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0
FPDR and Portland:
A Concerned Accountant’s Perspective
by
Noah Roth
An undergraduate honors thesis submitted in partial fulfillment of the
requirements for the degree of
Bachelor of Science
in
University Honors
and
Accounting
Thesis Adviser
Sarah Engle
Portland State University
2024
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Dedication
This paper is dedicated to Bob and Bonnie Roth, my grandparents. They always supported and
encouraged me in everything I did. Though they are not here to read this essay, I know that they
would be proud of this work and the long road I have taken to graduate. Academics themselves,
they understood the value of a college education and set me on this path a long time ago, whether
they knew it or not.
I miss and love you both dearly.
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Introduction
The Portland Fire and Police Disability and Retirement (FPDR) pension plan is currently
the largest liability on the city of Portland’s books by a factor of six, accounting for more than
half of the total liabilities that the city of Portland is obligated to pay (Portland ACFR, 2023).
The FPDR fund was established in 1942 to provide disability, retirement, and death benefits to
members of the police and fire department and as of the latest financial report, Portlanders are on
the hook for approximately $3.7 billion in pension payments to current and future retirees
(Portland ACFR, 2023, p. 31). The value of this debt obligation does fluctuate based on a few
factors, namely interest and bond rates available to the city, as well as active participants, but has
remained sizable in the recent past and remains distinct from similar pension schemes in other
cities across the United States. This paper aims to thoroughly investigate the current state and
history of the FPDR fund as well as develop recommendations to address the more concerning
elements of the pension plan. The FPDR pension represents a contentious combination of
mismanagement and archaic design, detracting from the wealth of law-abiding citizens in order
to prop up a financial apparatus that is far out of date.
FPDR History and Context
In Portland, like many other cities, it was difficult to attract young men to join the police
and fire departments during and after the Second World War. The city needed to incentivize
young men who either had not gone to war or were looking for employment after their time
serving. To achieve this, members of the city government, in collaboration with Portland Police
and Fire representatives, established the Fire and Police Disability and Retirement pension fund
as a means to encourage new recruits into their programs; however, one of the only avenues of
Roth 3
funding available at the time were additions to property taxes paid in the city of Portland. In
1942, the plan was codified in the city of Portland’s charter by a majority vote, becoming chapter
5 of the city’s charter. This plan levied a new property tax amount based on the real market value
of residential properties in the city, determined by the needs of the fund to cover retirement and
disability benefits to eligible employees. A second group or “part” of the plan was introduced in
the 1980s which tamped down the benefits paid to eligible employees, as it became apparent that
the fund did not need to provide the same level of benefits that it had at its inception.
Later, around the turn of the millennia, there was some more attention paid to the pension
plan in the form of journalists investigating the circumstances of the fund who noticed some
alarming facts about how the pension fund was funded and the people who were receiving those
funds. In 2006, a third tier of the fund was introduced to mitigate the negative attention that the
pension plan received. This final part started to transition new hires to the standard Oregon
Public Employee Retirement System or (O)PERS, with the important distinction being that
employees in this tier would have their contributions to PERS covered by the FPDR pension
fund, rather than relying on their own contributions in the form of payroll deductions. This is
unlike the circumstances for most other public workers in Oregon, as almost all other public
employees are required to contribute pre-tax income to the PERS in order to be adequately
vested, a point of inequity that benefits Portland police officers and firefighters. As of June 30th
2023, the fund is represented by a $3.8 billion liability on the city’s financial statements and a
property tax levy to the tune of $2.73 per $1000 of assessed value or $1.11 per $1000 of real
market value of all property in Portland (FPDR ACFR, 2023, p. 8).
There are predominantly two types of pension plans in the United States: Defined Benefit
(DB) and Defined Contribution (DC). Defined Benefit pension plans offer a guaranteed, fixed
Roth 4
retirement payment paid to employees after they retire, based upon their salary and years of
service. DB plans are common for government employees as it is a primary incentive for
government employers to offset wages that are lower than the private sector for similar positions.
