Conflicts Abound in PERS

Dan Re is rapidly becoming an important voice in the debate over Oregon’s gold-plated Public Employees Retirement System (PERS). What he adds is an acurate history of the corruption of the process. Following is a recent article that Dan has completed:

Oregon’s PERS-fect Storm

“Like the Eastern Atlantic Seaboard that suffered through the perfect storm in October, 1991, Oregon is experiencing an intensely ferocious storm that is wreaking havoc throughout the State. This storm is not the result of warm fronts, cold fronts and pressure systems. It’s a PERS-fect storm, caused by thirty-five years of PERS legislators promoting their self-interest in the Oregon Public Employees Retirement System.

“From 1945, when PERS was created, until 1971 legislators were not PERS members. In 1971 the Attorney General reversed a 1963 opinion and held that legislators could join PERS. In response to that opinion, the legislature passed a law in 1975 that allowed anyone who had ever served in the legislature to retroactively join PERS. The legislators did not automatically become PERS members, however. They joined PERS only if they chose to join it. Since 1975, most legislators have join PERS.

“Less than a year before they allowed themselves to join PERS, the legislators referred the Oregon Ethics Code to the people of Oregon who approved it in the 1974 general election. The first provision of the Code declares that public office is a public trust. Legislators hold a public office and that makes them public trustees. Generally, trustees are prohibited from making decisions when they have a conflict of interest because they have a duty of complete loyalty to the trust beneficiaries. An exception exists, however, if the trustee obtains the consent of the beneficiaries after full disclosure of the conflict.

“The 1975 law allowing legislators to join PERS created a conflict of interest for every legislator who joined PERS. That law was passed after the Ethics Code became effective. The legislators did not request and were not given consent by the people of Oregon to join PERS. After the legislators joined PERS they made fundamental changes to the PERS laws which have led directly to the current PERS crisis.

“In 1983, the legislature put the Oregon judges into PERS. Eighty-four of the ninety legislators were PERS members in 1983. Prior to that law the judges participate in the independent Judges Retirement Fund. With the judges in PERS, each judge had a conflict of interest in every PERS case and the people could not change PERS laws by initiative without the approval of PERS judges.

“In 1989, eighty-two of the ninety legislators were PERS members and that year the legislature made PERS funding Oregon’s highest financial priority. Under that law, if a public employer did not pay its PERS assessment on time, the PERS Board could require the State Treasury to withhold all funds that delinquent employer was entitled to. That is why public agencies, such as the State, school districts, cities and counties, must reduce services when PERS assessments go up. PERS legislators have required PERS assessments to be paid before a public agency can provide the services that it was created to provide.

“In 1996, the Oregon Supreme Court invalidated Ballot Measure 8 which had been passed by the people in November, 1994. Ballot Measure 8 made three changes to PERS: it prohibited public employers from picking up employee PERS contributions; it eliminated the 8% assumed minimum rate for PERS accounts; and, it stopped unused sick from being treated as salary in computing a PERS member’s retirement benefit. All seven of the justices of the Supreme Court were PERS members and, by a vote of 4 to 3, the court held that Ballot Measure 8 was unconstitutional. In that case, PERS members asked PERS judges to invalidate the will of the people and the people were represented by the Attorney General, who was also a PERS member.

“For the last thirty-five years, all final PERS decisions have been made by PERS members. Oregon’s PERS-fect storm will not subside until all parties affected by PERS decisions have meaningful representation in the decision making process. The legitimacy of government action depends upon the consent of the governed. Non-PERS Oregonians have been excluded from PERS decision making since 1975 and they have not consented to any PERS decision made thereafter. The legislature must acknowledge its mistakes and take corrective action immediately.

“Daniel C. Re “

Readers can obtain additional information about Dan and the PERS issue at his website: http://www.inrethepeople.com/

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  • Rupert in Springfield

    At this stage of the game there is no way to adjust or eliminate PERS either legislativly, judicially or through the initiative. The judges have made clear where they stand and will fight any attempt by the citizens to have fiscal sanity on this issue.

    In addition PERS benificiaries have made two things quite clear.

    1 – They believe wholeheartedly they are entitled to every dime possible under the system.

