are only a few men in America capable of coaching a football team or running a bank? These guys have hot streaks and cold streaks like everyone else. Clawbacks from Wall Street is the answer, Madoff victims did it.
9
As a long-time NYT reader, I'm appalled at the quality, or lack thereof, in this article. I was initially left scratching my head at what seemed to be incomplete if not deliberately leading-through-omission reporting: what is the average pension payout today? What is the state of Oregon's pension funding? Are there other considerations in the funding of public education aside from the pension debt?
Just a quick perusal of some of the Oregonian's and other state newspapers' excellent reporting on this issue brought me up to speed. The average yearly payout per retiree is only in the $20-30k yearly range. If we include only those with full public careers, meaning 35+ years of service, it does increase the numbers to the $60k range - but it's also important to note the context that local reporting gives these numbers: Oregon for decades paid public workers low salaries with high benefits as a draw. The funding, or lack thereof, of these pensions was a choice of the state at that time, and those receiving the highest pensions now are by and large those who were underpaid for most of their careers.
Walsh also didn't mention the impact of changes already made by Oregon - new retiree payouts have dropped annually since the early 2000s, and the pension fund, currently around $70 billion, is now in better shape than most states. Again, I'm unpleasantly surprised at the incomplete picture presented in this article, which begets more questions than it answers.
37
While informative in some ways this article is irresponsible in other ways. It tars public pension problems (real) in all states with the insane decisions that the state of Oregon made. Including income made outside of state employment in pension calculations? Crazy. Even California hasn't been this stupid.
It appears that Oregon has a state income tax similar to that of neighboring California but no state sales tax. Why not?
Red leaning people in mainly blue Oregon don't want their taxes raised? Boo hoo. Raise them anyway.
And find a way to undo the stupid decisions that make Oregon the perfect subject for a sensationalistic article like this.
7
I receive a penaion from the State of NY for my 30 years of service. The eye-popping example of a pension of $76,000 per month exceeds what my pension pays me for an entire year. But we do not read anything in your article saying that most pensioners are receive pensions in line with mine rather than the one you quoted in your article. I wish you has taken the time to mention us ordinary folks and/or pension systems which appear to be well run (such as in NYS). In addition, your article says that pension costs are directly responsible for cuts such goverment services such as police protection. This is really very poor journalism. As an intelligent person, you are surely aware that government budgets are complex things made up of many different factors, only one of which is pension costs. I am a subscriber of the NYT and read it just about every day. I’m sorry to say that this very biased and one sided article leaves me disillusioned.
21
Huge surprise there. An academic administrator in the liberal haven of Oregon has his snout buried deeper in the public trough than anyone. Forget the "Hollywood" sign. They need to post a giant "Hypocrisy" sign on top of the hill in the photo accompanying the story.
5
try not to conflate these ridiculous outliers with the median $24k/yr. and say "all pensions must end"
14
Poorly researched and written article about a very important topic.
"A $76,000 monthly pension" in the title? How common is this? Answer: EXTREMELY uncommon, and likely not at all "why states and cities (Note the plural-- as if this happens in many places) are short on cash." A couple of (admittedly outrageous) outliers do not explain much, in fact. It would have been far more accurate and persuasive to discuss what the average and median pension amount is, how many retirees draw pensions (this number has swelled in recent years), just how underfunded by the state the pension fund has been-- all of these are factors influencing the shortfall.
Articles like this, in which I am qualified to judge the quality and find it lacking, make me doubt the overall quality and accuracy in the NYT, and make me especially hesitant to believe what it publishes in topics in which I am not as knowledgeable. Come on, NYT, I expect more of your reporters and editors!
21
Oregon should be embarrassed.
4
We earned our pensions. Maybe a cap on the amount of new pensions would be just and fair. But based on history, it’ll be our little pensions, which we need to live somewhat comfortably, that will get cut,
6
It's interesting to see comments blaming unions for the gigantic pensions of nonunion positions. Do readers understand that management positions -- the positions with such impressive retirement compensation -- are not represented by unions? These are sweetheart deals for executives, just like in the private sector.
Let's not fly off the handle blaming unions for what management is getting.
9
You have got to be kidding me. Why is everyone moaning about pensions? We were all supposed to have one, plus our social security and our 401K Supplemental Income Program. The 401 came out in the early 80's. It was never meant to be a retirement system but an added benefit to the public if they had discretionary income. Then after about 10 years the corporations took the pensionS away and the Feds let it happen. People are not financial pros to do investments and 401K programs benefit the company with there charges and commissions. In Massachusetts as a state worker you do not contribute to Social Security so the states pays nothing into it either. You do not get credit for those years and if you did work another job you get penalized. The real problem is not pensions for there should be pensions for all but the biggest financial scam of the 20th century by removing pensions just for greed and fat bonuses. People should not be mad at pensions but mad at corporate America for taking them away from you. You cannot have tax reductions forever just control your number of employees and that goes not only for government but for the private sector. It is time to protest the real problem and bring back pensions for all. The best for this country is pensions, social security and the 401K not retirement system but Supplemental Income Program as it was originally intended. Wake up AMERICA AND VOTE THESE DEMOCRATS AND REPUBLICANS OUT.
12
Pensions or social security have a sound economic purpose. Allows people to be self sustaining in retirement, and most or all of it goes directly back into the economy where it becomes income for others, taxed when its earned, taxed when its spent. (It’s the old comic multiplier of $1.50 economic activity for every $1.00 spent. Tho I’ve seen it estimated as high as $3.00 for every $1.00)
Most public pensions are in lieu of social security so they paid into it with every paycheck.
Any abuse is at the higher levels—- state university presidents and their staff paid in the hundreds of thousands. That is unconscionable. Don’t demonize the cops, firefighters, or professional staff who are truly public servants.
10
oops. "economic"! not "comic". (spellcheck!)
Again and again we see the Me Generation sticking it to the rest of us. Soon they will be gone - but the damage they have wrought on this country will last and last.
6
A pension like this is wrong - but it reflects the contract given to the president not the pensioon system itself, and obscures two real causes of state problems, one of which is decades of tax cuts, especially the federal estate tax, which supported state and local services. You can’t blame the pension system for that. The second, why does Oregon or any univeristy pay presidents, coaches, the amount that it did in this case? Corporate salaries for C suites need to be addressed first, before using a story like this to attack public pension systems, which mostly work.
9
I'm kind of shocked at all the pushback against this article. It highlights a real problem. I worked for a university that had to pony up a ridiculous amount of money every year to support a state-run pension program that 1) it no longer subscribed to and 2) it had no voice in governing. It only makes sense that the compensation for working people (teachers) was therefore depressed and that health-care costs for faculty and staff went up, while the nonworking people (retirees) got annual wage increases and full health-care coverage. And there's this little business of high tuition that everyone complains about. If the money to balance the budget doesn't come from other sources, ultimately, students and their families pay the price.
6
You university may no longer have "subscribed" to that state-run program, but I would be willing to bet good money it still had real liabilities associated with it -- like past or current employees getting benefits from it. If you don't like seeing stuff like this happen you need to play an active role and keep after the people responsible for managing benefits. If it's a public university you work for, then play an actrive role as a voter and citizen.
1
Of course, those receiving pensions larger than what they require to live in comfort could decide to donate money to our schools, or for infrastructure projects. I'm not holding my breath, but it is technically an option and it would solve a great many problems. Funny how nobody seems to want to put children first when the collection plate gets passed around, especially those who can most afford it. Selfish greed rears it's ugly head and suddenly nobody wants to pay for "other people's kids." Suddenly they want to know what these children have done for them, and why they "deserve" charity. Charity is about what you can do to help combat suffering and need, not about what the needy and suffering can do to help you. Just looking out for number one doesn't keep you from dying, it just insures that you will die with a shriveled heart full of miserly self obsession and leave nothing lasting behind.
7
This article should have cited the far more substantive Pew
report "The State Pension Funding Gap: 2016", available at
http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2018/04/t....
JohnH
4
correction: I meant to say our fund went down $680 million, not $680 dollars
Oregon’s always been on the “strange side”. Years ago, if you purchased a home in Portland, you soon discovered you were paying far more in property taxes than your neighbors who had been living there a few years longer, a tax scam to put the burden on unsuspecting home buyers moving into the area. There’s also no state or local sales tax, which makes no sense. How do you pay for all of the necessary public services? Oh wait, that sounds just like Oklahoma and a few other “red states”.
2
Perfect formula for attacking public service employees.
Step 1: ignore the decades of tax cuts for the top 1% and the beggar-they-neighbor tax-incentive giveaways to large corporations.
Step 2: cite the over the top pension deals of top management, making them appear to be representative of the public service workers in general
Step 3: bring out the crocodiles to weep over the havoc of current state finances.
Well-done! You'll surely survive the next culling of reporters at the NYTimes.
20
Was he making $76,000 a month before retiring. Isn't this just more unaddressed medical billing fraud?
1
He was the head of a university when he retired.
He was making almost twice that much per month before retiring.
This article focuses on extreme cases hence reads like a propaganda piece.
Wouldn’t it be helpful to know what proportion of the state’s total pension outlay goes to people getting more than $100,000 a year? And what is the average or median pension that Oregon retirees are now getting? The author can’t bother to provide these key pieces of information that would give us a realistic perspective on the pension crisis.
Is the problem extreme cases or the unfunded normal pension? You can’t tell from this sensationalistic “analysis.”
12
The worst generation, the Baby Boomers, in their desperate attempts to bankroll what they're 'owed' will end up bankrupting us all. Only recently has this finally come to the surface. In the end, we all pay the price. Your children will remember.
5
Seems a bit unfair to blame the Baby Boomers, many who worked long hours each day without complaint to build a future for their families, saved to provide a college education for their children, and
embraced community spirit by helping neighbors when necessary. As a Baby Boomer, I rarely see the same work ethic, foresight, and compassion in today’s entitled generation.
7
Public sector employees should not be allowed to unionize. There is no management function in government. Everyone is on the same side of the bargaining table trying to figure out how to get taxpayers to pay for more. Unions elect the politicians in and politicians do their bidding.
The motto of the public sector is: "leave no taxpayer teat unsuckled".
9
This is untrue, at least for Oregon. When unions bargain, they bargain with actual management. Only the barest elements of the pension are subject to collective bargaining. The types of payouts are not bargainable, accrual rates are not bargainable, and generally what counts as income is not subject to bargaining. Things like whether to participate in the sick leave program are subject to bargaining, as is who pays for the employee contribution to the pension system (since 1979, when it was offered IN LIEU OF A PAY INCREASE during a period of hyper-inflation and a prolonged public employee strike, all employers initially "picked up" the mandatory, post-tax, employee contribution). Since the mid-1990s various employers have negotiated pay increases for their employees in exchange for the employees resuming their mandatory 6% contribution. Since 2004, that 6% contributes nothing to the lifetime pension benefit; instead, the 6% has been diverted to a 401-k type account with no employer match and that grows or falls at market rates. This account is simply paid out at retirement; it isn't annuitized but can be rolled into an IRA or other tax deferred account. The Legislature is solely responsible for the plan structure.
2
Great, let’s continue to punish public employees for the poor budgetary decisions of the legislature. I pay a mandatory 10% contribution to my pension account, and I stand to earn something around $1500 per month if I put in 30 years of service. That mandatory contribution means I have less to contribute to an investment account, that over 30 years would almost certainly earn more. We have already had our overtime, benefits, pension, and administrative budgets slashed. We’ve been in a pay freeze for 3 years, but most of us are 30-40% undercompensated for market. How much more do you want us to give? Passion for public service has its bounds...
If you want a competent, waste-free public workforce, you have to stop demonizing us and find other solutions for budget shortfalls.
14
The fact that these cases exist in any way is a problem.
1
Let's hear again about how wonderful shareholder capitalism is and how stock buybacks will "eventually" ripple through the financial system and lead to some company somewhere adding more workers or raising pay. The Wall Street shenanigans of the Aughts still keeps giving, eh? Let's privatize Social Security too! Think this comment is unrelated to this story? It all goes back to the greed is good philosophy from the Reagan years, as I see it. Unbridled rent seeking and putting share prices above everything. Wall Streets tanked the world economy and we average folks are living with the consequences.
And no coach should be paid millions let alone a pension based on licenses.
9
This article uses extreme cases that have no relation to the typical Oregon public sector pension to argue for stealing the pensions of teachers and fire fighters. And yet somehow the media are surprised nobody trusts them.
12
Every so often we read one of these... but wjay about the outlandish milking the system pensions/disabiliiy paymrnyd got police and firefighters?? We need all the info for all the states and wages. Sorry but I don't understand the need for the seven million dollar football coaches or college presidents for state schools. (and not paying the performers namely the athletes who put their bodies on the line_. An endemic problem. How many people really earn the amounts they are being paid? What is fair or reasonable? I do enjoy hard facts... when I can read them.
4
I am a proud public employee, with overtime 140k our pension is half that. When I retire I'll relocate to a lo-tax low cost of living Right to Work(Right To Work For Less) State.
4
According to the reporters comments.
"In 2000, the average public worker with 30 years of service retired at age 53, with a pension of 106% of his or her final salary. The Oregon state legislature had originally designed the plan to provide a maximum benefit of 50% of a person's final salary after 30 years. "
Since the state supreme court seems to be blocking a change to the benefits the easiest solutions for me seems to be enacting a targeted tax in orde to reduce the benefits to around 75% of the final salary with a cap of around 50-60k.
Also seems like the state should increase its taxes in order to ensure enough teachers, police officers etc are available in the communities.
Several commenters have stated that teachers have not received raises in their salaries and instead they have received future benefits. This seems like a bad system, my solution would be to tie their salaries to a inflation index.
4
As a Republican and long-time Oregon resident it is extraordinarily interesting to see how a story carefully constructed to denigrate public employee unions is so readily accepted by Times readers. Of course there is no mention that many of the modifications to PERS came at the behest of Republicans like Governor Vic Atyieh, always inclined to pass compensation costs to the future by shifting pay raises to promises of pension incomes. No mention that the Oregon Legislature, Republicans and Democrats alike, "spends" billions of dollars annually through tax breaks and exemptions to special interests, reducing the revenue flow available to cover obligations such as PERS. This year the state will spend perhaps ten times as much through such breaks as it will spend on PERS, yet neither Ms. Walsh nor the Oregonian mention such enormous giveaways as a reason for a tight budget. There are literally hundreds of such breaks, some dating from the 19th century, eating away at public revenues. THERE is the real story for Ms. Walsh but it was ignored for the anti-union sensationalism promoted by the Oregonian. Most Oregon public employees would prefer more current income instead of promises of possible pension largesse in the distant future. Unfortunately that reality is subsumed by the outrageous payments to coaches and administrators who ironically are not part of public employee unions. Unions bear the criticism that should be directed to legislators, administrators, and politicians.
23
Josephine County has extremely low property taxes. This causes the budget shortfalls and this is compounded by past PERS expenses.
5
In my opinion, it is a shame to expose the few people in Oregon who receive over-sized pensions.
Rather, the real bad guys were the state employees and shameless private sector concerns that cut these folks a deal in the first place for a very short term gain for another dubious purpose.
In the case of the football coach, the deal was done for the purpose of lining the pockets of state entitles that profited from the endorsements generated by the coach.
Where did that money go? If at least a portion of it didn't go into the retirement fund to cover the coach's pension, there was severe
financial mismanagement... and the public affected by it have every right to sue the State of Oregon to recoup the money to have the school activities they lost that resulted from that egregious mismanagement.
Follow the money, and you'll find the true bad guy. More than likely, if you look further, you'll find even more mismanagement. Its the responsibility of the state to examine this.
If the state doesn't do that, then the people should make their voice heard, and get the best attorneys to track down the real bad guys and prosecute them to the fullest extent of the law.
Daryl
4
Always worth noting that the employees always make their contributions to pension plans: it’s deducted from their pay. It is the employers who too often welch on the deal leaving the employee stranded as they wail about greedy unions.
6
Not in Oregon. Previous negotiations have the employer often covering all contributions.
5
Slash the pensions! There is nothing else to do. A football coach getting $46K/mo after 13 years of walking the sidelines is profane. I live in CA and the stealing by public employees through pension benefits and rules that allows double dipping is an epidemic. Perhaps a State filing for bankruptcy may be the only way the runaway public pension systems can be trimmed to realistic levels.
7
So you’re saying that because a football coach gets a pension you find inappropriate ALL public sector pensions in Oregon should be slashed. Using similar logic, you will agree that because some Times readers have obscene wealth your investments should be seized.
8
Not all public pension systems are so mismanaged, but the headline of this article suggests otherwise. The blame in Oregon rests with lawmakers, not the vast majority of pensioners in Oregon and elsewhere who have worked for decades to earn relatively modest pensions. Yet it is they who are likely to see their benefits reduced as public pension systems are indiscriminately attacked by the right wing. The taxpayers didn't "give" me anything as a public employee; I worked hard for my paychecks and it was understood that my pension benefits were a form of deferred compensation.
7
Deferred compensation equates to "we don't have enough money today so we'll burden the next generation with the bill". And of course why would there be more money then. This is not negotiating, because the ones paying the bill were not there. Only politicians, union leaders, and public officials who were more worried about getting re-elected or keeping their job than doing the right thing.
7
Baby boomers have an entitlement complex.
1
The article does not bear out the claim that unions are to blame. The lawmakers make the laws, not the unions.
No union can buy that many lawmakers
1
Early retirement with such high monthly payments is a scam on the public. I support unions and labor rights across the board, but when society tolerates such excesses the damage done adversely affects the majority. This is just not right.
13
This is why even FDR was opposed to public employee unions. No one represents the taxpayer at the bargaining table.
6
It's also ironic that those of us in the private sector who don't have pensions even though we have worked our entire lives and will be forced to work until we are 65 or older will be the ones paying taxes and funding these oversized pensions. Retiring at 50, 53? In my dreams.
3
Some government jobs will pay less than the equivalent in the private sector.
1
I have lived in Oregon for 40 years. It is really sad to see our school system and the infrastructure go down so much. I value the public servants quite a bit. But I do not understand 3 things (1) why are well paid doctors etc part of PERS (2) why is the rampant abuse by the top earners tolerated by the rank and file (like teachers and such) and lastly (3) we have created a two class citizenship in PERS. Why are the newer workers who are getting the shaft not fighting this?
18
One thing not mentioned is the clout that local unions have in small towns to get generous pensions. In my small town in the Bay Area the firefighters union pays for and endorses city council members, and runs ads for and against council members (which should be illegal because they determine their benefits) to the point that council members are afraid to endure their displeasure or wrath, and are lobbied against and voted out if they do. The council members they buy then approve or continue generous pensions that allow firefighters to retire as young as age 50 after just 10 years of service, with full health benefits for them and their family forever and very generous pensions that are based on their highest annual salary (usually bloated with overtime to pad the numbers) The result is pensions that are astronomically high and, as mentioned in the article, crowd out other city services - subsidized housing, education, libraries, road repairs, parks and recs etc, etc. Nobody seems to notice until things are very dire indeed, which may be soon. Firefighters and police deserve a fair pension but not to the point of feeding at the trough so extensively that everybody else loses out.
15
Exactly...which is why public unions should either be outlawed and/or be barred from contributing to any public election
12
Yet giant corporations who increase profits by keeping wages down should be able to continue to make political donations?
10
That's the problem, the average Joe looks at others in his class(Blue Collar) and says why do they have those benefits? I don't!! Yet these are jobs open to all!!
Crabs in a barrel type situation
1
The whole idea of states taking over union pensions is plain silly. Check out Ontario in Canada. There, the pensions are privately held. Look at Ford, Chrysler etc. these union monies are held by the unions. Teacher pension.s should be the responsibility of the unions. Not the state. Same for police, university faculty, fireman etc. Taxpayers should not be liable for union decions. Ever.
14
Pensions of public employees have been the responsibility of cities, counties or states from the outset. Characterizing them as "union pensions" is ridiculous, uninformed and disingenuous.
2
I don't feel sorry for Oregon. They are a red GOP state and they voted for no more taxes. Anti tax votes means government ceases to exist. In Curry county their library closed police laid off, no EMS and the jails may go next. The teachers need to have sit ins at their congressman and senators offices and ask why is your pay higher than mine. I'm the educated one. See if they will share their million dollar salaries with you.
3
Oregon has 2 Democratic Senators, a Democratic Governor and State Legislature, and 5 out of 6 Democratic Representatives. It’s a blue state.
25
Actually you might be confusing Oregon with Oklahoma. Oregon is most definitely NOT a "red GOP" state, unless you're talking exclusively about the eastern part of that state, which is one of the most remote regions in the country.
17
Actually we have four of five Democratic representatives. Our population growth might qualify us for a 6th representative after the 2020 census, but as of now we have only five Members of the US House.
5
A bunch of complainers. These hard working retirees earned their pensions. Raise the taxes more. Those citizens have plenty of money. Teachers deserve higher pensions. We want more stuff.
4
I may have worked hard as an Oregon employee at $25,000-30,000/year for 30 years, but it doesn't mean I should have a pension of about $45,000/year! The "money match" formula should have been changed decades ago.
16
Irony, yes? I hope. Tap all pensions at 60.000.. that is enough.
1
I am glad hardworking teachers in my family going back three generations have-had PERS Clearly tier one became too expensive by the '90's, but the courts have ruled it can't be touched, despite bi-partisan legislative efforts.
I learned in this article that when it was ruled that state retirees had to pay taxes, the legislature increased PERS payments by 9% for PERS employee. It is implied the LEG did so out of fear of a court challenge, but I wonder if that is one benefit that could legally be rescinded?
It also needs to be added that the OR LEG offered a doggie bone to the taxpayers in 1979 -"the kicker" rebate, which is issued when the calculated revenue for a given biennium exceeds the forecast revenue by at least two percent. Voters liked it and voted it into the constitution in 2000, while lowering & capping property taxes in 1990 and voting against sales tax proposals numerous times from the 1930's through 1993.
Oregon has been innovative in many areas like primary elections, open beaches, land use, and the bottle bill, but on economics we have been our own worst enemy.
8
1.9 million a year for a college football coach????? Our priorities are obviously upside down........76 grand a month for a pension? I believe public servants (and ALL workers with a full time job) should be paid a living wage with a pension of some sort, but that is truly ridiculous. Reboot the math with a system calculated by someone with a little common sense.
19
That should stop right now. It is not the priorities are upside down, they have no priorities. For shame.
Public Employees cry all the crocodile tears you want. Even taking 6% of your paycheck (oh my), and an equal 6% state contribution, receiving an average of $40k per year pension pales to the rest of the 70% of Americans Social Security take. Do the math.
You retire at 55, get 40k for 30 years or $1.200,000
The rest of us need to wait to 62, get $24k for 23 year or $550,000
and this does not include the generous health benefit that you get.
16
There are no health benefits after retirement.
1
Perhaps you should work harder to restore unions to the point where they can demand that all workers get a proper pension, and health care, and protection from corporate excess! Instead of complaining about those who still command such compensation.
3
No public employee deserves a $76,000 per month pension.
2
This crisis will end in financial collapse--a time-bomb waiting for every state and local government without the courage to say "no". The real threat to our economic survival--ain't the Chinese and certainly not the Russians.
16
Right you are. The real threat is those folks who think that people should work until they die.
Well - according to this article there does seem to be problem. This should be addressed by changing the system (and it seems that there have been some changes made). But, consistent with the rule of law, pension obligations accrued under the agreed and published terms of employment should be honored in full - a deal is a deal. The people of Oregon will simply have to pay up to meet their obligations.
Of course, one consolation, somebody receiving an income of $76,000 per month (from any source) has the means to contribute a lot of tax revenue. Therein lies the obvious remedy.
3
I don't understand why a "deal is a deal" with public sector employees but not private sector employees. Why discriminate against a specific group?
1
But can in fact solvent private sector employers abrogate their contracts with employees? I don't think so.
1
What about the young people saving part of that money for their later years? Nonsense! Cut that down to size, what is the matter with them?
I worked in the pension field. What I find missing here is why -- very long ago --Oregon didn't close the plan they had and start with a new plan that applied to all new hires going forward.
6
PERS
Tier 1
Tier 2
Tier 3
Tier 4
Each one a big reduction of benefits. At least PERS retirees aren’t going to need public assistance and need Medicaid to take care of their long term care needs like half of Americans who have no retirement savings at all.
3
Actually they did.
1
Reductio ad absurdum. they have Medicare and their expensive supplements. enough with the handouts. they should be ashamed to take that money.
1
I am an Oregon teacher and retired last year after 26 years in the system. For ten of those years, I did not receive a raise or even a cost of living increase. The district, pleading poverty, choose to bargain with increased PERS benefits. I watched my husband's salary shoot up and almost double mine in those years but I knew I would have a decent pension when I retired.
I receive about $3100 gross per month. My gross salary when I left the profession was $82,000 so the pension is less than half.
The people with the huge pensions you mention in the article made some lucrative deals and their universitites negotiated with them but they are, by far, rare cases.
People forget that the PERS benefits were negotiated in lieu of salary increases year after year.
22
You stated the reason for not receiving a raise was your district had no money. If there was no money then, why would there be more money for retirement? This is the classic kick the can down the road. The harsh reality is no raise, and no pension increase, because there is no money. But instead you burdened the next generation with your demands. Only in the public sphere can you spend money you don't have and stick the unrepresented tax payer with the bill.
6
This was the employers' idea. We, the workers, wanted our fair increases to keep up with the cost of living. We didn't negotiate this.
1
Generous pensions for public workers are one of multiple ways current generations make later generations pay their bills. I think that if your generation votes for generous pensions, then that generation is responsible for paying the bill.
10
Mathematically speaking, if Oregon funded their 6% share of the pension at the same time the teachers did they would reap the same bull market returns to match their pensioners and would be fully funded. I realize it’s easy to get the readers riled up about pension amounts that are high, but it’s somewhat disingenuous when the article makes no reference to why Oregon has to make local communities contribute to growing costs without explaining why they’re ballooning... from not being fully funded for 30 years so Oregon could do other stuff with teacher pension money. Same problem here in Connecticut. Hope you got your clicks, NYT.
9
It's not complicated: cost are ballooning because unions pushed for, and legislators made, irresponsible promises that they could not keep. Sorry, I wish it were different, but bottom line is that OR, CT, etc. public pensioners are being paid from future generations.
7
So I read the wrong post in my last response. It was from someone else. Yes, the costs are getting carried to the next generation because the existing generation refused to fund it. That doesn’t change that the existing generation deserves their pensions.
