In my opinion, employees must pay their “EMPLOYEE CONTRIBUTION” to their PERS Pension.
The City “Pick UP” of that Employee responsibility is putting the Citizens in Ashland and many other cities at risk. And most of the City “pick up” doesn’t even go into fund the PERS Pension (it goes to a great idea an IAP, which is like an employee controlled 401k, staff control their IAP).
The Governor, Kate Brown, has led by example and recently re-negotiated Collective Bargaining Agreements with at least two large Public Service employee unions to have the employee pay their employee contribution. This is a start. Ashland needs to have employees pay their PERS Pension “employees’ contribution” as well.
Councilor Tonya Graham claims that that Ashland must pay the “employee contribution” to their pension “to be competitive”. However, Oregon is the only State out of all 50 States that does not require employees to pay their “employee contribution”. And the State is now leading to implement collective bargaining agreements to require that.
I will offer only one of many examples. San Jose Calif implemented employees pay employee contribution for “new Employees”. Many Police for example quit over it. The academy produced more than sufficient new recruits and they have one of the best Police forces nationwide. This isn’t easy, I get that. I for one am for one very proud of our Ashland Staff. They will feel better about contributing to their pension. And Council can work on negotiating a change with existing collective bargaining agreements to make their existing compensation remain whole, perhaps even raises, or added vacation leave as other cities have done. Giving staff more time off flexibility has value to both city and some staff. This is what Kate Brown did. There may be an initial additional cost but it will be a known amount that can be budgeted for. not the default surprise mode Ashland is in now.
Here is the thing. NASRA, National Association of State Retirement Administrators identify “trends” in administering public employee retirement plans. All are trending to employees paying their “employee contribution”. Why, because it is the right thing to do, and many Cities are having trouble with balancing their budgets when they “pick up” someone else’s cost responsibility. Cities have enough trouble taking care of their own responsibilities. Initially these other cities take baby steps by mandating that all “new hires’ pay their own “employee contribution”. These positions can be made competitive given current market condition with salary and all the other great Ashland employment benefits, and perhaps increased job diversity satisfaction. Also work hours flexibility that Covid has taught us. “Pick – up” isn’t the only way.
How are PERS Pensions funded nationwide? (1991-2020)
- Employer Contributions 28% (Citizen Pays)
- Employee Contributions 12%
- Investment Earnings 60%
Ashland’s Budget plan for these three things for 2022-2023
- Employer Contributions 27.35% (*Incl 0.75% Employee Contribution- Pick up) (shows only OPSRP data- Different for Tier1/Tier2 and Police and Fire) (Citizen Pays)
- Employee Contribution 0
- UAL 6.5% ? (Citizen PAYS)
- Investment Earnings 66.15% ? (This is a hope not a plan, whatever isn’t achieved the Citizen pays the difference- higher UAL)
Given the recent downturn in Stock Markets these earnings will not be achieved, and Ashland’s and other cities will be impacted with increased UAL surprises. IMO, this is serious and the way this is set up now, the employee has zero risk and the Ashland citizens have all the risk. In the real-world 401K’s, IAP’s and IRA’s have all the risk, but citizens can act to mitigate the risk. With the UAL, the citizen will get hit with all the risk and the Utility bill will go up.