| . |
|
|
|
Breaking News
|
|
Newsletter
December 2003
November 2003
September 2003
December 2003
PERS LAWSUIT UPDATE
INJUNCTION CASE FILED IN U.S. DISTRICT COURT
In addition to the lawsuits challenging the 2003 PERS legislation that have been filed in the Oregon Supreme Court, the Multnomah County Circuit Court and the U.S. District Court, attorneys for the PERS Coalition, which AOF is a member, have filed an action in the federal court seeking enforcement of a permanent injunction originally issued by the U.S. District Court in September 1978 in the case of Henderson v. State of Oregon. The Henderson case involved the use of mortality tables in calculating retirement benefits for PERS members. The court in 1978 ruled that PERS had to use ìtopped-upî or male-only mortality tables in computing benefits. The use of these tables will always result in higher benefit levels. In HB 2004, which mandates adoption of new tables, this requirement was ignored. The attorneys are asking the federal court to enforce its own, albeit aged, order.
OPTIONAL RETIREMENT PLAN FOR FACULTY UNDER ATTACK
Just when we thought things couldnít get any worse, the Optional Retirement Plan for Faculty (ORP) is under threat of being rendered much less of an attractive alternative.
Using the passage of Ballot Measure 29 in September which authorized the State to issue $2 billion in bonds to pre-pay future liabilities of the PERS system, the State has decided to recalculate and reduce contributions to the ORP. These contributions are tied by statute to PERS contributions which historically have been set for each biennium and remain unchanged until the next biennium. Coming out of the 2003 session, the employer contribution rates were set at 11.31% for Tier 1 members and 11.71% for Tier 2 members.
This mid-stream recalculation results in employer ORP contributions falling to 3.71% for Tier 1 members and 4.27% for Tier 2 members. All because the State decided to pay down a future liability for PERS, which is an entirely separate retirement plan. Talk about innocent bystanders!
AOF has retained the Bennett Hartman law firm which is handling the PERS Coalition cases over the 2003 legislation, to research what legal remedies ORP members may have.
AOF has also written to Chancellor Jarvis asking him to use his administrative authority to right this wrong. In his letter to the Chancellor, AOF Executive Director Mark Nelson wrote: ìÖAll of these occurrences are related to the PERS system and its financial obligations and none related to the ORP. The only people that are hurt and damaged, however, are the faculty members in the ORP... I am requesting that you rescind the contribution rate change notice and maintain the expected, and funded, contribution rate of 11.71% for the ORP for the balance of the 2003-2005 biennium and direct the OUS member institutions to expend the funds originally budgeted for the ORP contributions at this rate .Holding this rate in place would correct the unfair result we now haveÖî
AOF has also requested that PERS release the actuarial study that concluded the reduced contribution rates were appropriate. If this study is not released by December 3, 2003, AOF intends to file a public records request with the Attorney General.
As this newsletter goes to print, we are awaiting responses from Chancellor Jarvis and from PERS.
PERS RULEMAKING UNDERWAY ON SUCCESSOR PLAN
PERS is in the beginning stages of rulemaking to implement the new successor retirement system dubbed the Oregon Public Service Retirement System (OPSRP)
One issue has arisen that ought to be of concern to faculty who are Tier 1 or Tier 2 members of PERS. This issue has to do with the ìbreak in serviceî provision of HB 2020, the OPSRP legislation.
The legislation defines a ìbreak in serviceî as when an active or inactive PERS member performs no hours of service in a qualifying position for a period of six consecutive full months or longer. If a break in service occurs, the PERS member defaults into the OPSRP system for service after the ìbreakî ends. Obviously this provision could have adverse implications for faculty on sabbatical or in a visiting professorship.
There are four exceptions to the hard-and-fast six month rule. These are 12 month allowances for family medical leave and for ìcareer development purposes.î Also, military duty does not count as a ìbreakî and, in the category of taking care of your own, neither does legislative service.
Under the rules as drafted, employers will define what is meant by ìcareer development purposes.î AOF intends to open a dialogue immediately with OUS to assure that this term is defined as favorably as possible for faculty.
November 2003 (top)
PERS LAWSUIT UPDATE
SPECIAL MASTER APPOINTED BY OREGON SUPREME COURT
The Oregon Supreme Court has appointed Court of Appeals Judge David Brewer to serve as a Special Master for the purpose of developing a fact finding report related to the 2003 PERS legislation that is the subject of the challenges filed with the Court.
Judge Brewer, who previously served as a Circuit Court Judge in Lane County is expected to complete this task in a six month time frame. If this process operates as expected, the parties will first attempt to identify the facts that they are in agreement on and, by elimination, identify the facts that are in dispute. The attorneys representing PERS members, the State of Oregon and the non-State defendant employers all agreed to the appointment of a special master. Since these cases were filed directly in the Supreme Court, there is no trial court or Court of Appeals record that it can rely on in sorting through the various claims and defenses.
The State of Oregon, which is represented by outside counsel because of the conflict that arose when Attorney General Hardy Myers advised the Legislature and the Governor that the 2003 legislation was likely to be found unconstitutional, has suggested that there are a variety of issues that the Special Master should address. These include whether the 2003 legislation actually results in harm to PERS members, whether the legislation impairs or breaches any contract between PERS members and their employers and whether the legislation was reasonable and necessary even if it did result in an impairment of contract.