Defined Contribution plans require employees to make either a pre or post income tax
contribution to either a pooled pension fund or individual retirement fund. DC plans are most
commonly offered by private employers, as the onus of retirement payments is primarily on the
employee’s willingness and financial ability to contribute to a pooled or individual retirement
fund, like an IRA or 401(k). Private employers largely shifted from DB to DC plans decades ago,
and they are often not considered a major benefit in the private sector because they do not offer
the same retirement benefits that DB plans have offered to public sector employees. The FPDR
pension plan is a subcategory of a Defined Benefit known as a “pay as you go” plan, meaning
that the needs of the fund are set by its governing body and then met directly by matching
revenues derived from property taxes. The Oregon PERS system is a hybrid plan where
employees are required to make contributions, but benefits are defined at the time of retirement.
PERS also holds about $82 billion in various investments, which netted $2.8 billion in
investment income during the last fiscal year (PERS ACFR, 2023, p. 40-41). The FPDR pension
plan does not hold any interest bearing long term investments, meaning that property owners in
Portland are obligated to pay for all of the fund’s cost: both benefit payments and fund
administrative costs.
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FPDR Today:
As of the 2023 ACFR, Portland has two component units within its governmental
accounting structure. The first is Prosper Portland, an entity which is legally separate from the
city but is reported as a discrete component unit in the city’s financial statements. This entity has
most of its financial information presented alongside the citywide financial statements reported
within Annual Comprehensive Financial Reports. Prosper Portland is an agency that was
developed to perform targeted urban renewal projects around the city by offering tax breaks to
small businesses and developing public capital works projects around the city. Prosper Portland
is able to access funding from the city through the issuance of one-day maturity bonds which the
agency redeems immediately; during the 2022-2023 fiscal year, Prosper Portland accessed $54
million through these bonds (Portland ACFR, 2023, p.148). The value of those bonds are
determined by the amount of property taxes that are “sufficient to meet debt service requirements
for outstanding long-term debt and lines of credit” meaning that Prosper Portland is only able to
access excess property taxes after the needs of other long term debt have been met (Portland
ACFR, 2023, pg 148).
The other component unit is the FPDR pension fund, which is considered a blended
entity, meaning that the pension fund’s financial information is not presented alongside the
financial information for the city as a whole, obfuscating the costs associated with the plan if one
only looks at the city’s financial statements. Blended units are generally considered to be so
intertwined with their government body that they are effectively presented as part of the primary
government. In the case of the FPDR pension fund, since it derives all of its revenues from
government activities in the form of property taxes and does not engage in business-like
activities in the same way that Prosper Portland does, it is considered a blended unit and
Roth 6
financial information is not presented alongside the city’s other financial statements, but rather
within the city’s annual financial reports. Blended units are allowed to present their financial
information in this way because they are considered fiscally dependent on the parent entity, in
this case the city itself, and typically require strict oversight from that parent entity. Much of the
pertinent information about the FPDR pension fund is buried within the notes to the Portland
financial statements, and in the Fund’s own annual financial reports.
The FPDR pension fund reported $750,000 in reserve funding, $22 million in cash and
investments, and $5.7 million in property taxes receivable for their fiscal year ended June 30th
2023 (FPDR ACFR, 2023, p. 18). In addition to these reported amounts, the FPDR annual filing
also reports that the fund received $185.2 million in contributions from the property tax levy
determined for the 2022-2023 fiscal year (FPDR ACFR, 2023, p. 10). These values represent a
remarkably well funded pension plan that Portlanders are obligated to pay for, but have no direct
governance or control over. Instead, the FPDR administers the plan itself and is vested with
much of the same fiduciary authority that it was given at its inception in 1942 (Portland ACFR,
2023, p. 175). The FPDR fund is governed by a five member board of trustees. Currently, mayor
Ted Wheeler serves as the Chairperson along with a retired police officer, retired firefighter, and
one civilian. The other civilian trustee spot is vacant. This is one of the primary reasons that the
FPDR pension needs to be altered dramatically: despite drawing all of its revenues from the
Portland property taxes, neither members of the Portland government nor land owning citizens
have any real control or authority over the fund itself; however, amendments to the FPDR
pension plan would be possible with a popular vote from Portlanders, as the city charter can be
altered by a straight vote.
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Another source of contention with the FPDR fund is the way in which it calculates
benefits paid out to retired or disabled employees. Employees who are in FPDR tiers 1 and 2, a
little over 2000 retirees, are still paid directly by the fund and do not participate in PERS.
