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COULD THE 6% PERS PICKUP END UP SCREWING THE TAXPAYER?
Conventional wisdom (including my recent on-air opinions) has it that the last best offer of the Medford 549C School District back in November of 2013, is a better deal for the taxpayers, because the 6% PERS pickup (another contribution to the employee's retirement) gets paid for by the employee, rather than the district. To help, the district offers teachers around a 10% wage hike. Sure, it sounds like it makes good sense..."Have the teachers pay the 6%, instead of the taxpayers, is GOOD for taxpayers".
But is it REALLY a good deal for the taxpayers?
I had a long conversation this morning with a person with serious finance creds, who assures me that switching the PERS pickup to employees, while raising their salary is the WORST thing 549C can do. Here's why:
1) As is, When the district pays the PERS pickup, it's a non-taxed contribution. When the teachers pay it, it's after-tax money.
2) Increasing teacher salaries immediately increases payroll taxes (social security) which taxpayers pay. It also immediately increases the PERS contributions, which the taxpayers pay. Worst of all, these higher salaries put the taxpayers on the hook for permanent higher final retirement benefits. Remember, a teacher's final retirement benefit is based on the top 3 years of salary. If you give all the teachers about a 10 percent salary boost, this is a big boost for final PERS benefits levels.
Not to go into too much detail, this financial expert made it clear to me that the best way to save taxpayer money is to NOT raise salaries that much, and any extra benefits or compensation go to the NON-SALARY side. In other words, pay the medical benefits, and other goodies, because that doesn't count as a PERS-boosting benefit. Holding salary increases to a bare minimum means the growth in PERS contribution rates, growth in payroll taxes, and the ultimate growth in final PERS pension benefit, are held to a minimum.
This financial expert also says the path the 549C district is on right now, with a big raise and PERS pickup changes will cost we taxpayers MILLIONS in extra PERS charges and higher benefits.
So, if this financial expert (who prefers to remain anonymous) understands these rules of finance, what about the 549C administrators?
REMEMBER THIS, WHEN YOU"RE ON THE JURY!
BILL'S GUEST for 02-14-2014
7:10 Novelist Dr.William Forstchen - The Pillar to the Sky - New novel about the concept of a "Space Elevator". Forschten is also famed for his previous novel "One Second After", about what happens to the country after an EMP attack. Read more on
7:35 State Senator Alan Bates takes calls, discusses the GAO investigation of Cover Oregon, called for by Congressman Greg Walden, and State Representative Dennis Richardson.
8:35 Kevin Starrett, Oregon Firearms Federation, and we talk the fate of recent gun bills in Salem.
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