    2 – They intend to use every legal remedy to enforce every dime of payment under the system.

    The PERS beneficiaries believe PERS is iron clad in a legal sense. In that regard they have certainly been successful in defeating even the slightest challenge to their pot of gold.

    There is only one way to change PERS, and it is not going to happen through the legislature or judicial review. It also will not happen through initiative – any voice by the people will be struck down by the judges on the plan.

    What needs to happen is simply publicity – and the publicity needs to be exactly what PERS beneficiaries are arguing.

    “We got you fair and square, we worked the system, passed the laws, we will get every damn dime out of you”

    I would suggest signs publicizing this fact with road signs like we often see for public works projects. Except these would be public Not Work projects.

    *Your Tax Dollars Not At Work – This road repair not performed in order to pay 1,000 PERS recipients*

    *This School will close one month early to pay 30 past teachers and administrators who are PERS recipients*

    *This bus does not run Tues-Friday, to pay PERS recipients John Smith and Mary Jones, bus drivers who used to work those days on this line but retired at 55. Thats right retired from a job driving a bus*

    PERS recipients have been adamant about their legal position, they are entitled to the money and will pursue it. That’s fine. If ones cause is just, then one should have no problem with the public knowing the cost of that justice.

    • Ron Marquez

      …..”If ones cause is just, then one should have no problem with the public knowing the cost of that justice.”…..

      Steve Buckstein,
      Is this a message the Cascade Policy Institute can put meat to and transmit state wide ? Is it even something you’d want to undertake ?

      Rupert is right in saying that until all Oregonians understand the impact of PERS on government services, nothing will change (my interprtation of his words).

    • Marvin McConoughey

      “The judges have made clear where they stand and will fight any attempt by the citizens to have fiscal sanity on this issue.” Maybe not. Courts have a long record of adapting to changed circumstances. Witness the infamous Dred Scott decision. The legislature should craft a new reform proposal for court consideration. Given careful wording and prior research it might be accepted, in whole or in part.

      • Rupert in Springfield

        >Maybe not. Courts have a long record of adapting to changed circumstances.

        That’s sort of what I am arguing.

        PERS recipients are proud as punch about their legal position and intend to enforce it. The public should be made aware of the actions taken by PERS recipients as well as the financial implications. PERS recipients should laud this effort given the pride we generally hear from them regarding their position.

        It will be a slow process, but as people become more and more aware of how they have been had, things will change

        It might take getting new judges in place. It might take changes in labor law at the state and federal level. The point is there isn’t thee money there to pay all this stuff and thats not only in Oregon. I think it will be a bigger and bigger problem nationally. Government employee unions have been very crafty at extracting money from taxpayers. At some point those taxpayers will have to chose between cushy retirement for those former employees and their kids education.

    • Mary’s Opinion

      Rupert, are you and others ready to begin an Oregon taxpayer movement to publically fight the run-a-way PERS system?

      Your are so right. If PERS is not controlled, it will become the number one item in the state’s budget to the detriment of all services to Oregon residents.

      • Rupert in Springfield

        I know nothing about starting up or running that sort of movement so I have a feeling I would not be the best choice. However I would be more than happy to work on the materials Rob De Harpport (see below) apparently has access to and put together some sort of information packet, YouTube video DVD or mailer on the subject.

        Frankly I think a You Tube video combined with a Facebook page would be the best low cost initial step.

  • Steve Plunk

    Government is increasingly failing to fulfill it’s promises under the long standing social contract regarding taxes paid by citizens. IN the private sector the contract would now be void since the government has breached it. Judges should understand this and support the citizens who have been cheated by their government and will end up paying the price for generations unless allowed to act.

    To those government employees who say the must be given what was promised under PERS I respond that I must be given what was promised when I paid my taxes, a government that is not corrupt, is solvent, and provides services for the taxes paid. None of that is happening so why should the taxpayers be obligated to PERS? I don’t think they should be.

    • Rupert in Springfield

      >I don’t think they should be.

      Thats a valid point, and I don’t think so either.

      However you will get no legal opinion that will ever agree with that.

      It simply has to become political suicide to support PERS, thats the only way we can keep from being ripped off. The citizens have to be angry about it, and that wont happen until the true costs are known and more importantly felt.