1
They’re not greedy. If you’re reacting to the handful of expensive payouts this article references you’re a sheep. Oregon decided to make contracts with pensioners and didn’t contribute over many years. It’s called compound interest and market returns that Oregon didn’t take advantage of because they wanted to put that money towards other things - it’s like all the credit card users across this country, I want this flashy thing now I’ll figure out the rest later. That’s not greed on the pensioners, that’s fraud and mismanagement by Oregon. I imagine if the terms were different you’d lose your mind over the level of theft by the government and expect them to pay what they owe... let’s change the terms to Veterans. Veterans are told they’ll get certain services for their duty. The government didn’t fund it properly so instead they’ll cut the service. You wouldn’t be calling Veterans greedy. Just because people work for the government doesn’t mean they’re exempt from retiring or benefits.
Of course, this article doesn't mention that Josephine County, where the sad tale of Three Rivers unfolds, has no money for law enforcement and emergency services because *they don't want to pay for it.* They stopped paying the taxes that provide these services years ago. Don't take my word for it - https://www.revealnews.org/article/in-the-rural-west-residents-choose-lo... Josephine is dealing with the repercussions of their libertarian anti tax ideology. Seems more than a little dishonest of the writer to exclude that "tiny" detail.
15
Agreed. Josephine County has the lowest property taxes in the state.
4
Easy fix - just pass a sales tax. Oregon is trying to fund public services with just income and property taxes, which won't stretch. Also, many Oregonians pay almost no property taxes because a lot of counties have been dependent of federal timber money to cover basic services for decades. This handout is almost gone and the "timber counties" have repeatedly rejected the property taxes needed to pay for police, fire, and schools. Stop blaming PERS for a defective tax structure and voters who want other people to support their local schools and essential services.
9
Our state income tax is already pretty high. I also disagree that our property taxes are low. At least that’s not my experience. I wouldn’t be against a sales tax if we got rid of the income tax (like Washington). That won’t happen though. Pensions have proved too costly for corporations and for states. They’re essentially long gone in the private sector, but public employees have somehow managed a better deal for themselves. The Oregon Legislature has attempted reform but has met resistance at the Oregon Supreme Court (all pensioners, I should add). I appreciate other’s critiques about the author’s use of sensationalist anecdotes to support her point. But, I think the author does a good job discussing the true cost of this (hopefully) dying retirement system, e.g., cutting teachers in well-off Beaverton. PERS truly does pass the buck, so to speak, to the next generation.
9
Another argument for people working until they die. The real solution is to recognize that, instead of dumping on ghost who actually have a decent retirement, we should all be working to ensure that everyone has a decent pension. Instead of kicking old folks to the curb.
2
No one values public employees, least of all teachers. Everybody believes teachers make too much money, don't have to really work, and don't deserve anything above social security in their retirement. The fact we have people who teach every day, every grade, and every child who shows up astounds me. Teachers get no respect, and would have no retirement if it came up for a vote. Truly, we are a nation that does not value education or intelligence, not even in our leaders.
12
Declare bankruptcy. Start over. Cap pensions at no more than $76,000 A YEAR.
Problem solved.
14
$76,000 a month. That’s not a pension, that’s grand larceny. The morons who allowed that should have to pay it themselves.
30
Agree that this is an abomination. But the people responsible are, well, the people.
1
We are extremely badly governed.
Our democracy is vanishing, thanks to a creeping oligarchy and two parties that seek to outdo each other in moral posturing and in ginning up asinine culture wars while they neglect the most basic requirements of good governance.
While each party preens and signals its superior virtue on nonsense issues, they neglect basic fiscal sanity and pay their minions ruinous pensions.
Our schools are a joke.
Our roads, bridges, ports and tunnels are a mess.
Our health care system is collapsing. One third of American adults have or are about to have diabetes.
Our children are immersed in a culture of garbage that makes the old pre-digital world of television look good. Moronic overgrown adolescent billionaires rule our news culture and our political debate.
We are living through a dystopian novel.
ENOUGH. We need a new political class.
27
Well said across the board!!!
5
Stories like these infuriate me because thousands of public employees (like myself) who earn far smaller pensions will be victimized when leeches like these suck retirement funds dry and politicians start to clamor for reduction or elimination of ALL government pensions.
40
Sad but true.
This article ignores the giant “elephant in the room,” and incorrectly lays the entire blame for local government funding woes in Oregon on PERS. It is true that growing PERS pension costs have placed a big burden on local governments. However, the article completely ignores the significant – and far greater -- impacts of statewide property tax limitation measures passed by Oregonians in the 1990s.
These measures created “death spiral” for our local schools – and created big funding problems for cities, counties and special districts.
For 25 years, our Legislature has struggled to make up the loss of funding to schools -- but has never come close to adequately funding them. Cities and counties are mostly on their own. Schools have been laying off teachers for 25 years, long before PERS was a “crisis.” Cities are filled with potholes and weedy parks from lack of funding.
So it isn't just PERS. We could solve the PERS funding issue, and cities and schools would still have a significant funding issue. A League of Oregon Cities “primer” on these measures and impacts, in which it says they (combined with rising health care and pension costs) have resulted “in a steady strangulation of city finances.” Click on the PDF for the full report.
Here’s the link:
http://www.orcities.org/Portals/17/Headlines/Measures%205%20and%2050%20A...
9
So if you could tax a house worth $210K at $15K a year, like they do in NJ, everything would be great?
I think I see why the voters voted the way they did....
22
Jonathan - While NJ is known to have exorbitant property tax rates on assessed valuations, I think it is of no value to use hyperbole in this discussion about Oregon. Please provide a source for such a claim.
I find NO information, I know of no one with a property and fixtures in NJ assessed at $210,000 paying over $5,500.
There is information available at many real estate and finance sites for more accurate information regarding property taxes on NJ properties ... and all states, including Connecticut.
3
Obviously from someone who does NOT own a home. Tax the other guy yeah! But you will be complaining bloody murder when the apartment you rent increases, due to the Tax on Property Owners, who then pass it on to you.
Has anyone considered how the Bush and Trump administrations, with their irresponsible financial and fiscal leadership and lust for deregulation of financial markets, has made it impossible for even the best fund managers to meet the historical returns targets (around 8% per year)? That is a major problem, and it continues today--undermining the progress made when Obama was president--and a major reason why pension funds are struggling and why people with 401ks can't keep up, either.
4
What progress was made when Obama was president?
3
Glad the public sector employees live like kings at the expense of the rest of us.
10
Please do not lump the great majority of hard working government employees with the fat cats mentioned in this article. Their payouts are in no way representative of what the average state worker gets. I retired recently, after 32 years of state service, and am barely getting by with the total of my pension and social security. I earned my pension by working all those years to help people with disabilities, and am proud of the work I and other people in public service engage in.
21
While I appreciate your service of 32 years, do you realize that most people will work 40 + years, and more and more people are working into their 70's ? This "concept" of working only 30-35 years and thinking you are entitled to retire no longer exists unless you are a public employee.
17
You are assuming she had only one job her whole life. I worked for the state for 30 years, and I worked at other jobs for 15 years before that, and retired at 67.
6
“Even as the American economy is humming, many states and cities are still hurting from the 2008 financial meltdown. The crash hammered their pension funds and tax revenues, but didn’t reduce the amounts they owe retirees.”
Not enough credit goes to the Republican Gramm-Leach-Bliley Act, signed into law by Bill Clinton which repealed part of the Glass-Steagall Act of 1933 which was enacted the last time banks crashed the world into a Great Depression. Credit George W. Bush and Alan Greenspan too, who thought banks would regulate themselves. Now the banks want to be taken off the leash again. They are even bigger now than the last time they were too big to fail. John Kenneth Galbraith’s “The Great Crash, 1929” written in 1955 shows how eerily similar 1929 and 2008 were. Goldman Sachs played a big part in both crashes. Wall Street is populated with vampire squids as per Matt Tiabbi’s writings
Although Oregon’s PERS investments were and are very well managed, the PERS portfolio took a -27% hit in 2008. It takes a long time to recover from a big hit like that. Go ahead and blame the workers. I blame the bankers, the GOP and the complicit Dems for letting this happen again and again. Warren/Sanders 2020. The real populists.
18
Excellent points. And people say bipartisanship is dead.
4
I believe the market is up over 250% since the crash. What were they doing for the past ten years? This is A problem of Oregon’s doing, and they are run by Democrats.
Thank Barney frank for force feeding Fannie and Freddie with bad mortgages.
1
If you're going to take simplistic view of the inability of San Francisco to provide a decent wage for teachers, all San Franciscans are informed that it's the cost of living, primarily housing, that makes it impossible to provide a decent wage for service employees. I don't know how the city can keep up with the real estate speculation and price gauging. The rest of the country is going that way with homeless everywhere.
8
if not mistaken, as Speaker of the House, Paul Ryan will also receive monies for office and staff for “unfinished work” which can continue for years
8
A formula is fair to everybody, so if there is a problem in the system, there is a problem in the formula. You can fix the formula, but in this pension case, you need to wait for decades before the fix actually works (and the system may bankrupt before that). I know making a long-term plan is hard, but someone should be blamed if it fails.
2
In Oregon PERS recipients also get healthcare, which also extends to their families and dependents.
7
Manny, they do not receive free healthcare, they can buy it if they have enough time in the system. It is not cheap, most buy other insurance not PERS insurance
9
This is simply not true. PERS retirees get absolutely zero in the way of healthcare--not a penny for themselves, families, or dependents. They can purchase medicare supplemental through a PERS coordinated plan--but at cost, without any state financial support.
9
Another piece of complete, unfounded misinformation. PERS does not provide free healthcare to any retiree. They put out bids for a pool of insurers to cover retirees, but the cost of participation is borne entirely by the retiree. There are some small subsidies available to certain employees that offset a small portion of healthcare expenses, but you have to enroll in one of the expensive PERS plans to get the subsidies. Many employers allow their retirees to continue to enroll in more favorably priced health options through the employer, but no purchase subsidy is offered. A very small number of employers offer a small "bridge" subsidy for long-time employees to cover pre-Medicare insurance costs, but these are employer specific and unrelated to the retirement system at all.
7
Coming soon to America: class warfare. This will perfectly complement our never-ending culture wars. Wonderful.
18
New Jersey, Oregon, it is basically the same formula for a financial crisis: Powerful teacher and public employee unions funded election their own candidates. The majority elected officials, controlled by unions, supported the massive pension increases. It is a very simple formula for financial disaster that is being played out in a similar way by the Federal government and it's massive deficit that supports medicare, medicade and other government handouts, AKA entitlements. It is a problem that is driven by greed that may be too deeply rooted in human nature to fix.
11
Sorry but Oregon's history is far more complex and defies your narrative. As for SS and Medicare, I would hardly call these "entitlements" since we and our employers paid in for these benefits throughout our entire working careers. They only become an "entitlement" if you think that we are getting them for free and that we never paid for them in the first place.
20
The point is that the "entitlements" and the rest of the federal and many state budgets, is far less that they have promised to pay for without creating massive debt and obligation.
5
The average SS recipient gets back between 30% more and 3x what they paid in depending on several factors. Public pensions are sucking us dry. In the mean time we cut taxes for the rich. The private sector has eliminated the problem by largely doing away with them except for the very top. Sound familiar?
10
So many nytwits still blaming Republicans and rich people here for out of control public employee pensions. The very people who have railed against these payouts to DMV types for years. Honestly, you just have a side now, no argument.
The firing of Andrew McCabe feels a lot better now, doesn't it, now that we saved a lifetime pension on a 49 year old, at least at the federal level.
Break these public employee unions, which are totally illegal to begin with. Pay them a dignified wage and give them dignified work, and maybe then we can have nice things again.
14
"Pay them a dignified wage and give them dignified work..." and you sir, I am sure, will be first in line to provide these.
6
Bob, you know nothing about me other than my own words. You make my case for me by parroting the snark and presuming the worst. If you had any sense, you would know that line you speak of would be long indeed, because most people are good and decent, and just don’t like being taken advantage of by the immature and selfish thinking you endorse.
I recently retired at age 65, from my teaching position at a NJ public school district, after 25 years of service. I received no pension credit for the seven additional years I taught in private schools.
I obtained a Master's degree and thirty additional graduate credits directly related to my teaching position. I now receive an annual pension of $34,800.
The school district administrators were very unhappy with those employees who took their sick days, even when really ill, or when they caught an illness from a student. Needless to say, there were many days when I should have stayed home, but I didn't want to deal with the comments that would be made, regarding absence, on my end-of-year evaluation. I received an additional payment of about $1500 for unused sick days.
Obviously, a person who receives $76K/month is milking the system, which is ludicrous. However, attacking all public employees who receive a pension is unfair, to say the least. I never received any bonuses for my work, except the pleasure of seeing my students learn and leave my classroom each June knowing far more than they did when they entered it the previous September.
Most people make career choices based on their desire to do a job and the salary package they'll get. If you think a teacher's job is great, then you should've trained to be a teacher! You should also have factored in the work you'd be doing until midnight most days so lesson plans and grading papers would be completed on time!
37
I think everyone should be responsible for their own pension, i did it and I''m proud of the fact that I did and without tax support so it can be done. Teachers often get a bad rap but I will tell you as a person starting out in teaching there are still plenty of bad ones. The smart ones have second careers that working 8 months a year allows and good for them and why not. You think staying up late is hard try working for 12 hours a day 11.5 months a year. Half the problem is the "poor me" that public servants cry about when it comes to the entitlements, I heard a comedian say "a hero is now someone who shows up for work". Very thought provoking.
I do not deny you your pension it is yours, but common sense needs to rule a littel here.
4
If you're happy funding your own retirement, that's great. If all you got from my comment was that I didn't like staying up late, that's unfortunate for you. What job do/did you work for 11-1/2 or 12 hours? I arrived at work at 8, stayed until 5:30 doing work in school, came home and made dinner. Then it was back to work in my home until I was literally falling asleep over my papers. I took 15 minutes for lunch on most days. That adds up to at least the same 11-1/2 hours as you say you work. Most people with high degrees of education as I have make a lot more money than I did, but I chose my profession because I wanted to make a positive difference in kids' lives. I only got a paycheck from September until June. There was no pay for the summer. I worked a summer job for many years and only had a week off from both jobs at the end of August.
8
RE: I received no pension credit for the seven additional years I taught in private schools.
Why would you? It sounds almost as if you writing that you should have.
This analysis seems to ignore an important fact about how pensions as deferred benefits often work. They were initially set up with the analysis assuming that the unions would continue to have robust memberships where the current members would help fund the pensions and in return those members would count on the unions having stable membership in their own future to pay for them.
Things like automation, increased worker productivity, and of course hostility toward unions in the form of things like right to work laws savages those assumptions and made the financial models upon which the pension plans were crafted to be wrong and now underfunded.
I’m not saying that the outlier pensions like a guy taking home 70k a month isn’t absurd and egregious but that’s not what is bankrupting these benefits systems.
5
Does Oregon have right to work laws?
1
Your a politician. You want the support of a public employee union. You promise them a generous pay/benefits/retirement package. You get elected. You serve your term. You leave. The bill comes due. The only people left are the public employees expecting to get their retirement and the taxpayer left holding the bag. Come on nyts, your located in NYC right, this isn't news is it? Apparently NYC pensions are only funded at 71%. Could be worse, Chicagos are at 20%. This reminds me of issues like popultion growth and national debt- don't talk about, maybe it will go away.
15
"2,000, like Dr. Robertson, who get pensions exceeding $100,000 a year."
how do you compare 76000/month with 100000/year. That is big jump.
17
Republican policies that put us a third-world level of tax and income distribution have achieved their goal: we are now Papua New Guinea--with nukes.
7
This topic has little to do with political parties. Both are at fault.
8
Not exactly. The democrats tend to be the guys giving away the farm to public unions and welfare recipients. The repubs mostly just cut taxes for their buddies. If your in the ever shrinking middle class, you just get to pay for both ends.
13
Pensions are now in the past
I am a federal retiree who is grateful for my pension (I contributed $116,000 post-tax toward my pension). I am lucky to have a pension and post-retirement medical coverage (which I also pay for).
Newer federal employees receive smaller pensions, work longer and pay more into the FERS retirement system than I did. They may also contribute pre-tax to the TSP (like a 401(k) plan) to provide them with added retirement funds.
Pensions for both private and public employees are being eliminated in favor of 401(k) plans. It is cheaper and easier for the employer because they are obligated to make 401(k) retirement payments based on what the employer and employee have in the fund. If the fund performs poorly, retirement distributions will be correspondingly reduced. Thus, risk is shifted to the employee. The employer is not legally obliged to pay a certain monthly amount, unlike a pension.
Thus, any employer knows it’s annual obligation and future events will not change its liability.
6
"Why States and Cities Are Short on Cash"?
Could it possibly have ANYTHING to do with the fact that many states (NJ, for one) slashed taxes for the rich, refused to raise taxes even on millionaires, and deliberately UNDERFUNDED pensions for years?
In NJ, this started with Christie Whitman, continued with various governors, and reached a crescendo under Chris Christie's mis-rule. In order to "balance" a budget the state simply doesn't make its contractually-obligated contributions to the pension fund for state workers, does this for several years and then claims the "debt" is "unmanageable"! (Christie negotiated a "compromise" deal with the state employees unions, which he subsequently tore up -- i.e. he reneged on the deal HE himself had negotiated!)
That "voodoo economics" is then the basis for claiming that the pension rules have to be revised and the state basically wants to renege on its contractual obligations! (Which employees have been planning to rely on when they retire, in many cases forgoing raises and other perks to preserve pensions!)
This article (bizarrely) cherry-picks an utterly NON-typical situation in Oregon and suggests -- totally misleadingly -- that sky-high benefits to some are the reason pension systems as a whole are in trouble. Simply NOT true, as a rule!
This reads like something out of a Murdoch paper, not the times. Utterly misleading. One wonders why this sort of piece even got run, especially with NO context or counterpoint article!
17
Crony socialism. Who in the private sector gets these kind of deals? All these public pensions will bankrupt the system for all of us. Voters are never told about these crony contracts with public unions. No one with an ethical compass would accept contracts that let professors and coaches to receive $76k and $46k respectively. These contracts should be broken for the good of all public workers before the revenue stream dries up.
21
Why isn't the US like the rest of the world where we have Superannuation funds which are paid into monthly by employers at a rate of 9-13% of yearly wage that can't be touched until 65?
11
The 15.3% FICA remitted by all US employees to cover SS and Medicare is what we have here.
6
Amazing how an article on unsustainable public employee pensions can avoid mentioning the corrupt role Democratic state legislators and public employee unions play in creating these situations in states nationwide.
15
Just like in Kentucky, right? When was the last time Dems controlled anything there? They have a larger unfunded actuarial liability than Oregon. Your blanket assumption that this is corruption on the part of Dem legislators and Dem public employee unions does not address the fact that the majority of the top recipients in Oregon were never union-represented employees. In fact, no administrator in any public employer circumstance in Oregon is represented b¥ a Union. So pinning this on Unions globally, or Dems globally misses the point. In fact, many of the problems being complained about in Oregon were negotiated at the behest of a very popular Republican Governor from 1977-1985 (the late Victor Atiyeh). It was his idea to include sick leave accruals in benefit calculations, it was his idea to "pick up" the employee contribution to the pension INSTEAD of giving employees a heavily negotiated pay raise (win-win was his concept), and it was during his administration that the Full Formula (percent of final salary as benefit) came in as an additional benefit option. These are legacy benefits that no new employee hired since 2003 is eligible for. Moreover, the legacy benefit of the guaranteed rate of return expired for new hires beginning January 1, 1996. Many of the Oregon PERS "problems" simply require time to work through the pre-1996 members, allowing all the accumulated changes (20 or so since the mid 1990s) to work themselves through the system.
18
Not to mention during the period of of Atiyeh, state workers were vastlly underpaid in salary; for new hires at the time, the compromise was the PERS compensation at the other end of the tunnel. My wife's current PERS income would be hard to live on without our other investments, especially when her health insurance is over $900 a month. With that said, I believe that the top drawers of PERS need to volunteerly stop abusing the system.
8
Kentucky? No, California where the 3% at 50 rule applies and public employees can retire at age 50 at 90% of their final year gross salary.
Start work at 20 and retire at 50 after working 30 years. Be sure to work as much OT as possible in your last year to greatly exceed your base salary since it is that last year on which the 90% is based.
And, yes, Democrats in the California Assembly created that mess and will do exactly nothing to fix it.
10
I have maxed out my contributions to Social Security for 38 years in a row and I have reported SS wages since I was 12 years old, but if I die or retire in the next few years, my wife gets maybe $3400 or possibly $3800 a month from my SS or she can claim her own. I am fortunate to own a house, but with monthly rents in the Portland, OR area reaching $2500 for a decent 1 bedroom, how is all of this supposed to end well for older people?
11
Cut the pensions. 50K per month? Ridiculous.
17
Don't forget, the vast majority of pensions are way, way smaller and go to blue collar and other civil servants who earn ordinary amounts and receive typically modest pensions.
5
I hope all of these people with substantial pensions are turning around and giving big time to local schools.
Or I hope they die young?
12
Depending on how the pension is written they might be working at another job. I knew a person that had two pensions from two different organizations. Perfectly legal.
6
Much of these pensions are going to teachers, especially in cities like NY. Maybe they should do a little contributing. As far as the double or triple dipper goes, that is the name of the game. Retire at 1/2 pay at 25 years, get hired back on as a contractor at a similar wage while collecting your retirement. Only in a government job.
3
In Chicago, a person can work for the public schools for one day and get a fat pension for the rest of their life. Of course you have to know someone to get the deal but its Chicago.
NYC has 'rubber rooms' where teachers sit, read, do nothing all day and get paid for it.
4
A missing piece of this story is that — fat-cat coaches and university presidents aside — for decades political leaders at every level offered workers good pension benefits in exchange for substandard salaries so they could balance budgets without raising taxes. They — and not the workers who accepted this bargain – are the real culprits.
33
Correct me if I'm wrong but there is no STATE TAX in Oregon !! Would it kill you people to cough up a few dollars a month to pay for this mess?
6
There is a state income tax in Oregon. There is not, however, a sales tax. I grew up there and saw several failed attempts to enact a sales tax.
3
Did you read the article? 9% state income tax.
4
Actually, the top marginal rate is 9.9%. Most people pay 9%, but many pay 9.9%.
4
Look who’s President — this is the work of greedy trump!
3
I mean he has been president for a year. Oregon’s problems pre date him by decades.
3
The Oregon PERS has unfunded liabilities of over $25 billion. That should have been reported in the story.
15
And that is typical of state and company pensions across the country. When push comes to shove they will be asking the Feds for bailouts.
You know what the one company whose pension is fully funded? The US Postal Office. The requirement was written into law by congress. Whenever the USPS asks for more money people suggest cutting the amount they have to put into the pension. We know now that isn't a good idea.
5
Interesting to check Bloomberg on Oregon's pension plan health: https://www.bloomberg.com/graphics/2017-state-pension-funding-ratios/
1
Do you mean to tell me that the left wing political model of buying votes in exchange for Govt largesse is unsustainable?
You don't say!
20
yes, as we can see, the right-wing model of buying politicians who will lower your taxes and direct public money your way is much more successful.
6
You hit the target on that one !
1
No theatre program? I have raised the substantial portion of $440,000 since 2014 to fund five part-time positions teaching dance and theatre in the Cave Junction schools that brings a world-class performing arts opportunity to the students. World class? Yes.
One of our staff is a graduate of Dell Arte of Humboldt County and my wife is one the the great choreographers of our time, and when she was in San Diego after 5 years as Donald McKayle's favorite pet student at UC Irvine, she created many (24+) of the most memorable original full-length works that city ever will see. The company, Eveoke, taught 60+ classes per week in the downtown conservatory and in the most needy schools, and produced one of the largest if not the most significant dance festival in the nation, producing 75+ companies on four stages to 12,000 patrons in Balboa Park, free to the public for 11 years.
When she and I left San Diego in 2007 (right after building out the 10th Avenue Theatre) to homestead and work in the appalachian pacific northwest region and homeschool our children, everyone said we were giving up everything we ever worked for -- WRONG! We have brought to this rurally isolated and generationally impoverished region what the Oregon Community Foundation has heralded as the model programming in all the state of Oregon. We have brought the community arts programming that would be the envy of any major city.
12
Chris, Hats off to you for being willing and able to replace that part of the public education program in Cave Junction. I had heard that in some cases nonprofits were stepping in to restore what was being lost to government budget cuts, but I was unaware of your initiative. Thanks for telling about it.
7
Good on you! I thank you, even though I don't have children. I was lucky in that I went to school in California at a time when they were the best schools in the nation, so there were always drama classes, chorus, after-school programs, interesting PE classes (fencing, gymnastics, etc.). It really saddens me to know that today's children who are growing up is middle-class and lower-class families (my family was the latter) barely even get the basics. Education is the gateway to a decent future.
4
Many would be profoundly surprised at the number of registered Republicans collecting inflated PERS pensions. What isn't mentioned is that those same people live in the finest residential sections of their towns & spend about as much time overseas vacationing as enjoying the wonders of nature in their own bailiwicks.
Most of the people I know believe teachers have earned every penny of their working salaries, clerical bureaucrats not so much. Pensions for all are outrageous.
11
I understand that these employees paid into a pension plan and they should absolutely be able to count on it. My issue with government pensions is that few private companies offer a pension; only a 401k.
It's time to look at military retirement pay also- not to mention the sham of Congressional benefits.
8
Do you know what people in the military make? That with the moves they have to make, how difficult it is for the spouse to work, to have any chance of advancement. For what they do even those that are not in combat, they are many times underpaid.
3
So rather than fight for the return of pensions in private industry you would rather take pensions away from the people who have still managed to hang on to them?
1
Finally public employees get their fair share. Why work all those years for 35 hours a week and try to make it in retirement on less than $100K a year? It is time the rich finally realized that a measly pension of $85-90,000 a year simply won’t cut it in this environment. There will always be outliers. So the retired Dean of the medical school makes $1 Million a year as a pension. Think of all the good he did!
5
One assumes you are being sarcastic.
11
REALITY: President Roosevelt was right in says public unions should not be allowed
15
Sounds like progressive politicians in Oregon are trying to bust some unions. Your neighbors to the south have an estimated $1,000,000,000 retirement deficit and they are trying to renege on their promises and contracts as well. What is going on out there? Have you no shame?
5
Hah, this is nothing. Wait till you look at California.
11
But California is going to secede from the Union and establish its own law and currency, right?
This article has no quantitative analysis showing how many pensions are as outrageous as the few mentioned. Fail.
This article has no analysis of progressivity of Oregon taxation, both statewide and local. Fail.
This article has no historical analysis of how public pensions have changed in Oregon or elsewhere. Fail.
There is a real problem about public pension liability. But this article merely resonates resentment.
53
Mr. Lercher, I'm sorry you didn't get the level of analysis and historical background you wanted. It does exist -- it just doesn't fit well into a standard news format.
