PERS And The So-Called 1996 and 2003 Fixes

In response to a November 26, 2011 PERS story in the Oregonian by Jeff Mapes, the following exchange occurred on www.oregonlive.com:

richard_surroz
elmexijediNovember 28, 2011 at 10:54AM

“until Judges are not on PERS nothing will entirely be fixed

Inappropriate? Alert us.

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lentball
 lentballNovember 28, 2011 at 10:24AM

elmex,

Daniel Re in a nutshell: In 1996 the Oregon Supreme Court upheld PERS’ basic prior contractual obligations to retirees. In the 15 years since, no one has found a legal challenge to that decision. Nor has anyone been able to substantiate a conflict of interest.

What Daniel Re (and you, persistently) ignore: In 1996 and in 2003, PERS made changes to the Oregon retirement system that eliminated any subsequent continuation of Tier 1 benefits.

In other words, PERS has been fixed, though the system still has contractual obligations to retirees.

Obligation. Contractual.”

lentball must be a PERS Tier One or Tier Two member, as no objective person could possible make those statements.  lentball’s perception is possible only by looking through PERS colored glasses.   Here’s why:

1.  lentball says that in the 15 years since the Oregon Supreme Court declared Ballot Measure 8 unconstitutional no one has been able to substantiate that Oregon judges have a conflict of interest.  That is just plain wrong.  No one involved in any of the PERS lawsuit has ever suggested that the judges did not have a conflict of interest.  And it is a conflict of interest that did not exist during the first 40 years of PERS.  Prior to 1984, the judges had their own independent retirement plan,  They had no conflict of interest with PERS.  But  PERS legislators forced the judges to join PERS in 1984 to prevent the people of Oregon from reducing PERS benefits through  initiative measures.  If the people  did change PERS, the change would be challenged in court.  The judges would decide the case and if the judges PERS members, they would lose money if they upheld the change.   That strategy worked perfectly because in 1994 the people of Oregon passed Ballot Measure 8 which reduced PERS benefits and  in 1996, the Supreme Court invalidated Ballot Measure 8.

2.  lentball also says that in 1996 and 2003 the PERS controlled legislature made changes that “fixed” the PERS problem.  To evaluate that pronouncement, you must first identify the “problem”.  There are at least two possibilities:  the problem for PERS members of having their benefits reduced; or, the problem for the people of Oregon in paying for the PERS benefits.  The 1996 and 2003 changes made by PERS legislators fixed the problem that they and all other PERS members had about preserving their benefits but the changes did not fix the problem that the people of Oregon had in paying for the benefits.

In 1995, the legislature created PERS Tier Two which covered persons who joined PERS after 1995.  Tier Two did have slightly lower benefits than Tier One.  All of the PERS legislators who made that change, however, were not effected by it since they were already in PERS members before 1996.

The 1995 PERS change was so ineffective that another, more drastic change was required in 2003.  In 2003 the legislature was controlled by Tier One and Tier Two PERS legislators.  They did not want to lose the PERS benefits they had created for themselves so they setup the Oregon Public Service Retirement Plan (OPSRP) which covered all person joining PERS after August 28, 2003.  Like the 1995 PERS change, the 2003 change did not apply to the PERS legislators who made it.

Today there are over 88,000 OPSRP members who work just as hard as the Tier One  and Two PERS members and who are just as valuable and important to the people of Oregon.  But the Tier One and Tier Two PERS legislators substantially reduced  the benefits for the OPSRP members.  They did that for the sole purpose of preserving their much higher Tier One and Two benefits.  The 2011 – 2013 legislative approved budget for PERS is $7.5 billion.  Out of that amount $7.225 billion goes for Tier One and Tier Two member benefits.  Only $0.208 billion goes to OPSRP benefits.

3.  Finally, lentball claims that the PERS benefits must be paid because they are  contractual obligations.  That is what the Oregon Supreme Court justices ruled but all of the justices were PERS members and, therefore, beneficiaries of the contract that they found to exist. If there  really is a contract, it was one that was negotiated exclusively between  PERS legislators and the rest of the PERS members and which was given validity by PERS judges.  The people of Oregon who were obligated to pay the contractual obligations did not participate in making the contract.

Contrary to what lentball says, I have not ignored the so-called PERS fixes of 1996 and 2003.  I have simply recognized them for what they are, a sham and a fraud on the people of Oregon to preserve the PERS benefits of Tier One and Tier Two PERS legislators who worked very hard to create their benefits.

That is what my lawsuit is all about.  Today in Oregon, no PERS laws can be made or changed unless PERS members in the legislature and on the Oregon Supreme Court consent to the change.  I believe that is wrong.  PERS members are certainly entitled to a seat at the table when PERS laws are made, but they are not entitled to EVERY seat at the table.  But that’s what they have had since 1971 and that is why PERS has developed into what it is today.  That is unfair and it must be changed.

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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.
This entry was posted in Ballot Measure 8, fundamental fairness, Oregon legislators, Oregon legislature, Oregon PERS and tagged , , , , , , , , , . Bookmark the permalink.

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