balt pension protest

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Last week, a good friend wrote an opinion piece for our local newspaper (The Yamhill Valley News-Register) in McMinnville, Oregon.  It was a comment about our ever-greater problems with the State’s Public Employee Retirement System – PERS.  I thought it was worthy of a wider audience.  Here it is:

Unworthy of PERS

Oregon’s Public Employee Retirement System (PERS) is getting a lot of attention lately. Cities, counties, school districts across the state have no alternative but to cut staffing in order to pay the skyrocketing PERS assessments needed to fund public employee retirements. Legislative reform of PERS is overdue. One reform should address the betrayal by a few who commit serious crimes in their roles as public officials.

An AP story in the News Register on February 5th reported a guilty plea by the city manager of Dallas, Oregon to charges of theft, official misconduct, and falsifying business records. The article went on to say that the city manager would not have his PERS pension reduced because there is no pension forfeiture law in Oregon and “Federal law prohibits tapping a pension”.

The article is half correct. Oregon doesn’t have a pension forfeiture law of any kind. However, 25 states and the federal government have some form of pension forfeiture. If a federal employee is convicted of offenses listed in 5 USC 8312 they are permanently barred from receiving their pension.

Why doesn’t Oregon have a pension forfeiture law?

I have lived in Oregon for 30 years and I am proud of the reputation for “clean government “Oregon enjoys. We are the beneficiaries of many great public servants who, long ago, had the foresight to protect watersheds, build bridges that are engineering marvels, and create the country’s best system of state parks.

But we occasionally have some rotten apples that need to be dealt with. The former city manager of Dallas is only the latest example. Last year we learned of massive kickbacks demanded by the City of Portland’s parking director in exchange for “no bid” contracts. A few years earlier, we learned of corruption by a Department of Corrections food service procurement official who was leading a luxurious lifestyle at taxpayer expense. Both of these officials used their offices for illegal purposes at the expense of taxpayers.

The most egregious offence doesn’t involve money…it exploits something far more precious—our kids. Last year, Michael Montgomery, who had taught Spanish for years at Salem’s Sprague High School, pled guilty to sexual abuse of one of his students and was sentenced to 5 years in prison. He’ll be eligible for full PERS when he is released.

Regrettably, Montgomery’s case is not unique. These crimes occur with too much frequency.  Penn State Assistant Football Coach Jerry Sandusky lost his $59,000 a year pension for molesting children due to Pennsylvania’s pension forfeiture law. Pennsylvania law even provides for victim compensation out of members’ pension contributions.

PERS provides every member with an annual account balance which consists of the member’s contributions. In most cases, employee contributions have been made by their public employers –a holdover from labor negotiations decades ago when employers agreed to cover the employee contributions in lieu of salary increases. This needs to change—but that is grist for another article.

When a PERS member retires, the account balance of that member is matched by employer funds to calculate an annuity for duration of the member’s life.

Public employees who are convicted of serious crimes while in the course of their duties should, at a minimum, forfeit the employer match to their account balance when calculating pension benefits. We should redirect the forfeited matching funds to victim restitution.

This step will inform public employees that the public trust is precious and that betrayal of that trust will bring about financial consequences.  And it will remove the bitter pill taxpayers have to swallow when crooks and predators are paroled and collect pensions that are unequalled in the private sector.

I can’t imagine why Oregon, or for that matter all states and the Federal Government, do not all have pension forfeiture laws.

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