The Infamous PERS

The Oregon Public Employees Retirement System (PERS) has received a lot of bad press in recent years and is often cited as the primary reason for the state’s inability to fund everything from education to prisons.  I believe there were some significant mistakes made in the management of the system in the past, but I also know that much of what is written about PERS is biased and/or wrong.

I need to confess that I am occasionally guilty of PERS envy when I see what an earlier generation of recipients received when they retired.  There was a sweet spot for people who served from the 1960s and 1970s into the 1990s and early years of the new century.  Some of those retirees made more money in retirement than they earned while they were employed, and no system can sustain those kinds of benefits for all employees.  Fortunately or unfortunately, depending on your point of view, the vast majority of PERS employees did not and will never receive that level of compensation.

Oregon’s frequently maligned Legislature belatedly saw the problem developing in the late 1990s and began to take action by first creating a new “tier” with lower benefits for new employees and then, in 2003, eliminating contributions to Tier 1 accounts.  The latter step had a dramatic effect on people like me, whose highest earning years came after 2003.  My pension after 30 years will be somewhere around 50 percent of my highest annual salary.  I am grateful for this benefit and I strongly supported the Legislature’s action even though I knew it would substantially reduce my pension.  I greatly prefer to have a smaller, secure benefit than to have nothing at all in the future.  Oregon PERS is one of the most highly rated public retirement systems in the nation today, and I am confident that it is now sustainable.

Some complain about the amount of our taxes that go into PERS without realizing that more than 70 percent of PERS income is derived from earnings on investments.  What this means for the state is that most of the money we put into PERS is increased more than two times through investment and then returned to Oregon where it is spent by retired employees on things like property taxes, mortgages, and purchases from Oregon businesses.  My father-in-law, for example, retired in the mid-1990s after 30 years as the street superintendant of a small city and receives about $18,000 a year in retirement benefits.  We don’t read many stories about him and the many more like him because it’s easier to provoke outrage and perhaps sell papers by writing about the earnings of a handful of former football coaches, university officials, and school superintendents.

The following link provides some interesting statistics about PERS (http://www.oregon.gov/PERS/docs/pers_facts_1-2014.pdf) and, I believe, gives a more accurate perspective on the costs and benefits of the system.  I am appreciative of this benefit, and I think it has served as a valuable tool to keep our best public employees in Oregon.  Our recent focus on the system’s costs have too often failed to consider its many benefits.

Preventing Tragedy

Cities do many important things, but one of the most significant things we do gets very little attention.  According to the Centers for Disease Control, the death rate from accidents in the United States in the early 1900s was more than 80 per 100,000 people.  Today that number, which now includes deaths from car accidents, is less than 40.  I suspect much of the reason that less than half as many people die from accidents (as a percentage of the population) as they did in earlier times is due to advances in medical care, but it is also obvious that prevention plays an important role in reducing the number of tragedies in our lives.

Improved education has helped us learn from our mistakes; and I’m sure that, 40 years from now, people would be shocked to learn that in 2013, about 39.1 people out of every 100,000 in the U.S. died in accidents.  I was surprised to learn in looking at the data that in 1971, the year I graduated from high school, the accidental death rate was at 54.8.  These numbers may not seem meaningful in the abstract; but if you project the rates across the U.S. population of 316 million, the difference means that the equivalent of the entire population of Albany (roughly 50,000 more people) would have died in U.S. accidents in 2013 if the accident rate had not declined from 1971.

City workers play an important role in the effort to continue reductions in this seldom seen but critically important statistic.  Safe work habits, prevention programs, emergency services, building code inspections, and community design all play a role in making Albany a safer place to live.  Often this work is unappreciated and controversial.  Few of us want to receive traffic citations or be told that we need to take out an expensive building permit to do a little work on our home.  How much, however, would we be willing to pay to save a life prematurely ended by a preventable accident?

I have received several grim reminders in recent weeks about how narrow the difference between life and death can be.  I am very grateful for the good work that goes on every day to promote safety and reduce the daily threats to our lives.  I don’t spend much time worrying about what could happen to me or my family, but I am a strong believer in working to prevent accidents that could have been avoided with some more thought and investment.  The lesson from the CDC statistics is that we can make our city a safer place; and, because we can, we have an obligation to do so.