One of the most important efforts to change Oregon PERS happened around 2000, when some cities and counties sued, after their mandatory pension contributions rose sharply. That litigation provided a wealth of information, including a Special Master's report commissioned by the Supreme Court of Oregon:
http://web.pdx.edu/~h1mf/Final%20written%20report.pdf
One finding responsive to your question ("how many pensions are as outrageous...") was that in 2000, the average public worker with 30 years of service retired at age 53, with a pension of 106% of his or her final salary. The Oregon state legislature had originally designed the plan to provide a maximum benefit of 50% of a person's final salary after 30 years. So people were getting more than twice the intended maximum.
State lawmakers tried to settle the litigation by establishing a more modest pension plan but the only people who got it were those hired since 2003. That's why local governments have been warned to expect their bills to keep rising for years -- many people with the older, costlier benefits have not retired yet, and PERS is now (belatedly) trying to properly fund their benefits.
There's a lot of history here, but I'm out of space. I hope this is helpful.
41
Thank you for trying to amplify the coverage of the subject, here and elsewhere in the comments, given the time and space constraints you describe.
However, I would argue that, if this topic is really that huge, complex, and critically important, it deserves a completely expanded treatment by NYT...perhaps along the lines of an investigative report...if at all possible.
It is painfully obvious from many of the personally affected commenters that the article was perceived as superficial or tangential, despite your best efforts.
At least we have a discussion started, but we need a more rigorous, comprehensive explication of the problem, not to mention a full review of potential remedies, maybe even by state.
1
Thank you for citing my post of the Special Master's report on the 2003 Strunk case.
1
I have been saying for years that public employee pensions must be capped. Say $50,000 per year regardless of how they may have spiked it or what their final earnings were otherwise.
22
I retired from the Post Office after 42 years, with the maximum pension of 80% of my high three years salary($50,000).After 42 years, I felt that $40,000 was very fair. State football coaches, college presidents, and others who make extremely large incomes, should not expect the same formula as lower level workers, as they have been paid so generously for many years, and can well afford to prepare for retirement. Anyone who has made hundreds of thousands of dollars a year, should have provided well for themselves. States should reduce the amount of pension for anyone making more than $150,000 a year. With the average income more in the range of $40,000, we cannot afford to pay millionaire football coaches, etc. huge retirements.
31
how is your high 3 salary only 50 thousand after 42 years? What did yo do in the postal service?
2
Johnny: everyone seems to think that US Postal pensions are GOVERNMENT pensions! They are not. My Husband stuck it out for 30 years and he now nets $31,000/yr and we pay health ins. Also, did you know that any pensioner who was under this program is not able to get his full social security benefits. They take off 2/3rds because you "worked for the government" so we get $254 SS. AND he cannot get any other social security, like mine, ex-wife etc. If he is eligible for any other SS payment, they take 2/3rds of that off and you pretty much get zero ! And my husband was a 'worker' not a 'shirker'. I believe that all employees after like year 2000 are now on Soc. Sec. Amazing what we learn along the way huh? Very interesting all the way around.
1
I'm surprised this article didn't talk at greater length about Illinois, which I believe has the most underfunded pension system in the country. Not a surprise, with the shenanigans that go on there: basic pension on the last few years and jacking up salary during those years; having more layers of school superintendents (for example) than any other state, all with their own vast set of employees; a crazed union leader for the Chicago Public Schools, for whom even during the recession, no raise was good enough; people like Mike Madigan in power for YEARS an refusing to make any changes even going forward; people collecting multiple pensions, etc. It's never-ending.
The pension obligations are one reason why people are leaving IL in droves. No one can afford to live there anymore, and you're getting less and less while paying huge amounts in property taxes, feed, and so on.
Ironically, I moved from IL to OR, and have to deal with the ridiculously high state income tax here. I wish I were rich enough to find/use all the tax loopholes that the rich do; alas, as usual, I pay the most, as part of the middle class. And that tax money is going for this ridiculousness, where pensions are calculated to include what wasn't even part of the state salary?? I'm speechless at that part.
14
Yes, I also was surprised at no mention of Illinois, which has, depending on who does the calculation, $130 billion in unfunded pension liability (Standard and Poor) or something north of $200 billion (conservative think tank). It's widely regarded as the most-underwater pension system in America. Regardless of the true figure, it's a whole lot of money, and the problem is getting worse, not better. It's not a stretch to say the pension mess is a drag on the state's economy. Someone is going to have to pay these bills that keep ballooning, and political leaders keep putting off the day of reckoning, making itty-bitty changes to the pension system that needs major surgery, if not downright elimination. We can fix this mess here and elsewhere, but it will take political courage, which is in short supply. All we have to do is, starting tomorrow, no more pensions. You get a generous 401(k) retirement plan and that's it. Existing retirees and workers wouldn't be affected--that would be illegal under the state constitution, not to mention contract law. But from here on out, no more pensions for new hires. When you think about it, that's about the only thing that will work, and it would work instantly. Otherwise, it will be more politicians doling out money with bills that don't come due until they're long out of office, which hurts everyone except politicians and government workers.
5
I believe they have tried fixing it in Illinois. The state and unions hammered out an agreement that was more a bandaid but it was something. The state supreme court junked it because its written that the amounts/ratios can not be changed.
1
This is an opinion piece masquerading as news. It is also innumerate. How could the Times publish an op-ed like this without so much as including an average or median pension figure? You would think $76k/month pensions were actually driving the cost of this system, which the author must (or should) know is a distortion.
This author of this piece has an opinion, which is fine. But even opinion pieces should come with a certain level of completeness and context. if this author can't do that, then this subject might be better for The Upshot, where topics involving numbers get a more professional treatment.
We expect better of the Times.
23
One $76000/mo pension [that should by all rights be approx 5K] depletes $71K from the system - to be used for services or pensions of others.
the problem building for MANY years has been that unionized public employees [police fire and senior admin] get private sector salaries and public-sector benefits/ pensions. It should be one or the other.
15
Both the article and many of the commentators seem to conflate the modest pensions paid to most retired public employees -- janitors, clerks, teachers, et al. -- and those paid to upper echelon administrators and coaches. The latter have much larger salaries, and often shorter stints with state institutions, than the former, so it seems disingenuous to treat Bellotti's and Robertson's pensions as if they were the norm. Further, since pensions are tied to salaries, these outsize pensions are not simply the result of the way in which the pensions themselves were calculated (http://www.oregonlive.com/trending/2016/12/top_state_salaries_in_oregon.....
20
JCS, I wish there were more space to explain Oregon's pension calculations. They are unusual, and they don't necessarily provide the biggest pensions to the people with the most demanding jobs or the greatest workplace achievements. In Oregon, whether you get a rich pension or a modest one can also depend heavily on which years you worked. That's because of the trustees' practice in the 1980s and 1990s of crediting workers' tracking accounts with stock-market gains. If you were already in the system in time to have an account balance when this was going on, you came out way ahead. People hired after 2003 don't get this option. So it would be entirely possible to have two teachers, identical in all respects (including salary) except that one worked during the 1990s and the other did not, and one would get a much bigger pension than the other. I hope that clarifies things somewhat.
18
In a state that pays into Social Security for it's employees, this does seem very generous. But conflating Oregon with other states is irresponsible journalism. Texas's system can be generous at retirement--35 years of service equals 80.5% of final pay at about age 58-59. However, there are no guaranteed cost of living raises--since 2001 Texas teachers have received one cost of living increase of 3%. It's not rocket science to figure out that those "generous" benefits will be rather quickly devoured by inflation. When you factor in the lack of Social Security for Texas teachers, it's quite a different picture. I saw this with my own grandmother. She taught for 42 years in Kansas and Arizona. She retired at 65 and passed at 92 in 2006. Her Arizona pension was 97 dollars and her Kansas pension was 217 dollars in 2006. Thankfully, she had the option to pay into Social Security and did so--that kept up with inflation and was fine. I myself teach as well as run a side business to ensure I have my full 30 creditable years for Social Security--I have no illusions that my pension will be any reasonable amount once I am truly too old to work. It certainly takes focus from my teaching, but I have to look out for myself. How do you imagine we will effectively staff the classroom if the pay is too poor to save for retirement and the benefits too poor to comfortably live on? Why would any reasonable person sign up for that? If I didn't have my side gig, I wouldn't.
3
And don't forget that when the big money hit, MANY Oregon employees quit, took their insane pensions and then hired right back on to start another one. (under another set of circumstances but still double dipping - would probably do the same myself with ten or 15 years still to go ! One of my neighbors worked in the school kitchen for 11 years and makes more than my Post Office hubbie does after 30 years !
1
As other have commented this is poor reporting by Ms. Walsh. Uses a few outliers to claim that is the reason why pensions are short on cash. How about looking into the politicians have underfunded the systems for years to cut taxes. Then, OMG, there is a problem.
13
$76,000 a month?
How much is Paul Ryan walking away with?
1
Ryan is 48, but has served 20 years in Congress. He is therefore eligible for a pension of about $85,000 a year when he turns 50 in two years.
11
Ryan's $85,000 a year is about $7,000 per month which is less than one tenth of $76,000 a month. It is time for the public to realize that when liberals start to spend money, they do not think of where the money will come from. And if you ask that question they will accuse you of cruelty.
Oh, well....
12
The fun part is to see their financial worth when they started as a newby and what their worth is now. Term limits is a great idea. When the corporations are running the country, our representatives are getting rich - for the most part.
2
What this story leaves out is that for academic salaries back in the 70s, salaries were far below the national average, and that retirement benefits were touted as an attraction to compensate for it. Later, the state picked up the contributions of the academics in lieu of a raise--deferred spending if you like. The state could have put aside money all those years ago to meet their future obligations, but left it for "later." PERS created their own problems, and it is rather disingenuous to blame the retirees.
12
I don't think any deferred salary is worth this much ..unless people were made to slave 17 hours a day with no pay/rest.
2
Don’t confuse the average faculty salary with the obscene salaries of coaches. Average retired faculty are NOT making megabucks, just comfotable retirements that are far below bankers, administrators, etc
7
Think of all those poorly paid professors who indeed work 16-18 hairs a day. You must realize that they are THINKING even when they are not in the classroom. That is hard work! Try thinking for a while! They are indeed slaving away. Thinking even while in the shower! We should be grateful for their thinking time, and express our appreciation with even more generous pensions!
5
The maximum Social Security benefit, requiring 35 years of contributions at the maximum rate, and recaching age 65 before collecting was $2,452 per month ($29,424) in 2016. That is the maximum pension that the vast majority of American private sector workers (who pay taxes to support public employees) can aspire to.
Every government pension system should have a similar cap. Or better yet. Every single government employee should simply get Social Security + 401K plans.
Every single pension plan is a pyramid scheme. There is no way for any pension plan to commit to pay benefits 40, 50, 60 years into the future. This math has not been invented. Therefore a benefit that can't be guaranteed can't be offered and should be outlawed.
There is not a single government pension system in the world that is not facin serious challenges. That is all you need to know. The only way the taxpayer can win this game is by not playing.
18
The maximum SS payment if you can wait until age 70 is about $42,500, assuming you maxed out over 35 years.
8
The federal employee retirement system is almost exactly that. They get about 1 percent of their top salary per year of federal service. As a medical sub specialist who accumulated 22 years of such service (during a longer medical career) my yearly pension is half of Dr Robertson’s monthly check. I will also collect a Social Security benefit and invested the maximum allowed in the government sponsored IRA-type retirement fund. It’s the state retirement funds that are wacko. Public service workers retiring at age 50 with pension incomes greater than they made while working, with full health care benefit. I gladly pay state taxes to support state infrastructure, education, safety net services, and yes, government employees. But I resent supporting these exhorbitant payouts to the few like Dr. Robertson and Coach Bellotti. And I’m a Democrat. I can’t imagine how Republicans feel.
11
No public employee retiring in Oregon gets "health benefits" as part of their retirement benefits. There are benefits negotiated for public employees by the retirement system, but they are expensive and nowhere near what you could get by remaining on an employer plan. Some employers (not the retirement system) provide bridge payments for a limited period of time for employees under Medicare age to purchase health insurance, but the bridge payments are generally small and only make a small dent in the cost of insurance until Medicare age. Once retirees reach Medicare age, the pension system also makes available Medicare B and D plans, but these are anything but cheap, and a small number of employees are eligible for a tiny monthly stipend to help offset the cost (only if you take the insurance, however). No free health care lunch in retirement for Oregon PERS retirees.
3
Under funding of pension plans is a global issue. In the U.S. private pension funds have about a 3 trillion dollar shortfall and the 20 largest OECD countries have a combined 78 trillion dollar shortfall. Then there is the very real looming retirement crisis. Half of all baby boomers have less than $100,000 saved for retirement and the problem is even worse for Gen Xers. In the U.S alone the top 1% control about 38% of the wealth. While there may be some particular policies with individual pension systems, the real issue is in how income and wealth get distributed. Along with fixing the $76,000 monthly pension for a very small number of people, we need to deal with the much larger issue of income inequality. Going after the pension's of teachers, police and other public servants, is not the problem. The problem is that the very rich have been able to stack the deck so that they capture most of the wealth and the rest of us fight over the crumbs. In the U.S. we need to go back to a top marginal tax rate of over 50% like it was during our golden age before the advent of Reaganomics .
16
Please explain how the "rich" have stacked the deck? Also, when criticizing the "rich" it would be helpful to acknowledge that the top 1% paid 43.4% of income taxes in the most recent year it was measured. Nearly 50% pay no federal income tax at all. Finally, what is the rational justification of the redistribution of the wealth that you advocate?
5
two words: paris hilton
2
The way government is run and the people elected to carry out the majority wishes is determined by the majority wishes of voters. No matter what the complaints are about sales taxes, pensions, property taxes, you name it, the people who elected them are ultimately accountable for what happened.
And any solutions, bridging measures or other means of dealing with past mistakes are equally the responsibility of the current voting public. If they would rather have school offerings reduced, fewer public services etc than more services or fixing what is wrong as much as can legally be done, then that is their choice.
I can understand the misery those who feel they are being punished for past transgressions, but on the other hand have no sympathy whatsoever if they can't find the gumption to fix their problems. As the old cliche goes, you can't have your cake and eat it too.
3
This is the type of funny math that kills pensions for everyone. I agree that most people would agree to get paid less during their working years to receive some type of guaranteed pension. But with these extremely high numbers, they are fueling the GOP's argument that pensions are a misuse of public funds and are not affordable in most US communities. If the Liberal left wants to keep pensions alive, they best make good economic sense and not be more than than what most people will pull from social security and hard saved 401K's.
6
There is no "funny" math involved here. There are a couple of outliers from a pool of more than 130,000 retirees. The outliers can be explained easily by referring to the system they belonged to. It is quite easy to compute their benefits from public information.
5
I'm a state employee, and have been concerned about political winds endangering my pension (corporations cut employees' pensions, politicians rail against spending on public employees, some private-sector employees who have been screwed by their employers turn against public employees). Many of us have forgone raises year after year knowing that our pensions would be there for us when we retire. Pensions should be honored. States should set aside money for them.
But this is ridiculous. Someone with a brain should have reviewed these plans when they were drawn up and agreed to, and mapped out what the implications would be. Shouldn't be that hard. Ravening greed is bad whether its corporate or employee.
14
It’s also Oregon’s fault for paying a football coach in excess of a half million dollars per annum in the first place. Waste once, double down and waste again. Municipalities should refuse to pay. That’s the only language the state will understand.
14
I hate to break it to you but Oregon pays its football coaches a lot more than half a million per annum -- last year it paid three head football coaches $8.4 million a year -- and that is just the University of Oregon and just the head football coach.
https://www.nytimes.com/2017/09/08/sports/ncaafootball/ncaa-coaches-sala...
6
Wait, what?
This article is written as if pension rules are some artifact from outer space. How do you write an article on state employee pensions and not mention the smoking gun?
UNIONS!
These rules are not random or capricious. They are negotiated formulas.
12
Why not write an article on how companies refuse to provide pensions because there ARE NO UNIONS?
Rather than despair above those who get traditional retirement benefits we should critique those companies that do not provide retirement benefits.
21
It takes two (or more) parties to negotiate. Of course unions will ask for generous pensions. They'd be doing their members a disservice to do otherwise. However, it is up to public officials to say "no" to unreasonable or unaffordable demands. They are supposed to be working in the public interest.
7
...and when one party supplies voter turnout to the other party in return for $800,000 pensions, so it goes.
4
I wonder how the blood suckers that collect these obscene payments would feel if they had to show up and talk to the public and justify the amounts to those suffering to pay taxes. This is Just the beginning of this slide.
10
All recipients of monthly benefit payments from Oregon PERS have their names and monthly payments published by the Oregonian on the web. It is available for anyone in the world to see.
Averages and medians culled from full databases give a false picture. The databases include those who worked in the pension system for a short time only, thus receive a minimal pension.
("You are vested in the OPSRP Pension Program on the earliest date in which you complete at least 600 hours of service in each of five calendar years")
To get a correct picture include only those who worked decades in the system.
4
Hello G.S. -- The pension plan you're looking at, called OPSRP, is the plan for all public workers hired after 2003. It was created by state lawmakers to hold pension costs to reasonable levels while still providing some retirement income to public workers.
The plan that's primarily blamed for causing the cost overruns is another one, called "Tier 1." That's the plan that allows retiring workers to choose the more favorable of two pension calculations. It's also the plan that the trustees speeded up the accruals for in the 1980s and 1990s. A court later found that the trustees had abused their discretion in doing this, but those who received the excess accruals were permitted to keep them.
One big problem: Local governments weren't billed for the inflated cost of the Tier 1 benefits until 1999, when their bills suddenly rose. That's one reason localities have now been warned that their pension bills will keep rising in the coming years: the pension system is trying to fill a very deep hole that was dug in the 1980s and 1990s.
If you read the description of OPSRP I don't think you'll be able to learn much about Tier 1. But Tier 1 is the biggest driver of the overall cost.
8
You don't get to throw out the data you don't like because they give you an answer that you don't want. That's not statistics; that's cheating.
1
The retiree does not select the monthly amount they will receive. Only whether they will add a beneficiary to the payment, leave any remaining balance after their death to their estate, or if they want to roll the entire balance into another retirement account or take a lump sum (cash) payment. The PERS officials decide what the best payment will be for thr retirees, based on the payout / beneficiary, etc., selection that is made.
What is missing from this article is the property tax limits imposed on local government since 1990; the fact that Oregon has no sales tax, and corporations pay some of the lowest income tax rates in the country. We could meet our public pension obligations and have good services if we would change any one of those policies or add a real estate transfer tax.
19
The next time you read a plea for increasing taxes to pay "heroic and our underpaid teachers, cops, social workers" think about the data revealed in this article. Most likely you will be reminded that for decades public employees have enjoyed much more generous and earlier pensions than private sector workers. And then you will perhaps wonder why state and local governments couldn't do the math necessary to deduct enough money from public employee salaries to keep the system in the black.
18
Maybe I am reading this incorrectly or I missed something, but the monthly pension amounts listed for Joseph Robertson and Mike Bellotti included additional entitlements such as product endorsement, licensing fees, incentive payments, clinical pay and unused sick or vacation time. If those additional extras had NOT been included, what would their monthly pensions have been?
I am not arguing that state employees receive a pension. They should receive one because they paid into their pension fund with each pay check. What should NEVER have been allowed are those incredibly over-the-top extras that probably add up to as much, if not more, than what their monthly pension would have been. Factoring in unused vacation time is bad enough, but unused SICK TIME? Seriously? It's those insane extras that are the problem.
The fact that lawmakers are allowed to sweeten their own nest eggs (which they will reap the benefits from for as long as they live) without any review, discussion, voter amendment, or approval from anyone other than themselves is criminal, or at least it should be. Public servants are just that - PUBLIC servants. Any time pension formulas and/or rule restructuring is considered which could truly heighten those yearly amounts beyond reasonable amounts should be left to the voters to decide instead of passing these greedy and ridiculous additions like thieves in the night.
16
Factoring in sick time has been around since the late 1979s, introduced by a Republican Governor who wanted to reduce absenteeism across the Board. "Use it or lose it" policies contributed to significant end-of-year absenteeism and lost productivity. After the 2003 reforms, which resulted in a diminution of members retiring under the original Money-Match system (where sick leave cannot be used in calculating the benefit), the number of people retiring under the full formula (years of service x service time multiplier as % x Final average salary) increased dramatically and the impact of sick leave and other forms of compensated and accrued time off increased the final average salary dramatically. Do bear in mind that counting accrued sick leave is not a system requirement; it is an option each employer decides.
The other factor omitted here is that "outside income" is available to relatively few people in the 300,000 members of the system. Where it is counted, the money has to be run through the agency, which then takes off taxes and other overhead expenses including pension contributions. This isn't a gift to anyone, and the agency (mostly higher ed) that permits it also is responsible for collecting and paying the required contributions. So, to a large extent, the taxpayers aren't really on the hook for any portion of those outside expenditures as the required payments to PERS should have been made. Much ado about nothing really.
1
...and don't forget how they "JUICE" the last few years of employment
to increase their pension payout amounts. This whole taking advantage and manipulating the system makes me ill.
8
I can understand allowing one year of unused sick leave for every 5 or 10 years of work. If someone gets a serious illness, it helps. And if they were always on time and present on the job, it is a good recognition of what they contributed.
1
Oregon has no sales tax. Zero. And one of the lowest state corporate tax rate. This article fails to mention either of these facts.
22
There are ways Oregon could help fix the gaps in funding for it's pension system. That would be to get rid of the Kicker. If Oregon didn't have this Kicker policy in 2017 alone, Oregon would have over 463 million more in tax revenue's it could use to help with the PERS shortfall problem. Here's how the kicker works. Every 2 years the State economist predicts how much the State will receive in all taxes paid to the State. If the actual amount of taxes received is 2% more than the estimate, all the amount over the estimate is returned to the tax payers. It's a stupid policy and does a lot of harm to Oregon. This article does a poor job of identify some of these good solutions. For one, is one of only five states without a sales tax. If Oregon got rid of the kicker and instituted a small sales tax, it could easily fix it's pension fund problem along with other funding problems.
8
Sue, no. Oregon would spend it. The kicker makes sure the budget is balanced, and unexpected revenue is returned back to the taxpayers.
2
Mike that is exactly the point. The money would be spent on the needs of the State. One being the pension fund.
2
Mike, it may require some fiscal toughness lawmakers to repeal the 'kicker'' and then dedicate those funds to reducing the tax burden on school district and other public employers. Possibly Oregon voters would support that repeal. Possibly....
3
This is similar to NY where city and state workers significantly pad their public pensions by working huge amounts of overtime in the year or two before retirement. Would love the Times to examine how that is affecting the finances of Westchester and other NY suburban communities. Taxes are getting insane and are putting the suburbs out of the financial reach of the middle class.
16
"I retired from AT&T in 1989 because of a "Special one time Early Retirement offer. Prior to that, for an employee to be vested in a pension required minimum age of 55 with 30 years of service and pension based upon average of the last 5 years of service (presumably the highest i the career). I knew many who left after 20 years with no pension. When I retired, my pension was calculated based upon a percentage of my "total cumulative salary over my entire service".
This makes sense because if an employers sets aside certain funds to meet the obligation based upon each year's total salary payments, then the problem will be less critical. If a person starts as an engineer for example in the Highway department at the age 22 and becomes Highway commissioner at the age of 50 with triple the starting salary, should his pension be based upon his last 3 to 5 years? I don' think the employer, a government in this case should be obligated to ensure that the retired employee enjoys the "same" lifestyle while not working.
Secondly, we should ELIMINATE the pension system. It requires the employer to maintain a staff to support the retired employee program. The programs have been based upon "longivity" studies. But we have been living much longer than previous estimates (I am 80 years old and collecting pension for last 29 years, longer than my service! No, I am not rich, but with Social Security and my savings, I am comfortable, with reliance on medicare.
5
I'm confused. Your pension, which allowed you to retire early from the private sector under a special deal, allows you to live comfortably, but future generations should be denied such an opportunity?
This shouldn't be about pensions or no pensions for public sector employees. It should be about fairness, loopholes, abuse, and reform.
The real trouble is interest-group politics, big money politics, dark money politics, and legislators bending over backwards to be bought.
11
The first rule of political reform is to start with an identifiable abuse that can be backed by publicly verifiable data. Once all the holes in the dike are plugged, it makes sense to ask where to go next. But, at risk of sounding "conservative", "first things first" makes sense to me.
3
David - YUP ! well said.
Financial literacy?
Future value of money?
Rule of 72?
Retirement planning?
TOTAL compensations?
"Fringe" benefit?
Return on investment?
Not to worry, No one knows about ignorance. No one cares about apathy.
2
My mother made about $359 a month from a public pension, after at least 13 years of work. Remember, a portion of that was deducted from her salary. Her life insurance was $3700. Every cent of that was gobbled up by the surrogate court after her she died (her lawyer did not have a copy of her will, or so he claimed). I'm a public employee, and after taxes, I have about $30,000 to live on. This is in NJ. My taxes also subsidize Pre-K, even for the very rich, and a huge chunk of my taxes are local school taxes. We don't all get rich as public employees. Personally, I would not recommend it, unless you are at the top of the food chain. At the bottom, you may even experience pay cuts.
3
Elected public officials created this problem. In NJ we have a similar situation, Elected officials from both parties were complicit in this mess. Here we have outrageous payouts to Police & Fire chiefs, school superintendents; municipal administrators etc sometime receiving payouts in the hundreds of thousands of dollars. In some cases municipalities have had to borrow millions to cover the payouts. People in NJ are disgusted yet there is no hue and cry to fix this issue.
5
Delaware alone among the northeastern states has an exploding population. Why? Because it is low tax, low insurance state with 0 sales tax. The silent hue and cry you hear are those taxpayers exiting Mass, Ct, NJ, and NY to DE.
Pay a college coach 2 MM/year and give him a pension based on it? Not much longer...
3
My wife is a "Tier 1" participant in the Oregon PERS system as the result of spending about 10 years at Oregon Health Sciences University before she moved on to the private biotech sector 20 years ago. Neither she nor I are retired yet, and it has been interesting to watch her Oregon PERS account grow at 8% (now 7.5%) "come hell or high water" while our other 401K style retirement assets have been hammered down and then boosted up by the stock market. But rather than focusing on a few ultra-high paid people, how about considering what is a fair and reasonable retirement income for a married couple who have worked 45-50 years in a row in public or private sector jobs with no breaks? Unlike the television commercials for the stockbrokers, we don't expect to be able to spend our retirement years in a condo overlooking the beach in Maui, but what is a reasonable expectation? Meat twice a week? Fresh lettuce every other Sunday?
15
I'm sure this has already been mentioned, but in addition to the needed pension reforms in many states (including my own state of Illinois,) we need to begin imposing a progressive state tax on pensions that begin at maybe $40,000 or $50,000 a year that go up considerably from there especially as we get closer to six figure pensions. Of course, each state would set it's own rates depending on need but short of congress allowing states to go bankrupt, I don't see many other solutions.
