On July 13, 1983, Oregon’s 62nd Legislative Assembly passed HB 2366 by a collective vote of 72 to 1, with 17 excused absences. Eighty-four of Oregon’s ninety legislators were PERS members in 1983 and each one of them would benefit from HB 2366.
In 1983 Oregon judges had a separate retirement plan, the Judges retirement Fund. HB 2366 made Oregon judges members of PERS. Any one who became an Oregon judge after December 31, 1983 and who was under 70 years old automatically became a PERS member on the day the person took office. Judges who were in office on December 31, 1983 were given the choice of becoming a PERS member or staying in the Judges Retirement Fund but those judge were offered a financial benefit if they joined PERS. All judges were required to contribute 7% of their compensation to their retirement plan, whether they joined PERS or if they stayed in the Judges Retirement Fund. If a judge joined PERS, however, HB 2366 required the State to pay the judge’s 7% contribution. That benefit gave every judge who joined PERS an immediate 7% increase in salary.
HB 2366 created a conflict of interest for every PERS judge who heard a PERS case and it deprived the people of Oregon of their right to have PERS cases decided by independent judges. The Oregon Code of Judicial Conduct and other Oregon laws prohibit judges from hearing cases where they have a conflict of interest but those prohibitions did not stop the judges from hearing PERS cases. They invoked the Rule of Necessity, an ancient judge made rule, which allows a judge with a conflict of interest to hear a case if all of the judges have the same conflict. Since HB 2366 resulted in all Oregon judges having a PERS conflict, the Rule of Necessity allowed the judges to decide PERS cases. The legislature had outflanked the people by putting the judges into PERS. The people could not reduced PERS benefits by an initiative measure unless the PERS judges allowed that to happen.
The Rule of Necessity was invoked by the Oregon Supreme Court in Oregon State Police Officers Association v. State of Oregon (1996). That case, decided by a 4 to 3 vote, invalidated Ballot Measure 8. In 1994, the people of Oregon passed Ballot Measure 8 which made three changes to PERS: (1) it required each PERS member to pay his or her employee contribution to PERS and prohibited the public employer from paying it; (2) it ended the 8% guaranteed minimum annual return on PERS employee accounts; and, (3) it prohibited the use of unused sick leave to compute PERS retirement benefits. All seven of the Oregon Supreme Court justices were PERS members and the majority held that Ballot Measure 8 was unconstitutional.
The problem with judges in PERS did not exist until the legislature passed HB 2366 in 1983. Ever since then, judges have had a substantial financial interest in the outcome of every PERS case. That’s wrong. Oregon’s judges need a good retirement plan but if they are PERS members, they can not decide PERS cases. The current situation is fundamentally unfair to all Oregonians and it must be changed. If the legislature, which created the problem, does not fix it, the people have every right to do so.