Benefits paid to tier 1 retirees are calculated based on the current pay scale for firefighters and
police officers, which is one reason that the liability has continued to increase rather than
decrease over time. As real wages have increased, so too have benefit payments to over 250
retirees who have not worked for either Portland Fire and Rescue or the Portland Police Bureau
since 1990. Additionally, tier 2 and 3 retirees are allowed to seek other employment and
guaranteed disbursement of at least twenty-five percent of their base pay given to them even if
they are actively employed, despite a retired or disabled designation in the eyes of PFR or PPB.
For these reasons, this liability continues to grow instead of shrink as it is continuously paid from
Portland property taxes annually, and will continue to cover PERS contributions for participating
employees ad infinitum.
The following chart demonstrates that the fund has, on average, continued to grow over
the past five years, with peaks around a mass-retirement that occurred as a result of serious,
critical attention paid to the police departments nationwide in mid-2020, affecting the 2020 and
2021 enrollment numbers and liability amount. This chart compares the net liability amount
owed by the city to be paid into PERS relative to the FPDR liability. For the former, the city of
Portland is obligated to pay a portion of PERS contributions on behalf of employees active in the
plan. Typically, this liability amount is rolling, meaning that the city makes its contributions to
PERS annually. The liability amounts listed on the statement of net position are the annual
obligations that the city owes to the state-wide program and is relative to number of PERS
eligible employees working for the city of Portland; hence, there is a similar increase in PERS
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liabilities around 2020 as eligible employees retired due to the pandemic. The PERS liability is
split between normal government activities and business-like activities, relative to the types of
employees active in PERS.
Chart 1: Comparison of the liability amounts for the FPDR pension fund and the Oregon Public Employee
Retirement System owed by the city of Portland. The latter is divided between normal government activities and
business-like activities, representing contributions on behalf of a multitude of employees to PERS (Portland ACFRs,
2018 - 2023).
Next, there is the fact that the FPDR pension fund is authorized to pay the wages of 19
full time employees from the general fund of the city of Portland, in addition to leasing an entire
office for these employees to work in. In total, the FPDR fund pays about $1.8 million each year
in wages to a handful of employees who work at their rented office space in downtown Portland.
Below is a table sourced from the City of Portland wage report published for the last fiscal year
detailing the positions and wages paid to employees of the FPDR fund.
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Table 1: All of the positions and salaries paid to employees of the FPDR pension fund during the 2022 - 2023 fiscal
year, sourced from the Open Data & Analytics page on portland.gov.
If the FPDR Fund was disbanded, this would free up a number of skilled public
employees to move into other positions more relevant to all Portlanders, not just a small segment
of the public workforce. Additionally, in cutting some of these jobs, the city would free up more
payroll space to hire more staff across other departments within the city of Portland.
The FPDR fund also reports that they entered a noncancelable lease with a third party on
July 1st, 2022 through December 31st, 2027 in the amount of $957,213 paid over the duration of
the lease (FPDR ACFR, 2023, p. 28). The city of Portland owns and operates a multitude of
office buildings throughout the city, so it is curious that the FPDR board of directors elected to
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rent from a third party, paying tax dollars to a private LLC, rather than occupy a portion of an
office building owned by the city. It is difficult to determine who exactly owns the building that
the FPDR office is located in, unlike an agency like the Portland Water Bureau, whose offices
are located in a building owned and operated by the city itself, as evidenced by publicly available
property tax records. This rental agreement appears on the surface to be a serious oversight,
intentional or not, by the FPDR board of trustees: why couldn’t they save money by renting an
office already owned by the government which they are a component unit of?
All in all, the FPDR pension fund has a few major issues which this author believes stem
from a lack of community awareness. If the public was made more aware of the circumstances
surrounding the FPDR pension fund, it seems likely that a referendum would be held on the
continued existence of the fund as it is today.
Literature Review:
Over the last twenty years, scholars and economists have performed research on the
efficacy of public pension plans across the United States, with a particular focus on their
resilience, or lack thereof, to economic shifts that impact the broader economic landscape.
Particularly, the Compensation & Benefits Review published by Sage Journals offers bi-monthly
peer reviewed articles addressing trends in employee pay and supplemental benefits for both
private and public positions. Additionally, the Pew Charitable Trusts is a non-profit, non-
governmental organization that was established in 1948 with the purpose of serving and
informing the public on a variety of issues through the use of data analytics. Over the years, Pew
has published several briefs about the status of retirement plans nationwide by offering
comparisons between different states, municipalities, and pension plans.
