– By Steve Benham, KATU: Feb 10, 2014
SALEM, Ore. – Concerns about colleges and universities cutting faculty hours to avoid paying health benefits under the new federal health care law has prompted state Sen. Michael Dembrow, D-Portland, to introduce legislation to make the practice for all Oregon employers illegal.
Senate Bill 1543 is scheduled to get a hearing before the Senate Health Care and Human Services committee today at 3:00 p.m.
Dembrow, who has taught English at the Cascade campus of Portland Community College for years, told KATU last week he’s heard “through the grapevine” and has read news reports that some community colleges “have been advised to reduce their teachers’ hours” in order to get out of paying health benefits to some employees.
Under the new health care law, the Patient Protection and Affordable Care Act (also known as “Obamacare”), companies that employ 50 or more employees are required to provide their workers with health insurance if they work an average of 30 hours or more a week…
Our Response & Your Comments
We’ll ignore the delicious irony of colleges, probably the single biggest institutional fans of ObamaCare, slashing professors’ hours to get out of paying for…ObamaCare!
Our larger point is that laws like these are the steroids that drive government hyper-growth. Here’s why…
First they pass ObamaCare, which is 2200 pages of dizzying complexities, dazzling contradictions and unintended consequences. Now you need more laws to clean up the complexities, contradictions and, most of all, unintended consequences. Thus emerges from the swamp Dembrow’s bill.
Then the new law demands more government to make it work. How do you prove in court that
State U cut Prof. Propellerhead’s hours to avoid paying his ObamaCare bill? Hire psychiatrists to muck about in his brain? Plus you need investigators to hunt down evidence. They need lawyers, offices and assistants. Plus you need new laws to empower the investigators and lawers. And the beat goes on and on – as government matasaticizes at your expense.
…When the Oregon Legislature convenes Monday, two large state agencies will be asking for tens of millions of dollars.
Corrections officials say they need about $90 million, and Human Services officials say they need about $100 million to fill their gaps, though some money is expected from other sources…
The Oregonian, January 28, 2014
Our Response and Your Comments
Here are three rules to remember when you’re reading about government “needing” more money:
Government (at every level – city, county, state, federal) always needs more money;
Government can never do with less money;
You can always do with less money because of Rule #1.
As Ronald Reagan opined: “Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”
A union representing health care workers on Monday filed five ballot measures with the Secretary of State’s office targeting hospital pricing, executive salary and transparency.
Local 49 of the Service Employees International Union (SEIU) filed the measures for the November 2014ballot after years of trying to make progress in the Legislature…
The ballot measures cover separate topics:
Executive compensation caps limiting hospital chief executive salary to 15 times the salary of the lowest-paid employee…
Price limits for larger hospitals…
The Oregonian, October 22, 2013
Lane Solutions Responds and Your Comments
We don’t often tip our hats to the SEIU, but today we just can’t resist it.
Because it takes special gall, guts, chutzpah or whatever you call it to ask Oregonians to vote for a measure whose backer has absolutely no intention of applying to himself.
The SEIU wants hospital CEO salary limited to 15 times the salary of, say, a dishwasher or janitor working there. Sounds good – right? It’s just so “fair.”
So, what does the SEIU pay its CEO? Former chief Andy Stern pulled down a cool $306,388 all in. Poor Mary Kay Henry, his replacement, is forced to live on only $256,065. Do you suppose that the lowest paid janitor or window washer whose dues fuel these salaries make one fifteenth of these amounts? That would be $20,426 of Handy Andy’s loot and $17,071 of Poor Mary Kay’s.
And did you notice that Poor Mary Kay’s salary is $50,000 less than Andy’s? Maybe she needs a union to fight for “equal pay for equal work?”
And did we mention that the SEIU, that tireless champion of equal pay, has nine union headquarters sub-bosses banking more than $200,000 per year?
