The Oregon Public Employees Retirement System (PERS) was established to provide retirement benefits to Oregon’s public employees. It has grown to an incredible size and has developed a tremendous appetite for money. For the 2011 – 2013 biennium, Governor Kitzhaber’s proposed budget allocated $7.5 billion dollars to PERS, almost $2 billion more than was allocated to K – 12 education. PERS funding has been made Oregon’s
highest financial priority and services to the people are cut back to ensure that
PERS is fully funded. The following information is provided to show you how PERS got to where it is today. You need that information to decide if you agree with the PERS priority.
- 1945 – PERS is created by the Oregon legislature. Legislators and were not PERS members and neither were judges, who had their own separate retirement plan. This resulted in the representation of both public employees and non-public employees when PERS laws were made. It also insured that if PERS cases went to court, those cases would be decided by independent judges. This arrangement was fair.
- 1963 – Oregon Attorney General says legislators cannot join PERS. In 1963, eighteen years after PERS was created, the Oregon Attorney was asked if Oregon legislators could join PERS. Attorney General Robert Y. Thornton said they could not. Unfortunately, that Attorney General opinion has disappeared but we know it existed because it was cited in the 1971 Attorney General opinion discussed in the next paragraph.
- 1971 – New Attorney General says legislators can join PERS. In 1971, Lee Johnson was the Oregon Attorney General and another request was made
to see if legislators could join PERS. This time the Attorney General said that they could. Thereafter, legislators had a conflict of interest regarding PERS. They could join PERS and they could pass laws that would increase their own PERS benefits. The non-PERS people of Oregon lost their independent representation in the legislature.
- 1975 – Legislators pass law allowing them to join PERS, retroactively. Four years after being allowed to join PERS by the Attorney General, the legislators passed a new law that gave them and anyone else who had ever served in the legislature the right to retroactively join PERS. 1975 was also the year that the Oregon Ethics Code went into effect. The Ethics Code prohibited public officials, including legislators, from using their office for personal financial gain.
- 1979 – Legislators pass the PERS pick up law. Until 1979, all PERS employees were required to pay part of their salary to PERS to help fund their retirement benefits. The public employers (the people of Oregon) also made contributions to PERS. In 1979, the legislators passed a law that allowed public employers to agree to pay the employees’ PERS contributions for them. This was called the “Pick Up” and if a public employer elected the Pick Up, the PERS employees did not have to pay anything to PERS. The people of Oregon would pay all PERS contributions. The administrators who ran each public employer and who made the Pick Up decision were also PERS members. If the elected the Pick Up, their own PERS contributions would be paid for them. The Pick Up law was only to be in effect for two years, July 1, 1979 to June 30, 1981, but the public employees, including the PERS legislators, liked it so much that it was made permanent.
- 1983 – Legislators put Oregon Judges into PERS. In 1983, 84 of the 90 Oregon legislators were PERS members and they decided to put the Oregon judges into PERS. The cumulative vote was 72 to 1. A person who became a judge for the first time after 1983 automatically became a PERS member. Persons who were judges before 1984 were given a choice. They could stay in their old retirement plan or they could join PERS. All judges, whether they were in PERS or in the old retirement plan, were required to pay 7% of their salary into their retirement plan but a special exception was made for judges who were in PERS. The state (the people of Oregon) would pay the 7% employee contribution for each PERS judge. That meant that judges who joined PERS received a 7% increase in salary. It also meant that the PERS judges had the most to lose if the people of Oregon eliminated the Pick Up because all other PERS employees had a 6% employee contribution. This law gave total control over all PERS decisions to PERS members. The non-PERS Oregonians no longer had any effective legislative representation in PERS matters and PERS cases would be decided by PERS judges.
- 1989 – PERS made Oregon’s highest financial priority. In 1989, 82 of the 90 Oregon legislators were PERS members and they passed a law that made PERS funding Oregon’s highest financial priority. They did that by prohibiting the State Treasure from paying money to a public employer until that employer had fully paid its PERS assessment. If a public employer did not have enough money to provide the services it was originally created to provided, such a teaching children or police and fire protection, and to pay its PERS bill that employer was required to pay PERS first and cut back services. The cumulative vote on this law was 68 to 4.
- 1994 – People pass Ballot Measure 8 which reduced PERS benefits. In 1994, the people of Oregon, exercising their constitutional right of initiative,
passed Ballot Measure 8. Ballot Measure 8 made three changes to the PERS laws: it eliminated the Pick Up and required every PERS employee to pay 6% of
his or her salary to PERS; it prohibited the use of the assumed minimum rate of
return on PERS members accounts; and, it ended the use of unused sick leave to
be used to compute PERS pensions. PERS members sued to have Ballot Measure 8 thrown out.
- 1996 – Oregon Supreme Court throws out Ballot Measure 8 in a 4 to 3 decision. In 1996, the Oregon Supreme Court held that Ballot Measure 8 was unconstitutional. Each justice on the court was a PERS member and had a personal financial stake in the outcome of the case. The provision that ended the Pick Up, with
which the justices had more to lose than any other PERS members, was held to be
unconstitutional by a 4 to 3 vote. That decision has cost the people of Oregon billions of dollars that otherwise could have been used to provide services to all Oregonians.
The PERS laws are what they are today because those laws have been made and judged exclusively by PERS members. The over 90% of Oregonians who are not PERS have been excluded from the process. AND THAT IS WHAT YOU NEED TO KNOW ABOUT PERS.
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