Oregon’s Public Pensions

You might find this New York Times article on Oregon’s public pensions interesting:

A public university president in Oregon gives new meaning to the idea of a pensioner.

Joseph Robertson, an eye surgeon who retired as head of the Oregon Health & Science University last fall, receives the state’s largest government pension.

It is $76,111.

Per month.

That is considerably more than the average Oregon family earns in a year.

Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making. Its economy is growing, but the cost of its state-run pension system is growing faster. More government workers are retiring, including more than 2,000, like Dr. Robertson, who get pensions exceeding $100,000 a year.

The state is not the most profligate pension payer in America, but its spiraling costs are notable in part because Oregon enjoys a reputation for fiscal discipline. Its experience shows how faulty financial decisions by states can eventually swamp local communities.

Oregon’s costs are inflated by the way in which it calculates pension benefits for public employees. Some of the pensions include income that employees earned on the side. Other retirees benefit from long-ago stock market rallies that inflated the current value of their payouts.

I don’t believe any Illinois public employee enjoys that high a pension paid from the state’s purse but there are some that are pretty outrageous. According to the Better Government Association’s Pension Database, the highest-paid state retirees in Illinois are receiving about a half million a year in pension payouts. There’s a clear argument that Illinois should abandon its present defined benefit retirement system in favor of a defined contribution. That would protect both retirees and taxpayers. It would not, however, give politicians the ability to siphon money that should be going to pension funds to other purposes so, of course, it won’t happen.

Illinois has the additional problem that it cannot constitutionally change the pension arrangements of present or past employees—only new ones.

5 comments… add one
  • steve Link

    That guy was the CEO of the hospital I assume. They make a lot of money. I guess that surprises people. Anway, just convert this epee to 401s.


  • I’m pretty sure the highest public employee pension in Illinois is being paid to a retired Illinois University athletic director.

    In Illinois we couldn’t do what you suggest. The state constitution has been interpreted, fully litigated right up to the Illinois Supreme Court, as prohibiting the pensions of state employees from being reduced. They’ve got to be paid according to the formula that prevailed when they first became public employees. Or above if the formula increased their pay/pensions.

    One of Illinois’s problems is that there’s a double whammy. The state universities pay their athletics directors from the proceeds of the athletic programs. The public school districts pay the salaries of teachers and administrators. But all of their pensions are picked up by the state. Consequently, there’s a common practice of goosing their pay right before retirement. It’s a form of delayed compensation.

  • CuriousOnlooker Link

    The people are sovereign; is there even majority support in Oregon or Illinois to reform public pensions? If not, then the state constitution is not the true barrier to reform.

    In which case the only motivation to reform will be the markets when it will not lend money to the state government or by whoever has to bailout the state.

  • There has been majority support for reforming state pensions here in Illinois but there hasn’t been enough support to amend the state’s constitution. The legislature has repeatedly tried enacting laws that would reduce the state’s pension liability. They’ve all been thrown out by the courts. We’d need to amend the state’s constitution.

  • steve Link

    And to think, Illinois University hasn’t even won the NCAA tournament or even put a team in the top 10 in football that i can remember recently. Not even getting your money’s worth.


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