Below is my testimony submitted for the December 3 meeting of the PERS Board. Due to good investment returns this past year, the increase in contributions going into PERS from public employers will likely be extremely low over the next two years.

In my July 11 op-ed published in The Oregonian, as well as in previous posts in this blog, I explained the need to bring a lot more money into PERS. That need has not gone away with a short period of good returns. But with Kate Brown’s appointment of new board chairperson Sadhana Shenoy two years ago who is now siding with the self-serving agenda of the public employee unions, this agenda is now ruling PERS. That’s right. The very organizations that created the PERS monster and have stymied any attempt at taming it now once again effectively run PERS.

And since these same forces control the Oregon Democratic party, not one nickel above what normal PERS policies require was allocated to PERS during the most recent session of the Legislature despite off-the-chart record tax revenues coming into state coffers.

Even if the PERS Board takes its fiduciary responsibility seriously, such as during the tenure of Eugene’s John Thomas as board chairman from 2010 to 2018, it will take a long period of significantly increasing contributions to get PERS healthy. To see new contributions slow to a trickle under Chairperson Shenoy is outrageous, but not entirely unexpected. Democrat Kate Brown appoints Democrat Sadhana Shenoy. Public employee unions control Democrats. Ergo, PERS progress stops.

Last month, Kate Brown quietly reappointed Sadhana Shenoy to a new three-year term as board chairperson.

Here is my testimony:

And now you hold your breath.

We see in today’s Milliman’s report that when 2021 investment returns through September are considered, public employers will receive a very moderate increase in contributions if these returns hold through the end of 2021, not the $1 billion increase estimated in last month’s report.

If returns hold, I’m sure you will celebrate successfully keeping employer contributions low. Mission accomplished, right? Never mind it will not be due to any rational action this board has taken. And never mind that Oregon and PERS will be worse off for it.

Absent a market drop before the end of the year, you will avoid the much-needed public scrutiny of your dreadful rate-setting policies of the last two years, decisions which can best be described not only as erratic and counterproductive but also once again driven by the political agenda of the public employee unions.

Let us not forget that public employee unions brazenly created the monster that PERS is today with monumentally disastrous decisions cynically and intentionally made years ago when they dominated the PERS Board. These decisions changed PERS from something that resembled an actual pension into a massive wealth transfer mechanism to funnel billions in Oregon tax dollars into the pocket of public retirees.

To this day, the unions are not only unapologetic for this destructive wealth grab, they are emboldened by it. Their shocking attempt in 2016 to pass the infamous Measure 97, which would have imposed a disastrous $3 billion dollar per year gross profits tax on Oregon corporations, so appalled me that it launched my post-retirement career as a commentator. The unions’ utter disregard for the destruction this tax would have caused throughout the Oregon economy taught me a lot about them.  I wrote this piece that was picked up by the Eugene Register Guard, and I like to think it played some small role in the voters’ sound rejection of Measure 97.

Fast forward to today, and not much has changed with respect to the unions. With the Oregon Democratic party firmly in their pockets, the unions immorally continue to wield their huge power to keep their PERS monster alive and stymie all efforts to tame it. Never mind that PERS’s gigantic unfunded liability hangs over the state like the sword of Damocles, with scant solutions on the horizon. The unions don’t care. They have never wanted to be part of the solution and likely never will. They have only one goal: funnel as much state money as they can to their members, by any means necessary, and without regard for the consequences to the state of Oregon or its citizens.

A 2003 law was intended to blunt the unions’ power by requiring that three out of the five PERS board members be independent of both public employees and public employers. We now see it didn’t go far enough. When one rogue independent board member sides with the public employees, as Chairperson Shenoy did in 2019, the blatantly self-serving and destructive agenda of the public employee unions once again rules the PERS Board, to the detriment of everyone in Oregon except them.

The great investment returns of the last several years in no way has brought PERS out of the woods. It took the longest bull market in history to get annual returns from the top of the last bull market until now close to 7 percent. This would be great if 7 percent continued as far as the eye can see. But bull markets end, sometimes catastrophically, so the next big test of PERS will come when the inevitable bear market arrives. PERS can likely survive a mild bear market, but a big drop will put the system in real trouble, especially if recovery is slow.

The best we can hope for is that by the time PERS is tested by the next bear market, the interests of the public employee unions will once again have been relegated to where they belong on the board: in the minority. Only then can this board get back to long and difficult business of clawing Oregon out from under this colossal burden that we charitably call a pension system.

One final comment for Chairperson Shenoy: I see that Governor Brown has quietly reappointed you and board member Stephen Buckley to new three-year terms. That means that you get another bite at the rate-setting apple in 2023. I look forward to observing and commenting on that process.

Merry Christmas.