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Bruce Perlman and Christopher Reddick (2022) performed a meta-analysis of 190
government bodies to examine how they were shifting away from Defined Benefit pensions to
alternative funding structures like Direct Contribution or a hybridization of Direct Benefit and
Direct Contribution (DB-DC pensions). Their article cites five factors that inform government
retirement plan reforms: financial constraints, interest group influence, membership
characteristics, liability and state characteristics (Perlman & Reddick, 2022, p. 18). Financial
constraints refers to a government body being unable to adequately fund DB pension plans as
returns on investments or funding sources can fluctuate, while benefits paid to retirees steadily
grows. The authors cite that the shift from a DB plan to a hybrid DC plan in Illinois for public
employees “was instituted primarily as a cost reduction measure” to alleviate the financial
burden placed on the state by providing defined benefits to retirees without contributions from
employees (Perlman & Reddick, 2022, p. 17). Interest group influence is of particular relevance
to the FPDR pension plan as it refers to the “stiff resistance to change from DB pension plans”
by police, fire, and teachers’ groups nationwide despite the financial strain that such plans place
on cities and states (Perlman & Reddick, 2022, p. 19). Membership characteristics refers to
changing demographics across all jobs as younger generations prefer retirement plans that are
more mobile, allowing them to change jobs or careers without jeopardizing their eventual
retirement. The authors cite this as a stark contrast to the attitudes of generations prior, who
would reliably work the same job for their entire career on the expectation of a healthy pension
(Perlman & Reddick, 2022, p. 20). Unfunded current liabilities, like the FPDR liability for the
city of Portland, is another factor these authors considered. Perlman and Reddick suggest that
consistent failure to meet funding requirements associated with DB plans “provide[s] an
environmental incentive for state and local governments to transition from DB pensions to
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alternative retirement plans” like DC or DB-DC (Perlman & Reddick, 2022, p. 20). Finally, the
authors considered the characteristics of each state those 190 government bodies reside in.
Specifically, they considered “state unemployment rate, liberal political ideology, union
membership, and plan administ[ration] by the state” as factors that contribute to the shift away
from DB plans to alternatives (Perlman & Reddick, 2022, 21). The authors conclude that it is
crucial for state and local governments to move away from DB plans in favor of alternative plans
more suited to the needs of changing demographics, political pressures, and the economic
landscape, but they do find that their research supported existing research on resistance from
police, fire, and education employees: “interest groups… want to maintain the status quo and
resist change to DB pension plans” (Perlman & Reddick, 2022, p. 26). In Portland, this resistance
comes in the form of unions who would strongly oppose any changes to the FPDR pension plan;
however, the plan could be transitioned by way of amending Chapter 5 of the city charter
through a popular vote.
The Pew Charitable Trusts have published a few articles over the past twenty years
addressing the specific issue of public retirement costs and strategies used nationwide to mitigate
runaway pension funds. One article, titled “A Widening Gap in Cities” addresses an increase in
disparity between the promises made by various state and local governments to provide
retirement benefits and the severe financial strain that bloated or underfunded pension plans can
have on cities nationwide and was published in 2013 with a specific focus on the impact that the
2008/9 recession had on pension plans across the country. This article analyzes financial data
from 2007-2009 to see how well municipalities were able to meet their pension obligations
before, during, and after the recession. Portland is mentioned several times, as the city was only
able to fund about 50% of their pension obligations for the fiscal year ended June 30, 2009.
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Presumably, this would have been the result of a significant reduction in property tax revenue in
Portland as a result of the nationwide economic shift. While the article does not specifically call
out the FPDR pension fund, the Pew Charitable Trusts report that Portland had a pension liability
of approximately $2.7 billion in 2009. This figure is consistent with the present liability amount
for the FPDR pension, today.