9
What's the justification? These workers paid into the retirement system while they worked, as well as paying state income taxes on their earnings. They pay income taxes on their retirement earnings as well. Why should anyone in this situation be subject to additional income tax just because they worked for a public employer and are receiving a pension that they helped fund though their own work. Makes no sense at all.
3
Pension defenders are mistaken.
To focus on today’s median or mean pension in Oregon misses the critical fact that those two numbers are growing rapidly year-over-year. If those numbers stayed frozen at current levels, Oregon would be fine. But pensions are decades-long obligations the state has to meet.
And to blame a lack of sales tax is similarly bogus. Most California communities have combined state and local slaes tax of well over 9%. Yet the state faces the same fiscal disaster as Oregon. See also Illinois.
For years politicians have negotiated generous pension plans for public workers instead of offering slalry increases. They did this knowing that when the bill came due, they would be long gone from office. Whereas with salary increases, those elected officials would have had to raise taxes, at their political peril.
So workers, politicians, and voters got what the wanted. For a while.
It’s small solace to know this behavior is not peculiar to the U.S. One need only read about what’s happening with England’s National Health Service.
6
I wouldn't like to say such a thing but I have to.
The generation Born after WWII till the mid-seventies are going to suck up our blood from our bone marrow before leaving this world.
It is not only the pension, it is their mentality degrading this nation and putting us out of the G7 league.
I live in New York, I gave you simplest example.
In NYC you can buy a most expensive home in the world, but when you leave home street pavement are the same quality as Mogadishu( Somalia).
And God knows I curse every single day to this negligent, degenerated Rural mentality.
My only relief of this degeneration, visiting Europe and seeing a 21st-century city ( Paris, London, Berlin, Barcelona, Madrid, Lisbon, Milan Vienna etc.
What a swamp leech generation they were?
10
Ah, the liberal chickens have come home to roost. The problem with socialism is that sooner or later you run out of other people's money.
20
If the Federal Reserve can just print as much 'money' as they want, why can't Oregon? Or each individual retiree? /s/
Do whatever you want to resolve this situation, (I would suggest hunting down the politicians and union leaders that okayed this and clawing back all their assets, and firing that doofus in the White House who loves his $3 million golf weekends, for starters) but if anyone comes for my crummy $1K Social Security check, earned after 35 years of hard labor in a rigged economy I couldn't save a damn thing in, I'm arriving in D.C. complete with rope, pikes, torches, pitchforks, tar and feathers.
11
There is a basic problem in news reporting where the examples used to help readers relate to the underlying issue dilute or distort And yes, they do contribute to bias. This article is no better. There are some fundamental problems with all defined benefit plans, even ignoring the outlier abuses. First, someone else is guaranteeing the underlying investment returns. Second, the payouts are based on an arbitrary formula. Third, a disproportionate share of the benefits accrue to long-term high paid employees. That's just for starters. Should we claw back benefits for long-term workers who, when they were hired, were very underpaid and considered that a tradeoff for a pension. No. But we can cap high pensions and start the reform process. No matter how you slice it, those reforms involve a transition to defined contribution (401k) type plans. Now lets start a real balanced discussion on how to move forward.
4
It's absolutely crazy that any coach or sport manager should earn 3MM year let alone 1MM and libraries, sports, music and other areas would suffer. School vs. sports is so backwards and antiquated thinking can't or not willing to change. give me ANY good reason why coaches should be paid more than any other teacher and you'll be wrong all the time????!!! Additionally, that anyone working for the city, state or other local government being a professional or not should earn this kind of money as reflected below is just crazy; the ones that do should feel ashamed over it.
10
No doubt you know that the Globe publishes the salaries of Mass state workers. State troopers are unbelievably common on the list.
6
I live in New York. Despite its reputation, its State pension fund is one of the best-funded in the country, one of the top five according to the last statistics I saw. This necessarily means the State and municipalities have contributed the necessary amount in the past.
Mark my words. When all those States that haven’t really do run out of money and the States and cities just can’t keep up, they’ll come for help from the Federal government. And they’ll say that those States that are “rich” should help out their less-fortunate fellow States. See, New York was the epicenter of the financial meltdown ten years ago so should expect to have to pay back for being saved.
And Kentucky is one of the worst-funded. I can’t wait to see Mitch McConnell pleading for help.
Shameless.
12
Will someone kindly tell Mitch to report to the county morgue!
2
This shows that NYrs will tax themselves to pay their bills, unlike other states that fall short and have to depend on the Fed to make ends meet. They are known as 'taker' states; NY is a 'giver' states. You're welcome.
4
To have it's programs "well funded" a state needs to collect taxes. Since so many voters buy the foolish propaganda of both parties and that of the Times editorial staff, public officials are forced to get money where they can, most easily at a bridge or tunnel.
2
the answer is clear, american needs to tax the rich some more. especially if ron wyden's social republic of oregon is going to be paying $76k monthly retirement payments.
honestly peoples, this an excellent example of the consequences of an omniscient government that seeks to perpetuate itself (get reelected) by giving other peoples money away. the giggler is all of us poor stupidos are counting our pennies so we can retire, now we have to pony up to pay a retiring football coach $500k a year. the majority of retirees DO NOT have $500k TOTAL to retire on. way to go ron wyden for showing america the way...
9
Pray tell how Senator Ron Wyden, who never served in the Oregon legislature, nor was he governor of Oregon, is in any way responsible for the the byzantine public employees pension system and its reported excesses? Any evidence that he is responsible for the mind-numbing salaries of U of O's coaches and their benefits packages, or was pushing for the hiring of the occasional exorbitantly remunerated hot-shot medical academic?
1
Jibaro - you get points on Ron Wyden He is a bloodsucker and all kinds of other names. He is a complete socialist - he and all the others here that pay all benefits for illegals in our sanctuary state. Lower college costs for illegals. All the social niceties that we can possibly provide for them. I may sound bitter but my family had to work really hard to become citizens and NOTHING was handed to them. NOTHING BUT OPPORTUNITY NOW THAT WE TOOK ADVANTAGE OF
Jeryna, your argument would be more effective if it were constructed out of facts. Although he leans left, Ron Wyden is far from a socialist. Undocumented immigrants do not get a tuition break in Oregon. Nobody poorer or less privileged than you is taking from you to advance some nefarious agenda to drag you and your family down.
It looks like the New York Times is available to you in LaPine via the internet. There is also a state university there. (I point this out so that NYT commenters not familiar with the area understand that LaPine, while remote, has the same access to knowledge and information they do in the big city.)
Unless you're only here because Lars Larson gave you marching orders to spread his intellectually dishonest talking points (or as we call them in polite society, lies), I'd suggest spending less time with the propagandists and more time with facts. It doesn't make you or your home state look good to spout all this baloney on the internet.
The Newspapers have completely ignored the Pension Disaster that is looming in California. Instead of attacking Trump on a multiple amount of times daily, they should be investigating the looting of the State, County & City treasuries by the Public Union Employees.
16
I know someone in California whose mother retired after a long career as a social worker (granted it is a job with below-market wages). The retiree was able to name ANYONE else as a successor beneficiary of the plan, in return for reducing the monthly benefit by 20%.
Now the retiree’s daughter, who is in her forties, is collecting 80% of the pension until she herself dies, as the original retiree has died.
You could name a newborn grandchild as the successor beneficiary, and then that baby collects 80% (upon the employee’s death) until the child dies, long, long after the original employee has died.
I was stunned when I heard this. Multiple Decades of pension will be paid for each employee who chooses this benefit.
11
One problem is that pension and pension funding issues are complicated, don't sell papers the way sex scandals do and, further, with all the layoffs and cutbacks at newspapers these days, there is simply a shortage of staff to over ANY story. I find it hard to believe many, if any, newspapers in Oregon, can afford the kind of staff capable of researching and writing throughly and coherently about issues like this.
1
Hi ellienyc -- I agree with what you said about the un-sexiness of pension funding issues and the difficulty of covering them at a time when news media budgets and staffing are under relentless pressure.
But I also want to give a hat tip to the media in Oregon for their work on this issue. In my story there's a link to the interactive dataset that The Oregonian now publishes every year on current payouts to all retired public workers. That information would still be a closely held secret if The Oregonian and another publication, the Statesman Journal (of Salem, Ore.) hadn't fought an 11-year legal battle to bring it into the public domain. Their hard work and tenacity benefit all of us.
13
Right here in NYC, doesn't overtime for the last 2-3 years of employment, get averaged in to pension calculations for our cops, firemen, and others? Hence the droves of retirements in the years after 9/11?
What could be more ludicrous.
It is plain and simple theft from the public treasury. That cops and firemen are doing it, makes it all the more heinous.
12
Yes, our "national heroes" claimed they couldn't afford NOT to retire, with the tons and tons of overtime they made in the WTC cleanup. I think some went out on pensions 2 or 3 times what they would otherwise have gotten. In any event, certainly all very very healthy six figure pensions coupled with lifetime health/dental care for selves and families. And the ones that didn't yet have 20 years of service managed to find a way to get "disabled" so they could go out too on very healthy disability pensions.
Of course, the problem here is not only politicians desperate for their endorsements and willing to give them what they want in return, but the narrative that has emerged post-9/11 that "first responders," "military," etc. are in all cases "national heroes" "keeping us safe from terrorism" and therefore deserving of whatever they want.
9
many of them retired, then promptly died of cancer and other ailments that were a direct result of their work at ground zero
1
And many of them refused to wear the masks offered to them while working there. However, no matter when or why they died,the pensions were still paid to them and their families. In addition, some are collecting even more from the Zadroga money and the 9/11 victims' fund,, despite the fact they already have lifetime health insurance from the FDNY.
One thing I always found odd about the 9/11 cleanup was that, based on the way it was described on local TV, the people working down there were volunteers. Perhaps, but only to the extent they had "volunteered" to work at very high overtime rates that had the added benefit of jacking up their soon to be collected pensions. I wasn't even aware of this overtime business until the story broke about personnel issues due to so many people retiring all at once.
2
"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery." Winston Churchill
9
It's really dumb that any pension in the country still overweights final salary or even the last few years as that is easy to game and also probably hurts some people that end up finishing their career at a lower paid job. They should base it on the inflation adjusted average over their work for the government like the second method except they need to keep the rates reasonable or pay up regularly so the costs aren't hidden.
5
These underfunded -overly generous- pensions are unsustainable and have to be reigned in... if not terminated entirely. Gasp!
4
On what grounds would you justify terminating the pension of someone who paid into a pension fund for 30-50 years before retiring, particularly if they were paying into that fund instead of into Social Security (I understand that's not the case in Oregon, but I know it is elsewhere)?
2
This is a ridiculous attempt to weasel out of pensions. The math was wrong. Set prudent pension caps immediately.
8
Every time I real this story I ask how one can legally project an annual return of better than 6% on such funds and why the fact that you can find other actuaries who make the same faulty assumption provides full protection.
7
And this is the bright, shining future that awaits the conservative movement. Progressives and liberals can crow all they want about the inevitability of demographics.
But the mathematical and economic truths of this particular liberal and progressive program are going to be far, far more destructive to the movement left than any populist pushback against open borders and PC culture.
It's going to be an all out war; Gen X and Z and Boomers who retired from the private sector, against Boomers who retired from the public sector, their unions, and a few leftist idealists who think the private sector should be impoverished so the public sector can benefit. The latter group is vanishingly small compared to the former. And the only reason the former is still unaware of this, is because the bills to pay are just now emerging. Once they're paying out the nose, and sacrificing even minimum services for this Ponzi scheme, liberalism and progressivism are going to be tarnished for a generation.
If liberals can get in front of this (and I believe we can, being mostly rational), we can probably turn things around. But the progressives, being tied to full blown socialism as it is, are probably going to get pulled down by this one. The same goes for single payer and "free college," other programs pushed by innumerate and overly idealistic progressives.
9
Capitalism is fine AFTER everyone is paid a 'living' wage or other benefit. what we have now is capitalism takes its cut, and anything leftover is split among the rest. there simply must be caps on pensions and other benefits. Another way to get there is to have VERY progressive taxes - 0 up to a a certain amount [say 4x the poverty level] and then rapidly rise to 90%.
8
"The same goes for single payer and "free college," other programs pushed by innumerate and overly idealistic progressives."
You mean the ones enjoyed for decades by most of the rest of the world, who increasingly score higher on technological and economic advancement and quality of life than a rapidly fading USA?
4
This is the second reason that public employees should have the same 401k access that private sector employees now have.
The first and most important reason is that the pension system is the greatest tool for keeping employees loyal to the “system” instead of to the public. Deferring so much of the compensation as a future promise raises the price of speaking out or taking a stand to an unacceptable level, making sure they work for the pigs in the farmhouse and not for us.
7
I support defined benefit pensions when they are accounted for properly, funded properly and managed properly. My mom and stepfather are retired middle school teachers and taught school for almost 40 years, paid into their pension and now receive a modest but comfortable pension in retirement. However, the "theory" and "reality" of defined benefit pensions have diverged dramatically to the detriment of taxpayers and current employees; retirees for the most part will receive their current pensions. The accounting for pensions understates the real, "true" costs; rates of return are too high, people are living longer, but many times mortality tables don't reflect the "true" longevity of workers. Politicians have used pension funds as piggy banks and when money is tight, instead of raising taxes or cutting services, they haven't fully funded the Annual Required Contribution. And management oversight of the pension plans is woefully lacking. Pension spiking, late salary boosts and promotions and extra overtime for people about to retire are all "tricks of the trade." And retirement ages in the early to mid 50's enables many public employees to retire, collect their pension and obtain a new job with a salary and 2nd pension - "Double dipping" I've lived in Illinois for 40 years, and have seen pensions abused at all levels of government and whenever someone raises issues or concerns they are attacked as anti union or anti government workers. The current systems isn't sustainable.
11
I can't speak specifically to the example of the eye surgeon mentioned in this article, but I know plenty of physicians who are employees at academic medical institutions who accept lower pay during their career with the promise of a generous retirement and other benefits. It's simply a way of attracting top talent without paying the going rate. The problem is that the bills eventually come due, and there was little oversight to the original hiring process.
8
The first step to solving the looming Pension Crisis is to switch new Hires to 401K plan as in the private sector.
There is a glaring Conflict of Interest when Lawmakers that are overseeing the Pension system are also future beneficiaries. A clash is looming when Private Sectors Workers with no Pension are asked to keep the Public sector broken system afloat with higher and higher taxes.
12
This issue resonates across the country. As a taxpayer, who has been self employed much of my career (and therefore have self-funded my retirement) I am not opposed to fair pension payout. And some public pensions are funded in large part by the worker. What angers me is stuffing or gaming of pensions unfairly, and the magnitude of some. IMO, all public pensions should be capped --say at $80,000 annually. If that sounds low, an alternative is a 401 K structure. This is the alternative we have in the private sector. For me to capture $80k a year in pensions (all of which will be taxable) I have to save $2 million in my retirement account (financial analysts say spending should not exceed 4% of total saved)This is very very tough to do -so why should I, as a taxpayer, fund these huge payouts for others that I have no hope whatsoever of replicating?
23
It is time to cap public employee pensions. It is unfair for schools to suffer so a few can benefit. They need to pick a number, $75,000or $100,000 and no one in the public pension system can collect more than that. Social security is capped, why not pensions?
16
Something is very wrong about $76K/mo pension, especially when it is in the public sector
13
The root problem is that we don't produce enough earned income to support the transfers to unearned income. Pension liabilities are just one form of unearned income transfers. The fact that the method of calculating these transfers was over-generous has made the situation worse. Folks need to be reminded that "investment" returns, be they 2%, 10% or 20% are transfers from earned income, often by circuitous routes. The money needs to be earned before it can be transferred. While businesses sell products and convert "product value" to dollars, the transactions are still funded by income that was earned sometime in the past.
3
In this sense, money represents illusion. The concrete issue how to allocate
the actual goods and services that are produced. As the "nonproducing"
draw (in the aggregate) a larger share of production, those producing must
receive a smaller share. Growth in production is worshiped because it
diminishes the adverse effects of shifting allocations.
Though "tax the rich more" is often proposed, the math does not work
because the wealthy (contrary to myth) do not consume much of the total
product (as a percentage of the aggregate produced.)
The extravagant lifestyle of some super spenders does not consume large portions of basic necessities. (Again, viewing aggregates.)
1
This leaves the wrong impression. Up front, the article says there are 2000 government workers who get pensions above $100,000. There may be government workers who coach state teams or who get lots of overtime, but I doubt that many are teachers. I turn 66 this year, usual retirement age, but I am not retiring. My pension would be around $32,000. I do well compared to many people, but it's not the killing the article suggests.
14
As someone who's getting a $32k/yr pension, aren't you seeing red over this issue? When these balloons get popped, everyone gets hurt equally. However, the problem is caused by abusers of the system making +$100k and getting 100%-200% of their full income, tax advantaged, not including SS after retiring. I'd be scared of Oregon going "Detroit" if I were you.
7
I don't see the logic of your point. Why would someone who is receiving exactly what he's been promised see "red" over someone else receiving exactly what he's been promised in the same system. You're comparing apples to cantaloupe. Do you understand the time and effort required to become a teacher? Now, following on that, do you understand the time, effort, and money required to become a specialized eye surgeon. Robertson came to OHSU as an ophthalmologist, became Chief of Opthamalogy, then Chief of Medicine, then Head of the Medical School, and finally became President of the entire Health Sciences University. Check how much research, teaching, and clinically focused eye surgeons make in the private sector (hint: far more than Joe Robertson). My wife was a physician for a private group, and her retirement makes mine look puny by comparison. Highly compensated individuals get high pensions.
2
this is going on everywhere and despite this big number the bulk of retirees are the problem. For example in Conn last year the avg teacher pension for one retiring in 2017 was 57090 and age 61. That equates to an annuity worth 1.1 million dollars(i.e. every teacher gets what I would have to spend 1.1 million to get using a 3% rate and 27 year life expectancy. Public safety even more. I know park rangers retiring in their 50s who get 70k plus(all public info ) and paralegals and DMV workers at 60k..tens of thousands of them all owed a million dollar annuity. This is all public info at cfsunlight.org or seethroughny.org and every state has an equivalent site. It is politically difficult to address this..this weekend I was at a wedding with a social serv middle mgr and paralegal who cost CT 130-140k(see ctsunlight.org)..neither have degrees. I have a masters in STEM and have never earned 100k(maybe I am a loser who knows). I know dozens of equivalent cases(100k librarians at Community colleges, 125k payroll clerks at community colleges(where I am an adjunct) and nobody knows or cares. They will be owed billions by hard working taxpayers who are more educated, work harder and have no idea(or time to learn) about this disgrace.
22
In my community, we have several retired teachers and politicians who are drawing pensions and in excess of the $ 76,000 and I can't complain about the contract but why are these payouts exempt from State tax while I and the rest of the private sector pay NY taxes on total 1099R over 20k. I could ask them but they are in Florida for the winter.
Of course many of our senior State Legislators who established this rule are drawing salary plus tax exempt pensions. I don't expect Gov Cuomo (who also draws Fed pension) to change anything soon.
18
All those "progressive" retired college profs and academia heads, encouraging students to join "Resistance" and demonstrante "solidarity" consistently demonstrate zero compassion, empathy or solidarity with the very college students (and wanna be students) whom they sent into War Against Trump.
Their obscenely generous retirement benefits packages, on top of that exponentially expanding due "inflation" adjustments ignoring the state of economy and ability of taxpayers to pay increasing burden of public employee benefits should be the top reasons for students and their parents, plus "activists" filling streets of our cities nationwide in (peaceful) protests.
Hypocrisy of academia, "progressives" and media seems to have no limits.
14
See my comment below. I taught at Portland State University for 30 years. PSU salaries are in the bottom quintile of all colleges in the US. My pension is $2400 before taxes. I am a progressive and not a hypocrite.
6
"Hypocrisy of academia, "progressives" and media seems to have no limits."
Your touching screed misses the very important fact that the private sector *up at the top* has watched its income more than double during and after the recession and *they* lobbied for and got a tax cut. Yet they hold their employees' wages down and complain now of the debt they just caused to jump (better trim those entitlements (that people paid into all of their working lives, hello) with furrowed brow. Sure. the hypocrisy of the plutocrats knows no limits.
2
And my cost of living adjustment this year was 1.5% - hardly “obscene.”
2
“Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making.” That is rich. It’s a financial squeeze of the public employee unions’ making. They demanded pensions the states could not afford to fund. Seeking their votes, politicians gave them generous pensions these states could not fund. Now, it’s catching up. As taxpayers realize they are paying for retirements of so called public servants while they cannot even fund their own retirements, politicians with have a more powerful voting block to answer to.
17
Unions "demanding" was not the problem, it was the politicians giving that was the problem. Put the blame on the politicians who saw this giving as a way to stay in office instead of working for the public good.
4
Your comment is incorrect. The history of Oregon PERS is easily verified online.
This problem has been on every state's radar for over a decade....it's only going to get worse. There is no magic bullet solution, other than for states to reduce payouts across the board, and do it progressively, so the largest recipients take the largest hits. ($500,000 a year is just plain wrong for a state pension, when teachers are losing jobs and middle class families who pay enormous taxes are not getting basic services!)
If we follow the logic and examples in this article, many cities and states across the country could potentially be forced into bankruptcy in an effort to balance their budgets that leave little to nothing for local services.
This problem was not caused by the people who benefit from PERS, but I fear that in coming years, millennials who will never benefit from pensions, could possibly mount a revolt at the voting booth and defund pensions altogether. Frightening notion, but not out of reach. Most youth I follow on Facebook are fiscal conservatives (Libertarians) and worry about their own fates, not others.
We need to have a national conversation...but it must begin at the local level. Saying and doing nothing will only fan the flames of a disaster waiting to happen. There are only so many tax dollars to go around....then the kitty is empty. Let's not wait until the pot boils over.
13
The author seized upon one very unusual outlier situation to create the lurid headline for this article, apparently for the purpose of inciting outrage at public employees. As I see from some of the comments, the author has succeeded. Such a familiar, distorted refrain.
What about the rank-and-file small pensioners? The retired public worker getting by on food stamps on a small pension with the upward-spiraling west-coast cost of living? I happen to personally know quite a few of those folks. By the way, workers have paid into these retirement systems their entire working lives, so the pension benefit is not a gift. And often Social Security benefits are traded away in public retirement systems, so that the state, county or city budget benefits by not paying the normal per-worker percentage into Social Security and Medicare. The result is that many civil employees often end up with no other retirement or health care options to fall back on, not even Social Security or Medicare.
As usual the solutions for balancing civil budgets and avoiding tax obligations devolve to blaming employees, minimizing benefits and salaries, layoffs, and balancing civil budgets on the backs of labor. And the modern Orwellian, double-speak tea-party term: "freedom to work."
16
Lack of services due to rising PERS costs is evident in the city of Eugene. University of Oregon students ask, "Where are the police?", when a string of robberies receives little police response. Children who go to the downtown library may have to step over inebriated persons laying along street curbs. Walkways are congested with vagrants who are permitted to tag buildings overnight with graffiti and sleep in filthy makeshift camps. Much of this is being normalized in what is becoming a new Wild West.
8
PERS caused the homelessness problem in Eugene? Help me out here. I'm confused.
This is a scam. It is no different than holding up a convenience store.
In Illinois almost all the public employee pensions are tied to formulas that are only loosely tied to the amount of money the person earned over his lifetime, and the pensions are multiples of what people earn outside the public employee system.
Why does an elementary school teacher have to retire at age 55 at over $100,000 per year?
13
These agreements cause terrible situations for college age students in California, as was well-covered in the Los Angeles Times last September in an article titled UC is handing out generous pensions, and students are paying the price with higher tuition.
http://www.latimes.com/local/lanow/la-me-uc-pensions-20170924-story.html
The Times analysis stated that the number of UC retirees collecting 6 figure pensions increased 60% since 2012.
6
Mistakes were made in Oregon PERS. It is embarrassing to receive a check knowing the sacrifices made to balance the books. If those whose pensions were inflated ( your story covered a number of individuals but not all who earned a pension larger than their annual salary) would donate or decline a portion of them it would go far toward reducing the tenor of this debate. There ought to be a legislated option to donate a portion of a PERS earned pension back to a system that is floundering.
5
More proof of the baby boomer generation being the cause of most of the nation’s problems.
10
Disappointing to see the Times present this complicated issue in such a simplified and biased manner. Yes, there are some anomalies with pensions that need to be corrected, but to bash the whole public employee retirement system and to blame all problems with state and local finances on the pension system smacks on an intentional attack on public employees. There are many sources of income and many many categories of expenses; it's misleading to imply that pensions alone are taking away needed services.
A more serious and helpful analysis would consider a variety of sources of income and expenditures and the trade offs that states and local governments need to make.
17
I've lived in Oregon -- I'm quite liberal -- and have many friends on the PERS system. Most retired in their early 50's and make more than when they were working. The story is spot-on. I'm pro-union/pro-teacher/pro-pension, but Oregon's system is out of this world and it's bankrupting the state.
37
As dramatic as some of these pensions are, they pale in comparison to golden parachutes for most publicly-owned companies, even ones in downward spirals. The eye doctor's ridiculous yearly pension would be a less than a month for many of these folks.
Alphabet's CEO (parent company of Google) Sundar Pichai's compensation was $100,632,102 salary in 2015 works to $2.28 million a week or $57,177 per hour or $457,418 daily or $952.95/minute. And he and other millionaires and billionaires just enjoyed massive tax cuts. Money that could go to universities, schools, public works and much more.
A serious solution to the pension crisis in stats like Oregon and Illinois is a graduated tax on pensioners with the first $75,000 being untaxed and each successive $75,000 being taxed at 1% so that a pension like the football coach would pay 7-8%. However, have this amount returned directly to the pension program NOT to the general revenue stream of the state. In Illinois, state money has been diverted from pensions to operations and other expenditures for decades. Clearly the state legislature cannot be trusted and by the tax being paid directly to the relevant pension system, the state legislature cannot mishandle and misappropriate the money as historically has been done. The state would continue to contribute, but the high-paid pensioners would be adding to the sustainability of the pension plans. And take the element of political graft and misappropriate out of the equation.
25
True and, unlike public pensions, those pension obligations are already funded.
1
the biggest difference in all this amigo is that golden parachutes for corporations are funded by corporate earnings. government worker retirement plans are funded by tax dollars. i understand your confusion in that many today conflate public monies with corporate assets. that is the eventual goal of our progressive government, claim everything and distribute it as the government deems fit. its already been done i.e. the DNP's favorite dictators, fidel, raul and their murdering flunky, che did that over 50 years ago.
5
Exorbitant taxpayer-paid salaries and benefits (primarily at the top end), irresponsibly authorized by politicians during the past 3 or so decades, are the root cause of most budget problems throughout the country. They should be capped. If people want to become wealthy, fine, let them try that in the private sector.
