Gov. Brown details plan to offset rising school pension costs

SALEM, Ore. (AP) – Oregon Gov. Kate Brown on Friday released her plan to pay down the state’s $26 billion pension debt and it drew quick fire from the state’s teacher union, which called it “an unbelievable betrayal.”

The governor said Friday she wants to raise $3.3 billion over the next 16 years by taking money from other streams of revenue.

She’s also asking teachers to contribute a portion of their pay to the state’s pension fund. Teachers would pay between 1.5% and 3% of their salary, depending on when they were hired.

The Oregon Education Association, the state’s largest teachers union, said the plan amounts to a salary cut for educators. Teachers are planning a walkout on Wednesday, May 8 to protest a lack of school funding.

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News release from Gov. Kate Brown:

Governor Kate Brown Unveils Plan to Stabilize PERS Rates for Education System Proposed framework protects employee retirement before the next economic downturn

(Salem, OR) — Governor Kate Brown today unveiled her plan to tackle funding for the Public Employees Retirement System (PERS). PERS is currently funded at 80 percent, while PERS rates continue to increase and are projected to remain high until 2035.

In any economic environment, these increases are not affordable for Oregon schools and will lead to teacher layoffs. However, when another economic crisis inevitably sweeps the country, the increases will be untenable, with cuts to services that no Oregonian will find acceptable.

“Oregon’s public employee retirement system, or PERS, is first and foremost an essential benefit for our public employees. In exchange for dedicating their lives to public service, Oregon has made a promise to provide them a secure retirement after decades of teaching our kids, fixing our roads, keeping our neighborhoods safe, fighting fires, or helping our children in foster care,” said Governor Brown.

“We must keep our promise to every PERS member, active and retired, to protect retirement security and the defined benefit plan in Oregon. And every Oregonian must step up to help us keep that promise. Employees should not carry this burden alone. Anything less would simply be kicking the can down the road.”

Governor Brown’s proposal includes:

Creation of a School PERS Offset Account to pay for the increase above 2019 – 2021 PERS rates for schools until PERS is fully funded or for 14 years, whichever comes first. Beginning PERS stability contribution pension accounts for employees to secure the defined benefit portion of PERS. The contribution will equal 3% of payroll for Tier 1 and Tier 2 members and 1.5% of payroll for OPSRP members, after the first $20,000 of annual salary. With the exemption, the average contribution would be 2.1% for Tier 1 and 2 and 1% for OPSRP. Members will not see a reduction in their current take-home pay as a result of these contributions. After PERS stability contributions end, if PERS drops below 90% funded in the future, employees will pay a temporary stability contribution of 3% (after $20,000 exemption), until PERS funded status recovers.

Governor Brown has proposed a number of options to fund the School PERS Offset Account, including:

A one-time retention of the income tax kicker, after returning the first $100 to each Oregon family, which would raise $400 million to 500 million. Using excess surplus from SAIF — Oregon’s not-for-profit, public workers’ compensation insurance company — above the Board’s target levels, which would bring in $486 million; or an alternative that includes SAIF covering workers’ compensation costs for school districts and a smaller one-time transfer Repatriation funds already dedicated under 2018 Senate Bill 1566 (and Senate Bill 1529) for a total of $83.3 million Windfall revenue from variable sources, including direct, above-trend revenues from capital gains and estate taxes to the account

Read Governor Brown’s testimony here. Additional information can be found here.

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News release from the Oregon Education Association:

OEA Statement on Governor Brown’s Proposal to Cut Educator Salaries

We are shocked to hear of Governor Kate Brown’s proposal to cut salaries for educators. At a time when lawmakers are finally making real strides toward investing in our schools, Governor Brown has decided to ask educators take a personal financial loss. This is an unbelievable betrayal of the values all Oregonians hold.

Oregonians value public schools and know educators deserve financial security. If we turn teaching into a low-paid occupation, we’ll lose quality educators and students will suffer.

Educators around the state helped elect Governor Brown just five months ago, based on the values we thought we shared. She said over and over on the campaign trail, she understood the importance of retaining educator salaries and retirements. Today, it’s clear she’s changed her mind.

When you cut salaries and benefits for educators, students suffer. Oregon educators already earn 22% less than their private sector peers with similar levels of education. In a moment when educators are standing up for students and school funding nationwide, and seeing increases to pay, this proposal takes Oregon backwards and will harm students and schools by making it more difficult to recruit and retain qualified educators and increasing teacher shortages.

In last year’s election, Oregon voters soundly rejected the plan to reduce teacher salaries to pay for pension costs when they voted against Knute Buehler, who made it a central platform of his campaign. Voters want fair compensation for educators.

Governor Brown’s plan is damaging to students and schools and cannot move forward. Time and time again, attacks on educator benefits have been overturned in Oregon’s highest courts. This proposal will almost inevitably be challenged as well.

We can’t balance school budgets on the back of the very people who serve our students.

Lawmakers who have students’ best interests at heart must stand strong against these potentially illegal and unfair salary cuts targeted at educators and other public servants.

Educators are already planning on taking action on May 8th to stand up for students – now they’ll be standing up for themselves too.