A second article by the Pew Charitable Trusts titled “Basic Legal Protections Vary
Widely for Participants in Public Retirement Plans” focuses on the fiduciary responsibilities
entrusted to the custodians of public retirement plans. “Fiduciaries” refers to the trustees and
administrators who have the authority to manage the assets which a pension fund holds, usually
by investing and allocating those assets to grow the fund. This article examines the laws
surrounding fiduciaries across the United States and offers a few short case studies into specific
pension plans. For example, Pew cites “weak governance practices” as key factor in the “serious
fiscal distress facing the Dallas Police and Fire Pension System” owed mostly to a lackluster real
estate market that subsequently resulted in “$1.4 billion in unfunded liabilities” which will
inevitably cost taxpayers millions of dollars annually to repay (Pew, 2017). The article goes on
to define eight key fiduciary duties as defined by the Uniform Management of Public Employee
Retirement Systems Act of 1997, of which Oregon has codified seven within state law. Two of
the codified fiduciary duties are of particular interest: incurring costs that are appropriate and
reasonable and the responsibility to diversify investment in order to grow their respective
pension plan. As previously mentioned, the FPDR pension fund has entered into an expensive
long-term lease which is arguably unnecessary for the facilitation of its retirement system given
the volume of properties available to Portland government agencies. Additionally, due to its
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status as a Defined Benefit, “pay as you go” pension plan, the fiduciaries of the FPDR pension
are under no real obligation to diversify investments or grow their assets.
Robert Lee and Joseph Vonasek collaborated on two papers examining the status of fire
and police pensions in the state of Florida; their first article in 2011 presents some history and
context for plans in Florida that resemble the FPDR pension fund in Portland.The second article,
published in 2021, re-examines those same plans and considers how they changed over that ten
year period. The retirement funds that these authors investigated are considered Defined Benefits
plans, like the FPDR pension, but do make long term stock investments to help maintain
adequate funding, unlike the “pay as you go” structure of the FPDR pension. In addition, these
plans are “siloed,” meaning that each municipality is responsible for maintaining its own fund
without additional monies from the state or county. Lee and Vonasek found that the vast majority
of pension funds would result in funding shortfalls unless statutes of Florida laws were changed
to require participants to contribute to their pension fund, creating a hybrid DB-DC program that
is less dependent on fickle revenues. The primary concern for these authors was a marked
decrease in pension plan funding due to the structure of Florida’s pension apparatus for
firefighters and police. Funding for these plans was derived from “premium tax revenue” on
property and casualty insurance policies written within a given municipality (Lee & Vonasek,
2011, p. 166). Effectively, these premium taxes would grow as the populations and prices of
insurance policies increased across the state of Florida; however, Lee and Vonasek examined the
economic recession of 2008/9 in the context of these revenues. That fiscal year saw a significant
decrease in premium tax revenues to fund fire and police pensions, resulting in many
underfunded pension plans across the state (Lee & Vonasek, 2011, p. 168). The authors drew the
Roth 15
conclusion that tying pension funding to revenues susceptible to market shifts “may be
contributing to a financially unsustainable system” (Lee & Vonasek, 2011, p. 168).
In 2021, Robert Lee and Joseph Vonasek re-examined the same municipalities they had
initially investigated in 2011. This study yielded similar results, many of the same plans that had
been underfunded in 2009 were still underfunded ten years later. The authors do note, however,
that they expected the plans to be better funded because many of them were directly invested in
the Stock Market as a means of generating interest on the premium tax revenues that they were
allowed to collect within their given municipalities, a Stock Market that saw tremendous growth
from 2016 - 2019 (Vonasek & Lee, 2021, p. 161). Again, the FPDR pension fund does not
actively invest in the same way. Instead, it is considered a “pay as you go” pension fund which
only holds cash and short term investments meaning that it does not invest in stock the same way
that PERS maintains a robust portfolio (Milliman Actuarial Report on FPDR, 2022, p. 9). Lee
and Vonasek recommend that the Florida municipal pension funds for firefighters and police
officers transition from Defined Benefits to Defined Contribution as a means to mitigate the
chronic underfunding of those targeted pension plans, by way of drawing revenue from
employee contributions and aligning the siloed retirement funds with the Florida state retirement
system (Vonasek & Lee, 2021, p. 172). A similar change is necessary to address the financial
burden that the FPDR pension places on the city of Portland.
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Pension Plans Across the United States:
Nationwide, Defined Benefit “pay as you go” pension plans like the FPDR have largely
been done away with, due to social and political pressures, to create more equity for public
employees. The Oregon PERS is a good example of a state-wide hybrid DB-DC program that
offers retirement funding to all public employees, regardless of their specific jobs or roles in the
public sector. Even though PERS is a pooled public pension fund, employees are still required to
contribute a portion of their salary during their time as a teacher or other public employee. That
is not currently the case with the FPDR pension. As previously discussed, members of FPDR
part 3, the latest iteration of the pension plan, are not obligated to pay into PERS as their
contributions are covered by taxes paid by property owners in Portland.
