Multnomah Co. Online Voters' Guide
November 2006 General Election

City of Portland

Measure No. 26-86

EXPLANATORY STATEMENT

This measure would make changes to the Fire and Police Disability and Retirement system in the Portland City Charter. The measure would change components of both the disability system and the retirement system.

This measure would require that independent audits of the disability system would be conducted. The measure would also change the current structure of the disability claims process to require that independent and neutral experts make disability claims decisions. In addition, the retirement system for new public safety officers would change, thereby limiting additional unfunded property tax liability.

An independent expert in disability systems will conduct an initial audit of the disability system within 9 months of the effective date of this measure. A subsequent audit will also be conducted by an independent expert in disability systems 12 months after the initial audit.

The changes to the disability system are expected to continue providing benefits to injured public safety officers while requiring that independent expert hearing officers make claims decisions regarding firefighters and police officers. The Board of Trustees would no longer make disability claims decisions. The number of members of the Board of Trustees would be reduced from 11 members to 5 members, including two citizens with expertise in disability or retirement systems, one City representative, and two representatives of members of the system.

The changes to the retirement system are expected to improve the future financial health of the City. Currently, the City faces a $1.64 Billion dollar unfunded property tax liability for the Fire and Police Disability and Retirement system. Unless changes are made to the retirement system, this liability is expected to increase to over $8 Billion dollars in 40 years time.

To change the retirement system, this measure would move all new police and firefighters into a funded retirement system. A funded retirement system means that property tax dollars would be collected and invested to reduce future property taxes. Changing the retirement system for new public safety officers is expected to increase the existing property tax levy rate in the short-term and decrease the rate in the long-term. The average annual residential property tax bill is expected to increase gradually by a maximum of $111 in 26 years.  Thereafter the average annual residential property tax bill will decline, decreasing by $399 in year 40. 

ARGUMENT IN FAVOR

MEASURE 26-86 IS A REAL SOLUTION TO A REAL PROBLEM

Disability decisions need to be made by Independent Experts

“The FPD&R Board of Trustees is made up of firefighters, police officers and city officials who may have good hearts and brains, but they have no particular expertise in assessing the validity claims.”

The Oregonian. September 21, 2005.

“Crucial steps are removing the board from voting on individual claims, making sure claims are aggressively administered to prevent abuses and providing incentives for the police and fire bureaus to get injured employees back to work.”

The Oregonian. April 28, 2006.

“Injury claims for other public employees … are investigated and approved or denied by independent claims adjusters.”

Willamette Week. March 25, 1998.

Current system jeopardizes the City's financial health

“The reform plan would improve what's not only costly and outrageous, but also scary about the Fire and Police Disability and Retirement system – its $1.6 billion unfunded pension liability. That's projected to swell to $8 billion over the next 40 years, jeopardizing the city's credit rating and its ability to pay for city services.”

The Oregonian. May 15, 2006.

“This unfunded fiscal time bomb … the current pension funding system makes little economic sense. Financed by property taxes, if the fund levy cannot cover the plan's annual expenses, the city's general fund makes up the difference.”

Portland Tribune. July 18, 2003 .

“Suffice it to say that the current Fire and Police Disability and Retirement system is a gaping, unfunded liability that could cripple the city if the economy took a spill.”

Portland Mercury. May 11, 2006.

VOTE YES on 26-86

• Ensure independent experts will decide disability claims

• Prevent the City from getting $8 Billion dollars in debt

• Guarantee independent audits of the disability system

(This information furnished by Dan Saltzman,
Citizens for Fair & Responsible Reform)

ARGUMENT IN FAVOR

Measure 26-86 is an absolutely critical solution to a problem that many Portlanders aren't even aware of. The problem goes by a very boring name: the unfunded liability of Portland's Fire and Police Disability and Retirement (FPD&R) system. As an experienced consulting actuary and financial professional, however, I can tell you that behind that dull name is a financial disaster for Portland unless we act today.

