As described in the prior posts “PERS Before and After Legislators – Employer/Employee Contributions” and “PERS Before And After Legislators – New Benefits”, after legislators were first allowed to join PERS in 1971, they fundamentally enhanced PERS benefits and dramatically changed how those benefits were funded. But they did more than that. They also created special PERS perks just for legislators and they eliminated the right of Oregon’s non-PERS citizens, who have always make up over 90% of the population, to have any meaningful voice in making PERS laws. In doing that, the PERS legislators gave PERS members total control over all PERS laws. Today, no PERS law can be made or changed without the consent of PERS members.
Here is a list of some of the most significant “Legislator Only” perks:
1. 1975 and 1987. Retroactive PERS membership for legislators. Twice, the PERS legislators passed laws that allowed just legislators to retroactively join PERS back to the first day they took office as a legislator. No other persons have ever been allowed to retroactively join PERS. If a legislator did retroactively join, that legislator would have to pay all of the employee contributions that would have paid if he or she had actually joined PERS on their first day as a legislator. But once the legislator paid that amount, the legislator was fully vested back to the retroactive date, even though no employer contributions had been made for that legislator nor had any earnings been made on the retroactive employee contributions or nonexistent employer contributions. That created an unfunded obligation that the PERS legislators required the people of Oregon to pay.
2. 1975. Retirement credit for legislators. Legislators passes a law that allowed legislators only to earn retirement credit after age 65. No one else could do that.
3. 1979. Pick up of employee contributions for PERS legislator’s. After passing the PERS pick up law, the legislators made sure that they would get the benefit of the pick up by passing a law that specifically allowed their PERS employee contributions to be picked up.
4. 1983. Nondisclosure of PERS information. In 1983, 84 of the 90 legislators were PERS members. They passed a law that made nonfinancial PERS membership records exempt from public disclosure, unless the public interest required disclosure. In 2009, PERS was taking the position that this law prevented it from disclosing the PERS membership status of elected officials. I appealed that decision and the Attorney General ruled in my favor and ordered PERS to disclose the PERS membership status of elected officials, ending 25 years of secrecy.
5. 1989. PERS becomes Oregon’s highest financial priority. In 1989, 82 of Oregon’s 90 legislators were PERS members and they passed a law that provided that if a PERS employer did not pay its PERS assessment on time, the state could withhold all moneys that employer was legally entitled to until PERS was fully paid. That law made it absolutely clear that paying PERS was the employer’s most important responsibility. PERS had to be paid first. The services that the public employer was actually created to provide could only be provided after PERS had been paid.
This is how the PERS legislators, who controlled the legislature, insured that PERS members would have total control over the PERS laws:
1983. Judges automatically become PERS members. Prior to 1984, Oregon’s judges had their own independent retirement plan. When they decided PERS cases, they did not have a personal, financial interest in the outcome of the case. In 1983, after they had more than doubled PERS benefits and created new benefits and perks for PERS members, the PERS legislators required all persons who became judges for the first time after 19893 to automatically become PERS members the second they took office. Judges became the only elected officials who did not have the right to not join PERS.
Persons who had been judges before 1984, were given the choice of joining PERS or staying in their existing retirement plan. Under that existing plan, the judges had to pay 7% of their salary to that plan each month. If the judges joined PERS, however, the legislators passed a law that required the people of Oregon to pay the 7% monthly contribution for each PERS judge. By joining PERS, the existing judges would receive an immediate 7% increase in pay. On December 31, 1983, not one of the seven Oregon Supreme Court justices was a PERS member, but by January 6, 1984, every one of them was a PERS member.
With the judges in PERS, the deck was stacked in favor of PERS members in every PERS lawsuit. If the people of Oregon tried to reduce PERS benefits through the Initiative, PERS members would sue to invalidate the change. That lawsuit would have to be decided by PERS judges who could lose benefits if the reductions made by the people were upheld.
That is exactly what happened with Ballot Measure 8 which was passed by the people in 1994. It eliminated: (1) the use of unused sick leave as part of final average salary; (2) the guaranteed minimum rate of return; and, (3) the PERS pick up. Those benefits had been created in the 1970s by PERS legislators and the judges receive the guaranteed minimum rate of return and the pick up. PERS members sued to throw it out and the Supreme Court did just that in 1996.
Were the changes made to PERS by the legislators after they were allowed to join PERS in 1971 just a coincidence that would have been made even if legislators were not allowed to join PERS or were those changes the direct result of the PERS legislator’s financial conflict of interest? You must answer that question for yourself. To evaluate the situation, I suggest that you read all three posts on this topic, then sit back, close your eyes and take a deep breath. You should have your answer post-haste.