I'm sure they're planning on it just defaulting. Deliberate debt swamping has to be making somebody wealthy.

Is the pension payout a function of the salary payout, and can it be adjusted by paying less and/or fewer? So are we really doomed, or just foolishly generous.

"raise about $3 billion more in taxes and fees every year for the next 30 years"

What drives you nutz is the gov and the legislature know there is a big problem. They'll take and sneak out $1B last session for PERS, then probably most of the stimulus and tobacco fund settlement went into the gen fund for PERS.

However, we just keep going on like nothing is happening and no need to wake the beast that is the pub employees union.

The other alternative is to just take all $30B at once, of course, that's 4 years worth of gen funds.

Oregon PERS's investment fees are the 4th highest among the states - twice the average.

http://mdpolicy.org/docLib/20120803_MarylandPolicyReport201204.pdf

However, he (Mr. Larrabee) acknowledged that “both calculations have usefulness” and said there is value in considering the worst possible outcome for PERS investments.

I am not a financial planner but I seriously doubt a 4% annual return is the worst possible outcome for our PERS investments. PERS managers are going far out on the risk curve to achieve the sub 8% returns they are achieving right now. If the PERS private equity gambles don't pay off then 4% annual will be a dream.

7.5% over several decades is, based on history, not an unreasonable assumption.

"7.5% over several decades is, based on history, not an unreasonable assumption."

Besides the stock market which returns that for brief periods, RE investments before the bubble burst and T-Bills in 1981, you have something that makes that look consistently reasonable?

Estimating returns in the 8 percent range going forward is totally unrealistic for portfolios that have large bond allocations, as do most pension funds. Bond yields have been pretty much in secular decline since 1980 but have hit rock bottom in the last year or so. The way it works is falling yields correspond to higher bond prices, driving up total bond returns. With benchmark interest rates now at or near zero, and the US dollar already elevated by the slow motion Euro meltodwn. there is no room left for bond yields to fall any further. 8 percent (or 7.5 percent) ain't going to happen and it doesn't take an actuarial genius to figure that out.

"Besides the stock market which returns that for brief periods, RE investments before the bubble burst and T-Bills in 1981, you have something that makes that look consistently reasonable?"

How about the average performance of the US stock market?

1928-2011 Arithmatic Average 11.20%
Geometric Average. 9.23%

1962-2011 Arithmatic Average 10.60%
Geometric Average. 9.20%

Source: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

The catch is that while long-term returns are positive the market is volatile; one year out of four is a year of "negative growth". And PERS has to pay out every year, not just when returns are good.

And by the silly but still in force laws of math, it takes more than a 1percent gain to offset a 1percent loss. Which is just one of the reasons privatizing Social Security is such a nifty idea.

PERS is a slow motion train wreck. We all can see the few bicycles and baby carriages that have already been hit. And we can see ahead the Suburbans filled with soccer teams about to be hit. And we refuse to do anything to mitigate the future impact. And half a mile away the school bus filled with more kids will be wiped out. Ah, but that is half a mile away. No worries yet, mate!

It is a known eventuality, so we can't really call it "an accident", can we? But yet, that is what we are doing, ignoring it until it gets much much worse. Ten years ago Ron Saxton tried to make it more visible and rally support around meaningful change. Greg MacPherson tried to do something but was squashed like a bug by the unions. Gov Kulo's minimal reforms that would have made some difference were overturned by the SC.

I say let them try and find the money from us turnips in 10-20 yrs. I'll have moved to a state that managed their affairs better. Capital is movable, and so are people. Why do you think so many Tier1 retires already moved out of Oregon?

I don't agree that privatizing Social Security is a nifty idea, but I think turning PERS into a defined contribution rather than defined benefit plan is one of the many changes the program needs. The extremely bad news about PERS has been flat ignored for the last two years. Ted Sickinger at the Oregonian has written reams on this. Where is the ruckus over the very recent 5 percent jump in agency budgets going to it? And another 5 to come next year. More than 25% of every agency budget will go to PERS. Where are those protests on the steps in Salem? It's a real cricket chirping moment.

"Gov Kulo's minimal reforms that would have made some difference were overturned by the SC."

Who are also beneficiaries of it.

"They found that Oregon needed the second-most additional revenue on a per-household basis of any state in the country, at about $2,140 for each of Oregon’s 1.5 million households"

I'll enjoy watching that from Idaho.

And all the return assumptions and historical performance calculations are based on nominal, not inflation-adjusted, returns.

If you add in the cost-of-living adjustments that every recipient is entitled to, then gross returns have to exceed the rate of inflation ON TOP OF their 8 percent assumption.