      This is why the 9% across the board cut that was proposed was a good idea.

      When schools are cut, when roads are falling apart, when taxes skyrocket and people see all the money going to a bunch of PERS recipients who scammed them years ago, thats when things will change. Not before.

    • Anonymous

      Steve, you have interesting legal theories, too bad they are crackpot. Take your theories to the courts, take them to Governor Kitzhaber! I’m sure you’ll get a sympathetic hearing.

      Your whiny air of persecution, all over the web, is really tiresome. If you think Oregon is so badly governed, get the hell out, go someplace you think is better. OK, so maybe you think Oregon has screwed up its government. Maybe it has. Who the hell voted in the people you hate so much? It was the people. Now they have to live with what they did.

      I really am growing to despise your kind. A real education at this website. I run into quite a few of you. All are whiners, a lot are losers. Good riddance!

      • Rupert in Springfield

        This is exactly the face of PERS that we need for the “Your Tax Dollars Not At Work” campaign.

        He is right – The courts and Governor Kitzhaber will have zero sympathy for the people paying for PERS.

        You pay, and pay and pay so that the PERS recipients will get their money. They are legally entitled to it and, by God, they are going to force every dime out of the taxpayers to get it.

        When schools get cut, when there are no police and roads are falling apart because everything is going to PERS recipients – lets have this guys face right there with the message of his post:

        _______________________ *Stop Whining, Shut Up and Pay* ___________________________________

        Let his message be seen and heard loud and clear. Nothing would be better to start a revolt over PERS than this persons message, which is the truth, getting out there.

      • Steve Plunk

        It’s easy for anonymous posters to call people whiny and act high and mighty. How am I supposed to take anything you say seriously?

        My comments are not legal theory. My comments are about fairness and common sense. The legalities of this are basically what’s screwing the taxpayers. I know there’s no legal grounds but it makes my statement none the less true.

        My complaints against government are neither tiresome or whiny unless you happen to be one of those on the government dole. Pointing out the shortcomings and failures of government is a citizens responsibility. Your attitude of just shut up and get ripped off is one of defeatism and cowardice. I’ll have none of it. As much as you may despise my kind I too despise yours. The kind that suckles from the government teat without regard to the consequences for future generations, the kind that gives up easily and appeases those who don’t deserve it.

        Trolls like you are merely an irritant to those who come here to exchange ideas. You offered nothing but personal insults. It takes a bigger person to actually be constructive.

        When you’re ready to step up and stand behind your words I might listen, until then, anonymous, keep your insults as private as your name. It’s pathetic to do otherwise.

        • Ron Marquez

          Good reply, Steve but until anon attaches a name to the nasty diatribes, don’t waste your time. Reasoned well thought out responses are lost on the anons of the world.

        • Anonymous

          Oh, Steve, so upstanding are you. All those public employees retiring early, like my dad, he was only 66. How old was your dad when he retired? Just wondering.

          • Rob DeHarpport

            Nice try-“Anonymous,” deflect the topic point of discussion. The reality is real easy to explain; every time a school makes cuts, a city can’t purchase an ambulance (or staff it as in Oakridge), a county can’t fully operate a jail etc. etc. etc. They come right after the taxpayer-even in a recession that has reduced the 2009 income of 1 in 5 Americans by 25% or more.
            The basic equation that folks need to understand about PERS is the 8% guarantee for Tier 1 PERS. Warren Buffet has stated that the 100 yr. average NYSE return is 5.3% –rare is the year that reaches 8%–additionally PERS Tier 1 also guarantees a 2% COLA. 2% COLA + 8% Guarantee=10% return. IS 5.3% greater than 10%?? Until many more Oregonians learn this basic inherent problem with PERS they will constantly face the choices of closing schools, reducing public safety or funding levies and paying higher taxes. KNOWLEDGE IS POWER! Those of us who know these facts must spread them– I know the info is there to distribute, I’ve been working with a guy who is very, very knowledgeable about PERS–he’s been trying to put a DVD together, let’s help him get it done. The well is dry Anonymous…..

