The PERS Legislators And 2009 Senate Bill 897

In one of their first acts during the 2010 Special Session of the Oregon Legislature, 71 members of the Senate and House voted to override Governor Kulongoski’s veto of SB 897.  In 2009, the legislature passed Senate Bill 897 without a single dissenting vote.  That bill provided, in part, that a PERS member could request a written verification of the PERS retirement data.  The bill then provided that the verification data provided to the PERS member MUST be used to compute that PERS member’s  retirement benefit, even if the data was wrong unless one of three exceptions applies. The incorrect data will not be used if: (1) the incorrect data reduces the PERS member’s retirement benefit; (2) the verified data will be adjusted for a net loss in the account balance or used sick leave that occur after the verification date; or, (3) the incorrect data will not be used if the member knew the information was wrong and did not notify PERS of the error.

Exceptions (1) and (3) stand as perfect examples of how the conflict of interest that the PERS legislators have affects their decision making.  Exception (1) only applies if the incorrect data reduces the PERS member’s retirement benefit, but it does not apply if it increases the PERS member’s retirement benefit.   There is absolutely no logical reason why incorrect data must be used if it increases retirement benefits but cannot be used if it reduces retirement benefits.   While exception (3) sounds good, it is meaningless.  PERS members have no obligation to read the verified data that is provided to them and exception (3) only applies if they do read it.  If the verified data is not read, the PERS member can not know if the data is wrong.

Here is an example of what could happen under SB 897:  PERS member Smith has PERS retirement data of “x”.   PERS member Smith requests and receives , but does not read, a PERS data verification statement that incorrectly shows Smith’s retirement data as “10x”.  This error could have been made accidentally or intentionally, it makes no difference.  The result of the incorrect data, however, means that the people of Oregon must pay PERS member Smith a retirement benefit that is ten times higher than the retirement benefit Smith actually earned.  And under SB 897 there is absolutely nothing that can be done to reduce that incorrect retirement benefit.

SB 897 was created by PERS legislators.   While the law applies to all PERS members who have not yet retired the 2009 legislators who were PERS members, which most of them were, clearly have the most to gain from it.  Legislators usually have short periods of service and low compensation.  As a result, the PERS retirement benefit for PERS legislators is modest.  But with SB 897 they are no longer stuck with the retirement benefit  they have actually earned.  Now they have a shot to become PERS millionaires.  All they need is a PERS data verification statement that incorrectly increase their actual PERS data.  In fact, every PERS member who has not yet retired has the no risk  opportunity to hit the jackpot thanks to SB 897 and the self-serving actions of the Oregon PERS legislators.

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About Dan Re

I am an attorney who has lived in Bend and practiced law since 1981. In educating myself about the Oregon Public Employees Retirement System (PERS), I was shocked at how the PERS laws were changed by the legislature, once legislators were allowed to join PERS in 1971, 26 years after PERS was first created. Those changes personally benefitted the legislators who made them at the direct financial expense of the people they were elected to represent. That is wrong and I intend to change it. In 2009, I started a non-profit 501(c)(4) corporation, In RE The People, Inc., for the purpose of informing concerned citizens of what happened regarding PERS and other issues of social and civic importance. I then created this blog to further that objective.
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