In his letter endorsing the appointment of a Special Master, counsel for the non-State defendants went into an extensive review of the arguments that he intends to make before the court including that the financial condition of the PERS system necessitated that radical changes be made to the system to reduce benefits even if members rights were trampled.
Greg Hartman, counsel for PERS members and the PERS Coalition endorsed the appointment of a Special Master but declined, for sound tactical reasons, to advertise any of the arguments that he will bring forward during the fact finding process.
Appointment of the Special Master is an important step forward in the ultimate resolution of these cases. As an editorial comment, Judge Brewerís reputation for fairness and the expeditious processing of legal matters, makes him an ideal candidate for this demanding and controversial position.
ATTORNEY GREG HARTMAN SPEAKS TO FACULTY AT OSU
Greg Hartman, the lead attorney for the PERS Coalition spoke to faculty and staff at Oregon State University on September 25, 2003. Over 100 attendees listened to Hartman outline the current status of the various lawsuits that have been filed challenging the 2003 PERS legislation.
Preparations are underway to schedule appearances for Mr. Hartman at other OUS campuses. Visit the AOF website for further information.
BIG CHANGES AT PERS
The 2003 Legislature passed HB 2005 which made significant changes in the PERS Board. The measure reduced the Board in size from 12 members to 5 members. Of the five members, three cannot be members of the PERS system and are required to have experience in business management, pension management or investing. One member each are designated to represent PERS employers and members. The new Board has begun to work through the many changes to the system mandated by the 2003 legislation, and it is too early to identify where the Board members loyalties will lie. The conventional wisdom is that this Board will end up taking whatever action the Governor desires in regard to how the system operates.
On October 30, 2003, the Board accepted the resignation of PERS Executive Director James Voytko. Voytkoís tenure was marked by frequent controversies with the Legislature, members and employers. On October 31, 2203, Laurie Warner was appointed interim Executive Director. Ms. Warner had served as the facilities Division Administrator for the state Department of Administrative Services. The Board is expected to conduct a nationwide search for a permanent successor.
LITIGATION FUND AND MEMBERSHIP DRIVE
AOF is a member of the PERS Coalition group that is managing the lawsuits and financing the legal costs. Many AOF members have already made generous contributions to the litigation fund. For faculty who are not members of AOF there are two ways you can help. First, you can join AOF now. Our dues are only $90 annually and can be paid by payroll deduction or by check. For this academic year, up to 25 percent of your dues payment will be devoted to the litigation as needs dictate. Alternatively, you can make a direct contribution to the fund.
Contact AOF at 503-363-7084 or at
pacounsel@pacounsel.org
if you have questions or comments. Printable versions of the pledge cards are also available on our website
www.oregonfaculties.org . Join your colleagues from across the state in this work that is so important to your future.
September 2003 (top)
PERS LAWSUIT UPDATE
The 2003 Legislature, with the support of Governor Kulongoski, passed HB 2003 and HB 2004, which if upheld in the courts, will have a severe adverse impact on the retirement benefits of active and retired PERS members.
HB 2004 directed the PERS Board to adopt new mortality tables and dictated how the new tables were to be implemented. The Legislature chose to use an approach that eliminates the inclusion of certain interest earnings in calculating benefits under the new tables.
HB 2003 is even more extreme in its effects on benefits. This bill suspended cost-of-living increases for some retirees, eliminated employees rights to contribute to their own pensions and cut off promised earnings.
It is estimated that the changes in HB 2003 and HB 2004 will reduce retirement benefits by as much as 30% for some PERS members.
LITIGATION SUMMARY
As of September 19, 2003, twelve separate actions have been filed in the Oregon Supreme Court, the U.S. District Court and the Multnomah County Circuit Court.
As a member of the PERS Coalition, the Association of Oregon Faculties is participating in the management and financing of six of these lawsuits. In addition, the lawyers handling the PERS Coalition suits are coordinating with counsel for other PERS members who have filed separate cases.
The 2003 legislation mandated that challenges to the laws be filed in the Oregon Supreme Court. This is unusual in that the Supreme Court typically deals with legal issues after cases have moved through a trial court and the Oregon Court of Appeals. The Supreme Court suits assert that the legislation violates state constitutional rights and results in a breach of the contract that exists between PERS members and their employers. This suit asks the court to strike down the legislation or to award damages for the harm done to PERS members.
The federal lawsuits claim that the legislation violates federal constitutional rights and seeks the court to declare the legislation null and void. The Multnomah County actions are class actions on behalf of all PERS members and are necessary in the event the Oregon Supreme Court finds that members are entitled to damages.
It is interesting to note that both the Attorney General and the Legislative Counsel advised the Legislature and the Governor that they believed the legislation violated contract rights of PERS members. This advice was offered before and during the legislative deliberations over the bills.
WHAT COMES NEXT?
The State of Oregon and PERS employers have responded to the petitions that were filed in the Supreme Court. The State raised no affirmative defenses to the suit except for defenses related to federal issues. The employer group raised various defenses, including the absurd assertion that the projected $9 billion in damages to PERS members are not material!
All the lawyers have agreed that the Supreme Court needs to appoint a master to take evidence and prepare a report to the Supreme Court. Once appointed, this part of the process is expected to take at least six months.
(top)
AOF will be providing a monthly update on the
litigation, which will be disseminated in written
form on all OUS campuses.
|
|
|
. |