13
As MP posted earlier: What is always left out of these discussions is the vast majority of the pensions which are paid out to janitors, secretaries, and clerks. These people were never well off and aren't now.
Let's talk about what that means: less people dependent on social security alone and/or falling through the economic cracks. Now both their modest pensions and their social security are under attack.
29
It's worse than you say, because public pensioners in most states do not participate in Social Security. So if the pension they earned is taken away, they become utterly destitute. The backstop of Social Security is not there. Get ready for throngs of elderly retired public-sector workers camping under highway overpasses, being a drain on welfare programs, and clogging emergency rooms for basic geriatric medical care. The author wants to throw grandma under the bus.
5
A study conducted by the Oregonian newspaper found that Oregon public employees earn the same pay as in the private sector. The newspaprer linked a state website that lits public employee salaries, and many earn six figures. Back in the 1960s and 1970s that was not true, but wages have caught up thanks to the unions. Note that in addition to the PERS pension, public retirees receive highly subsidized medical insurance and Social Security.
3
Not true. I’m on PERS and certainly don’t have subsidized medical insurance. I’m on Medicare like everyone else, and I pay for all of it.
2
This is like what happened in the NYFD in the year or two after 9/11/01. So many firefighters & officers made so much overtime on the cleanup that they claimed they were "forced" to retire because all that extra cleanup overtime would count in calculating their pensions, but only if in the final year or couple year(s) of employment. So tons of them retired all at once leaving a huge personnel gap in the dept (not to mention a big liability in their pension plan), especially among senior officers apparently. They only need 20 years of service (at any age) . However, if they are deemed "disabled" they don't need to need to me any age or service requirements, plus get a lifetime pension that is triple tax free (fed, state and city), so many, many city FD and PD employees actually retire on disability pensions.
11
The bias against pensions in the article is striking. Many public employees are paid low salaries with the expectation when they get hired of a good pension when they retire. One only hears that CEOs have to be paid their golden parachute salaries because contracts are sacrosanct but pensions for working class public employees keep getting cut back despite those promises made at the beginning of employees' careers.
24
I taught at Portland State University for 30 years. My salary very slowly crept up to $60,000 (including teaching in the summer), by the time I retired. I always felt that I could live with the salary, even though it was difficult to save for retirement, because I had the promise of a pension, which is about $2400 a month, before taxes. I am outraged at those who made giant salaries as surgeons, coaches, etc., and now have giant pensions as well. And if my pension, and that of others, is cut because of these outliers, I will be even more infuriated.
120
I don't know when you retired (or when you worked), and I don't know what optional benefit form you chose (a beneficiary or not), but you are leaving something out. If you retired under full formula, made $60,000 per year, worked 30 years, had any significant sick leave accrual, your base benefit would have been greater than $2500 per month before adding in the income tax remedy, and the "other" retirement plan that no one seems to discuss here, the IAP. While the IAP isn't very significant in comparison to the value of your defined benefit over time, it still represents a sum of money that is available at retirement to purchase an annuity to supplement your PERS pension, or to invest on your own, or to draw it out from PERS over a 5 year period.
While I sympathize with your story (and know many in your position), I've also been studying and writing about Oregon PERS for more than 20 years, including some of my later years on the same faculty as you, and know more about the system than about 99% of the Oregon population. We fail to help our own cause to insist that the State, the public employers, and the Legislature honor the contracts they entered into with its employees unilaterally (and remember that many of the outlier cases were never represented by any Union).
3
As I mentioned, my salary crept ( very slowly) to $60,000 by the time I retired. For most of my teaching years, I made much, much less per year.
1
EXACTLY. This is the more common reality.
1
And the American Electorate just keeps on voting themselves a lifestyle they cannot afford. I guess the bottom may be closer than I had thought, maybe even in my lifetime.
7
This article could be written on practically every municipality and state in this country. Years ago, in a middle American seemingly prosperous town where I lived, I inquired about the extraordinary additional costs per employee published during a city manager search, and at that time, the city was contributing, on average, 30% total pay to make up for shortfalls in pension plan performance. By my calculations then, the debt amounted to more than $50k per city families, and that was prior to the market fall in 2008. When I asked if the plan could be changed to a conventional 401k retirement, I was assured that it could be. All that was required was approval of 100% of the city employees.
4
In reply to Driven:
Public employees paid into their pensions. I paid 13% of my salary into my pension fund. Very few raises, poor health care benefits, salary cuts twice at 5%. No social security. Everyone should have these benefits.
12
Ms. Walsh might usefully turn her journalistic skills to a deeper investigation of government pensions across the board - from prison guards to firemen and policemen, to teachers, politicians, road workers, janitors - you name it. Pension plans with incentives to game the system in the last five years of employment are all over the place, and help to turn what might have been a fair pension into something that robs the taxpayer. Managers responsible for stopping these games care more about their employees than the taxpayer - and go along at our expense.
7
It is a sad state of affairs and it is very difficult to do anything about it because local politicians always want the support of their unions, so they agree to all this nonsense in exchange for endorsements. In New York good government groups have been trying (and suing) for years to at least get the NYC FD union to list who is getting how much money -- even if not identified by name, just by zip code or something. It is very difficult and the FD union always seems to win. Here there is the additional issue that a lot of the FD and PD go out on alleged "disability" pensions, which means they don't even have to have 20 yrs of service, plus the "disability pension" is income tax free for life under federal, state and local income tax laws. Plus they get lifetime comprehensive health/dental insurance for selves & familes, starting from moment of "retirement." Then they go out at age 40 or 45 or whatever and get good paying jobs in private sector-- anti-terrorism consultants, fire safety consultants and the like (despite alleged "disabilities" in some casaes).
5
They care about themselves and other higher level eventual pensioners; not their lower salary employees. If your job is cut 3 years short of retirement age in MA - the formula decreases the pension by roughly 50%. Half of $50,000 a year is what is left after 30 yrs of contributions. No one makes up the difference. In addition, MA teachers cannot collect their paid for Social Security benefit. It's called double- dipping. Also state and federal taxes must be paid.
2
Our Democratic governors and legislators have been ignoring the PERS problem for about 20 years.
Current state employees' union dues go to hire lobbyists to make sure that PERS recipients don't have any reasonable reductions in benefits. In the meantime those same working state employees have worse and worse working conditions (too large classrooms, not enough child protection workers). They should rebel against their union leaders to try to get more state revenue for current employees.
I'm a PERS recipient who, by waiting to get benefits when I was 70, is now getting almost $4,000/month although I rarely made more than 30K/year. I worked more than 30 years but my account continued to grow at 7.5-8%/year even after I quit working.
4
I was a low-level manager in a public employee unit when, due to an unexpected vacancy, we had to hire a temporary worker. A recently retired senior executive, then the highest paid public retiree in our county, with an annual pension of over $250,000, volunteered to fill the vacancy. Imagine my surprise when this retiree demanded that she be compensated for her "volunteer" service, at a rate 4x what I could have hired a fully qualified temp worker -- and that pay further inflated her pension! I got burned but never took her offers of "volunteer" work again.
Some people have no morality, empathy, or compassion for others.
16
I’m not against unions. History has shown us what happens when corporate executives run rampant when unchecked by unions. The strength of democracy in the United States rests in our system of checks and balances. The balance is broken when it comes to Government Employees Unions in state and local government — this imbalance is more prevalent the more local the government. The most difficult endeavor for candidates running for local offices and districts is acquiring funding and campaign workers. Government Employee Unions use their financial assets and members — acquired from outside the electoral district — to get their candidates elected or to replace officials they disagree with. Since no other group has the ability or feels the need to do the same, public employees unions have a virtually insurmountable electoral advantage. We are left with government officials having to negotiate and face the very people that have the power to hire and fire them. Add to that the pressure elected union officials face to continually vye for more concessions, lest their opponents ask — even with fair contracts in hand — “What have you done for us lately?” and you end up with a mess. One group garnering excessive benefits at the expense of everyone else. Public employee unions with their narrow mandates should not be involved in local elections. They should not control the destinies of the officials sitting across the table and negotiating with them.
10
Out of curiosity, could you provide examples of when/where public employees have managed to dominate state and local governments in this way? or evidence as to how prevalent this is?
3
States need to get out of the pension business and join the 21st century, where all pensions have been ended and 401k have taken over. It is a political will problem, where the public employees back politicians who keep the gravy train going. Only when the voters wake up and figure out the scam will they end this money pump.
8
Given that people are already being hugely affected by this, like the article clearly shows, it doesn’t seem that’s happening. I wonder too when this waking up everyone is waiting for, actually happens.
1
When the stock market investments by average wage earners are guaranteed not to disappear. 401Ks were created by Reagan admin. when Companies realized they could not meet their unfunded pension obligations - simply allowed to give employee a refund of his own pension contribution that would not be taxed if rolled over directly into 401K acc't. Company kept its contribution from each employee's account. 401K management firms collect fees, gov't collects taxes - companies have no responsibility - average workers needs are ignored by all.
3
A basic problem with pension fund management is that pensions make future promises without the certainty of income to fund those future promises. It's a little like a defect in the business model that gets banks and S&Ls into trouble from time to time. They lend fixed and long and invest short and variable. When short rates rise they can run losses.
Actuaries often get blamed for underestimating pension liabilities, but it is not their fault. Actuaries use estimated future rates of return, but they don't set them. The fault rests on management. It seems that public retirement plans are especially prone to bad management. The reason may be that, in the public sector generally, spending and income are only loosely connected. That's a dangerous mindset for pension managers.
4
There's a bit more to it than just that. The other assumption, hopefully you know what assume spells, is that in the future each subsequent generation will have more employed, getting paid more, and paying more taxes. That's not the way it's been and will not be that way in the future. In essence, as we run low on money we just roll the excess onto a new credit card.
2
As a Republican in Orergon I weep regarding the Mary Walsh piece on Oregon´s public sector pensions. It is to a large degree a rehash of periodic attacks by the state´s largest newspaper, the Oregonian. As it reported recently 9 of the top 10 pensions were either for physician-administrators at Oregon Health Sciences University or football coaches. The convoluted retirement system described by Walsh reflects a combination of rosy assessments, a willingness of successive state governments (including Republicans) to use the pension system to solve other problems such as reframing salary raises as future pension benefits, and the state's idiotic constitutional requirement that income tax revenues above estimates two years previously must be returned to taxpayers rather than used to cover obligations such as future PERS benefits. Oregonians face pressures on services precisely because they voted to return to their pockets funds they had already paid out rather than channeling them to backfill a foreseeable commitment. This is what passes for financial prudence in Oregon. Walsh does not mention this, presumably because it is inconsistent with the narrative she wishes to promote. There is no reason for highly-paid administrators to be part of this system, nor for athletic coaches to be pensioned in the same fashion as corrections officers or state foresters. But beware of manipulated critiques. Note: I am not now nor have I ever been a member of PERS, nor is anyone in my family.
51
this is easily resovled by having upper limits on payout and absolutely not including more than ones salary.
But make no mistake this is NOT about the person getting $87,000 a month, an easy fix, this is about using that as an excuse to remove funds for janitors getting $20,000 a YEAR. It always is.
Remember that. this is about getting the poor to attack others who are struggling
111
MP - you said it very plainly. It is never the “example” high pensioners who gamed the system who will pay. It is the teacher who works 40 years in the classroom, or the aides, or the janitors who will lose the ability to retire with dignity.
This is a way to throw red meat to the ill-informed mob. In the melee, the rich get richer and the poor fight for scraps.
27
Well stated and true. I was shocked that the NYT would willingly print anti-union propaganda like this, until I flipped through to their Travel section about the best Swiss vacation that money can buy and then I realized that their target audience is not the middle class (and hasn’t been for a long time).
1
Current pensioners have a contractual right to their full pensions. However, did I read that general taxes are increasing in order to pay the pensions? Governments impose different tax rates on different categories of people all the time. Oregon can meet its contractual obligation without short changing the younger generations simply by increasing taxes on public pensions. Impose a 10% surtax, for example, on public pension income. Legal and fair. Of course, it will be litigated but as a lawyer (admittedly with no experience in this area of law) I give it a 75% chance of surviving a challenge. Downside: federal law prohibits a state from taxing a former resident who moves out of state. Keep the rate low enough that pensioners' ties to family and friends will keep them in the state (in addition to the sunny weather).
tSucks for pensioners, but something must be done.
4
Good idea but the rate should be progressive so as not to harm the typical modest pension. The upper rate should be very high to knock down those outrageously high pensions.
2
There are laws against discriminatory taxation. You cannot single out one class of people for separate treatment just because of the source of their income. Joe Robertson will pay both Oregon State taxes at 9.9% and federal tax at roughly 37% on his pension income, more or less like every other person earning the same amount.
3
"financial distress has been severe since 1994, when logging was curtailed to save an endangered owl." This is an inaccurate statement. There are many factors influencing the logging of forests in Oregon. Innovations in wood product processing, foreign purchasing practices, changes in foreign wood production (Canada), and yes, protection of endangered species all contributed to a general decline.
In 1917 the Oregon Legislature approves legislation allocating 75% of the federal forestland receipts to roads and 25% to schools.
9
A lot of states have purposely kept wages low but promised excellent retirement packages. They are now reaping what they sowed, while taxpayers get the short end of the stick.
That said, a pension of over $76000 a month is ridiculous for any public employee, regardless of position, experience or qualifications. Former presidents and members of Congress get only a fraction of that.
Most of us live on far less. Disabled in my 40s, for over 20 years I lived solely on my Social Security. An inheritance has allowed me a little wiggle room, but most people can't count on that.
I can't even imagine what one spends $76000 a year on, let alone a month. It sounds greedy and unnecessary when others live comfortably on far less.
11
Even if the article highlights outliers of pension recipients, a single pension of $76,000 a month is $912,000 per year! How can this be justified?
A quick look at the PERS beneficiaries shows dozens that make over $200k per year in pensions, and some at the rate of over 300% of their salaries.
These systems are unsustainable. Cap their pensions at twice the maximum social security benefit. Allowing public service to be a get rich scheme is why our representatives don't represent us anymore.
13
I was an analyst for a public agency in Oregon in the early 1990s. It was clear that Oregon PERS was headed for a train wreck if employer contributions weren’t increased. No changes were made so employer rates could be kept down without impacting employees.
8
I agree that this is a permanent danger of state systems--too much protecting of employers from actually meeting the terms of the contracts they themselves have negotiated. However, lots of changes have been made since the 90s. The Oregon retirement system has undergone over 20 benefit reductions since 1995, and the system has been restructured two or three times during those years.
2
An enormous tragedy lies in the line that Oregon "has allowed earthquake and tsunami preparations to lapse." Until Mt. St. Helens erupted in 1980, no one knew of the dangers lurking offshore in the form of the Cascadia fault, a subduction zone fault that ruptures every 250 to 500 years, depending on one's location on the fault, with quakes as strong as category 9-plus. Its last eruption was 318 years ago, and in southern Oregon, a rupture is considered "past due." Tragically, the state was built with many unreinforced masonry buildings, which are in danger of completely collapsing. Bridges not designed to withstand quakes--nearly all of them--are also in danger of complete collapse. Death tolls are projected to be as high as 14,000 people, with 30,000 injured. Yet these deaths must be accepted as inevitable so that a retired football coach can earn over $550,000 a year? Oregon will have blood on its hands.
12
The earned retirements of old folks are not the place to go to fund earthquake preparedness. That way lies madness. Oregon might better start with the fact that it has the overall lowest corporate tax rate in the nation.
12
No employee, public or private, should receive a greater pension than their final salary, adjusted for inflation.
Since the states cannot change the terms of their pensions, there should be a federal excise tax of 90% on all pension payments in excess of that amount.
33
"No employee, public or private, should receive a greater pension than their final salary, adjusted for inflation. "
One problem with that is, here in Mass, pension spiking is kind of rampant. From changing job classifications in the final years, to piling up the OT, to cashing out on unused vacation or sick time, it's not looking pretty down the road. There was some anti-spiking legislation introduced, but as far as i'm aware, it nover got passed.
9
And there should be a cap of something less than $100,000. Pensions should be enough for people to live comfortably after a lifetime of work. Those making big bucks for 30 or 40 years should have their home and second home paid off. They should also have investments augmenting their pensions. If some folks get too much, others will suffer with not enough.
2
In the State University system it is a given for dept heads and higher- also in state and municipal jobs other than teaching and libraries both women's jobs.
2
In Oregon Multnomah County the voters have passed special measures in the last three years to raise education funds through property taxes. Since majority of the voters are not home owners, these 'education' measures always passed.
It's an easy way for the county to raise money to pay for public pensions in the name of more money for education. I voted Yes for the first two times until I have had enough of this loophole.
4
Josephine county historically has had two consistent elements- the voters there turn down tax increases to fund services (see articles on OPB) and people in the county report not trusting officials and wanting to take care of things on their own. The situation there is not entirely driven by the impact of PERS. Please- I expect more thorough reporting from the Times.
14
This is what politicians love to do: spend money today, and leave the bills to the kids. And when the time to pay the piper arrives, well, the politicians, and many of the people that voted for them, will be retired and living someplace else, probably with nice weather.
There are many to blame. The politicians are surely near the top of the list. but many public service unions are are not far behind.
This is why I call myself a fiscal conservative. I would prefer not to pay for things I can't afford, especially using borrowed money. Democratic politicians and liberal newspapers are far more guilty of this sort of spend now, let someone else pay later, style of governing. (That said, there's clearly fault on both sides of the aisle, especially with the recent Republican tax "reform.)
Entitlements, the third rail of politics, are especially concerning. Both Social Security and Medicare will be bankrupt in a decade or two.
But it sure is more fun, for voter and politician alike, to spend now on borrowed money, than to pay today for the services we need.
9
According to the Wikipedia, Oregon has a gross domestic product (GDP) of over $200 billion, of which less than $3 billion passes through the state budget. State income tax is the fifth highest in the U.S., but corporation taxes are very low. There is no sales tax. The numbers used in the PERS tracking accounts were high but not unreasonable, and if the money had been raised through taxes and invested appropriately, there would be no problem meeting the contracted pension payments. However, the people of Oregon chose to avoid these taxes, and perhaps in doing so they were able to attract high-tech manufacturers as their lumber industry gradually declined. A full accounting might show that investing in the state’s economic future was actually a shrewd move, even if it was greased rather heavily along the way. On the other hand, the people of Oregon also chose to pay their current state college football coaches $2.6 million and $2.9 million per year, against which (one hopes) they have set aside a few dollars for paying their pensions. Their priorities are different from my own, but they’ve made their choices and now they have to live with them.
14
Why would state governments be issuing defined-benefit pensions at all? Unless you are God and know exactly when people will die and/or you have a printing press for dollars (like the Federal government does), why would you be promising to send people checks until they die?
Insurance companies can afford to write annuities like this (though usually without an inflation adjustment liability) because if people live longer they won't have to pay out so much on the life insurance side. But for an ordinary employer to do this is madness (as GM found out!).
Taxpayers should vote to amend state constitutions so that their politicians can no longer moonlight as actuaries. Government workers can have 401k plans like everyone else, plus Social Security for a defined-benefit check (backed up by the Feds, who DO have a printing press for dollars). Maybe government workers will demand higher current compensation if they can't get a pension worth $millions, but at least the cost would be right out in the open for everyone to see, vote on, etc.
18
You do realize that the vast, vast majority of state employees don’t receive pensions ‘in the millions’, right? I, mean, not even close.
8
This is not Oregon's problem. Actuarial judgments are made regularly by actuaries who make recommendations to policy bodies. If the population is large enough, the predictions can be pretty accurate. This is what's extraordinarily good about defined benefit systems. It is possible and reasonable to fund retirements until a retiree dies. You "lose" if you die young, but most of us like the security of knowing we won't die in abject poverty.
4
"most of us like the security of knowing we won't die in abject poverty."
I didn't mean to suggest that a defined benefit pension wasn't awesome for the retired government workers. But Americans who worked for the private sector generally have to rely on Social Security for guaranteed poverty avoidance.
Actuarial predictions "can be pretty accurate"? Who can tell you what different classes of assets will yield as a return on investment in 2035? Who can tell you what medical advances will be made in 2045 that could prolong the lives of government workers retiring today at age 50? (that former worker would be 77 years old in 2015) And, since the scheme is still being run for workers starting today at age 18, it would also be helpful to know investment returns and medical technology advances circa 2100.
$76,000 a month is a ridiculous pension for anyone. There is a real problem here.
34
Only 1% of the population would disagree. That's why most people favorite pension caps. But there are ways around that, too.
2
People who played the system are the problem? We used to call them 'the smartest people in the room'.
1
Are state workers in Oregon covered by Social Security retirement benefits? The article did not say.
3
Yes, Oregon public employees are covered for Social Security.
2
Yes.
Yes.
2
I'm having trouble understanding the basic premise of this article that something is unusually wrong with pensions in Oregon. When I search the question what I find is that Oregon has one of the best funded pension systems in the USA. A Wall Street Journal analysis has Oregon as 5th best of all states at percent of pensions funded = 95%. https://graphics.wsj.com/table/Connecticut_102015
By the way, since some people mention CA, it is 21st, while Texas is 15th. Poorly ranked states are a hotchpotch with Illinois worst.
To me this article just illustrates the weakness of the usual newspaper style -- individual horror stories may get clicks and readers, but they do not produce generalizable data.
32
Absolutely agree. Bloomberg says the same: https://www.bloomberg.com/graphics/2017-state-pension-funding-ratios/
3
For more information about the issues with Oregon's pensions, read this: http://www.oregonlive.com/politics/index.ssf/2016/09/this_is_becoming_a_...
This "pension" is really defered compensation. Money put off into an account to insure a fair and reasonable and may I say "healthy" retirement. Something we should "all" be striving for and have a right to. Unfortunately, once again when there is a shortfall it's always the overly generous terms in hindsight, unfairly generous and it's poor negotiators and greedy pensioners fault. Then out come the "poor us" versus the "greedy them" argument and it's all "their" fault. Ridiculous. At this point designed to short change a responsibly negotiated contract after the fact which represents irresponsibility and laziness on the part of federal or state management. Why never the discussion of fiscal responsibility or lack thereof on the part of state or county? The utter failure to "pay your people first" or in other words properly fund their retirement which in all honesty are wages for work performed. The idea that a decent job with decent benefits is somehow anathema to economically sound state or city government has to be dispelled by honest accounting and not reverting to the "low hanging fruit" thought or reconciliation method. In closing, $76,000 does not sound like a great deal of money to me in this day and age. What we should be doing is imploring those governments with the forethought to pay their people well to actually follow through and not rob their retirement funds in the short term to dishonestly fund other measures in the long term.
5
I agree that a pension of $76,000 per year is not excessive in this day and age.
But this was $76,000 per MONTH. Over $900,000 per year. So yes, I do have a problem with that.
One post suggested a surtax on pension income above the highest salary attained by the pensioner before retirement. That is a good idea. I would make two modifications: 1) Set a floor for the onset of the surtax. Say, somewhere north of $70k; 2) make the surtax more than 100% for “showbiz” employees (eg football and basketball coaches).
14
Really, $76k a month is not a lot of money in this day and age?
J.Mocarski: It's $76,000 per month, not per year- and that is alot of money.
5
So we have our version of France and Belgium right here in the good old USA. When I lived in Belgium back in the 90s and looked to give raises to the locals many refused and looked for other ways to get benefits because their tax burden was so high that any raise they got would actually make them more negative in take home income than without a raise. And most of it went to pay for pensions of government workers. Funny how the socialist model is most pushed by those who benefit the most from it and have to work the least to get it.
8
I am retired from the University of Wisconsin. The State of Wisconsin pension fund is one of the largest in the country and covers almost all public employees in the state. The formula used to calculate our pensions does not inflate them, nor are we promised any cost of living adjustments, our pension ( in the so-called fixed fund) rises and falls on how the state investment board does, smoothed over 3 years. Pensions can also be in part based on the stock market returns only, and they can go,up or down much more depending on how the market does. The only promise is ours can't go below the floor that was your initial pension. In fact during the recession ours did go down. But the pension plan is fully funded and is probably the safest in the country, because of the restrictions on the way pensions are calculated.
12
PERS should be anagram PERPS!
3
An anagram has the exact same number of characters. Yours has one character too many.
8
People who support what is really the KleptoKratic Party never, ever learn. As the great Margaret Thatcher observed, the problem with socialism (even Democratic Socialism, Bernie!) is that they eventually run out of other peoples money! The stake through the heart of public financing was when labor unions got the right to give money to the campaigns of the elected officials who negotiated their contracts. They could obviously say "You want to get elected, give us taxpayer $$ and we'll give you a share." Legal Mafia style protection racquet, extortion. And the ones being extorted (the taxpayers) don't even know its happening. Until it collapses.
19
Nothing is stopping anyone who is receiving a pension they feel is too high or undeserved from giving it back.
10
it would be a tax fiasco.
If I was making that much money A MONTH, I sure wouldn't be living in Oregon........."Tahiti, here I come".....
7
They need to learn Herb Stein’s law. What cannot go on won’t. Nuts is nuts.
8
As a resident of Oregon I (and many others) am interested in seeing how far services such as schools, police and infrastructure maintenance will be cut before there is a revolt and the Oregon Constitution is revised so that a limit can be placed on the amount of pension money paid out. There will be innocent people hurt when this happens, no doubt, but it seems inevitable that it will happen.
20
The recourse to bad public oversight is in the courts. Oh wait, the state already lost there.
1
You could get some small savings that way, but it would take a long time to start accruing--but I would be in favor of an annual retirement cap. A surer routs to state funding would be to do something about the fact that Oregon has the nation's lowest overall corporate tax rate.
1
Yes, and the judges receive PERS pensions. So much for the courts.
4
It seems that the article is referring to defined benefit plans that have proven excessive and unaffordable compared to simpler define contribution plans that most corporations and universities have switched to. The latter means that employees contribute a defined amount or percent per month often matched by their employer and where the employee may have some control over where the funds are invested. These plans pose not risk for the employers. The problem with defined benefits plans is that they often promise to pay out the highest income earned which puts pressure on the employer to make investments that may grow to match that. In most cases, these plans never work and we see either bankruptcies with private corporations or the problems recounted here. The situation is unworkable and forces the employer and employee to renegotiate their pension.
2
The employee has no pressure to renegotiate the terms of their pension. Prior judgments in courts have affirmed this. Taxpayers will be required to pay for their politicians promises, they lined their pockets in the short term and sold out taxpayers in the long term. Too bad, so sad.
4
there is something seriously amiss with a system that values a football coach at 'a league average of $3 million a year' while libraries go wanting.
it beggars belief.
132
I weep also. But administrators and politicians saw short term gains. Maybe the smartest people in the room calculated the long term benefits.
5
Obviously, you are unfamiliar with the US sport oriented culture (maybe I should call it "lack of culture").
