Paying for the Past, part 3: PERS cures on the table
MEDFORD, Ore. - The state wants to take away funding for employees that provide the services... umm it's a little offensive,” DHS Child Welfare Support Staff, Barbara Walsh said.
Barbara Walsh isn't one of the people who'll be making 200 percent more than her actual salary when she retires.
As a tier three member she's just trying to get by.
"The plan that I'm on at this point, which most employees today are on, is similar to a 401k that people in the private sector would have," Walsh said.
Walsh is 65 and has worked for the county for five years. In order to retire with a sustainable income, she's planning to work until she is 77.
Each pay period 6 percent of her salary is placed in her Individual Account Program otherwise known as IAP - and as Walsh mentioned similar to a 401k account.
However, that pool of money is at risk.
"That's been the talk, is whether to redirect that 6 percent, which is going directly into their own retirement account, into paying for the full PERS bill. That's one way that we could have some impact on the PERS bills," State Representative Pam Marsh Said.
That strategy, however, raises the concern for fairness.
"Is it fair to put a burden on current employees to pay for benefits from people they've never met? It's a little bit like asking people to sit down at a restaurant and pay for a meal for people who were there before them,” Rep. Marsh said.
If that were to be that case Walsh says her retirement plan won't be sustainable.
"I suspect that I will be retiring into poverty," Walsh said.
So what else is on the table?
One possibility is capping the final salary that gets calculated into the formula proposed by Senate Bill 560.
"I think we should talk about a cap, it's not a magic solution, it doesn't save us a whole lot of money," Rep. Marsh said.
Another consideration is Senate Bill 559, which would broaden the final salary calculation period.
"By making it five years rather than three it makes it a little harder for people to artificially spike those last magic three years," 30 year financial advisor, Peter Sage said.
This would better regulate people trying to fit in more overtime into their final years of retirement to maximize their PERS benefit.
Another option Rep Walsh is apprehensive about.
"We won't save a lot of money by going to five years and the other side of that is that we're so sensitive to the fact the even when we start talking about PERS a lot pf people who are in the system start thinking about retiring because if they begin to anticipate that there may be cuts in their retirement salary and they are already within a stone throws of retirement, it's easy to push a whole lot of people into retirement," Rep. Marsh said.
Currently 32 percent of PERS members are eligible to retire.
It's a fear looming over the PERS Board and state legislators.
A financial expert and a state representative agree, it's a complicated matter.
"The things about curing the PERS problem, number one there is no cure," Sage said.
"It's not an easy fix, not an easy fix at all," Rep. Marsh said.
But with the debt piling on and the burden increasing for employers, people want answers.
"Not doing anything is not a solution," Medford School District Chief Operations Officer, Brad Earl said.
State officials working on the issue say they are heavily restricted by constitutional protections.
Employers say, stand up to those with constitutional amendments.
"To give them more authority to make the changes that are necessary. I understand that's hard for an elected official because you may not get reelected if you do those kinds of changes. But if you're really a true state's person then you should be looking out for the long term benefits of the state," Earl said.
Perhaps that, and taking this as a lesson learned on future public employment programs.
"It's one thing to guess what tomorrow's weather will be but if you're going to guess the weather a year from now, you stand at being way way wrong," Sage said.