Colorado has established a state-wide program to fund retirement and disability benefits
for fire and police employees handled by the Fire and Police Pension Association of Colorado, or
FPPA. FPPA still pays out a Defined Benefit pension to many former employees, but has
recently started to require employee contributions in addition to revenues collected from
participating municipalities. Similar to the FPDR pension, FPPA pays out a Defined Benefit
pension to employees hired before January 1st 2004, employees hired after that date and enrolled
in a statewide hybrid DB-DC plan that is more similar to Oregon’s PERS (FPPA ACFR, 2023, p.
31). Each participating Colorado municipality is obligated to contribute a proportion of payroll
expenses paid to FPPA participants, and those participants are required to contribute a portion of
their wages to the fund directly. For example, for the fiscal year ended December 31, 2023, the
city of Denver contributed $22 million to FPPA which was 8.9% of payroll expenses paid to
Roth 17
firefighters and police officers in the city during that fiscal year (Denver ACFR, 2023, p. 146).
During the same financial period, FPPA reported a total of $151 million in employer
contributions, funding coming from Denver and other municipalities, as well as $174 million in
contributions from participants (FPPA ACFR, 2023, p. 25). By collecting from both
municipalities and participants, the FPPA is able to secure a consistent stream of new additions
without directly burdening any specific municipality or levying additional taxes from non-
participant citizens throughout the state. In this way, there is much more equity for Colorado
taxpayers as well as government employees who participate in FPPA as neither party is obligated
to finance the entirety of the pension fund but rather, the burden of financing is shared
proportionately by cities and participating employees. Additionally, this allows FPPA access to a
much larger pool of financial resources to invest, manage, and distribute to retirees.
Overall, FPPA represents a program that has started the arduous process of transitioning
away from Defined Benefit plans and towards a more equitable solution for all parties; however,
as highlighted in Perlman and Reddick, there is a lack of mobility for current employees who are
participating in FPPA. Because their retirement is tied to a statewide, targeted pension plan,
active employees are unable to transfer their retirement into other public pension plans like
Colorado’s PARA, a program similar to Oregon’s PERS, or move across state lines, even if they
continue to work in the public sector. For this reason, FPPA is not a perfect system nor does it
provide a level of equity for employees, but it does represent a willingness to adapt antiquated
pension plans to the modern era.
On the opposite extreme is the case of the city of Central Falls, Rhode Island. On August
1st, 2011, one of the smallest cities in the smallest state declared Chapter 9 bankruptcy, owed in
large part to a $80 million liability payable to fire and police retirees who had left their positions
Roth 18
years prior. Zachary Malinowski provided commentary on the case in the Chicago Planning
journal in 2013. His research found that more that 55% of retirees were collecting disability
payments from the city and that between 1978 and 1988, “82 percent of the public safety
workers left with injuries they claimed they suffered while on duty” and that the average age at
retirement was 46, meaning that Central Falls was “burdened with millions of dollars in
payments for decades to come” (Malinowski 2013). At the time, Central Falls had a population
of just under 20,000 meaning that it was relatively easy to trace retirees and their benefit
payments, the same cannot be said for the city of Portland, populated by over half a million. It is
highly likely that if such an analysis was conducted in Portland, it would uncover similar results
in terms of retirement payments being made to individuals far younger than the typical retiree.
Therein lies one of the biggest financial issues with the FPDR pension fund: a high quantity of
young retirees vested in an archaic Defined Benefit plan have caused the pension liability to
continually increase as those retirees continue to collect benefits for decades without any
mechanism to reduce or offset the liability. That is not to say that Portland will face the same fate
as Central Falls, but a liability as colossal as that owed by Portland to the FPDR pension fund is
cause for great concern.
