House committee chairman: Pension reform not in the cards this year

House committee chairman: Pension reform not in the cards this year

by
Dustin Hurst
January 28, 2014
Dustin Hurst
Author Image
January 28, 2014
[post_thumbnail]Rep. Steve Hartgen, R-Twin Falls, says pension reform is not on the agenda for the 2014 Legislature.

Serious pension reform—at least for state lawmakers—is sweeping the Northwest, but one Idaho lawmaker who chairs a key committee wants none of it.

Lawmakers in Oregon kicked off the reform push last year by essentially ending guaranteed pension benefits for new legislators. This year, one Washington Republican is looking to push the state’s elected officials into more fiscally sustainable 401(k) plans.

“Our fund is stable,” said Rep. Steve Hartgen, R-Twin Falls, who chairs the House Commerce and Human Resources Committee.

Fund stability, though, isn’t why Washington and Oregon lawmakers are pursuing or have successfully passed pension reforms in their respective states.

In Oregon, lawmakers there felt that participating in the pension system while simultaneously voting on legislation that affects the program presented a rather obvious conflict of interest.

Idaho legislators could face the same dilemma since they regularly vote on pension-related bills.

Hartgen rebuffed the idea that Idaho should follow Oregon’s lead there. The Twin Falls Republican said that because Gem State legislators don’t earn much from the state’s modest retirement system, the conflict isn’t all that great.

He also said that because the state’s pension program, known as the Public Employee Retirement System of Idaho (PERSI), has its own oversight board with members appointed by the governor and approved the Senate, legislators are protected from conflicts.

“It’s insulated by several levels of voting,” he said.

The Oregon pension system has its own oversight board, too.

In Washington, a Republican lawmaker is attempting to make government operate like a business—aeronautical giant Boeing in particular.

After Boeing successfully negotiated to move some of its machinists into 401(k) retirement plans, state Rep. John Braun, R-Centralia, decided elected officials in Washington should follow the company’s lead.

“This is a chance for us to show that we are willing to lead by example,” Braun told Northwest Watchdog this week.

Braun’s measure may have to clear several obstacles in Olympia, where Democrats hold both chambers in the Capitol, along with the governor’s office. Still, Democratic leaders said earlier this month that the idea deserves at least some discussion.

But according to Hartgen, there’s no apparent interest in actually doing that. “I don’t think there’s much of a sense that’s the right way to go,” Hartgen said of moving elected officials to 401(k) plans.

Hartgen continually praised PERSI as a system with modest benefits, low overall costs and relatively good fiscal health. “It’s worked out pretty well,” he said.

The fund is hardly perfect, though. According to PERSI’s own numbers, the program is only about 90 percent funded, meaning that the state is $1.4 billion short of the assets it needs to meet long-term obligations.

One outside group, State Budget Solutions (SBS), challenges those figures. In a report released earlier this month by the Washington, D.C.,-based think tank, Idaho is about $15 billion in the red. The wide disparity comes from SBS using more conservative estimates for investment returns, on which PERSI relies for income.

Even if a person chooses to believe PERSI’s figures, the fund’s health has come at a significant cost. Last year, lawmakers approved a measure that increased PERSI contributions for employers and workers. According to the agency, governments across the state—school districts, fire departments and counties—had to cough up more than $50 million to cover the increased pension costs.

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