Then there’s the measure to put price controls on “larger” hospitals. Larger than what? MASH units? Yeah – price controls are turning Cuba and Venezuela into economic power houses. Remember gas lines?
This week we award what’s really a “Golden Lamb” Award – Because the money you earned and your “Public Servants” in Salem wasted wasn’t that much. If it weren’t your money it’d be worth a laugh.
In case you were about to shed a tear for the Beaver State’s cheese industry, don’t bother, because the Oregon Cheese Guild has scored a cool $50,000 to produce videos featuring cheese farmers, cheese experts and cheese history. We hope they’re not too “cheesy” (sorry).
Remember that old ad “Is your dog getting enough cheese?” Maybe they could blow some more bucks by running their video on pay TV’s The Dog Channel!
SALEM, Ore. — Gov. John Kitzhaber has signed a bill he hopes will curb the state’s prison population. Kitzhaber signed the measure during a ceremony in his office Thursday, flanked by district attorneys and sheriffs. Among other things, the measure reduces sentences for certain drug and property crimes and driving with a suspended license. It’s projected to keep the prison population flat for about five years. Kitzhaber sought to limit prison growth for a decade, but he made concessions to win support from the law-enforcement community.- Associated Press
Lane Solutions Responds…
Congrats to Guv Kitzhaber for finding the golden key to cutting costs. Want to save money on prisons? Presto – Cut the punishment for crimes. Maybe we can save money on the Oregon Highway Patrol by raising the speed limit to 95 MPH. Save hospital costs by treating all strokes and heart attacks as outpatient cases?
Here’s what we won’t do to save money on prisons: Ask why, of the 14 states with populations of 2 to 5 million, 10 spend less per inmate than Oregon and 9 of those are right-to-work states. 3 of the 4 that spend more are, like Oregon, forced-union states.
Nor will we ask why Oregon entry level correctional officials pocket 24% more annual take home pay than nearby states’ officials.
Heaven forbid that we ask why, in the Oregon Legislative Fiscal Office study of Oregon and 11 surrounding states, Oregon was the only state in the sample which paid the entire employee contributions to the retirement plan and health insurance premiums.
We conclude that it’s just easier to turn criminals loose on Oregonians than rein in unions.
By Rep. Kevin Cameron (R-Salem)
There have been nearly 50 bills introduced that address, in some way, the PERS issue. So far, there has been no substantial legislation that has received a hearing. I am co-sponsoring the below four bills that were introduced by Rep. Bruce Hanna (R-Roseburg).
HB 3056 would limit the computation of “final average salary” to salary, rather than including unused sick time and vacation accruals.
HB 3057 would limit the COLA for PERS benefits to the first $36,000 of retirement income.
HB 3058 phases out the ability of employers to “pick-up” the employee’s 6% contribution into retirement accounts by 2020.
HB 3059 ends the practice of providing a supplemental benefit payment to offset income taxes for those who are not subject to Oregon income taxes.
It is my understanding that estimates of savings after instituting these reforms would be over $700 million per biennium. These alterations to the current process are important steps in the right direction to put PERS on sustainable footing for the future.
This is not a conversation about the worthiness of our public employees. It is a conversation about the absolute proven unsustainability of this retirement system. These bills deserve the opportunity to be heard, at the very least, in order to begin meaningful dialogue about how we are going to address this important issue in our state. The impact that it is having to our school districts and local government budgets is devastating and hurting our kids, our seniors, our social service agencies, and public safety. We must do better.
Reprinted with permission from Oregon Catalyst
Recently a highly placed official with Eugene 4J Public Schools spoke off the record with a member of Lane Solutions’ editorial staff. He revealed to us the cold, hard facts about the coming mandated increase in Public Employees’ Retirement System (PERS) payments and their effects on Eugene students.
