Representative Barnhart Said WHAT?

In a December 12, 2013 article in the Oregonian by Christian Gaston regarding Oregon and the sales tax, Rep. Barnhart, from Eugene, who is Chairman of the House Revenue Committee is quoted as saying “Until Oregonians are convinced that they want to support the school system and the universities and the community colleges, all of it (the discussion of a sales tax) is unimportant”.

The problem with Rep. Barnhart’s statement is that it does not really address the concerns of Oregonians.  Rep. Barnhart is suggesting that Oregonians do not care enough about education to vote for a sales tax but that is not true.  Rep. Barnhart is either forgetting about or refusing to acknowledge the tremendous financial obligation that has been forced upon Oregonians to fund PERS before one cent can be spent on education.  This is not surprising, however, when you consider that Rep. Barnhart is a PERS member.  He knows that laws enacted by PERS legislators like himself require PERS benefits to funded before any payment can be made to support the school system, universities and community colleges.  And Rep. Barnhart receives a significant financial benefit from those laws.

The Oregonian article indicates that a 2.5% sales tax could raise approximately $3  billion dollars during the 2013-15 biennium and that would be just enough to prevent any budget shortfalls.  During that same two-year period, the legislature has approved a budget for PERS of $9.5 billion.  That is $1.5 billion higher than the PERS budget for the prior biennium.  One-half of the entire potential budget shortfall is attributable to PERS, which must be paid first.

A large part of that PERS budget is needed just to fund the PERS Pick-up.   In 2010, PERS stated that the PERS Pick-up obligation during the 2011 – 2013 biennium would be $874 million.  The people of Oregon eliminated the PERS Pick-up when they passed Ballot Measure 8, in 1994, but the Pick-up was reinstated by the Justices of the Oregon Supreme Court in 1996.  Those Justices were all PERS members and they had more to gain by throwing out the Pick-up than all other PERS members.  That’s because the Pick-up amount for judges is 7% of compensation while it is 6% for all other PERS members.

The truth is that the people of Oregon have never decided not to fund to the school system, the universities and the community colleges.  In fact by passing Ballot Measure 8, the people took action to ensure that more funds would be available for education by requiring  all public employees, including Rep. Barnhart, to pay contributions to their own retirement benefits.

What Rep. Barnhart should have said  is this: Until Oregonians are convinced that they want to support the school system and the universities and the community colleges,  after they pay the exorbitant PERS assessments that have been forced down their throats by PERS legislators and the Supreme Court, all of it (the discussion of a sales tax) is unimportant.  If he had said that, he would have been right.  What he actually said was pure baloney.

Dan Re

Posted in fundamental fairness, Oregon legislators, Oregon PERS, PERS Pick Up, public employees retirement plan | Tagged , , , , | Leave a comment

Oregonian Guest Editorial October 30, 2013

The following is a Guest Editorial that I wrote which was published in the Oregonian on October 30, 2013.

Dan Re

PERS decisions undermined by conflicts of interest in Oregon courts: Guest opinion

Guest Columnist By Guest Columnist The Oregonian
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on October 30, 2013 at 4:30 AM, updated October 30, 2013 at 4:33 AM

By Daniel Re

The 2013 Oregon Legislature trimmed pension benefits by passing Senate Bill 822. In September, the Central Oregon Irrigation District (COID) intervened in the litigation in which PERS members are seeking to invalidate PERS reductions made by SB 822. COID also filed motions to disqualify the Oregon Supreme Court justices and the court-appointed special master.

Those motions were based on the fact that all of the justices and the special master are PERS members and their own PERS retirement benefit may be reduced if SB822 is upheld. That financial conflict of interest would disqualify them from participating in the case if judges who do not have a PERS conflict of interest can be appointed to take their places.

The Supreme Court gave all parties the right to file responses to the motions to disqualify and responses were filed by some PERS members, the City of Portland, the League of Oregon Cities and the State of Oregon. Each response argued that the justices and the special master should not be disqualified, despite their financial conflict of interest. It was appropriate for PERS members to file a response and it may have been appropriate for the City of Portland and the League of Oregon Cities to have done so.

But it was not appropriate for the State of Oregon.