3
I am a PERS Tier 1 retiree! I was also an elected Union rep. PERS is being destroyed the the liberal leftwing pigs that are sucking it dry. NO ONE is getting that huge pension other than management and big wigs who are double dipping! PERS needs a COMPLETE audit by a third party. There are shenanigans going on with double dipping by management and the upper pay grades. These people have created themselves a nice little Golden Parachute, while 90% of the real State Workers get a regular pension~and having to make due with that. Nothing extravegant, not even what we made when we worked. And paying exhorbinate prices for PERS provided medical insurance! PERS has been taken over by CROOKS! Its original design and intent where sound, until the Democrats had control of it for too long. We don't need to abolish PERS, It needs a full audit and revamp. STOP threatening the regular retiree's pensions, they do NOT make what the news would lead you to believe. State employees don't get huge pensions when they retire unless they have invested actively in other avenues of income. Management and other 'higher ups' DO! It is time for the truth about PERS to be revealed!
11
Name one crook who has "taken over (Oregon) PERS". You can't because it is scrupulously run. If you want to search for crooks, start looking at the employers who have systematically underfunded the system starting about 21 years ago.
3
Where I come from this is simply called "looting."
13
These super payoffs miss the point of police and fire and mayors that collect big pensions and then have the nerve to live another fifty years.
5
They should do a series on the tens of thousands of fire and police that are scamming the workman's comp system. No one talks about it because of their "hero" status.
12
So true in California as well. The anti Robin Hood approach, take from the masses, elevate the "heroes". Work the system, it's the American way. Listening Paul Ryan?-these are true examples of entitlement programs that need reform. You always were too busy barking up the wrong tree to see the whole forest. Hidden in plain sight
2
Sounds like standard Trumpism. Take ftom the poor and struggling and give it to the ultra-wealthy. Bernie Sanders, we need you now more than ever!
6
It sure does! Except this plan was implemented and has been operated by a overwhelmingly liberal (blue) state. So it seems left wing liberals are stealing from the hard working state workers.
The Democrats continue to prove that they are the party of the people!
3
Bernie - what has he done since failing to get the Democratic nomination? He has abandoned you and is lining his own pockets.
1
What is ridiculous is that anyone should be making millions per year in the first place, whether in public or private employment. Is one person's work really 100x, 200x, 300x more valuable than another's? If wages and salaries were more equitable to begin with, there wouldn't be such crazy and unsustainable problems with pensions.
15
If you are the founder of the company who sacrificed so much and took all the risks then you are entitled to it. If you are a hired hand then no.
2
Maybe Oregonians should organize mass picketing in front of the Oregon Supreme Court building. The supreme court ruling is ridiculous and not conducive to a productive society.
4
The Oregon Supreme Court members stand for election every six years. If you don't like the Court, find new candidates. Each ruling involving PERS has been from a court with a different makeup. Not more than one ruling was ever entered by the same seven individuals. Some decisions have been unanimous, some split 4-3, some 5-2. The Court follows the Oregon and US Constitution, and their opinions are usually thoughtful and well-reasoned on all the nuances of statutory and constitutional law.
4
Absolutely agree. The rule of law is essential. The Oregon Court has crafted very careful decisions about contracts, and it has been very clear about nixing unilateral and retroactive take-aways from workers. The Oregon Court is a paragon for people who believe in the rule of law, who believe that a contract is a contract, for people who still believe that words and promises mean something. We should have more such Courts--and more such people.
1
Lest we forget, teachers have, at a MINIMUM, a four-year university degree in the subject they teach. Many have post-graduate degrees as well. How many of the highlighted "complainers" dedicated the time and finances necessary to educate themselves to get a higher-paying career?
If you compare the average wage that a highly educated graduate could have made in industry to that of a teacher, you'll find that there was a huge financial sacrifice made by the majority of teachers. Receiving a modest pension at the end of a 30+-year teaching career makes the long-term sacrifice more tolerable.
Highlighting the most egregious examples of pension manipulation does a grave disservice to the vast majority of public-school educators that sacrifice their own financial gains for the good of YOUR children (and grandchildren).
Either we value education...or we don't.
Examine the political party platforms, and recognize why each takes the stand on education that they do. An ignorant electorate is more easily frightened, gullible, and manipulable. Take that knowledge with you to the ballot box.
147
Sorry but claiming teachers can make much more in private employment (factoring in better benefits, pensions, tenure and more vacation time) is not accurate at all. Let’s be honest teaching is not some “sacrifice” it is largely a lifestyle choice. Not a lot of pressure (see teachers unions killing accountability), great pensions and benefits, lots of time off. There is a reason the adage goes “those who can’t - teach.”
11
Teaching is a very tough job. Never in a bazillion years would or could i do it. But the notion that if they weren't teaching, they'd all be making 6 figures in the private sector, with the same sort of job protections and guarantees is kind of ludicrous. And that they'd be able to retire with full bennies after 25 years instead of 40. I feel for the ones who get burnout as well, it does neither them nor us any good when they don't feel they can switch jobs without losing their accrued benefits.
I'm all for paying them a higher salary with a manageable pension. But our politicians and union leaders operate under IBGYBG, so here we are.
18
My wife, who is an elementary public school teacher, claims that anyone who never has spent one full day of their working life responsible for a class of children who are randomly selected because of their postal address and age has no business passing judgement on those who do. Just one day of your life would greatly enlighten your opinion.
95
It's very odd that this article entirely omits the role that Public Employee Unions have in electing and supporting Democratic lawmakers in blue states. In California, the more money a union gives in contributions, the higher the salaries and pensions of its members. Prison guards have the highest salaries in the state, and the most powerful union.
This is an entirely corrupt system that is as bad or worse than any of the corporate, Koch Brother-type of pay-for-play that is so often mentioned by the NYT and especially frequent commenters. Ask yourself why this critical link was not made in this article.
40
There is a legitimate point here. The other side is that in Oregon corporations know just how much to spend against the Unions to prevent any kind of tax reform that would lose them the privilege of having the lowest overall corporate tax rate in the nation. I can't foresee a time when they will stand down.
2
Campaign Finance Reform would go a long way to resolving pension problems and most most other public governance issues.
1
Paul,
The most powerful, problematic unions are for law enforcement, and their members vote Republican in overwhelming numbers. And, like the military, they can always bank on a blank check from the GOP. Nice try though.
1
This article appears to be spoon-fed by those who want to renege on all the legal promises made to Oregon retirees.
It is true the former Oregon football coach makes an obscene amount. He made an obscene amount when he was coaching.
But the database available at the OREGONIAN newspaper shows that tens of thousands of retirees average about $27,000 a YEAR.
The story buries the fact that for over 15 years not one dime has been put into “benefit defined” plans and that every Oregon PERS employee is now in essentially a 401-K type plan with no guarantees.
I’ve worked since the mid-1970s and when I retire as an Attorney after almost 40 years my retirement will be about 50% of my pay.
Scapegoating employee’s is no way to solve the problem of badly structured retirement plans or incompetent or greedy money management.
145
https://gov.oregonlive.com/pers/
I looked at that sorted by type of payment. There were over 100 pages of those who got the money match, whose last name started with W. Out of just over 5000 pages. I did not click to see how many total pages there were of money match, but 1/3 to 1/2 half would be a good guess. You can see many are getting quite a sweet deal considering their pay and service.
It sounds like you for whatever reason will not be getting a money match, nor will your benefit be cut back?
But you will get 50% PLUS social security. And perhaps a separate 401(k) type account, I am not sure about that part for Tiers 1, and many employers pay the 6% for the employee:
http://www.oregonlive.com/business/index.ssf/2017/02/pers_9_myths_about_...
See myths:
The average PERS benefit is only $29,720 year
and
Oregon's retirement system has been downsized to the point that it's really only a 401(k) program
2
My goodness, do you know how out of touch you are with the reality most Americans live with? A pension of 50% of your pay? Most Americans could only dream of something like that! And you're arguing that's modest!
No wonder these state pensions are out of control!
Public pensions are living on borrowed time in this country. The vast majority of us who don't work for government are paying for this, and we don't get pensions, and we're putting up with potholes and understaffed jails and the like while taxes increase to pay the costs of pensions for retirees who haven't worked in years. Retirees shouldn't be held responsible--it's not their fault that politicians gave away the farm. But no more. Put 'em on 401(k)'s tomorrow. Just because you work for the government doesn't mean that you should be set for life.
12
How does it feel to be just another crab in the bucket? I don't mean to offend, but only to point out that your solution to the problem doesn't help anybody but the 1% that wants all of us to keep pulling each other down instead of rising up to fix the problem. There's plenty of wealth in this country-- more than enough for all workers to enjoy a secure retirement, regardless of whether they work for the government of a public corporation
14
George,
Where I live, state employees not only get pensions with COLA's, they also get free health care. For life. While they are employed, it is, for all intents and purposes, impossible to fire them, no matter what they do or don't do, due to union protection. Also politically impossible to fire anyone if the economy goes bad due to the political power of unions.
Now, I'm all for bringing everyone to the same economic level as government workers, but that's not the way this has worked or is likely ever going to work. Meanwhile, flooding in my neighborhood gets worse and worse because there isn't money to fix storm sewers. Folks in wheelchairs dodge cars in busy streets because the sidewalks are crumbling. People whine about privatizing government services such as prisons, but the truth is, we can't afford to hire more workers due to pension costs, and so we contract with the private sector, which is horrible but necessary.
I'm all for redistribution of wealth and ending the concentration of money at the very top. I'm also in favor of the Easter bunny. I don't see public sector union members doing squat for me and others in my position who pay the bills and save as much as we can for retirement and cross our fingers every time the stock market goes down, hoping our nest eggs don't disappear. That's reality for most of us. Meanwhile, government workers keep voting for the same politicians who created this mess that benefits no one but themselves.
I am sorry NYTimes, but this journalism misses the most important consideration. Public pensions and the actuarial tables that inform them were not designed to support the super high salaries that public higher education began handing out in the 1990’s.
The simple way to explain this is to draw an analogy to investment diversification. Imagine if 76 Oregonians were receiving $1000 monthly pensions. These pensioners would end their draw at death, and these deaths would be spread out over an anticipated time frame. The single pay out of $76000 per month is exacerbated by the spouse and or children that can get this benefit upon the individual death. On the other hand, the “76” would have multiple variations of family benefits. Plans were not designed to make high stakes bets on individuals.
There is a federal law that caps the required payout of a pension. (I don’t recall the amount.) A simple state legislated cap limiting the payout will fix the problem moving forward.
Worst of all are the states (like Ohio) that are proposing cuts in the COLA promised retirees. Again, the simple and fair way to do this is to preserve the COLA at the subsistence level of all, rich and poor, on the first $20,000 of pension. A COLA is the cost of staying alive, it is not the cost of maintaining an extraordinary quality of life.
These problems can be fixed with creative and socially just thinking
13
NY does this type of thing with the COLA. It is only based on the first $18K of the pension and you have to meet an age requirement and be retired for a certain amount of time to earn it.
http://www.osc.state.ny.us/retire/retirees/cost_of_living_adjustment.php
The biggest part of the problem is at the municipal level where local government grants big payouts for police and fire. Additionally, part-(time public officials are provided coverage as patronage. State workers rarely receive the big paydays. The exception is state university football coaches. Teachers who defend the thin veneer of civilization that prevents children from becoming dumb have been under paid by politicians who aren’t interested in education. In America, the lowest common denominator is the rule.
5
Offer to sit down and negotiate reasonable changes - or let the plans go under - no middle ground.
14
I just want to correct the notion that logging was curtailed in order to save the spotted owl. The Endangered Species Act was used to curtail unsustainable logging practices. It was the only legal means available to stave off an environmental disaster.
95
This is interesting. The ‘bailouts’ of 2008-2009 resulted in the public bailing out several banks to stabilize the financial system. As an investment proposition, the bailouts resulted in 100% of the capital being returned to Joe TaxPayer a reasonable rate of return. I’d characterize this as an abiding success. Yet, the state of state and local unfounded pension obligations are loaded with so much “pork” that the only way to keep up is an ongoing, ever-increasing burden on the same Joe TaxPayer, as clearly evidenced by this article. The absence of any moral outrage for these retirement plans speaks to the lack of moral courage in our state’s and nation’s leadership and media, unless the object of ire are dastardly “profit-driven capitalists”.
4
It doesn't help that, in many instances, law enforcement personnel are vastly over-payed.
7
Depends on where you live: rural, urban, suburban. I live in a small town of under 25,000 in NJ where the average salary of officers is $81,0000. Compare that to the starting salary of NYCPD. Unions set the pace. But it is unfathomable that a public pension system would determine proper maintenance on public roads.
2
Law enforcement, firemen, and all public employees should be fairly compensated. (Recent teacher strikes in West Virginia and Oklahoma highlight the fact that all states and public sector entities compensate their employees at very different rates) But salaries are only one part of total compensation. Total compensation is the summation of salary + benefits + defined benefit pensions. It's pretty easy to quantify the cost of salary and benefits, but the real annual cost of providing a defined benefit pension is more subjective and harder to determine. Unions understate the real cost in order to hide the true value and politicians also are incentivized to understate the true cost so that they don't have to contribute as much money into the pension plan. Taxpayers are left holding the bag.
1
Where is the shame that Dr. Robertson should feel for making out like a bandit on the backs of cities all over his state? This is why I smirk every time I hear praise of our “selfless” public servants. Change the selfless to selfish and, in too many cases, you have the right of it. The pensions that the servants are making appear to far exceed the incomes of those in the private sector. It hasn’t always been this way and we need a return to fiscal sanity that no longer enriches public sector retirees.
14
Robertson is not representative of public employees in Oregon or anywhere else. The median annual pension in Oregon is 24K, which means a whole lot of old folks are taking home less. I agree, though, that the way this article is written makes it sound as if Robertson is representative. And that's a problem. But, then, how could you make the case against pensions if you started with a portrait of a retiree who takes home 24K?
14
Nathan,
No public employee should take home a retirement more than 33,000/year. I don't care how much they made while working. They should save out of their working paycheck just like the rest of us.
3
Was this article funded by John Arnold? Pension obligations should be met, period. If governments agree to fund a pension then they are obligated to do so. The problems exist because governments, not workers who kept their end of the bargain, failed to contribute as they agreed to do. Solution: raise taxes as needed to make good on their contractual agreements. The wealthy have gotten huge tax breaks over the last 30+ years. Time to fix that and fund the pensions.
34
Sorry, if pension agreements are the result of an unholy alliance between government and self serving public sector unions and their heavy duty campaign contributions, then they should not be honored. None other than progressive icon FDR warned against the fiscal dangers of public employee unions and he was correct.
29
Your solution is naive about contractual agreements. I was a delegate in my union (NYC) and even we had to come to the conclusion that we were in trouble, even with the stock market gains from our investments. That's why in City negotiations, we agreed to vest new hired personnel at 10 rather than 5 years, as well as other concessions. Public employees also pay taxes, and people seem to forget that. It's a much more complex issue than you present.
4
Good luck Katie. Government mafia must be paid or else !
1
The real story here is that state and local governments both underfunded their pension obligations and played with risky, get rich quick investment schemes. They refused to raise taxes knowing that they were going to face bankruptcy if they did not. Now, of course everyone blames the employees who, like me, paid in to the pension funds.
22
Jeff, "everyone doesn't blame employees" but you did/do have a role since few employees held their union leaders accountable for telling the truth. I recognize that this wouldn't make you popular amongst your peers, but this still doesn't allow you to abrogate your role in this mess. Politicians play/played a big role as did union leaders and taxpayers weren't paying enough attention either. Lots of blame to go around. But what this pension disaster demonstrates is that when "plans" are devised that encourage "bad" behavior, that bad behavior will occur. Current pension plans are like teenagers. If they are ignored and unsupervised, they may be fine for one or two weekends, but longer term, you are asking for trouble. And we've found trouble at many cities, counties and states.
The problem with calling into question the reliability of public pension payments, is that pension benefits are a substantial part of public employee compensation. People elect to work a job based upon total compensation, not just the immediate cash compensation.
If a worker believes the pension promises made, then the pension promises will be given full value. People will work for less cash compensation because they believe in the pension.
But, if everyone comes to believe the pension promise is a fairy tale that will be revoked later, the worker will not consider the pension promise at all, and will demand higher cash compensation.
Adequate traditional pensions are good for the public, since those retirees will not be on the dole like all the private employees who were paid more cash but blew it all. Human psychology being what it is, the vast majority of people find a reason to spend all their income and trust that retirement will take care of itself. The end of traditional pension plans in the private sector is an unmitigated and underappreciated public policy disaster.
42
The fallacy in your argument is that many more people want government jobs with benefits than there are full time jobs so it has little to do with hiring. I say this as a government worker whose pension will be 2200 per month in contrast to the 76000 per month described here.
3
I don't know any state employees with a $1.9 million-a-year contract and a $3 million-a-year market rate. Most people make somewhere between $50 and 100k. Some high level employees make more. Low level employees make less. That really doesn't describe a pension problem. That describes a revenue problem.
I'm sorry Oregon couldn't find the political will power to properly finance their public services. That stinks. However, they had decades to address the problem. Retirees like to move to Oregon for low taxes. They vote. That's your problem. Personally, I don't find the national situation any better. We've known for 40 years boomers present a problem for social services in retirement. All the same, we've seen 40 years of anti-tax nonsense culminating in our most recent budgetary disaster.
Guess what? Easy come, easy go. I'll happily vote to keep my benefits and stick Reaganites with the bill. I don't begrudge anyone for collecting their pension no matter how ridiculous the payment. I'd happily take a lower wage in exchange for a guaranteed annuity. Getting stuck with lousy 401k matching or no retirement compensation at all is a raw deal. Relying on dividends is not a healthy path to retirement for this nation as a whole.
12
Unfortunately for you Andy--there are more of us than you. Guess who will lose.
1
As someone who has worked on this issue for years, for Oregon governors and for Oregon unions, I can attest that there are solutions available to reduce these ballooning pension costs and to mitigate the effects on budgets and services that Ms. Walsh describes in this piece -- but we have to work through denial (by my former union colleagues), challenge wishful thinking (that better investment returns will solve the problem) and move beyond partisan posturing to achieve these solutions. We are dealing with legacy costs here from a system that went haywire and produced retirement benefits of 80%, 100% of salary and more for career employees when its stated goal was 50% of salary. Those who benefited from this extraordinary largesse were quick to feel that they deserved it, but the downsides were many and negative in the impacts on budgets and services, constraints on staffing and pay for a new generation of public workers, a diminution of resources for kids in today's classrooms, and an undeserved discrediting of the concept of a defined benefit pension plan. Our system here in Oregon has presented progressives with an an "inconvenient truth" that we have yet to deal with.
Dealing with legacy costs is hard. In this instance, it will require adjustment to benefits in the system going forward and a reinstatement of employee contributions to support their pensions. But not dealing with these problems will be even harder on Oregonians for years to come.
20
Nesbitt did work for the unions at one time. Then he went into high level politics and government management, and like many who have done so, instantly and completely changed his orientation toward almost everything. Read through his recent comments and editorials, and you will see that he hates the minimum wage, hates taxes, hates unions and on and on, just like his political patron (who, incidentally, had to resign).
8
This is simply not true. Oregon PERS benefits have been reduced over 20 times since 1995. The system has been completely restructured two or three times--with benefit reductions. The legacy payouts peaked in about 2000 and the salary replacement ratio is still falling.
I do agree that the system needs minor constant tweaking. No one can predict the real rate of return. Negotiating with business interests for a fairer corporate tax rate by slightly increasing employee contributions is not absolutely unreasonable. But it has to be fair.
6
How about all of those hefty pensions to local, state, and federally-elected officials? Talk about hypocrisy!
7
Look at Illinois legislators. They can receive their pension starting at age 55, and they can buy pension credits to boost their annual pensions. Representative Jan Schakowsky bought pension credits by paying about $4,000 to boost her annual pension by about $2,500 per year, and since she "retired" from being an Illinois legislature and became a US Representative in Washington she's collected almost $500,000 from her state pension, while being paid her salary in Washington DC and is accumulating a 2nd, federal pension. Is she is a true "Public Servant" or is the "Public Serving" her?
4
In the rush to defend your average public employee, Oregonians should not let the Joe Robertson's off the hook.
The "median" retirement benefit is irrelevant. The fact that the "average" PERS retirement is so much higher than the "median" (by almost 25%) hints at how much of the PERS pot these "outliers" are grabbing.
The article doesn't mention that Robertson elected the "survivors benefit" which means that his much younger second wife will be collecting this astronomical retirement at the expense of Oregon school children for years after Robertson is dead and gone.
52
There needs to be claw back. Dr. Robertson made plenty of money in his salary to save on his own.
8
If Dr. Robertson hadn't taken the survivor benefit his monthly payment would have been even larger.
1
Well, even the last Civil War widow finally died in 2004.....
1
Strange reasoning here. Inflammatory examples, too. The median pension in Oregon is about 24K. The benefits of workers have been reduced over 20 times since 1995. Yes, the Oregon system has its 1%, the outliers, the ones who get all the attention in this article. Most workers are awfully tired of having these people rubbed in their faces when the annual "cut retirements!" movement comes around again. Most would gladly approve a cap on retirement payouts.
It's also strange to blame retirees for the state's budget shortages when Oregon has the overall lowest corporate tax rate in the nation. If corporations paid their fair share in Oregon, the budget picture would be entirely different. Why blame retirees, who after all have worked their entire lives?
There are many misleading characterizations in this article, but one last point: Employers pay for these retirements, and in Oregon it is relatively unusual for them to fall too far behind in this. In this respect, Oregon has one of the healthier systems in the country. Employers also make the contracts that lead to the high retirement payments. Insofar as there is a problem, insofar as the payments become destructive, the root of the problem is in the way individual employers negotiate contracts--not with the state system.
It's too bad that this article represents things in a misleading way. A lot of aging folks in Oregon with 24k and less pensions are going to start waking up in the middle of the night again, worried.
88
It is very difficult for an Oregon taxpayer to understand why some people have made out like bandits and others have not. People who worked in the same office with roughly the same responsibilities for about the same period of time have ended up with wildly different pension benefits. (We know this because the local newspaper publishes the benefits after winning a struggle with the public employees union, which wanted to suppress the information.) No matter how it happened, those of us who are paying nine percent of our incomes to support the madness are increasingly angry. The population is growing rapidly and there is no money for infrastructure to address it. I intend to leave the state after I retire.
15
It's pointless to make corporations pay state income taxes when they just pass them on to the end user making their products more expensive.
3
The factual errors in this article are significant; omissions greater. Here are three examples:
1. Members of Oregon PERS don't get to "choose" the highest benefit calculation. The statutes require that PERS pay the highest monthly benefit calculated.
2. Less than half of members receive an income tax remedy, and few get 9.89%. This history is complicated and didn't happen just because the Legislature decided to give away money needlessly. Those hired in the 60s, 70s, and 80s were promised a pension free from Oregon State Income tax. Federal retirees did not have the same benefit. In 1988 the US Supreme Court (Davis v Michigan), ruled that States could not preferentially tax public employee pensions if they didn't give the same benefit to resident Federal retirees. Oregon's Legislature decided to tax PERS pensions, rather than allow tax-free treatment of federal pension income. Multiple lawsuits followed. The Oregon Supreme Court ruled in 1991 that Oregon had impaired the contract between public employees and the pension system. Five years later Oregon public employees who worked prior to October 1991 received a pension increase in proportion to work performed prior to 10/91 and their total career length. Federal employees got to reduce their pension income in the same proportion.
3. The employers systematically underfunded the system using accounting tricks allowed by the Board, actuary, and the Legislature. The employers created the shortfall, not retirees.
90
More detail. PERS was changed significantly in 1995, and 2003. Those years saw creation of new membership rules for new hires. Each new tier had less generous benefits than the original Tier. Litigation beginning in 2000 resulted in recapturing money from members who were active in April 2000 and beyond due to Board exceeding its fiduciary duty. Legislation n 2003 reformed the Board composition, slapped restrictions on paying more than assumed rates, shut down further contributions to member accounts, and refigured the way the employer match would be calculated in the future under certain circumstances. It also specified rules that mandated where excess earnings would go - to reserve accounts. By 2007 the system was 106% funded. Just before the 2008 crash, employers persuaded the PERS Board to use reserve funds to buy down employer contributions. In 2008, the crash occurred leaving PERS with no reserves to offset losses. In 2013, the Legislature passed a bill to reduce COLA increases against the advice of the AG and its own counsel. Worse, the $5.6B 20 year savings was front-loaded so employers could reduce their required PERS contributions immediately. Members sued, while most employers spent their newfound largesse. In 2014, the system was pronounced fully funded again. In 2015, the Oregon Supreme Court ruled against the COLA reduction for breach of contract. Suddenly $580M vanished from the state budget, and by 2017 PERS had a UAL of $23B.
18
It is not true that "employers systematiclly underfunded the system. In 2006 (and prior years), PERS was fully funded. It was the Great Recession of 2008 which decimated the fund.
1
I beg to differ. From 1997 forward, when employers were expected to start covering the tax remedy (following the Chess Settlement), and the actuary started to expect employers to cover growing Money Match obligations, the PERS Board, acting on the push from the employers started to agitate for things like rate-smoothing, corridor funding, and changing the actuarial method of new people joining the system, the employers were allowed to pay at the low end of the estimates for full funding of the system.
12
And this is exactly why the affluent need to pay more taxes.
13
Right, to subsidize everyone elses lifestyle and to rectify their bad decisions.
No thanks, I prefer to keep my wealth to myself.
4
Why should the affluent pay for you? Make your own money.
3
FDR was right. Public employee unions should be illegal.
31
Public employee unions are fine, they just can't be allowed to have collective bargaining rights over wages, benefits and pensions. In most states, the legislators get the same benefits as the state employees. Who is looking out for the citizens?
5
Amen Arundo. They need to be abolished as soon as possible.
4
Our legislature is part-time, and members don't receive the same benefits (or salary) as public employees. They are members of PERS for the time they are in the Legislature, but vesting rules apply to them just like every other public employees. The only way the legislators benefit significantly from PERS is if they are already a public employee before they serve in the Legislature, or get some plum public employee job immediately after leaving the legislature.
2
Well at least the good thing from a taxpayer perspective is you can always move to the several no income tax states to not be liable to fund these political payoffs to the unions.
3
They just find a way to tax you in different ways. Property taxes, sales taxes, etc. while the average taxpayer is struggling to put something aside for their retirement they are paying out the nose for public employees who work less with guaranteed employment. This is happening because there is very little light shed on it.
3
"you can always move to the several no income tax states to not be liable to fund these political payoffs to the unions."
Or you can move to a state where civil service unions are prohibited.
2
Sure. Pick a HIGHLY VALUED surgeon and administrator, one who's nominal salary was WAY MORE THAN most Americans earn ..... and tell us the guy didn't earn it?