Currently, Portland faces a $1.64 billion (and growing) unfunded liability for the FPD&R system. Unless we make changes to this system, this liability will balloon to $8 billion dollars in 40 years. With 500,000 citizens, that's $16,000 for every Portland resident!

If the City's police and fire retirement system is not fixed, we leave our children and grandchildren a huge and unmanageable debt in the billions of dollars.

Failing to address this looming problem threatens the financial health of the City, including the possibility that the City could face bankruptcy and cuts to essential services like road repairs, parks, and public safety.

Measure 26-86 will solve that problem for Portland by reforming the FPD&R system. To fix the problem, all new firefighters and police officers would be moved into a funded system. A funded system collects contributions designed to stably fund the amount of pension benefits earned each year. These funds would be invested and then used to pay pension benefits when due. Under a funded system, investment earnings help offset a portion of the cost of pension payments.

This reform will protect our firefighters and police officers but will also protect Portland taxpayers. And it will prevent the “unfunded pension liability” from swallowing the budget that pays for our basic city services.

Please vote YES on 26-86.

Jeff Furnish

(Financial Professional, Citizen Member & Chair of Independent Review Committee for the Fire and Police Disability & Retirement System)

(This information furnished by Jeff Furnish)

ARGUMENT IN FAVOR

I have been waiting a long time to be able to encourage support for a measure like this.

As a small business person from the East side, I know watching the bottom line is crucial to the success of any business. I understand the importance of good city services, but I want to make sure that there is real accountability for how our money is spent. That is why I am urging you to vote Yes on Measure 26-86.

We have all read about problems with the Fire and Police Disability system. One of the biggest problems with this system has been firefighters and police officers have been deciding who gets disability benefits. This Measure solves that conflict of interest by having decisions on disability awards made by neutral and independent experts.

Measure 26-86 makes changes to prevent fraud and abuse of the system and make the system more fair, and accountable.

This measure also ensures that independent audits of the disability system are completed. We deserve accountability from this system.

By changing to a more responsible pension system, Measure 26-86 will save taxpayer money and protect city services for the long term.

Please vote Yes on Measure 26-86.

Ken Turner
President, 82nd Avenue of Roses Business Association

(This information furnished by Ken Turner)

ARGUMENT IN FAVOR

When I consider the reasons to ask you to vote Yes on the pension and disability system reforms of Measure 26-86, I come at it from three perspectives: as a former police officer, as a citizen, and as your Mayor.

As a former police officer and participant in the system, I know first hand how important it is to our police officers and firefighters. I can assure you that as Measure 26-86 makes the pension and disability system more financially stable, independent and fair, it keeps faith with the men and women who put their lives on the line to protect us everyday.

As a citizen, I am pleased that I have the chance to vote on a measure that will do so much to improve the stability and responsibility of Portland's finances. The looming debt of the current pension system is one of the single greatest threats to Portland's future.

As your Mayor, I am proud that City Council was able to tackle a difficult issue that has frustrated city government for years. It took a great deal of cooperation, trust, and good faith to get this measure on the ballot. The hard work was worth it, as a failure to reform the system would have threatened the financial health of our city, left a huge and unmanageable debt to future generations, and could have led to cuts to important city services like our parks, public safety, and road repair.

A yes vote will ensure that our children and grandchildren are not left with an enormous financial burden; it will improve our City's fiscal health; and make sure that we have a fair system for our public safety officers.

YES on 26-86, fixing this system now – it's the right – and smart – thing to do.

Portland City Mayor Tom Potter

(This information furnished by Tom Potter)

ARGUMENT IN FAVOR

I am a retiree who lives on a pension from the fire and police retirement system. This measure won't impact me – the system will stay the same for Portland police officers and firefighters who are currently retired or serving. The measure continues to keep the promises made to us.