The State’s role in this case is to defend SB822, but its response is inconsistent with that obligation. The State is represented by the attorney general and by numerous Oregon Department of Justice attorneys. All of the Department of Justice attorneys are PERS members and their personal retirement benefits are also at stake in the litigation. Attorney General Ellen Rosenblum is most likely a PERS member since she was an elected judge for over 22 years and all judges elected after 1983 became PERS members upon taking office.

Non-PERS members make up over 92 percent of Oregon’s population. Yet PERS members dominate every aspect of the SB822 lawsuit. The people who want SB822 thrown out are all PERS members. The justices of the Oregon Supreme Court are all PERS members. The special master is a PERS member. The attorneys representing the State in defending SB822 are all PERS members. The PERS retirement benefits of each one of those persons is at risk if SB822 is upheld.

I believe the Supreme Court justices, the special master and the Department of Justice attorneys will try their best not to be influenced by their PERS interest, but they will be influenced by it. That’s basic human nature and it’s why conflict of interest rules have existed for hundreds of years. The State’s response should not have been filed. It is not in the best interest of defending SB822. It’s in the best interest of the PERS members who want to invalidate it. In filing that response, the State has damaged the credibility of its efforts to defend SB822, and it needs to explain why.

Daniel Re is a Bend attorney. His law firm represent COID in general business matters, but Re says he is not personally involved in that representation and says his firm is not representing COID in the SB822 intervention or in the motions to disqualify the Supreme Court justices or the special master.

Posted in fundamental fairness, Oregon judges, Oregon PERS, Oregon SB 822, public employee retirement system | Tagged , , , , | Leave a comment

Responses Filed To Motions To Disqualify Justices in SB 822 Litigation

On October 17, 2013, responses were filed to COID’s motions to disqualify the Justices of the Oregon Supreme Court and the Special Master appointed by the Supreme Court to propose facts upon which the SB 822 litigation will be determined.  Responses were filed by certain PERS members who are suing to have SB 822 declared invalid, by the City of Portland, by the League of Oregon Cities and, most surprisingly of all, by the State of Oregon.   All of the responses argued that the Supreme Court Justices and the Special Master should not be disqualified despite the fact that all of them are PERS members and their retirement benefits may be reduced if SB 822 is upheld.  Basically, these parties prefer to have the SB 822 case decided by judges who are PERS members rather than by judges who are impartial.

The fact that the State of Oregon filed a response is surprising because it’s the role in the case is to defend SB 822.  It is hard to imagine that your chances of successfully defending a law in court is better when the judges who will decide the case may very likely lose money if the law is upheld.  But that is what the State has done.

COID now has until October 24, to file a reply to those responses and then the Supreme Court will rule on COID’s motions.

Dan Re

Posted in fundamental fairness, Oregon judges, Oregon legislators, Oregon PERS, Oregon SB 822 | Tagged , , , , | Leave a comment

Are Judges Really PERS Members? You Bet They Are.

Many PERS members argue that there is no problem in having judges who are PERS members decide PERS cases because the judges are not really part of the same PERS retirement system that other public employees are in.  But that argument is wrong.  While  judges are in a separate PERS plan that applies only to judges, many of the benefits and rules that apply to the plan for judges are exactly the same as the benefits and rules that apply to all other PERS member.  Among other common benefits shared by all PERS members, including judges, are: the PERS pick-up, cost of living adjustments and guaranteed minimum rate of return on Tier One member accounts.

In fact, judges even have some rights that are similar but superior to the rights of all other PERS members.  Those superior PERS rights for judges only include:

  • No probationary waiting period before becoming a PERS member.  All other PERS members have a six month probationary waiting period.
  • The PERS pick-up for judges is mandatory by law.  It is not subject to negotiations like it is for all other PERS members.  And the biggest superior pick-up benefit that judges have is that their pick-up amount is seven percent of salary, not six percent like it is for all other PERS members who receive the pick-up.  So when ever a PERS lawsuit involves the PERS pick-up, as if did in the Oregon State Police Officers’ Association case that invalidated Ballot Measure 8 in 1996, the judges have more skin in the game than anyone else.
  • All judges are either members of Tier One or Tier Two, no matter when they first join PERS.  Any person who is not a judge and who first becomes a PERS member after September 29, 2003, is a member of the lower benefit Oregon Public Service Retirement Plan.  A judge who becomes a PERS member after that date is a Tier Two member.

