PERS Unfunded Liability – Legislation & Solutions
PERS cost savings legislation passes. SB
1049 passed the Senate with a bare 16-vote majority and then followed
with passage in the House with a bare 31-vote majority, but only after Speaker
Kotek stood ‘at ease’ on the House floor and called Democrats into her office
to twist enough arms to secure the 31 votes she needed.
It was perhaps the most impressive display of political clout that we’ve seen all session. The Speaker literally marshaled all 31 votes she needed from her own caucus (no Republicans voted for the bill), and in the process infuriated her caucus’ biggest constituency and benefactor (public employee unions). It was truly impressive.
As a refresher on the substance of SB 1049:
- Tier 1 and Tier 2 members, who are public employees who entered the PERS system before 2004, would have 2.5% of their salaries diverted from their individual retirement accounts into paying off the system’s debt.
- Workers hired 2004 of later (PERS Tier 3 and Tier 4), would face a lower diversion – 0.75% of their salaries.
- The biggest cost savings comes from the re-amortization of the pension debt. Over 2/3 of the savings comes from this re-financing provision.
- A reduction in assumed interest rate for retirees who use the “money match” method of calculating their pension benefits.
- SAIF is largely held harmless.
- About $600 million in pension cost savings per biennium across state government and schools.
For more information on the PERS Unfunded liability, how we got there and possible solutions and coalition information, go to PERSSolutions.org