PORTLAND, Ore. (AP) — Oregon Health & Science University is seeking to stop paying a 6 percent retirement contribution it makes for more than 5,000 employees.
The proposal was part of an offer the Portland hospital and public university made this week in collective bargaining with unions, The Oregonian newspaper reported (http://is.gd/SIRhvn ).
Roughly 70 percent of Public Employees Retirement System members statewide have their required contribution paid by their employer. The “pickup,” as it’s commonly known, was substituted for pay raises in the past, and has become standard in collective bargaining agreements.
But the cost of funding worker retirement benefits is reaching crisis levels for many public employers in Oregon, and OHSU President Joe Robertson said it’s important for the university to take this step to control expenses. Eliminating the pickup in 2013 would save $20 million and hold the university’s annual PERS costs constant at about $50 million.
“Being good stewards of our resources means figuring out a way to address the unsustainability of PERS,” Robertson told employees in a newsletter this week. “The ’employee pickup,’ which OHSU had previously paid for PERS employees, is one of the few aspects of the program we can control —and one we can no longer afford.”
Robertson said the proposal is only one element of a compensation and retirement package that would remain better than average.
Frank Vehafric, a representative for OHSU members of the American Federation of State, County and Municipal Employees, said the PERS cost problem is cyclical in nature, and costs will eventually be reduced via better investment returns or the retirement of older employees.
Dropping the pickup would be a “very serious financial blow to our members,” Vehafric said. “It was part of the deal a long time ago to swap pay increases for the pickup. There’s no part of this offer to make employees whole for that trade.”
PERS finished 2011 with $54.7 billion in assets. That amount covers 73 percent of its liabilities, down from 78 percent at the end of the previous year due to poor investment returns. Employer contributions doubled last July, taking $1.1 billion from public budgets already punctured by the recession.
Elimination of the pickup is not a new idea. Just before leaving office, former Gov. Ted Kulongoski released a report that considered reducing employee contributions to PERS as a means to trim overall compensation costs.
State agency contracts, however, guarantee employees a 6 percent pay raise if the Legislature changed the law and eliminated employee contributions.
OHSU is in a stronger position to undertake such a change than many government entities. It’s a public corporation with a budget that’s largely independent of the state’s.
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Information from: The Oregonian, http://www.oregonlive.com