The three most significant PERS cases decide by the Oregon Supreme Court, in my opinion, are: Hughes v. State, in 1992, which held that certain PERS benefits were contractual rights; the Oregon State Police Officers’ Association  v. State case decided in 1996; and, the Strunk  case decided in 2005 which invalidate many of the PERS changes made by the 2003 legislature.  Each of those cases involved PERS benefits that the judges were receiving or would receive after they retired.  So if anyone tells you that the fact that judges are PERS members does not disqualify them from deciding PERS case because they are really in a different PERS plan, don’t believe them.   Ask that person if he or she is a PERS member or related to a PERS member.  Most likely they are and they want to keep the unfair advantage that they currently have in all PERS lawsuits.  That advantage is having the case decided by a judge who has the same or greater financial risk at stake in the case as they do.

But that is fundamentally unfair and it never existed during the first twenty-five years of PERS.  For that first twenty-five years, judges had their own independent retirement plan and they had no conflict of interest when they decided PERS cases.  The impartiality of the judges deciding PERS cases was ended by the 1983 legislature that was composed of eighty-four PERS members and six non-PERS legislature.  That legislature forced every Oregon elected judge to join PERS effective January 1, 1984.

As recognized in an old African proverb, “Corn cannot expect justice from a court composed of chickens”.  As hard as the judges try to be impartial when their own financial interests are at stake in a lawsuit, they simply cannot be.  Judges are human and it is  contrary to human nature for a person to rule against the financial interest of that person and his or her family.  Everyone knows that and it is why conflict of interest rules have existed for centuries.  The first written record I have found of rules allowing for the disqualification of judges was contained in the Code of Justinian, which was complied in 532 A.D.  That Roman Empire Code  provided that if a person before a Roman court felt the judge was biased, that person could recuse the judge and have the case decided by another judge who was not biased.  The people of Oregon have every right to have PERS cases decided by judges who are impartial just like Roman citizens had almost 1500 years ago and we had before 1984.  We must demand that the right to impartial judges in PERS cases be restored to us as soon as possible.

Dan Re

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Who Will Object To Impartial Judges For The SB 822 Litigation?

On October 3, 2013, the Oregon Supreme Court granted Central Oregon Irrigation District’s (COID) motion to intervene in the SB 822 litigation.  That litigation was initiated by PERS members who want to invalidate the reductions that SB 822 made to PERS benefits.

The Supreme Court also gave all parties to that litigation until October 17, 2013 to respond to the motions that COID made to disqualify the Supreme Court Justices and the special master appointed by the Supreme Court from participating in the SB 822 litigation.  Those motions to disqualify were made on the grounds that all of the Supreme Court Justices and the special master are PERS members whose PERS benefits are at risk in the litigation.  COID has argued that temporary judges who are not PERS members can be appointed to decide the case.

It will be very interesting to see which of the parties, if any, file a response to the motions to disqualify.  By filing such a motion, the party would be arguing that PERS members are legally entitled to have all PERS cases decided by judges who are PERS members.  As absurd as that position is, that is what the situation has been for the last twenty-nine years.  Due to a law passed by the legislature in 1983, all Oregon elected judges have automatically become PERS members as soon as they take office since January 1, 1984.  That law made Oregon’s elected judges the only elected officials who automatically become PERS members.  All other elected officials in Oregon have a choice to join PERS but are not required to join it.

And despite the fact that Oregon law specifically allows non-PERS temporary judges to be appointed to decided cases, the elected Justices of the Supreme Court have rejected that possibility for PERS cases and have required all PERS cases to be decided by PERS judges.  So.it is my guess that the PERS members who are suing to invalidate the SB 822 PERS reductions will respond to the motions to disqualify the Justices and the special master.  Having the SB 822 case decided by PERS judges who have the same risk of lower PERS benefits as they do, if SB 822 is upheld, gives those PERS members a big advantage, a very BIG advantage.