Recommendations:
Reform is necessary to mitigate the financial burden which the FPDR pension fund
places not only on the city of Portland, but more importantly the burden it puts on property
owning Portlanders. As of the 2023 tax year, property taxes paid to the FPDR pension fund
accounted for approximately 10% of the average Portland property tax bill: for a home with a
real market value of $500,000 about $600 of a $7000 tax bill would go directly to the FPDR
Roth 19
pension fund. This amount is roughly equivalent to the amount paid to the Portland Public
Schools bond, which is a measure voted on regularly by Portland citizens. Arguably, the best
solution would be to eliminate the FPDR pension fund and Chapter 5 of the city charter
altogether. Retirees in parts 1 and 2 of the FPDR pension could be rolled into the Oregon Public
Employee Retirement System to the relevant tiers and plans they would have been allowed to
participate in had their years of service been in a position with PERS. Newer hires would not
have their current retirement system affected that much; however, it would be necessary to
require new hires to contribute to PERS out of their own paycheck rather than rely on Portland
property taxes to pay it for them. Adding some 2000 participants would put some financial stress
on PERS, but this strain could be mitigated by rolling over all existing FPDR funds and
investments into the state program which could help offset the logistical complexity of enrolling
these retirees retroactively. Additionally, several skilled members of the FPDR staff would be
valuable in handling this transition, ensuring that their employment would not be stopped due to
the elimination of the FPDR fund. In eliminating the fund altogether, PFR and PPB employees
would then be obligated to pay into PERS at the same rate that most other public employees in
the state are, and PERS is already set up to provide preferential treatment to firefighters and
police officers, with a lower retirement age and generally better pension rates.
Ideally, these changes would incentivize the Portland Police Bureau to work to keep the
city safe but it is highly likely that there would be significant pushback from their employees and
union. A safer city would eventually translate to more public sector jobs, higher revenues for the
city, and would help to rebuild trust in PPB, specifically. Other incentives, perhaps a stipend for
continuing education, may be necessary to ensure the continued cooperation of the PPB. A
benefit for PFR and PPB employees would be that there would be some more flexibility for them
Roth 20
if they decided to seek other employment as civil servants. For example, if a firefighter wanted to
change careers and work at the city parks department, there would not be any disruptions to their
retirement accruals, they would continue to pay a similar amount into PERS and may have the
opportunity to earn a higher salary, resulting in a better pension than if they were to continue
working for Portland Fire and Rescue.
Regardless of what the changes are, the only way for reforms to be made is a ballot
measure passed by Portlanders to address this issue that has plagued the financial situation of this
city for over eighty years. It should be possible to find a solution that creates more equity for all
public employees while lowering the tax burden for land owning Portlanders. Of course, there is
the possibility that the unions for Portland Fire and Rescue and the Portland Police Bureau could
sue to block such changes, which could delay the process significantly. Ultimately, it would
likely be in the hands of higher courts to determine if the people of Portland have the right to
make changes to the FPDR pension fund.
Conclusion
Portlanders do not have any direct input on the FPDR pension liability, since it was built
into the City Charter and it is not a regular ballot measure, like bond measures for schools and
additional tax levies road maintenance tend to be. Already, the FPDR pension fund has
continually grown to account for more than half of the total liabilities owed by the city of
Portland and will continue to grow unless changes are made. Furthermore, research shows that
there is a significant risk to the city’s financial future if this liability is allowed to grow
perpetually, as the case of Central Falls demonstrates. As it stands, Portlanders will be obligated
to pay into this fund for decades to come. The time to rectify this situation was decades ago, but
Roth 21
dramatically altering the FPDR pension fund is a change that could be made in the next few
years with enough support from Portland voters.
To do so would require a great deal of work on the part of responsible civil servants: an
audit of all 2000 or so recipients to determine those who are eligible to receive retirement
benefits per the rules of the Oregon PERS and drastically reduce benefits paid to members of
FPDR Parts 1 and 2, especially for retirees who have worked after “retirement” from the
Portland Fire Department or Police Bureau. Finally, the remaining assets in the trust of the FPDR
could be rolled into PERS and the committee and administrative apparatus for overseeing the
fund could then be dissolved, saving the city of Portland from paying for an entity it does not
need. All in all, this liability oversight represents what seems to be a common problem in the city
of Portland: an antiquated solution to a decades old problem demonstrates that this city claims to
place value in one place while completely neglecting a reconciliation with its history that could
culminate in benefits for generations to come. More equity for public workers would build trust
among agencies and government bodies that operate within the city, and while it is difficult to
prescribe a dismantling of such a program, it is necessary to move the city forward.
Roth 22
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