SALEM — A task force says it’s found ways to reduce the Public Employee Pension System’s $25.3 billion unfunded liability by as much as $10.4 billion.
The options it outlined in a report Wednesday are wide ranging — increased taxes on beer and wine; sweeping state reserve funds; dedicating one-time financial windfalls to PERS; selling one or more state universities to a private, not-for-profit entity.
Gov. Kate Brown appointed the seven-member task force, comprised of business leaders and people with public sector experience, to find ways to reduce the unfunded liability by at least $5 billion over the next five years.
Rather than making recommendations of specific actions, the task force offered options it judged to be reasonable and likely to deliver “a material reduction” in the liability.
The report looks at a number of ways that the state could use available funding and assets to reduce the liability. They include:
• Increasing state alcohol revenue by raising taxes, getting better prices from suppliers and establishing a demand-based retail pricing structure. Changes could net more than $453 million.
• Dedicating one-time financial windfalls to PERS liability. Those windfalls would include proceeds for increased debt collection, legal settlements, estate and capital gains tax revenue in excess of projections and monies collected on foreclosures in excess of taxes owed. These windfalls could be worth $1.2 billion.
• Dedicating proceeds from the sale of unclaimed property to PERS for funding of $200 million.
• Make use of surplus capital held by SAIF Corporation, the state’s tax-exempt workers comp insurance company. That could yield more than $500 million.
• Reducing the cash and short-term investments held by state-controlled entities. The task force estimates this would yield between $750 million and $1.5 billion.
• Privatizing some or all of Oregon’s eight public universities by seeking non-profit backing to buy the institutions. The task force estimates privatization could yield between $250 million and $1.5 billion.
• Selling state property, such as the Portland State Office Building and other facilities. The task force says the state could raise more than $128 million.
• Increasing water right fees, raising the cap on fire fighting costs paid by private land owners and dedicating proceeds of timber harvest conducted by the state on federal lands to offset the PERS liability could raise up to $330 million.
If all of those measures were implemented, between $4.2 billion and $6.4 billion could be saved, the task force estimated.
The task force also recommended setting up a state incentive program that would match 25 percent of the money paid by non-state public employers to pay down their liability. According to the report, the incentive program could reduce the unfunded liability by an additional $2 billion to $4 billion.
The funding estimates come with a caveat: The dollar amounts were provided by agencies affected by the possible changes, and the task force didn’t try to independently confirm them.
Neither, in most cases, did the task force include the costs of putting the changes into place or “collateral financial impacts on public or private entities.”
“Some options may overlap or be mutually exclusive to implement,” the task force wrote in Nov. 1 letter to Brown.
Jim Green, executive director of the Oregon School Boards Association, called the report a good initial step. He emphasized in a prepared statement that the state needed a “broad approach” to paying down the PERS unfunded liability.
Green said one of the options provided by the task force — sweeping money left over at the end of the school year to pay down PERS debt — would pose a difficulty for schools.
Meanwhile, the head of the Oregon Education Association, the state’s largest teachers’ union, praised the findings.
“We applaud the governor and the UAL task force for working to find innovative ways to reduce costs to employers without cutting the retirement benefits that are so essential for recruitment and retention of teachers, first responders, nurses, and other public employees,” said OEA President John Larson in a statement Wednesday.
Brown’s likely GOP opponent, Republican State Rep. Knute Buehler of Bend, dismissed the report as “the governor’s pawn shop politics” in a news release through his campaign, arguing “the only solution is a change in leadership.”