Federal appeals court deals blow to Oregon PERS retirees
The U.S. 9th Circuit Court of Ap-
peals dealt Oregon public employee re-
tirees a blow Oct. 24 by upholding two
pieces of a Public Employee Retirement
System (PERS) reform package passed
by the 2003 Oregon Legislature.
Soon after that law was enacted,
public employee unions formed a coal-
tion to fight the reforms in court.
In a case known as Robertson, the
federal court upheld two key Oregon
Supreme Court rulings initially made in
what was known as the Strunk case,
which the high court decided in 2005.
At issue were two pieces of the PERS
reforms: the right for employers,
through PERS, to divert the employees’
6 percent pension contribution away
from the regular PERS account and into
individual accounts, and the elimination
of employees’ ability to contribute to a
variable account.
The unions filed Robertson because
state and federal contract law are simi-
lar, but not identical. There was hope
that even though the state court said the
reforms were OK under Oregon law
that the 9th Circuit would find the re-
forms illegal under federal pension law.
However, the federal court said “… the
2003 legislation does not impair a term
of the employees’ PERS contract and,
therefore, does not violate the federal
contract clause.”
Strunk was a split decision when the
Oregon Supreme Court released its
original 4-3 verdict in March 2005.
Public employees won on two major is-
sues when the Oregon court ruled that
current Tier 1 members are entitled to
an annual 8 percent interest credit in
their PERS accounts and also ruled that
PERS could not withhold annual cost-
of-living adjustments from retirees as a
means of recouping excess earnings
credited in 1999.
The PERS Coalition did not prevail
on three issues in Strunk: the two issues
that were carried on in Robertson, plus
a challenge to the updating of mortality
tables that was ultimately dropped.
The 9th Circuit decision announced
Oct. 24 was issued by a three-judge
panel — Barry Silverman, Ronald
Gould and John Rhoades — with the
opinion written by Judge Rhoades.
“This is a very disappointing deci-
sion,” said Greg Hartman, attorney for
the PERS Coalition. “Once again, from
our perspective, a court failed to key in
on the primary rights of our members
in continuing their PERS contract.
One victim of the decision is the
Money Match retirement option. While
none of the court decisions specifically
eliminates Money Match, it won’t be
the best option like it was for many em-
ployees when their variable earnings
were funneled into their regular PERS
account.
“With the employee 6 percent di-
verted into the Individual Account Pro-
gram and employees no longer earning
variable dollars that go into their PERS
account, future retirees will see their
best payout under the Full Formula plan
— which was the point of the reforms
all along,” said Oregon AFSCME sen-
ior political coordinator Mary Botkin,
who lobbies PERS issues for Oregon
AFSCME Council 75.
The PERS Coalition could ask the
entire 9th Circuit Court to reconsider
the decision or it could appeal to the
U.S. Supreme Court. At press time, the
coalition had not yet decided how to
proceed.
Hartman emphasized, however, that
the Robertson decision has no impact
on several other pending PERS-related
cases in Oregon. The Arken and Robin-
son cases recently completed the oral
argument phase; both of those cases
deal with retiree issues. Also pending
is the White case, which mirrors the is-
sues in the City of Eugene case (also
known as the Lipscomb case). City of
Eugene dealt with the so-called em-
ployer-PERS “settlement” and 1999
earnings; the Oregon Supreme Court
initially ruled onthe case but later va-
cated its decision, leaving the door open
for White to revisit the entire situation.
Arken, Robinson and White are all
currently in Multnomah County Circuit
Court. Once that court renders a deci-
sion, each of the three could be ap-
pealed to the Oregon Court of Appeals
and ultimately the Oregon Supreme
Court.
(Editor’ Note: This article was ex-
cerpted from Oregon AFSCME Coun-
cil 75’s E-lert written by Don Loving.)
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