But this measure is even more important to those who come after us. That's true for future police and firefighters who will have a fair pension and disability to protect them, just as they will protect all of us. And that is especially true for Portland taxpayers, who will have a reformed system with controlled and predictable costs.

As someone who lives on a fixed income, I have to be very careful with money. I expect our government to be careful with the money we give it. This measure is a chance for us to make a smart, long term financial decision that will pay dividends now and in the future.

Please join me in voting YES on 26-86 for a better financial future for taxpayers, and a fair reform for the people who keep you safe.

Mel Pittmon

Retired Portland Firefighter

(This information furnished by Mel Pittmon)

ARGUMENT IN FAVOR

Measure 26-86 makes significant and sweeping reforms to the Fire and Police Disability system.

FIXES THE DISABILITY SYSTEM: Creates a fair system that won't be abused; a system that will protect injured firefighters and police officers.

An independent citizens committee spent months examining this system and found that the major problem with the current system is that disability experts do not make decisions in claims. Instead, a board controlled by beneficiaries of the system has been making decisions on disability claims.

For the public to have confidence in this system, qualified and independent experts in disability matters must make claims decisions. Measure 26-86 fixes that problem and ensures that neutral and independent experts make claims decisions.

ENSURES ACCOUNTABILITY: Guarantees independent audits of the disability system.

Measure 26-86 also ensures that independent audits of the disability system will be conducted. The public deserves to know its dollars are being spent wisely, while still making sure that the system takes care of firefighters and police officers injured in the line of duty – which is exactly what Measure 26-86 does.

Please vote YES on 26-86.

Questions? Please call 503-224-5160.

Portland City Commissioner Dan Saltzman

(This information furnished by Dan Saltzman)

ARGUMENT IN FAVOR

City Club of Portland has carefully and objectively studied Portland's Fire and Police Disability and Retirement Fund 12 times – first in 1932 and most recently in 2005-06. Our members were compelled to study this system because of mounting concerns about the financial viability of the system and its potential impact on other essential city services.

We have closely followed the efforts of City Council to reform the Fire and Police Disability and Retirement Fund and have helped shape this package of much needed reforms, which are now on your ballot.

City Club Urges You to Vote YES on Measure 26-86.

• This measure solves the problem of having fire and police officers decide disability claims, and instead guarantees that independent experts will decide disability claims.

• This measure requires independent auditors to conduct program audits of the disability system.

• This measure creates a system administered by neutral, objective and fiscally responsible parties.

• The current structure of the system is extremely detrimental to the city's financial health. Measure 26-86 will in time eliminate the pension system's unfunded liability.

• Left unaddressed, the system's unfunded pension liability will grow from $1.64 billion to over $8 billion in 40 years.

• This measure will protect current members of the system and will serve future generations of firefighters and police officers as well.

Please Vote YES on Measure 26-86.

Founded in 1916, City Club of Portland is a nonprofit, nonpartisan civic affairs organization that promotes civic engagement and active citizenship to build a stronger community. Through unbiased research and compelling programs, City Club connects citizens with ideas and issues that affect our community.

(This information furnished by Eva Schweber,
City Club of Portland)

ARGUMENT IN FAVOR

We are the union that represents the lieutenants, captains, and commanders who lead the Portland Police Bureau. It is our job to protect the interests of the police officers we lead, just as they protect our lives.

But we are also community members who care deeply about Portland, and the financial health and stability of city government.

Measure 26-86 is the product of long and sometimes difficult work: Balancing the needs and interests of all is difficult but that is exactly what this measure does. All the interested parties came to the table and worked hard to arrive at this product that is both fair for the members of the Police and Fire Bureaus and also fair for the citizens of our city.

Measure 26-86 is something that we must support to insure the financial stability of our pension system and the health of the city's financial future.

We gladly add our voices to the voices of community leaders, the local business community and citizens who care about Portland's future.

Vote Yes on Measure 26-86.

Portland Police Commanding Officers Association

(This information furnished by Dave Benson,
Portland Police Commanding Officers Association)