During the coming biennium, mandated PERS payments by Eugene 4J will increase by 6.55%, or about $4,900,000 per year. By State law this, plus current PERS payments, must be made first. In other words, before 4J hires one more teacher, buys one new textbook, or makes one new computer available to our children, it must pay this additional amount into employee retirement.
So, what will this increase cost our children? Plenty. According to this official, a teacher costs 4J about $95,000 per year. Each one percent increase in PERS payments costs about $750,000 per year. So every one percent increase in PERS payments means that our children lose almost eight teachers!
The cost of a 6.55% PERS increase? The possible loss of nearly 52 teachers! The result – more kids per class and less education.
Should the PERS increase be covered by teacher layoffs, who will lose his or her job? Thanks to union rules seniority trumps teaching ability, performance and results. So the last hired become the first fired. This means that less expensive teachers are the first to go. A first year teacher costs about $32,000 less than a teacher with 20 years seniority, or about $63,000 per year. If all the layoffs come from this group, 4J will have to lay off 78 teachers!
In previous issues of Lane Solutions readers have learned how PERS rules and disputes concerning them are both made and adjudicated by the very State officials who profit from their own decisions, thus stacking the deck against taxpayers.
One result of this stacked deck is that PERS retirees are compensated for Oregon income taxes they must pay on their PERS income – even if they live elsewhere and therefore don’t pay Oregon income taxes. That’s right – a PERS retiree living in Delaware gets money from Oregon taxpayers for the Oregon income taxes he or she doesn’t pay!
The 4J official who revealed for our readers the true cost of PERS increases concluded the interview with some even more disturbing news: The increase in health insurance premiums is even larger than the PERS increase, and so may result in even more teacher layoffs. But more about that in a future issue of Lane Solutions.
On Thursday, November 29, 2012, the Lane County Sheriff’s Office closed another 35 jail beds resulting in the release of more than 30 inmates from the Lane County Jail. By Friday afternoon two of the released inmates were already back – one arrested for robbing a bank and one for unlawful entry and theft.
The release of these inmates from the Lane County Jail is directly related to the significant reduction in federal funding and is indicative of the lack of active management of the federal forests that make up half our land base. I fully support Sheriff Turner and his dedicated staff during this challenging time. They are sworn to protect us, but have been confined by inadequate resources.
Many voices have called for Lane County to move beyond federal timber revenue sharing, yet we cannot ignore the economic potential of the forests amongst which we live. Lane County Commissioners, even this week, continue to debate the form and function of a property tax measure dedicated to supporting the jail. But to fully rebuild a functioning public safety system (jail, patrol, prosecution, youth services, and treatment and prevention) would take more than a doubling of Lane County’s existing property tax. Residents have never supported tax proposals of that size, and there is no reason to expect they will now even in spite of the dismantled state of our public safety system. A property tax increase at this time throws cold water on our fragile recovery and, under Measure 5, the only options available to voters are temporary solutions. What’s more, those options could actually impinge on the tax revenue of our community’s fire, school, city, and other taxing districts.
Lane County’s partnership with the federal government goes all the way back to 1906, when the first national forests were created and County Commissioners throughout the West lobbied Congress to create a mechanism that would replace tax revenue lost by creating enormous amounts of publicly owned lands. Congress has all but completely walked away from this promise. I thank Congressmen DeFazio, Walden, and Schrader, and Governor Kitzhaber for forcing a dialogue to find a way to ensure both the essential ecosystem and the crucial revenue that provides for the security of Lane County families.
What we’ve seen this week – what we’ve seen as our system has eroded over the last several years – is the result of the reduction of tens of millions of real dollars. It cannot be blamed on uncontrollable cost, bad management, or waste. No single, immediate solution will fix our system. We need a long term solution to a sustainable public safety system that lays out the incremental steps to get there. We are committed to identifying such a cohesive strategy.