After all, PERS benefits did not get to where they are today until after Oregon’s judges became PERS members and started deciding all PERS cases.  It was PERS judges who invalidated Ballot Measure 8 which was passed by the people of Oregon in 1994.  Ballot Measure 8 eliminated the PERS pick-up, the guaranteed minimum rate of return on PERS employee accounts and the use of unused sick leave to increase a PERS members final average salary.  It was also PERS judges who decided for the first time, after they became PERS members, that PERS benefits were actually a contract.  Before that happened, the legislature and the people of Oregon, through the initiative, could change any PERS law prospectively.  And the judges also invalidated many changes to PERS made by the 2003 legislature.

Those actions by the judges have cost the people of Oregon billions of dollars every year in funding PERS benefits that had been eliminated by the people but reinstated by the judges.  Were those decisions wrong?  Maybe but maybe not.  It is impossible to tell but the credibility of those decisions was clearly affected by the fact that the judges making the decisions had a personal financial stake in the outcome cases and the actual outcome financially benefited them significantly.

Having judges who are PERS members decide PERS cases is just wrong.  It does not have to be that way.  The right to impartial judges in PERS cases must be restored to the people of Oregon.  We have that right in every other type of case and there is no justification for carving out an exception for PERS cases.

Dan Re

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PERS Is Now Off The Table For Gov. Kitzhaber – But It’s Not Really Off The Table

After passage of the “Grand Bargain” by the Legislative Assembly on October 2, 2013, Governor Kitzhaber proclaimed “The Public Employees Retirement System is off the table for this governor,” …. “We are done. We are going to move on to other things that are important to Oregonians.”  See the October 2, 2013 Oregonian article by Christian Gaston.   The “Grand Bargain”, in part, made significant reductions to PERS cost of living adjustments.

While PERS may be off the table politically for Gov. Kitzhaber, it is hardly off the table.  Before the “Grand Bargain” PERS reductions can go into effect, PERS members will have the opportunity to challenge those reductions in the Oregon Supreme Court.  The Oregon Supreme Court is composed entirely of judges who are PERS members and the cost of living adjustments for those judges will be reduced from what the law currently provides, if the “Grand Bargain” is upheld.  To date, the Supreme Court justices have refused to disqualify themselves from deciding PERS case, despite their financial conflict of interest in the outcome of those cases.  Currently, however, a challenge to their ability to decide the SB 822 PERS litigation is pending.  The court has not yet ruled on that challenge.

It is simply wrong for judges, who are PERS members, to have the final word on whether changes to the PERS laws, whether made by the people of Oregon by initiative or through the Legislative Assembly, are valid.  Oregon law allows temporary judges, who do not have a conflict of interest, to be appointed in cases like this to decide such cases and for the first thirty-eight years that PERS existed, Oregon judges were not PERS members.  The judges had their own independent retirement plan.   They did not have a conflict of interest when they decided PERS cases.

The current system which requires all PERS cases to be decided by judges who are PERS members was created by Oregon legislators, after those legislators were first allowed to join PERS in 1971.  From 1971 through 1982, most legislators joined PERS and they substantially increased PERS benefits.  The following for a history of PERS benefit enhancements by legislators both before and after they were allowed to join PERS:

PERS BENEFITS BEFORE LEGISLATORS WERE ALLOWED TO JOIN PERS

PERS was created in 1945.  

From 1945 through 1970, PERS benefits remained constant.  They provided:

(1) A retirement benefit of 50% of final average salary (FAS) after a full career;

– FAS was average of highest annual salary during 5 of last 10 years

– full career was 30 years for general service and 25 years for police and fire

(2) Legislators and Judges could not join PERS;

–  AG opinion in 1963 ruled legislators could not join PERS

–  Judges had independent retirement plan created in 1943

(3) PERS employers and PERS members were both required to contribute to PERS;                         

(4) The 50% retirement benefit was funded as follows:

–  20% FAS from Employer;

– 20% FAS from Employee;

– 10% FAS from Social Security, after public employees were allowed to join social security system in 1953.     

