Gov. Kate Brown’s newly released plan for shielding school districts from debilitating rate increases tied to the state’s pension fund has garnered kudos and outcry since it was unveiled last week.
House Speaker Tina Kotek on Monday gave the proposal mixed marks and suggested legislative leaders may bypass Brown's recommendations.
While Kotek found much to agree with in the governor’s proposal — in particular plucking a one-time cash infusion from the state’s bountiful worker compensation fund, known as SAIF, and redirecting the “kicker” tax refund expected to go back to taxpayers next year — she disagreed with one key element.
Brown’s plan would only help Oregon school districts. Kotek says any solution should benefit all public agencies and localities that pay into the debt-riddled Public Employees Retirement System, or PERS.
“The one disagreement I would have with the governor at this point is making sure the rates benefit all services, not just schools,” Kotek said in a meeting with reporters. “Everyone has the same problem right now.”
To that end, Kotek, D-Portland, and Senate President Peter Courtney, D-Salem, have “just started” talking about what their own plan for easing the state’s pension burdens could look like, she said.
Long criticized for being inattentive to ballooning debt in the pension system, Brown’s office released a complex and detailed $3.3 billion plan on Friday. By cobbling together money from a number of places, the governor’s office said the plan could help hold in place the rates that school districts are currently required to pay into PERS.
That focus on schools is partly rooted on a central goal Brown and legislative leaders are chasing this session: A $2 billion business tax hike that would pay for education improvements around the state. Without any action on rising PERS payments, critics in the business community and elsewhere have pointed out that much of the new money would find its way into the pension system, not classrooms.
"PERS rates for schools are the governor’s top priority and should be addressed first," said gubernatorial spokeswoman Kate Kondayen. "The governor welcomes the Legislature to find additional resources to assist other public employers, but we must prioritize schools first."
Kotek said she wasn’t sure how targeting money to just one set of public employers would work. She disagrees with that approach in general.
“Whatever we end up trying to do, it should pay down the rates for all public services not just schools,” she said.
She didn’t offer any specifics for what her proposal might look like, though Kotek did support a proposal for a one-time use of surplus money from SAIF, the state’s workers compensation fund. She called it the “most politically viable” source of money in Brown’s proposal.
The high-performing fund has more reserves on hand than it needs, the governor's office argues. Business interests have criticized the idea.
Kotek also said she supports keeping around $500 million currently expected to flow back to taxpayers as part of Oregon’s unique “kicker” law, and using that to stabilize pension rates. That would require a two-thirds vote in the Legislature.
The speaker was less certain about a proposal to require public employees to pay money into PERS, a proposal that saw swift and fierce backlash from teachers unions on Friday. Kotek didn’t dismiss the idea out of hand, but suggested it would need to be part of a larger package to be considered.
“If we are going to ask state employees to contribute to the pension fund to help deal with the problem, it's not just their responsibility to do that,” she said. “I think you can only approach that if you have a shared, balanced, fair approach.”
While Brown’s plan focused on stabilizing rates for schools, the wider-reaching strategy being worked up by Kotek and Courtney would simply try to limit rate increases year to year.
“If we can reduce how large those rate increases are, I think that's an achievable goal,” Kotek said. “To say it's going to be zero I think is going to be very difficult.”
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