On July 13, 1983, the Oregon Legislative Assembly passed HB 2366. That law became effective January 1, 1984 and it made almost all Oregon judges members of the Oregon Public Employees Retirement System (PERS). For a person under age 71 who became a judge for the first time after 1983, PERS membership was automatic. If a person had been a judge prior to 1984 and had made contributions to the prior retirement plan for judges, the Judge’s Retirement Fund, the law offered the judge a choice. The judge could stay in the Judges Retirement Fund or the judge could join PERS. The salary of such a judge who joined PERS, however, would be substantially increased.
This is how judges who joined PERS received a substantial increase in pay. Under PERS or the Judges Retirement Fund, the law required each judge to contribute 7% of the judge’s salary to the plan. If the judge stayed in the Judges Retirement Fund, the judge had to pay that 7% contribution. But if the judge joined PERS, the law required the State of Oregon would pay the judge’s 7% contribution. That meant that every judge who joined PERS received an immediate 7% salary increase. Soon, all acting judges were PERS members and in 1991 the legislature abolished the Judges Retirement Fund.
While HB 2366 was financially good for the judges, it was not good for the 92% of Oregon’s population who were not PERS members. The problem was that the new law gave each PERS judge a direct and substantial financial interest in the outcome of the any PERS case the judge would hear. That financial conflict of interest destroyed each judge’s neutrality regarding PERS cases and violated the Oregon Code of Judicial Conduct, violated ORS 14.210(1)(a) and, if the case involved a taking of a person’s property by the state, violated the due process clause of the 14th Amendment to the US Constitution. All of those provisions prohibit a judge with a financial interest in the outcome of a case from hearing the case.
It is important to note that HB 2366 was passed by a legislature that was dominated by PERS members. Of the ninety members, eighty-four were in PERS. The cumulative vote for the bill was 72 to 1 and PERS members cast sixty-nine of the 72 aye votes. As discussed in Parts 1 and 2 of this report, once the Oregon legislators allowed themselves to retroactively join PERS in 1975, they made numerous changes that increased PERS benefits. Putting the judges into PERS, however, was their crowning achievement as it effectively prevented the people from changing the PERS laws by initiative or referendum, without the approval of the PERS judges. And history would show that if the people tried to change PERS laws by reducing benefits, the PERS judges would not approve. This not only benefitted the judges but it benefitted every PERS member, including the PERS legislators.
In 1994, the people passed Ballot Measure 8, which prohibited public employers from paying PERS employee contributions and required the public employees to pay their own contributions. It also eliminated the the use of unused sick leave in computing a PERS retirement benefit and it did away with the guaranteed minimum 8% return on PERS member accounts. PERS members did not like those changes so they filed a lawsuit to declare Ballot Measure 8 unconstitutional. That lawsuit, Oregon State Police Officers Association v. State of Oregon, was decided by the Oregon Supreme Court in 1996. By a 4 to 3 vote the court agreed with the PERS members and threw out Ballot Measure 8.
To justify hearing that case despite their conflict of interest, the Supreme Court justices invoked the Rule of Necessity. That rule provides that when there are no judges without a conflict of interest, judges with the conflict can hear the case because there is no other way to resolve the dispute. The Rule of Necessity is still being used in Oregon to allow PERS judges to decide PERS cases but I have challenged it. My challenge has been ignored in the Oregon courts so far but the battle is not over and the result may be different when the case gets to federal court.
Today, PERS members have absolute control over all PERS decisions. They have absolute control because they have taken it and they have been supported by the courts. That is fundamentally unfair to all Oregonians. That is why I am fighting PERS and why I will continue to fight PERS until fairness is restored to all of the people of Oregon.