PERS BENEFIT INCREASES  AFTER LEGISLATORS ALLOWED TO JOIN PERS 

1971.  Attorney General rules legislators can join PERS.  Legislators increase Employer benefit to 25% FAS.

1973.  Legislators allow unused sick leave to be part of FAS and increased Employer benefit to 30% FAS.

– unused sick leave benefit converted from one-time payment to double benefit with lifetime payment

1975.  Legislators passed laws that let legislators join retroactively and guaranteed minimum rate of return:

(1)  Allowed any person who ever served in legislature to retroactively join PERS, at the police and fire rate;

(2)  Made legislators the only people who could earn PERS retirement credit after 65;

(3)  Made the people of Oregon guarantee PERS members that their employee accounts would receive a minimum return each year that would be determined by PERS members.

1979.  They passed the PERS pick up law, which was to expire June 30, 1981.  55 of the 90 legislators were PERS members.  The PERS pick up law provided a double benefit:

(1) Administrators of a public employer allowed to make the taxpayers who funded the public employer pay the employee contributions for the employees of that employer, including the administrators who made the pick up decision; and,

(2)  PERS member who receive pick up also received double benefit of higher employer funded retirement benefit.  Legislators passed a law that specifically allowed their employee PERS contributions to be picked up.

– In 2010 PERS estimated that 70% of PERS members had their employee contribution picked up and  that the PERS Pick Up during the 2011 – 2013 biennium would cost $750 million in picked up contributions   and $124 million increased employer contributions.

1981.  Legislators make PERS pick up permanent and increased the Employer benefit to 50% FAS.

Once the legislators had substantially enhanced PERS benefits, they forced Oregon judges to join PERS.  That deprived the people of Oregon of their right to have PERS cases decided by impartial judges and ensured that PERS members would have a clear advantage in every PERS lawsuit.  The judges were on the same side as the PERS members.  And only after judges were PERS members did the judges decide that PERS benefits were a contract and that the people of Oregon could not change that contract without the consent of the PERS members.

If you do not like the current system in which judges who are PERS members must decide every PERS case, tell your legislators.  The legislators created this problem and they can change it and it must be changed.

Dan Re

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Central Oregon Irrigation District Intervenes In SB 822 Litigation

Central Oregon Irrigation District (COID) is a participating PERS employer.  On September 27, 2013, COID filed a Motion To Intervene in the SB 822 litigation.  It also filed motions to disqualify the Oregon Supreme Court justices and the special master appointed by the Supreme Court from participating in the SB 822 case.  The Motions To Disqualify are based on the fact that all of the Supreme Court justices and the special master are PERS members and as PERS members they have a financial stake in the litigation.   COID believes that it is fundamentally unfair that the SB 822 litigation be decided by judges who stand to lose money if SB 822 is upheld.

COID took this action to protect the right of COID members to have the SB 822 litigation determined by impartial judges.  If SB 822 is not upheld by the Supreme Court, the district members will pay more for PERS costs and will most likely suffer a reduction in the services that COID currently provides.

Oregon law allows for the appointment of temporary judges to decide cases in situations like this.  The SB 822 litigation is too important to COID’s members to allow the case to be decided by judges with a financial conflict of interest.

While COID’s actions are intended only for the benefit of its members, those actions will also affect the right of every Oregonian to have PERS lawsuits decided by impartial judges.  The right to impartial judges is one of our most fundamental safeguards against governmental abuse.

If you believe that our right to impartial judges must be protected, this case is important to you.  Let your legislators know how you feel about it and demand that our right to impartial judges in PERS be restored.

Remember that we had impartial judges for PERS cases during the first thirty-eight years that PERS existed.  It was only after legislators were allowed to join PERS in 1971 and after those PERS legislators spent the next twelve years substantially enhancing PERS benefits that they forced Oregon’s judges into PERS, effective January 1, 1984.  And it was only after judges became PERS members that they ruled that PERS benefits were a contract.  A contract that those same judges immediately became beneficiaries of and from which they have or will receive thousands of dollars in PERS benefits that the people of Oregon are forced to pay for.  That’s not fair.  It’s not justice.  It’s injustice.

Dan Re

Posted in fundamental fairness, Oregon judges, Oregon PERS, Oregon SB 822, public employees retirement plan | Tagged , , , , | 1 Comment