Why are there so many cuts to schools in Oregon?

Oregon gave more money to K-12 schools in its 2011-13 budget. Not a lot more, but more. It went from $5.7 billion in 2009-11 to $5.725 billion in this biennium.

Part of the reason for cuts is Oregon’s Public Employee Retirement System. It’s devouring more out of school budgets.

Bend-La Pine Schools recently saw the cost of its PERS contribution go up by about $5 million. That’s $5 million less for teacher salaries, books or computers.

Next year, as The Oregonian reported, the bill for PERS is going to jump up again, by perhaps $1 billion across the state. Retirement costs will then be eating up 25 percent to 30 percent of payroll budgets. There’s no sign that PERS is going anywhere but up.

The state has some $55 billion in PERS investments. It has to have enough money to pay the benefits for retirees in the future.

The money comes from two places: returns on investments and payments by employers, such as school districts and local and state governments.

The PERS board has assumed it will get an 8 percent rate of return on its investments. That has been achieved historically, but not in the last 10 years. Returns have fallen to 7 percent in the past decade. In the past five years, returns were under 2 percent.

That leaves PERS with only about 73 percent of its liabilities covered. If earnings are not enough, schools and governments pay more to cover the shortfall.

Legislators, with some notable exceptions, have done little to fix the problem.

When state Rep. Jason Conger, R-Bend, proposed tweaking the cost-of-living-adjustment for PERS in the 2012 Legislature, he couldn’t even get a hearing for his bill. His change could have saved school districts $200 million per biennium in PERS costs.

One important question to ask candidates for statewide office is what are they going to do about PERS. Are they going to be content to let it erode our schools? Do they have the political courage to seek a real solution?