Oregon Weighs Privatization to Cure $5 Billion Pension Shortfall

PORTLAND, Ore. (CN) – Ideas to address an estimated $5 billion shortfall in funding for the retirement plans promised to Oregon public employees focused heavily on privatizing public assets at a task force meeting on Monday, including privatizing state universities and liquor sales and selling off public water rights.

Oregon Gov. Kate Brown appointed a task force to address the shortfall, which comes entirely from the cost of providing benefits already promised to retirees of Oregon’s 900 public employers. That list includes teachers, firefighters and employees of cities, counties and the state, among others. The shortfall has little to do with benefits provided to current employees.

At the meeting, Nik Blosser, Brown’s chief of staff, underlined the gravity of the situation.

“I think it’s useful to think about what happens if we do nothing,” Blosser said. “Our task is helping these public entities survive and continue to deliver the services they deliver.”

Brown asked the seven-member task force to investigate every possible source of revenue, even those that are politically sticky. The only options she took off the table were privatizing prisons and state parks and selling off the five state forests. Everything else, she said, was fair game.

The group consists of CFOs from major companies, including Nike and Oregon Health & Science University – itself a public employer – as well as lawyers and a battalion chief in the Salem Fire Department.

At Monday’s meeting, the task force cast a wide net. George Naughton, chief financial officer for the state’s Department of Administrative Services, laid out all available assets that could be used to cover the shortfall.

Naughton discussed buildings owned by the state, including the shuttered mental hospital, that could be sold. He talked about handing state-run programs over to private companies, such as the liquor control commission and state database hosting. He described various sources of revenue that are already tight but may be a place for further squeezing, including school budgets and timber payments that the federal government makes to cash-starved rural counties.

Task force member Rick Miller, founder of elder-care conglomerate Avamere Group, wondered about selling water rights that the state currently assigns by historical claim.

“We may have natural resources that we are giving away that we should be charging for. Whether its river water or well water, I’m not sure that the citizens of the state are getting the financial benefit from the sale of our resources.”

The task force is charged with wading through all those tough options and choosing the lesser evils.

Task force chairman Donald Blair said he was glad the group’s job was limited to providing recommendations by November, and does not include making a final decision or enforcing one.

“We are unconstrained by some of the difficult political and policy things that the governor is going to have to wrestle with, God bless her,” Blair said.

 

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