Pray tell, who negotiated his compensation package? Is it only ok to have a phat retirement package if you're from the private sector? Don't we want the best - worth the most - leading in our public agencies as well? Want to shut down every public university medical school? Engineering school?
13
Many workers in private sector jobs don't have any retirement packages, much less "phat" ones, and they pay a higher %age for health benefits than public workers do. The average pay for one teacher in NJ -- in the mid 50Ks -- is more than the average income for full NJ households.
8
I spent the last six years of my career in a professional Public Works position. Traditional PERS was terminated three years in, replaced by a hybrid defined contribution/ defined benefit plan. After 10 years of COLA increases in retirement, I collect less than $7,500 per year from PERS.
I remember early on in my public sector job often returning to the office from a construction project to find colleagues huddled around a computer running projections and congratulating themselves that they would be earning higher salaries in retirement than currently. Having come from the private sector, I found this unseemly, and offered the friendly observation: "You know, at some point, you are going to have to do some actual work!" That did not win me any friends.
PERS beneficiaries as a whole know what a scam the program is, just as the public does, but they shrug their shoulders and retreat to the fallacy of future compensation for current below-market compensation. The fallacy is that they are in those "under-compensated" positions for a reason, and by choice. It would be unkind to suggest what those reasons are. No one is stopping the aggrieved from moving to the private sector. Teachers are an exception, but Oregon already ranks 14th in teacher salaries nationally, well above the median.
Why not voluntarily return those obscene "outlier" windfalls back to the state treasury to fund other suffering public priorities? I suspect that suggestion won't win me any friends, either.
20
Why would any sane person return some or all of his/her pension? The pension was part of the inducement to accept a job in the first place. For 99% of people in the public sector, the pension is a unilateral contract, offered by the employer and not subject to negotiation one the part of the prospective employer, and it is counted as part of the total compensation package. As an individual, you either take the pension, or reject the job. So under those circumstances, why would Joe Robertson feel any obligation to return any portion of his $900,000 annual pension? He got what he was offered, and ended up with 58% of his Final Average Salary at retirement. Joe did nothing wrong. Physicians in specialties like his earn a lot without being administrators, but being President of a massive Health Science University earns even more.
When I retired, I got 83% of my FAS. We both worked for the same system - higher education - but retired at different times. If I had waited to retire when Joe did, I might have gotten significant more in absolute dollars, but significantly less in % of FAS.
None of us bargained for the system we have. It was an is what it is when we were hired.
3
Outrageous! Unconscionable. Indefensible.
This sort of (union negotiated at tax payer expense) largess MUST be RE-negotiated into today's financial REALITY. Right now.
8
This article unfairly focuses on the highly unusual pensions of a couple people at the top as examples of the pension problem. These examples only foment unfounded negative reactions toward the majority of people entitled to pensions, who get much more modest annual payments (think $20-30,000/year). Yet, it is the average pensioner who will suffer from the public backlash aimed at those at the top, when in fact the public should be demanding their own pensions from their employers. This is a crisis of political mismanagement - don't let the victims be the hardworking public servants who kept their end of the bargain that states will soon try to get out of. That would truly be a crisis.
35
Hardworking public servants? Name one.
4
The vast majority of problem public pensions -- Kentucky, California, NJ, IL, CT, PA, MA -- to name but a handful of the worst offenders, base pensions on worker's final salary and years of service. The Oregon wackadoodle pension calculation is an outlier dreamed up by some purchased politician (an oxymoron I know).
The problem is that politicians would rather promise a benefit that some other poor slob down the road will pay for. This leaves money for either worker raises (which increase the future pension) or the ability to provide services without paying for them.
Pension and OPEB underfunding is a bipartisan problem caused by incompetence, chronic underfunding and kicking the can down the road.
The problem is not greedy public workers or too cheap to pay the tab taxpayers. It is the politicians who refused to adequately fund the commitments they made.
The solution? First, when in a hole -- stop digging. OPEB (retiree medical benefits) which are not even funded (compared to underfunded pensions) need to be eliminated, Period, These are health benefits on top of Medicare. And if public workers cant afford to retire before 65. Well, join the real world.
And future, as yet unearned, defined benefit pension accruals need to be frozen and replaced with defined contribution plans. Politicians have demonstrated their inability to manage DB plans responsibly. How many more Chicago, Detroit, Illinois and Kentucky train wrecks does the taxpayer need to pay for?
15
tell it to the courts that have thus far said go-forward future work-not-yet-performed accruals cannot be reduced.
2
Public pension accounting rules need to be overhauled where every future penny of entitlement is paid for during the working life of the employee. Assumed returns need to be conservative based on long term interest rates, not stock market, hedge fund or venture capital investments which look good on investment advisors power point presentations but never really appear after all the commissions and fees are paid as NJ and IL have discovered. Politicians are honest only if honesty is forced on them by the system. If the pension fund falls short, there needs to be conversation on cutting payouts before borrowing and hitting up taxpayers.
3
Rahul is correct. Private sector accounting rules require pension liabilities to be measured based on a high quality, fixed income yield curve. In contract, public sector accounting rules base the liability measure on the expected return on assets.
In other words, the same liabilities are measured lower if the fund invests in very risk investments than if the fund were invested conservatively. Not surprisingly, public pensions invest more aggressively than private sector pensions -- exposing taxpayers to having to pay the shortfall.
3
I receive a modest pension from the Alameda County, CA, retirement system. I opted to retire early and, thus, my pension is smaller than many others. I receive monthly reports on the financial health of the system. There are also other benefits that I receive. I dont know how the system was designed or when but it seems to be ticking along nicely. Every day I tell myself how lucky I am.
2
Ah, the joys of public service union negotiations.
6
All blue states have pension problems. Illinois and New Jersey are today in technical default in that they can not cover obligations today without stealing money from other state service accounts. The unions refuse to take any cuts or contribute more money to pensions so state taxes will continue to rise. The problem is the middle class is fleeing these states for less oppressive tax states creating a downward spiral.
19
Red States do not have pension problems since they are anti-union "right to work (for less) states. No pension benefits no problems. there is a reason taht the Right to Work states are in the lowest level of income and retirement bei-nifits.
3
Don't pretend that this is a Democrat only problem.
Kentucky, Oklahoma and most red states have also underfunded their public pensions by tens of billions of dollars. And made promises to provide retiree medical benefits in excess of Medicare they haven't begun to fund.
It's bipartisan irresponsibility.
14
My wife and I had the pleasure of eating out with a former Oregon sewer department worker and his teacher wife who retired in their fifties at the top of their heady state retirement schedule. They impressed us with their conversation of now owning five rental houses. They generously paid for our meal.
97
I begrudge no man who spent his professional life in a sewer the benefit of rental properties
3
It's necessarily that he earned a lot of money. One way to do it is to use the equity in the home you live in for the down payment on the first. You collect enough rent to cover the expenses like paying the equity loan down and the mortgage and taxes on the rental property as well as the maintenance. Get to a certain point and repeat until you own five of them. Once they're paid off the rents are your pension.
1
As you say, that plus an annual retirement income double their income from 20 years ago, which made the rentals possible.
2
With all due respect, it is NOT the math that is strange, but rather Oregon’s lawmakers and their bizarre decisions. For them to "include a golden touch, redefining “salary” to include remuneration from any source" speaks volumes of their recklessness and irresponsibility while in the position of being a lawmaker.
To add money from "licensing deals and endorsements that the Ducks’ athletic program generated" or to base a pension on salary AND "incentive payments, clinical pay and unused sick or vacation time", I can only wonder, what on earth were they thinking? And as a result of this insane decision to add "extra generate income" into the overall pension salary, there is not enough money for the essentials, i.e., less police protection, infrastructure needs, and various school programs.
While these lawmakers' decision may have been legal, they are most certainly unethical and immoral on a grandest of scales. Every single lawmaker who voted in favor of this disgraceful added pension entitlement should be voted out as soon as possible. Such a shameful act of greed.
151
They are all gone, retired and cashing their Pension check.
3
In my state by the time you vote him out he has already “earned” a legislatures pension after only 16 years of part time “service”. Especially since he can add in other types of elected positions or government jobs.
2
The legislators who you think are responsible are long dead, or long retired.
1
No public employee should ever receive more than the maximum dollar amount of SS which is around 3300.00/month. I don't care that they were promised. Too bad, so sad.
26
Sorry, but slavery was eliminated in the 1800s. Now, all people have the same constitutional rights, including to a contract. Don't like it? Change the constitution to make some people back into slaves, or move to a country that allows slavery.
2
Now do California...We face 1 TRILLION unfunded pension liabilities and yet Brown, et al, hail the surplus budget we have and California is held up as the bastion of effective policy! Pot holes, heart wrenching and rampant homelessness, highest income disparity, exorbitant housing and gas costs, etc. but hey we have a train to no where though so there is that...
14
You left out that California is also the home of the $200,000 life guard who can retire at 50 with the same pension as a police officer.
Sweet deal for working on your suntan.
8
In an report just the other day on San Francisco gleaned from a walk of 15 square blocks reporters counted 303 piles of human excrement and 100 hypodermic needles. People, men and women were shown urination in the streets. The streets are lined with store bought tents as well as jerry-rigged with scrap lumber and piping and blue tarps. Garbage is everywhere along with the vermin that subsist on it.
I'm sure these conditions can be found in Los Angeles and a few more cities the size of Stockton. If California is doing so well why is this being tolerated?
In today's NYTimes there's a story about a couple in Portland OR getting married. They live on the street and will join their tents together. Yo can find this in Seattle too according to my sister who lives in Federal Way.
There's something about the West Coast that this so common and even further north in Vancouver. Yes there's a commonality there but I just can't put my finger on it but I know it starts with a "D" or an "L".
2
If outrageous pensions are your bailiwick consider those "earned" by the likes of Sanford I. "Sandy" Weill, former chief executive and chairman of Citigroup. His opulent lifestyle comes compliments of public money which bailed out him and his insolvent employer. Let's show the same love for more deserving public servants.
16
could care less about mr weill's pension as his pension is not backstopped by the taxpayers. if mr. weill's pension has to be picked up by the PBGC then his pension is going to be reduced by 95%.
9
Agreed. But the Sandy Weill's of the world are a handful. The public employees are not. The growing public pensions hurt the services that the taxpayer thinks they are paying for. Sandy Weill...not really. I hate the bailouts but you are diverting attention from a very real and growing problem.
5
The big banks all paid back the loans with outrageous interest. Bank Of America was paying $250,000,000 a quarter on a loan the federals forced on it. Neither it nor Wells Fargo needed the loans. It was about the Fed making the interest.
4
SEIU and their role in our government needs to be made illegal. They are an affront to the taxpayers and provide nothing but over bloated budgets and a desire only to help themselves while providing a low standard of employment. Sad to see the taxpayers held hostage by our own government.
15
In Oregon, Teachers in the 1980s were asked to go without cost of living increases and reduced benefits but promised they would be paid retirement benefits instead. This was negotiated in good faith.
If Oregon actually taxed corporations fairly the PERS costs would not be an issue. PERS is an easy target and business in Oregon continues to point at PERS instead of allowing themselves to be taxed. Please write an article that focuses on the lack of tax revenue from business in Oregon. This is the real issue. Not PERS.
184
Taxing businesses just increases the costs of their products to the end user. But then it's just about taking the end user's money any how, isn't it? And the routing is irrelevant, right?
3
In the late 1970s and early 1980s, inflation was running at 15% or more. At the time, I was employed by a bank and did not receive a cost-of-living adjustment to my pay, same as many (of not most) individuals working in the private sector. What the State of Oregon should have done was to simply say "NO" - no pay increases, no cost-of-living adjustment. Instead they picked up the 6% retirement contribution formerly paid by the public employees.............
4
That is a narrow legal definition of “good faith”. The politicians promised the teachers that a future generation would pay the bill for the current generation’s expenses and the teachers agreed. Basically two parties agreed to shaft a third party who was not present to object—the future. Not really good faith.
Just a public sector version by politicians of the Bankater’s IBGYBG: “I’ll be gone; you’ll be gone.”
1
I live in Oregon and read about this frequently, but I don’t claim to understand it enough to assign blame or propose a solution. But in the big picture, for the whole country, we have a new problem with common extreme longevity. If a public employee (or any citizen) lives to age 90, and was employed for only 20 years, how is that in any way sustainable for a collection of humans? Especially considering the sizable health care expenses in the last three decades? Some of the richest retirees I know are career military professionals, even lowly nurses.
Scandinavian countries can do it, because they are willing to tax themselves to pay for it. Here in the US, we are afflicted with magical thinking, that “tax” is a four letter word, but entitlements are sacrosanct. Make no mistake, we absolutely must find a way to generate more revenue in a fair formula for all. We let the rich and corporations off way too easy, when it comes to supporting the common good.
176
The common good in this case is the "liberal progressive democratic" good that is the basis of this article. Let's be clear so that it doesn't happen again.
4
What about the non union, non public employee? Are they just supposed to pay for these benefits in a way that prevents them from saving anything for their own retirement? This is crazy thinking.
12
"Entitlements" are so-called because the recipients are entitled to them, usually because they paid for them directly over many years. This is in contrast to "discretionary spending" which is so called because the expenses are at the discretion of the government rather than being obligatory.
Our discretionary spending is what we should be looking at. At least 43% goes to the military.
I grew up in Oregon, and moved to Seattle in the late 80s after having worked in State government for ten months for a department that I thought should have been abolished years before. (We edited and published articles on topics, including cooking and sewing, that were much better covered in the "women's" magazines of the era.)
It was a great example of how the self-perpetuating nature of government creates bloat and waste in some areas while other areas that people really need starve - creating a situation where no one is happy. I'm a progressive on social issues, but I also recognize that when people are given free license to feather their nests at public expense, they do. The union employees of Oregon and the politicians they held hostage created this problem back when I was a young adult, knowing full well that they were creating a fiscal time bomb with consequences that wouldn't be fully realized for decades.
19
Enact reform that reduces pensions to reasonable living allowances.
10
A nice thought, but in Illinois, it is against the State Constitution to reduce pension benefits. They did try and it got turned out by the Supreme Court.
Only hope we have is bankruptcy along the lines of Puerto Rico. States, like Puerto Rico, can't go bankrupt except now they can within narrow strictures. We were specifically listed as a "risk" while legislating the Puerto Rico bailout.
New Governor, likely a Democrat, wants an amendment to our States constitution that will let him raise taxes so he can fund pensions along with Universal Healthcare.
People have no hope here and are leaving as quickly as they can. The rate of High School students attending out of state colleges soared 64% this year.
2
yeah, tell that to the courts who have thus far said "no".
Now it is Oregonians' turn to discover how largesse at the taxpayer's expense always ends in a financial collapse.
13
Fine, maybe the decisions that were made on the structures of public pensions were incredibly bone-headed. It certainly sounds that way. But they were made and implemented by duly elected public officials. The people who elected those officials need to pay what they, through their elected officials, agreed to pay. A contract is a contract. If that requires raising taxes, so be it.
5
hahahaha. Taxes at 50%+ of GDP would be needed to pay. Good luck collecting that (see Greece for example of what would happen)
5
"The people who elected those officials need to pay what they, through their elected officials, agreed to pay. A contract is a contract. If that requires raising taxes, so be it."
Your problem with that (I say this as one who has always lived in corrupt -and currently grossly overextended- blue states) is that i'm not aware of any law that forces people to remain in the states where they're paying more tax dollars for fewer services. That includes those who took their inflated pensions and hied off to Florida, and those who got tired of it and hied off to the likes of Texas or the Carolinas. So you get de facto death spiral states. Which, for the cherry on top, lost or are in danger of losing House seats.
2
Yes. And don't forget to vote in November if you want to start to correct this issue.
2
I believe there are at least two sources to this problem, neither of which was explored in the article. The existence, in the pension system, of public employees who make multi-million dollars salaries (University presidents and college football coaches). The public pension system should be capped at, perhaps, a salary of 250,000 a year. Under such a cap it would be possible to use the same formula to calculate retirement as is used to calculate the retirement of a teacher or a bus driver. More importantly, government officials must be to restricted to making agreements based on realistic revenue projections which would be recalculated annually. Along with such contracts officials would be required to put away the funds necessary to pay off the retirees at a predetermined rate.
Jim Mamer
34
This is a class issue. It has nothing to do with where in the country you live. Heads of companies, corporations and universities (public or otherwise), and those with high status jobs with a lot of visibility, are seen as special -- i.e., better than the rest of us. Even heads of companies who get fired for malfeasance often get a severance package worth millions and are set for life, when they really belong in prison. Meanwhile, the working people whose labor made these people rich walk away empty handed.
Remind me again why we just gave bigger tax breaks to billionaires and millionaires?
207
The tax breaks just passed in Congress will cost anyone making over $250K a year more money not less.
4
The Oregonian newspaper used to argue that my pension as a classroom teacher was unreasonable because of a retired coaches' outrageous pension. More recently, my pension was in jeopardy because of a retired eye doctor. I never made what these people take home each month in an entire year, and my YEARLY pension is a fraction of what they receive each month.
Employees in the private sector only have a right to benefits they have earned, future accruals can be changed.
Some state workers have a constitutional right to continue to earn benefit on a formula when they were first hired and others courts have ruled this is a contractual right. This is not "bad", but states should be very careful whenever they adopt benefits.
The Oregon situation is unique in that it came up with this match. Normally the return of employee contributions is rather small, so matching it would be as well. Young quitters usually don't have much power so this I think was done as an idea that they should get something other than just their own money back. I know that this problem has been known about for some time but not sure it was understood when it was adopted.
The only solution would be to cut employee pay or raises and maybe employee staff? But there would be problems with doing this just for older workers, where this would be most effective. Not sure there is incentive to cut people or pay, if costs saving for doing so are not allocated back to the places doing this?
What is included in pay, like overtime is a common problem. New plans with lessor benefits are put in to allow older plans to be increased. The recession was a perfect storm with bonds , stocks and interest rates all going down.
The public is largely unaware of these commitments until it is too late.
3
Oops!
I just read this:
"The Oregon Supreme Court was quite specific when it rejected the legislature's last round of public pension reforms in 2015. It said PERS can't claw back benefits that have already been earned. But it can change benefits going forward."
http://www.oregonlive.com/business/index.ssf/2017/02/pers_9_myths_about_...
Still in this case most of these benefits have been earned and converted into benefits. And cutting pay might hurt the younger folks who won't get these money match pensions etc.
olI wonder if the problem stemmed from the 90's where the computer industry was paying great salaries to attract great people. Education, law enforcement, firefighters other public employees traditionally paid low salaries. How could they compete? Pensions. I guess the smartest people in the room understood the end game.
3
1) Public sector pensions should be capped at no more $100,000 per year.
2) Pensions payment should be based on final 5 years of base salary only- no OT or residuals
3) Payments start at age 65; not after 20 years.
4) When education and public safety suffer, pension obligations are going to gave to be renegotiated.
212
Lebuhn,
Your comment is ridiculous: "Pensions should be based on final 5 years of base salary."
Pensions should not be based on arbitrary formulas that could be gamed. Pensions should be proportional to the amount that the person earned over his lifetime (regardless of whether that is 1 year or 40 years).
4
Basing Pensions on the last five years of salary requires a huge payment from the taxpaying public who have no such luxury, but whose self funded retirements are actually far more dependent on their early investments. Pensions should be an annuity purchased with the employee’s 401k at whatever age they wish to retire with what is their money.
3
Oregon tried to renegotiate, but the court would not allow them to do this. Instead they forced all employees onto the new system, not just new hires. This detail is reported in the article inaccurately. Those hired under the old system kept that pension, but could not pay into it (many teacher, for example, accepted flat salaries for years and also paid into PERS). EVERYONE was required to work under the new system when it was instituted. That system pays out over a maximum of 20 years.
My state Connecticut will implode from such unfunded state employee pensions. 100k plus pensions to people who never contributed to their pension or healthcare. Current workers with base salaries of 64K earning an extra 160K a year in OT which will be factored into the pension. No one is asking how the pensions can be paid, let alone how these people can work so much OT. How do people work 16 hours a day, 7 days a week for years? This is all public record. The state Comptrollers post the wages real time. The University of Conn. just had an 84 year old Professor making 200K. His wife killed him and he did not report to work for 8 months. No one noticed him missing.
10
Socialistic paradise for party or union good comrades, financial ruin for the population.
2
Not true. He was a MD and was noticed. Anecdotes are not the best way to make the point that formulas need to be revised.
https://www.cbsnews.com/news/body-of-slain-uconn-prof-may-have-been-in-h...
2
Yes, he was a Prof. in the medical school and working on an online course. His supervisor (The Dean) never noticed him missing. Someone in the UCONN Medical School Administration, became concerned about him not responding to emails concerning moving his office. The professor had not entered the building in months. This points to the layers of overpaid bloat in many state Governments.
2
You missed the boat on this article. I began working for Portland Public Schools in 1998 and our PERS was very horrible. We could not retire on what was being put into it, plain and simple. Many of us were wondering what we were going to do. Contrast this with our fellow teachers who go in during the 70's and 80's and were retiring with 100% or MORE of their salaries. It was unbelievable and nobody wanted to tackle the injustice of it.
17
Yes. The salary replacement ratio soared and hit a peak in 2000, with some people taking home 100%! Since the mid-90s, though, there have been three major system restructures and over 20 legislated benefit reductions. The ration is closer to 50% now and still falling as a consequence of the reforms.
I agree that this article missed boat. In fact it missed several boats.
5
My pension is managed by contract through my private union and the “multi-employer.” Payouts are estimated on endowment and contributions that are directly related to amount of work. Every contribution is tied to a day of work.
The conversation of pension funding is meaningless if it’s being pillaged for other budgets. An investment fund is already liable to risk.
Blaming and holding municipalities responsible is part of the fix. But, we also need to address the nationwide problem of saving for retirement. We do need to go back at least in part to a strong arm approach to saving and keeping it locked up. 401ks, unless you’re financially literate and making maximum regular employee contributions, just don’t cut it.
5
As a soon to be public pension recipient, they should provide for an adequate living, but should not include endorsements and other deals that are icing on the cake for a very few. Those should be completely private, between the recipient and the commercial enterprise.
6
Pensions should be capped to an amount that pays the bills - bills based on a state per capita average, and that's it.
3
Most of the states that suffer from these pension anomalies tend to be Blue States where public sector unions have captured the state houses and there is a nexus between democratic party politicians and the unions. The unions help the pols get elected while the pols repay the unions with pension freebies like early retirement, double dipping, cash for accumulated vacations and other tactics outlined in this article. Actuarial tables with life expectancies, interest rates, portfolio returns, future contributions and even cash available are manipulated to show the pension plans healthier than they are while maximizing payout. After the pols are in office, taxes are sneaked in under various feel good pretexts while hiding the true purpose of the taxes. Some states like New Jersey and Illinois even borrow money to pay out these pensions while pretending their pension systems are solvent while under any sane accounting rules, they are bankrupt. The only solution is to ban public sector unions altogether and to ban public employees from contributing to campaigns for elected office because these politicians are supposed to be the supervisors of these public employees and are supposed to set the rules for their employment, which they cannot do if they are beholden to the employees for survival in their elected offices.
7
I would agree about the political contribution opinion if we also banned corporations from contributing, publicly funded and capped campaigns, and had a national holiday for all to Vote. If you’re going to support democracy do it across the board.
9
Not comparable. When a corporation lobby's a politician it isn't to raid the public cookie jar. It is invariably for some variance to build something or break some rule.
The end result of this profligacy is going to be that future employees will have no pensions. Look at the American auto industry where $ 70 an hour workers are being replaced by $ 28 an hour workers. You can blame the management, unions, workers, politicians or anybody else but the reality is that the man at the bottom of the chain is the one that suffers. The blue states believe that Taxpayers are captive and they don't understand the math but in reality jobs are fungible and people vote with their feet. There is a reason no new auto plant has opened in Michigan since 1975.
1
It is not the highest paid pension recipients that is Oregon's problem (though the mathematics that figure pension benefits was ill considered and venal for my state on a whole). The average state employees pension benefit is reasonable and perhaps too low. The basic problem is the calculation that promised higher returns from investments than any competent actuary would calculate. And a refusal to make full pension contributions as part of the state budget each year. Oregon citizens will suffer from this for many years as it crowds out increasing percentages of our civic needs.
14
california also fighting this battle. cali courts have now finally said the pensions are not absolutely guaranteed but only must be "reasonable", so there may finally be a way forward to get control. the real problem is that for public workers you cannot even change to go-forward rate of pension accruals for work not yet performed. that is the insanity that has to change.
5
Mr Bellotti and others who receive pensions above $100K per YEAR, should be contributing ALL of their payout to provide public education and services for their communities. They should do this, not because they are legally bound, but rather out of a sense of OBLIGATION and DUTY to their fellow human beings who are suffering because these pensioners are being paid money they do not need or deserve.
6
I work for a local water and sewer authority and our state pension maxes out at half of your yearly income. So while I agree that some of the pensions shown in this article are egregious what will happen now is the Republicans will use this to go after all pensions. For what's it's worth I earned $79,000 last year so assuming I worked at the company long enough my maximum pension would be just under $40,000 a year. That's with no health benefits provided in retirement.
13
This is the consistent tactic of writers who write propaganda for the anti-pension movement. They always focus on the outliers, the wealthiest, most money-draining people whose salaries and retirement payouts are almost beyond belief. On the basis of this distorted emotional appeal, they argue that there is something wrong with pension systems themselves--and so threaten the well-being of, say, all those workers and retirees in Oregon, where the median annual pension is 24K.
9
You are entitled to your own opinions, but not to your own math. Pensions reform is simple to contemplate. Make the employees contribute 50% of the cost of their pension. Do not allow overtime and other extras to inflate the pension. Put reasonable vesting limits on the receipt of the pension. And do not allow individuals to draw a pension before age 60 or 62 or 65. However, truth and leadership and communication are necessary to make these changes happen. Ultimately, bankruptcy will break these pension contracts.
47
I have a state pension where I contribute 5% of my pay and the 'company' only contributes if there's a shortfall. I can't collect a nickel until 60 but since we don't receive health benefits in retirement most people stay until Medicare eligibility, unless they have a younger spouse with benefits
4
you can do all of that, but only for new hires as the courts have said that you cannot reduce any pension benefit after hiring. that is the real problem and that is why as the article states that unless the courts make a new ruling you will have to wait until the majority wave of current workers and retirees die.
2
Unless you have a letter from God telling you exactly when every retiree will die and also what investment returns are going to be for the next 50 years, how do you know the "cost of their pension"? Why would you want your state and local governments to be in the business (on an amateur basis) of providing annuities? Why not have government workers on 401k plans plus Social Security, like most private-sector workers in the U.S.?
1
It is revealing that so majority of these pensions are for public teachers. Other public workers too of course but the great majority covers the health and retirement benefits of public teachers.