Sid Leiken is Chair of the Lane County Board of Commissioners
Voters are ready for PERS reform. Essential services such as prison beds, law enforcement, and school days, are being sacrificed while PERS expenditures skyrocket. During 2009-2011, PERS spending will amount to approximately $825 million. That spending is set to increase by $495 million to $1.3 billion in 2011-2013.[i] It is clear that the system is broken. We must introduce legislation to fix the growing problems pertaining to the overall “PERS machinery.” We must eradicate wasteful spending while ensuring that public workers receive retirement benefits as promised.
Passing PERS reform is only half the battle. In the past, Oregon courts have overturned PERS reforms by invoking the Contract Clauses of both the Federal and Oregon Constitutions. To paraphrase, the Contract Clauses say that the state can’t pass laws that impair the obligations of existing contracts.[ii] The Oregon Supreme Court has consistently held that PERS members have “vested contractual rights in pension benefits.”[iii] Accordingly, the Federal and Oregon Contract Clauses serve as substantial barriers to PERS reform.
Nevertheless, courts have recognized a legal distinction between legislation that “impairs” a contract and legislation that merely “breaches” a contract between public employees and the State.[iv] The Oregon Supreme Court will allow legislation that breaches contracts, but will invalidate laws that impair contracts.[v] The Oregon Supreme Court has determined that legislation that impairs existing contracts are “statutes that prevent both performance of the contract and compensation to the nonbreaching party.”[vi] Well-drafted legislation can get around this distinction and merely result in a “breach” of contract, rather than unlawful “impairment” of the obligations of the contract.
As we move forward in our effort to curtail inefficient government spending, we must introduce reforms with this legal distinction in mind. There is no doubt that opponents of reform will bring legal challenges, but well-drafted legislation can and will survive.
[i] 2011-13 Estimated State Agency Payroll
2009-11 Salaries and Wages = $5,850,731,907 ($825,251,701 = Total PERS expenses, 2009-11)
(Source: Legislative Fiscal Office)
Assumed growth in State payroll expense = 3.75% (Assumptions: 2.75% inflation + 1% Real Wage Growth)
(Source: PERS Actuary)
$5,850,731,907 X .0375 = $219,402,446.51 (Assumed increase in State payroll for 2011-13.)
$5,850,731,907 + 219,402,446.51 = $6,070,134,353.51 (Total anticipated State payroll for 2011-13.)
2011-13 Estimated State Agency PERS Calculations
$6,070,134,353.51 x .098 = $ 594,873,167 (9.8% for 2011-13 State’s employer contribution rate)
$6,070,134,353.51 x .06 = $ 364,208,061 (6% Employee’s IAP paid by State for State employees.)
$6,070,134,353.51 x .0595 = $ 361,172,994 (5.95% paid by State on Pension Obligation Bonds.)
(9.8% + 6% + 5.95% = 21.75%) = $1,320,254,222 (Total anticipated PERS costs for 2011-13 )
$1,320,254,222 – 825,251,701 = $495,002,251 (Additional PERS costs for 2011-13 State Budget)
Note: “The rate components are as follows: 9.8% (2011-13 employer contribution rate) + 6.0% (member
IAP contribution) + 5.95% (POB service cost).” ”… a 21.75% total cost basis.”
(Source: PERS Administration—3-11-2010 Email to Rep. Richardson—emphasis added.)
[ii] Hughes v. State, 314 Ore. 1, 33 (1992) (citing Taylor v. Multnomah County Deputy Sherriff’s Retirement Board, 265 Ore. 445, 450 (1973)).
[iii] Hughes v. State, 314 Ore. 1, 33 (1992) (citing Taylor v. Multnomah County Deputy Sherriff’s Retirement Board, 265 Ore. 445, 450 (1973)).
[iv] Kopilak, David, Hughes v. State: Breaching Statutory Contracts Without Violating Oregon’s Contract Clause, 72 Or. L. Rev. 487, 488 (1993).
[vi] 72 Or. L Rev. at 500 (citing Hughes, 314 Ore. at 31).