In Oregon, the $75.5 billion Oregon Public Employees Retirement Fund is a frequent topic of discussion for incumbent Democratic Gov. Kate Brown and her challenger, Republican state Rep. Knute Buehler.
In March, the Oregon Legislature passed a bill championed by Ms. Brown aimed at reducing the system's unfunded liability, which was $22.3 billion as of Dec. 31. The bill set up two new funds, a side account for school districts to be invested alongside pension assets to reduce school district pension contributions, and an incentive fund to match certain lump-sum employer contributions to the pension plan.
The bill also directed the state treasurer to study the feasibility of borrowing money from the Oregon Short Term Fund, a $15.7 billion short-term cash investment pool in which a number of local governments and state agencies participate, to be redeployed into investments. The state treasurer is to report the results of the study to the Legislative Assembly no later than Sept. 30, 2019.
Ms. Brown set up a task force in 2017 to bring down PERS' unfunded actuarial liability and has said she will work with the group to continue that mission, if elected. In November 2017, the task force put out a report recommending a number of measures, including harvesting some of the state's timberland, selling state-owned real estate and privatizing state universities, which could bring in $4.2 billion to $6.4 billion to reduce the system's unfunded actuarial liability.
Mr. Buehler would like to take PERS in a different direction. While protecting pension benefits that have already been earned, he wants to enroll new employees and move current employees to a 401(k)-type plan with an unspecified "reasonable match," cap the salary amount used to calculate benefits at $100,000 a year, and require all state and local government employees to contribute toward their own retirement benefits.
Public employees in Oregon already are required to contribute 6% of their salary into the state's individual account program, a supplemental defined contribution plan that belongs to the employee. Mr. Buehler wants all or at least of portion of that 6% contribution to be redirected to PERS.