Most PERS systems today are underwater, which is to say that unlike the heydays of the 1970's and 1980's, they're now under-funded. You can't blame the employees, though it's true that a few, such as former Oregon governor Ted Kulongoski and sports coach Mike Belotti are raking in millions a year. Most, however, aren't coming close to making from PERS what they earned when employed.
Nonetheless, in Oregon, the PERS Board unanimously approved a 45% "contribution increase" from state and local agencies to the tune of nearly $1 billion per year. State and local governments are now on track to funnel nearly $3 billion in "contributions" to PERS each year.
School districts will be paying on average about 26.7 percent more of their payroll starting in 2013. The escalating cost of the pension system has become a budget buster for many of the 900 government agencies, school districts and municipal entities whose employees are members.
How could something like this happen?
During much of the 1970's and 1980's, public-sector wages remained relatively flat, even as private-sector employees were enjoying raises of 5% or more. At the time, public employees contributed 6% of their wages to PERS. To alleviate the disparity, politicians across the state mandated the 6% pick-up in which, in exchange for modest to no wage increases, agencies "picked up" the employee contribution; effectively doubling agency liability to 12%.
Over time, as the private sector shrank, government entities expanded; although line-worker ranks remained relatively stable, hundreds of highly-paid managers were added. The result, of course, was exponential growth in agency liability for PERS contributions. Politicians, having abdicated their oversight responsibilities, allowed it all to go unchecked.
As an example, let's look at one division in the Metro Oregon Zoo: a dozen years ago, the animal care division was led by one Curator and one Assistant Curator. Today, they have a Deputy Director, no Assistant Curators - but at least four Curators. Total compensation package paid by taxpayers approaches $3/4 million annually, for just these five managers. The four Curators, on average, "manage" eight experienced, professional Animal Care staff; state guidelines call for one manager per eleven line staff.
Given that much the same has occurred throughout the public sector, it's easy to see where the problems with PERS have accrued. It is, however, more difficult to determine a solution: judges and legislators are all members of PERS.
