PERS battle cry: «A deal is a dealĄ

Oregon public employee unions filed two lawsuits July 22 seeking to overturn a pair of laws signed in May by Oregon Governor Ted Kulongoski that changed the Public Employees Retirement System (PERS).

“Our battle cry is ‘A deal is a deal,’” said attorney Greg Hartman, who represents a group of 13 public employee unions known as the PERS Coalition.

“The issue here is: What have people been promised?” Hartman said.

House Bills 2003 and 2004 reduced pension benefits for active and retired PERS members by suspending cost-of-living adjustments for some retirees, eliminating promised earnings, and ending the ability of employees to contribute to their own pensions.

Hartman said by passing the laws, the Legislature went against the advice of its own legislative counsel Greg Chaimov, and Attorney General Hardy Myers, both of whom predicted the laws would be struck down in court as a breach of contract.

The PERS Coalition calls it an issue of fairness, Hartman said. Public employees have made life decisions based on what they calculated in their pension benefits, and many stayed in public service based on those promises. Under the new laws, public employees close to retirement could lose 10 to 15 percent of their pension benefit, and mid-career employees could lose up to one-third. Recent hires could actually do better under the changes.

Hartman said it’s important to keep in mind the context of the dispute: The longest stock market downturn in decades. The Legislature passed the changes largely because the fund’s stock market losses meant public employers would have to substantially increase contributions to the fund in order to meet pension obligations. To lessen that “unfunded liability,” the laws basically reduced — by about $9 billion — the amount of benefits promised to current PERS participants.

“Pension funds all over the country are hurting,” Hartman said, “but the State of Oregon is the only public pension system in the country that basically decided to tear up the system.”

PERS has about 308,000 active and retired enrollees, including 185,000 represented by unions in the PERS Coalition. They include school teachers, some police, firefighters, nurses, corrections officers and many other classifications. Technically, the unions that represent public employees don’t have legal standing to file suit, so they selected a representative group of individual union members, and suits were filed on their behalf.

The suit filed in U.S. District Court in Portland charges that the new laws are a breach of contract that violates the U.S. Constitution, while a separate suit filed with the Oregon Supreme Court in Salem charges that the laws are a breach of contract that violates the Oregon Constitution. Direct appeal to the Oregon Supreme Court was authorized by the two laws in order to get a speedy resolution of the legal challenge the Legislature knew they would face.

Hartman predicted it could take 12 to 18 months to get a decision from the courts.

Two other groups may file lawsuits separately, Hartman said: one consisting of retirees, and one consisting of public employees who don’t have union representation.

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