1. Public education of kids is Important.
2. On the other hand, states and towns should not be spending money they do not have -- year after year after year.
2
Pensions with fancy formulas will always lead to fraud and mismanagement.
I would be glad to see pensions — both public and private—managed as separate entities and as tightly as life insurance companies.
9
Legacy costs can and have been America’s dirty little secret. Take the post office employees as one example. The post office continues to lose because of its generous pensions.Or take northwest/delta airlines as an example of how to get rid of legacy costs by declaring bankruptcy and killing the unions or forcing them into impossible bargaining positions. For most Americans however, the pension seems like a luxurious symbol of our past. Most of us are lucky to have an employer contribution to a 401k. By replacing most pensions in the eighties and nineties with the 401k plan, it was corporate America flipping the bird to the American workforce. Now the common refrain is, we must do what is best for our shareholders not the community at large.
8
The Federal Government reformed pensions for all employees hired starting Jan. 1, 1984. It's a three tier Hybrid plan involving Social Security, 401K and simple Defined Benefit pension. Work 30 years, you get 30 percent of high three. If states had done this years ago, they might have saved themselves.
3
California is heading for a similar crisis. I have a brother in law who retired from working for the state water department as a manager at the age of 55. That was 15 years ago. He lives in a million dollar beach home. Having no children, he doesn't really give a flip how poorly schools are run as long as he gets his exorbitant salary. The irony is that now at 70, he has had a stroke and his multistory home is unsuitable for him to live well. He has to sell the home and buy something more reasonable. But who will buy this home? It only has one bedroom although it has a magnificent view. I guess some well placed millennial who can work from home might buy it but given the traffic and distance, it's too far from the nearest city for a commute. And yet he still gets his pension-to the tune of around $10K a month. Meanwhile teachers who live in the area are unsure that their pensions will even be there ten years down the road. Many are actively seeking employment in states like Texas-where the cost of living is lower and the pensions-while must less-are constant. With open borders, failing economies, businesses fleeing more and higher taxation and a legislation that seems unwilling to look at the problem without attaching a social justice agenda to it---how long before the west coast become Bangladesh? Or are we there already?
9
This problem is occurring all over USA principally in Democrat states where the same scenario occurs over and over. Crooked politicians buy votes by promising state workers at generous rates which will be financed by future taxpayers.
That future is now. Hundreds of state and city based pension funds are broke and should be declared bankrupt. They tried that in Illinois but the state constitution won't allow it so taxpayers are being obliged to pick up the tab. This is why Illinois is battering residents with new taxes.
Through the next few years pension funds all over the country are going to start paying at a reduced level. There will be no choice.
11
In 2016, one out of three older adults received income from private company or union pension plans, federal, state, or local government pension plans, or Railroad Retirement, military or veterans pensions. The median private pension benefit of individuals age 65 and older was $9,262 a year. The median state or local government pension benefit was $17,576 a year.
Table 10. Median benefit for persons age 65 and older with income from private pensions and annuities, public pensions, and veterans benefits
Type of pension benefit
Median benefit, 2016
Private pensions and annuities
$9,262
Federal government pension
$22,172
State or local government pension
$17,576
Railroad pension
$24,592
Military pension
$20,723
Veterans benefits
$10,639
Some folks managed to get big pay-outs but most folks no so much.
63
Based on your figures I would sum it up a little differently. Some folks are receiving barely enough to live on while others are not receiving enough to live on. But of course the anti-public service advocates like to focus only on the few who are getting outrageous pensions.
2
You left out the ONLY pension I get: Social Security.
$900/month.
3
Unfortunately this article repeats the same approach of other anti-pension articles. It selectively focuses on the highest pension recipients to stir up resentment and ire when they are clearly outliers. Nowhere does the author tell us what the typical pension is, which is quite modest.
To the contrary, the author implies that Oregon's pensions are too high and responsible for crowding out other state expenses, such as support for education. Nowhere does she discuss the impact of years of state underfunding of its pension system. That is typical in many states. State budgets are balanced by shorting pension contributions, the inevitable consequence of which is problems down the road.
Finally, she does not reveal what any Oregonian knows: the state's lack of a sales tax or other compensating revenue is the real culprit for putting pressure on public services.
393
You are just wrong. A few outsized pensions do not yield today’s mess. The whole system is broken.
And given the total level of taxation in Oregon, the answer should not be a sales tax or some other additional tax.
11
Exactly, my state pension maxes out at half of the average of your last 3 years salary and that's with no health benefits in retirement.
2
I live in SC, where my property tax on a similarly valued home are less than 1/11 of my property taxes in CT a few years ago. We have a sales tax and an income tax. We have accommodations taxes for our tourist trade.
Meanwhile, our gasoline taxes are relatively low, but food is relatively high in cost.
Like many states, what we don't have are citizens who are willing to pay taxes so that they can have good schools, good roads and other public services.
1
Every working person should receive a pension, but those pensions should be capped. And put a stop to double-dipping. The cap should be the same for everyone. I know a police officer who receives three full pensions because he worked in three different Michigan cities. Why should we penalize an officer who ends his career in the community where he began?
24
this implies that he is able to get a "full" pension with far less than 30 years of work in any one jurisdiction. is that not the problem?
3
Agree with what's other posters have said- but reporter should have dug deeper in the physicians salary-even with the streams mentioned by the medical centers spoke-person, they dotn add up unless he was way overpaid as a state medical school/Ctr administrator. and/or he was coping far too much surgery when he should have been in his office. Either way it shows the problem with ALL these muni pal poems ion systems-they are subject to tremendous manipulation , not the least fo which is being underfunded Anne./or overly optimistic in their projections. WORST of all they tend to attract employees who spend their whole career focused on retirement and their pensions , not the ideal employee for any enterprise. Next time pay belotti the $3 million upfront or make Nike pay it !
4
So the answer is people like me without a pension and self-funding their own retirement, including health benefits, need to pay more taxes? No wonder Democrats can't win elections.
136
Public employees don’t receive social security in lieu of their pension.
6
Why don't you ask the average retired police officer or firefighter what his pension is?
2
They receive way more than the avg. SS payout and i don't want to fund their pension. They are not special.
4
Certainly pensions need to be put on a sustainable track but cherry picking the very top earners doesn't paint a realistic picture of the problem. It would be like looking at C-suite salaries and using that to imply that everyone in a company is getting paid too much money.
Plus, not every state has the same problems. Many states are underfunded, some are not. A bad state pension system in Oregon doesn't mean all state pensions are bad.
Finally, where's this headed? Inevitably it's to convert all government pensions into 401(k) style. How's that working out for America in general? We keep hearing about people who are too poor to retire. But unlike private industry, where it's pretty easy to force out older workers, it's difficult to get rid of state workers except for cause. Do we really want too-broke-to-retire 80 year olds lingering to perform our essential government services?
Another thing. Mathematically speaking, there is no difference between a 401(k) and a defined benefit pension in that a 401(k) can be converted into an annuity with the same payout as a defined benefit. So what's the advantage to the 401(k)? It's not risk, it's the fact that at the end of the day, 401(k) pensions on average pay a heck of a lot less than defined benefit pensions. That's what this is about, making retirees live off less money so that we can lower taxes for the wealthy. Maybe that's a laudable goal but at the very least, let's be honest about it.
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Actually Oregon's system is a healthy one. This article strays from the path in many ways: https://www.bloomberg.com/graphics/2017-state-pension-funding-ratios/
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Wall Street loves 401ks because of “administration fees”
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A handfull of additional points would have improved this story:
1. While there have been clear abuses and mismanagement, the median public pension is very, very modest.
2. In many cases, participants had their salaries reduces to pay into the pensions
3. Part of the liability is from the governing entity not putting in their small annual portion in past years. It is like buying something on a credit card and not making the payments.
4. The higher cost and liabilities are now being driven in part by pension systems adopting more conservative assumptions than their experience would require because of political pressure.
5. Many pension systems are well funded and are making sustrainable contributions they can afford; only those that are not in sound condition are getting media attention.
6. Follow the money. Critics are often funded by companies that benefit from 401k style accounts, even though such accounts have more fees, more risk, lower returns, and are creating a much more dangerous set of problems.
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the median public pension is meaningless because it includes and intermingles the 5-year pension with the 30-year pension. the public pension advocates always use this kind of lie.
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Nonsense. The median statistic treats equally the small value and the large value outliers.
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1. True but irrelevant - the system in aggregate is underfunded. Nothing to do w/large vs. small pensions.
2. True
3. Because the % going to PERS grew and they had to provide services to current citizens.
4. Wrong. 8% is a ridiculous number to assume for future returns. Good luck getting that. Nothing to do with politics. It's math and expected returns. 30-year treasuries are yielding 3% BTW.
5. Wrong. The total pension liability under GASB 67 standards for all state and local funds is $4.967 trillion, which is covered by $3.589 trillion in assets, which implies an unfunded liability of $1.378 trillion and a funding ratio of 72.3 percent.
6. I am a huge believer in pensions because I work in the investment industry and find the notion that people should define their own asset allocation and find the proper investments to execute their plan ridiculous. The problem is that the governance for US pensions is atrocious: politically-biased boards, strong unions and constituent groups that pressure these boards to made bad decisions, and you end up with the future generation indebted by the current pensioner generation. Look north to Canada for properly governed pensions, and yes, bring that here and we'll be in much better shape. It has nothing to do with 401k providers and everything to do with a broken and politically motivated governance system.
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I retired in 2016 after 21 years at the University of Oregon. I would have been under "Tier 1" of the PERS retirement program, but was also offered the "Optional Retirement Plan" under TIAA-CREF, which I took. I will never know whether it was the best or worst financial decision I've ever made, but at least my conscience is clear as I am not helping bankrupt the state. On the other hand, like my fellow classroom instructors, I certainly wouldn't have accrued 6-figure compensation with a guaranteed 8% increase. Obviously unsustainable, legislators should never allowed this to happen. Oregonians are tired of being told we have to pay higher taxes to support our schools, when the lion's share is going to PERS.
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If you were in TIAA-CREF in Oregon, you benefited from the underfunding of PERS. You received the same employer contribution as made to PERS, which had to be higher than the normal TIAA contribution to make up for the past underfunding.
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Where I live, the single women who work at the town hall, school or in any municipal capacity are considered good catches for the men without pensions, who very often work in the trades.
Seriously.
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I see that all the time. The husband is a contractor making good money, usually with a lot of it off the books, but with no health benefits or retirement but they're married to a teacher or something similar
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Unfunded mandates like public employees pensions are a problem. However, focusing on the biggest pensions, as this article does, is misleading. The vast majority of public employee pensioners in this country are not football coaches or doctors. They are teachers and firefighters. Middle class workers that lived on modest wages their entire lives and upon retirement get well-earned pensions. Unfunded mandates are a problem because the money managers, who made an upper class wage and have six figure pensions, lost hundreds of millions of pension fund dollars. Bankrupt pensions are caused by poor money management not funny math or public employee contracts.
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Bankrupt pensions are caused by over promising and underfunding - seldom if ever by poor performance or investment management fees. Seek knowledge.
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Correct. The unrealistic 8% returns are the issue.
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David,
Firefighters in the bay area are usually very well compensated with great retirement benefits. That's the reason why the jobs are so coveted and often handed down on a nepotism based system. I've never heard anyone who knows refer to their pay as "modest".
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Public pension plans should look to Wisconsin's fully-funded, risk-sharing model. It will not help others correct past mistakes, but it offers an example of how to create and manage a fiscally responsible system. This link to a piece in the Milwaukee Journal Sentinel explains why Wisconsin has succeeded where others have failed.
https://projects.jsonline.com/news/2016/9/26/wisconsins-fully-funded-pen...
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Wisconsin should of included police and fire They are not special on my dime.
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Corrected link to article reference above:
https://projects.jsonline.com/news/2016/9/26/wisconsins-fully-funded-pen...
Some police and fire employees are covered under the Wisconsin Retirement System. Local governments can participate--some do and some do not. In the past few years, there was an interesting proposal to allow ALL Wisconsin employees (public and private sector) to join. Didn't happen, but intriguing.
By implication, this report conflates the pension amounts of MDs with working class retirees, but many of the latter are living precarious existences.
This article reveals more about class differences and the power of the upper class to arrange outrageous pensions than it does about pensions generally.
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MDs do not (normally) get any pensions. They are independent practitioners. They might make a lot and MIGHT put away a lot, but it's in the form of IRAs, SEP accounts, stocks, etc.
The thing with a TEACHER (or other public union) pension is it is GUARANTEED by the state and often at outrageous amounts. You can never outlive it. It never declines in value like stocks or bonds or savings accounts. It's all "up up up" and no risk for the teacher -- all the burden is placed on taxpayers who have no such benefits nor any ability to get such benefits.
It is good here to stop and remind ourselves that teachers are one of the very few in the WORLD who get full time pay for part time work -- 6 hours a day by union contract -- 180 days a year -- 8 months of work, but with all summer off with pay (11 weeks, nicest weather) and 3 weeks at Christmas and 10 days at Easter, countless Federal holidays nobody else gets, teacher "conference days" (attendance not obligatory) and my favorite -- EIGHT SNOW DAYS, which increasingly are called on fairly mild winter days (in the MIDWEST) when it is merely blustery and EVERYONE ELSE GOES TO WORK.
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Sure, "concerned," and most make around $35,000 per year, and won't be able to claim Social Security when they retire.
Except your benefits description is WAY off the mark, and shows only that you know absolutely nothing about the teaching profession and the realities of it.
As such. the constant squawking up and down this forum is as silly as it is false.
Enough, already.
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1. Picking outliers (like the football coach) to argue about generalities is dishonest. Makes me distrust your analysis.
2. Who else gets to welch on their deals? Private contract is the foundation of America! The argument here is "Yeah, we made a deal but we do not want to keep it". In any other party, the legal response would be "Sucks for you." The government has unlimited ability to raise funds to cover their deals, as they did in the financial crisis. THAT was some deal! Sticking it to the little guy is an art form---first rule, talk about the football coach.
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The government does not have an unlimited ability to raise funds--we are talking about a state government. In addition, this is not a private contract--this is public. The public employees better start saving out of their paycheck. The pensions will fail and they will need every dime.
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Teachers "welched on the deal" to actually TEACH children the basics of reading, writing, math, science.
It's time to CLAWBACK their obscene benefits.
What wimpering sycophant decided that a football coach or university head deserves a million dollars or more in retirement?
The average SS check is $14,000 but it is US CHUMPS and suckers who have to pay you greedy teachers your obscene luxe benefits and PENSIONS. 92% of Americans have no pensions AT ALL.
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Perhaps the states could declare bankruptcy and seek protection from the courts to protect them from pensions that are damaging a states ability to run a school system. I don't see how a state supreme court could rule against trying to fix a stupidly designed system that is actually harming the public.
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States can't declare bankruptcy.
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States are sovereign powers and can not declare bankruptcy.
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How? greedy and immensely powerful teacher unions.
As in Kentucky and other very poor states...the teachers just strike. Sometimes just the THREAT of a strike is enough -- it disrupts children's education -- can ruin college plans! -- working parents often have no ability to find child care on short notice or for long terms.
It is pure and simple black mail. Also: through BRIBERY from donations (from union DUES)....teacher unions basically own every state legislature in the nation.
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So raise taxes.
I'm so tired of greedy taxpayers not paying their fair share and wanting everything for free.
It's time the little people learn who's boss.
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You can't raise taxes because tax payers will avoid paying them. Look at what is happening in Connecticut: they raise taxes, and the people who pay them move out of state, increasing the budget deficits.
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THIS is why the federal government should NOT bail out state governments. It's also why state supreme courts' rulings on financial matters should be reviewed at a federal level.
Unelected bureaucrats are killing the American middle class. Pitchforks, tar and feathers should be deployed ASAP by citizens.
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Actually most of these benefits were put through by elected politicians seeking to get the union vote
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Teacher unions -- greedy, corrupt, richer than Midas -- basically OWN the Democratic Party, and influence every political decision there.
The Democratic Party will never ever offend their BIGGEST CONTRIBUTORS.
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Oregon has a healthy economy and a healthy retirement system. It is nowhere near needing "bailed out." Its Court is one of the most consistent, precise, and honest Courts extant. Median pension in the system is about 24K. I'm not sure what you're talking about here.
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Politicians buy votes by signing off on overgenerous pension systems knowing full well they will have left office before the bill comes due, leaving future poloticians andtaxpayers holding the bag. California operates much the same way.
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THIS. It happens again and again. Politicians knowingly do this because it works for them.
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and the public employees happily accept the deal also knowing it is unsustainable. only the taxpayers are missing from the table.
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"The state is not the most profligate pension payer in America..." Imagine that!
Another perfect example of how the US can not longer afford the fairy tales it has been collectively telling itself. Planet Tiffany is still alive and well in many minds still believing in the likes of trickle down economics or that 8% return on investment should be the guaranteed minimum. Poorly crafted pension plans are haunting us decades later; the proverbial 'can' cannot be kicked any further.
Dallas just went through a painful multi-year re-negotiation of the police and fireman pension plans and we are still not out of the woods yet. Recently, Dallas announced a new prioritization of emergency medical calls as they don't have enough vehicles any more to respond to all of them.
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Can't let them emergency medical calls get in the way of Texas keeping them taxes low or non existent. Also them guvment workers. The race to the bottom starts here.
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@Edwin - Property tax in Texas is actually very high, particularly in Dallas.
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The fact that mine is the ONLY comment (so far...) indicates there is something seriously wrong here - when they learn of an executive or public official receiving salaries, pensions or bonuses clearly absurdly high, people should react! In many cases, the cause is either incompetence or criminality of boards or directors approving unjustified and/or unjustifiable "compensation". Such egregious acts should be investigated and there should be "clawback" provisions in laws governing both employment pension compensation, particularly when taxpayer money is funding such payments.
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Let's not try to put the average muncipal worker in the same camp as those who receive $76.111 a month or a head coach that receives $46,000 a month. Most Municial workers make a living and are not living in a lap of luxury. The Private sector went this route years ago and did away with Pensions. I understand all need to come to the table and work out a solution, i wouls Not want to see Pension system die. Majority of workers were hurt when pensions died in the private sector. With talk of attacking Social Security is not a time to stop Pensions. I now the article did not speak of ending Pensions but, this is how it Starts.
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Most municipal workers receive a much better deal than private sector workers and have no appetite to fund their leisure while government services are drastically reduced.
Pensions are a fiscal tapeworm that will eventually consume every dollar of taxes unless we kill it.
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Not all public employees are TEACHER UNON employees -- the greediest, most powerful, most politically connected and most corrupt of all.
If people knew what their kid's teacher was hauling home -- $115,000 for a third grade teacher I know -- and what they would get in PENSIONS at only age 52 -- and the free gold-plated health care (never taxed by Obamacare -- another Obama LIE!!!) -- they'd be physically sick.
But part of the scam is hiding this, and to keep saying "oh teachers are SO POOR! so suffering! we have to buy pencils and stuff!"
It's a scam.
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"$115,000 for a third grade teacher I know"
-----------------------------------------------
A sample of one - and an unverifiable, anecdotal sample at that - is generalizable, "concerned"?
How does that work?
1
So Oregon politicians created laws with myriad unintentional windfalls for state employees. The state is going broke because they’ve failed to fix their pension system for a generation.
Also, Three Rivers school district still has librarians for each school but not a district librarian - a distinction the article did not mention. Losing a bureaucrat isn’t the worst thing for most districts. But still: Plenty of openings - including a boys bowling coach and a strength and conditioning coaching position.
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I just hope that when people read this, they realize that pensions have changed for a lot of people--so demonizing an industry is inaccurate. I am a teacher. I started teaching late in life and paid into social security for most of my life. As a teacher, I am told I will not receive social security. (Hey, who will?) But I am also required to pay into a pension system (8% of my salary) and have been told that I will not begin to see interest on that 8% until I have worked for 20 years because the pension system has changed over time. I am 47. It would be much better for me if I could put that money in a non-pension fund that would see some interest over the next 20 years. I don't know how this will play out or if I will be able to stay in this field, but to lose access to the social security system that i have spent most of my life paying into and to be told that I will see nothing but the principal that I put into the system for the next twenty years, isn't financially prudent and certainly won't leave me with a safe retirement, even if teachers who started teaching 10 years ago ARE most likely to have a safer retirement.
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somehow i don't believe you. if you paid into fica for "most of your life" you would have a fica benefit. you need to pay into the system for 40 quarters, which is only 10 years. so somehow i think you are not telling the whole truth. there is WEP which can reduce but not eliminate your govt pension if you are receiving more than one govt pension.
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Elaine: I believe that at 62, you have a CHOICE of EITHER the teacher's pension or the SS you paid into.
Of course, the teacher pension will be 5 times as much as the potential SS check, so your decision will be very easy.
I'm playing a sad song for you now, on the world's tiniest violin.
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It is unfortunate that a state like Oregon which has tried hard to provide a safety net for its citizens as well as equal opportunity has failed so miserably to make its employee retirement system more just and equitable. No society can achieve equal opportunity for all citizens but Oregon's PERS is a particularly glaring inequity, achieved at the expense of all its citizens.
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Not quite accurate. The examples in this article are hardly representative of the members of Oregon's retirement system, whose median income is around 24K. PERS has undergone benefit reductions over 20 times since 1995 and has been completely restructured two or three times during those years. The 1% trotted out in this article are a misrepresentation. An annual pension cap would be acceptable to most workers, but then the 1% and their enablers have all sorts of workarounds. Actually, Oregon's system is pretty healthy.
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Excessive pensions are rooted in wage disparities. Administrators, supervisors and highly paid CEO's, CFO's, and board members set the stage for gouging retirement benefits. It's a "get all you can for yourself" mentality where wealth is measured by hoarding money, not by personal happiness or caring for others. This escalating trend of inflated pensions cannot be sustained, obviously, but it is also true that most people who are paid more than most others feel magically entitled to being special, and will not want to share for the benefit of their community.
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Government employees are accountable to tax payers, and should not be confused with those in the corporate sector.
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It's such an outrage and I'm sorry to say my Democratic Party and it's allies in the unions and legal profession who out-negotiated government. I am saved by the thought that which is impossible will never happen. Many cities will never pay out all these pensions because they won't be able to. It's doubly sad because there are great inequities in pensions; some schoolteachers struggle while fire chiefs and university Presidents live like potentates. It is time for mayors, county supervisors and governors to go nuclear and fight this nonsense on all levels to roll back the pension obligations of citizens in these jurisdictions.
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The cities won't be able to pay out the benefits, and will be forced to declare bankruptcy. But bankruptcy will just screw the bondholders, and won't fix the pension issue. Hyperinflation of the dollar is the only thing I see fixing this issue (sounds alarming, but I sincerely believe it's the only solution).
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I hope every one of these states, cities and counties go bankrupt. I pray for this. The greedheads MUST BE PUNISHED.
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It wasn't a situation of out negotiating anyone, the workers and the politicians are in fact on the same side of table vs the taxpayers. The pols get the backing of the unions and the evil of the pensions happen way after these pols have retired. What a system, everywhere the Democrats have no opposition you have these issues. Connecticut, Detroit, NY, Illinois etc. This is a deliberate policy and should surprise no one, this is what the voters voted for. They are learning the true cost of being liberal.
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It's pretty obvious what needs to happen to set things right. The question comes down to which party has the guts and is willing to take the political hit to rectify this travesty? The answer: neither.
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some states and cities have tried but the courts have said "no".
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it would be like asking turkeys to vote for thanksgiving; not going to happen.
1
Yup. Lots of moaning by progressives and unions today about “austerity” when the actual truth is state and local revenues continue to increase but pensions (basically political payola from corrupted Democratic politicians to buy union votes) has increased faster than these revenues squeezing out funds for current operating expenses.
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Republican Governor John Rowland put Connecticut on the map when he approved what is now the largest, most generous public employee pension plan in the country. That was over 20 years ago, but we citizens and our state politicians are left holding the bag and fighting hard among ourselves for a state budget that's undermined by his political monkeyshines, though the former governor keeps his pension. Roland's blight is a true headache for Hartford and has jeopardized our state's future.
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According to data from Oregon's Comprehensive Annual Financial Report and the US Bureau Economic Analysis, the state's tax revenues declined from 6.3% of state personal income in 2005 to 5.9% of income in 2015. There's nothing wrong with a declining tax burden but It doesn't seem that public employee pensions are creating a crisis for the state's taxpayers.
1
While the outlier high pensions paid to a few doctors, coaches, and administrators are ridiculous, these three factors should be considered:
1) Outliers vs average
Most retirees are receiving much smaller amounts. According to the Eugene Register Guard:
"The big-dollar beneficiaries are outliers in the PERS system. The average annual benefit among the current 130,000 retirees and their survivors is $31,162 a year; the median is $24,754 annually."
http://registerguard.com/rg/news/local/36645022-75/ex-lcc-president-join...
Focusing on outrageous outliers, whether high or low, gives a false impression of where the bulk of the money is going.
2) Total compensation
For many years, Oregon purposely paid very low salaries but shifted total compensation in the direction of benefits. Many retirees worked for decades at below market wages knowing that their benefits made up the difference. In a sense they are being blamed for saving and for simply accepting the contract offered.
3) Bigger picture
Many things impact Oregon's financial situation (e.g., no sales tax, over reliance on other taxes, O&C funds, lack of trust in public institutions) but there are some that have decided to latch on to PERS as the problem. It is a factor but by no means the whole story. How do Oregon's total taxes, cost of living, etc, compare to other places? Where are taxes being spent and what tax breaks are reducing revenues?
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Yes, Mr. Helmer is right to point out that the article’s focus on the way pensions are calculated doesn’t give the whole picture. Some readers blame unions and greedy public employees. Perhaps. But the larger, structural problem in many states is a chronic mismatch between state revenues and the actual costs of public services. Insufficient revenue inspires legislators, with the complicity of taxpayers, to defer public compensation to some future time - when some other legislature and some other taxpayers will have to clean up the mess. I might note that something similar is happening at the federal level. Tax cut, anyone?
16
Your first point is accurate but it all adds up.
The money is still owed and the state cannot pay it.
So I see you point but does it matter that much?
Your third point: Yes but all that MATTERS is that the state is running in the red AND that debt will grow for another twenty years. "Tax reform" sounds nice but what you are really saying is to increase taxes.
3
This comment by John F. Helmer is more informative and well-reasoned than Walsh's article. Walsh only accounts for one incorrect and distorted perspective; the reporting is fine, but once that frame of reference is accepted the seemingly factual account becomes an opinion piece masquerading as journalism. By assuming that the only problem is pensions, instead of the clearer evidence to the contrary presented by Helmer above, and that pensions are too high across the board, instead of the more complete and detailed evidence presented by Helmer, Walsh paints the reader into a corner where there is only one (misguided) solution: cut pensions for State of Oregon works. That is not an inevitable conclusion from the actual evidence. It is a conclusion that will follow at our own demise.
6