The 2013 Oregon Legislative Assembly passed SB 822, which reduced two PERS benefits. The benefits reduced were: (1) annual cost of living increases for retired PERS members; and, (2) the elimination of increased retirement benefits for retired PERS members who are not Oregon residents. This second benefit is intended to offset Oregon income tax paid on PERS benefits and it is only available to PERS members who received their first PERS payment before January 1, 2012.
PERS members have sued to have SB 822 declared invalid and they have every right to do so. If those PERS members succeed and win the lawsuit, the reductions in PERS benefits made by the legislature will be thrown out and the PERS retirement benefits will remain as they are. That will be good for PERS members but not good for non-PERS members, who make up over 92% of the Oregon’s population and who pay most of the cost for those PERS retirement benefits.
The PERS lawsuit will be decided by the seven justices of the Oregon Supreme Court. Each one of those justices is a PERS member in his or her capacity as a judge, since every elected judge automatically becomes a PERS member the seconds he or she takes office. Additionally, four of the justices are also regular PERS members for public service performed before they were elected judges. The PERS retirement benefits of each one of those justices is at risk in this lawsuit. If SB 822 is upheld, the cost of living increases they will receive after they retire will have a lower annual increase than the increase they would get under the current law. As a result, those justices have a financial interest in the outcome of the SB 822 lawsuit.
The Supreme Court justices have also appointed a Special Master to hold hearing to determine what the facts of the case are. The Special Master will then present his proposed fact to the Supreme Court. The Supreme Court will decide the case by applying the law to the facts accepted by the Supreme Court. The Special Master is an Oregon judge and, as a result, is also a PERS member. He is also a regular PERS member for public service performed before he became a judge. Therefore, he has the same financial risk in the outcome of the case as the Supreme Court justices have.
As a result, SB 822 will not actually reduce PERS benefits unless the PERS judges approve the reduction by upholding SB 822. Generally, judges with a conflict of interest in a case cannot decide the case. The major exception to this general rule is if it is impossible to find judges to decide the case who do not have the conflict of interest. All Oregon elected judges do have the same PERS conflict. But there are other judges, temporary judges, who have the same power and authority as elected judges, who are not PERS members who could decide PERS cases. Therefore, the exception to the general rule should not apply. As of today, however, Oregon’s elected judges have refused to appoint temporary judges to decide PERS cases and this has created the situation where no PERS laws can be changed unless PERS members approve the change.
The legislature created this problem when it forced all elected judges to be PERS members, effective January 1, 1984. During the first thirty-eight years that PERS existed, from 1945 – 1983, Oregon judges had their own separate retirement plan and they were not PERS members. All PERS cases were decided by impartial judges. If you like the current PERS justice system, where PERS members must approve any change to the PERS laws, let your legislator know. But if you do not like the current system, let your legislators know that. They can change the system if they want to but so far the majority of the legislators have not wanted to do so. They seem to prefer a system where PERS members the final say on any PERS changes.