          • Rupert in Springfield

            Your friend is putting out a DVD on PERS? That’s brilliant! PERS recipients are insistent they are in the right legally. Every court has upheld this as well. Let’s get out the good news on how much these folks are collecting from us! PERS recipients say “see you in court”. We should say “see you on TV to advertise your good fortune and what it means for every taxpayer”. Does your friend have a website? Has he thought about distribution? I would suggest a mailing list of everyone who has a kid in school. That way the education can continue while the kids are at home due to shortened school years to pay the luxurious PERS benefits.

          • Rob DeHarpport

            Rupert,
            He has all the pertinent and damning information compiled and outlined in a concise easy to understand presentation. He has written several articles and opinions about PERS over many years- we just need some help putting it all together– make it “viral” as they say. We need to all connect on this project.

          • Rupert in Springfield

            Well, I’m not sure what form it is in but I would be more than happy to work on this if I could be of any help. Drop me an email.

          • Ron Marquez

            I’m in to, Rob. I’ll help in any way I can. Email me when you need help.

          • Steve Plunk

            Anonymous, Do you really expect me to allow to draw family members into this? You can’t debate on merits so you want to personalize it? I will tell you this, my father (who recently passed away) did not retire using money from a corrupt retirement plan paid for with taxpayer money. His retirement did not bankrupt school districts, cities, and the state.

            You are simply reprehensible. Either man up or crawl back under your rock.

          • Anonymous

            Sorry to hear about your dad. A lot of public employees have parents who pass away, too. I hope he had many years happy retirement, more than my dad, dad, who only had 7. And no, my dad wasn’t in a “corrupt” program. Yeah, it was taxpayer funded. So what. Business isn’t corrupt as hell? And no, his pension didn’t, hasn’t bankrupted the state. Speaking again of corruption, there’s plenty of stuff out there about transportation firms and safety violations and the like. One of the dirtiest businesses around. I certainly trust none of this applies. You don’t want to have public employees? Then move somewhere more to your liking.

            And you think your dad earned his money while mine didn’t? Well, to hell with you!

          • Steve Plunk

            Anonymous you are making a fool of yourself. I never mentioned your family members so don’t get all indignant. You play dirty but I’ll stick to the high road. Just so you know my company received a satisfactory safety rating which is the highest you can get. Again you’re playing dirty and bringing up things not part of the debate in an effort to personally besmirch me. Nice.

            Larry Huss laid out in detail why PERS has been and is corrupt. Add in the fact taxpayers had no proper representation in negotiations and it’s worse than he describes. As for PERS bankrupting the state there are plenty of people in Salem who would agree with that assessment along with local school districts and municipalities who are seeing payroll costs force massive cuts. You can say technically it hasn’t bankrupted the state since there is no bankruptcy mechanism for states but we know it has undermined the finances to a point we are essentially bankrupt and facing further unfunded mandates in the future.

            Move away? I’ve said it before, why move when you can politically involved and change things through democracy? That cheap rhetoric won’t fly. Besides I want public employees. Non union, fairly paid, non PERS, public respecting, hard working, public employees. I haven’t asked and don’t feel obligated to reply but are you a public employee? You know what I do so it seems a fair question.

          • eagle eye

            You want “Non union, fairly paid, non PERS, public respecting, hard working, public employees”? You already have items 2,4,5,6. You’ll have to get the laws changed to get 1. And item 3 no pension plan? They’d have to be crazy.

  • Marvin McConoughey

    One of many PERS problems is simply that the economy has not done as well as many , both management and employees, hoped. It is questionable if the state will have an impressive economic future, given the global and national economy. Under these conditions, both labor and management should get together and agree on some practical reforms that make the best of a bad situation. I was informed by a union leader many years ago that contracts are living documents and should be renegotiated when underlying facts changed. He was responding to an unexpected large increase in corporate profits, but the same point can apply now.

  • Rupert in Springfield

    Gotta love it, these guys will stop at nothing.

    Ok – Get this

    The Eugene 4J school district got some Obama bucks for schools.

    Ok, no big deal there, so did a whole mess of other places. Like other school districts they took the Obama bucks, put it towards education, then pulled money out of the education budget to use for other things there were budget shortfalls on. In other words the Obama bucks basically replaced money in the school budget that was spent elsewhere.

    Alright, not really all that remarkable, everyone did it.

    So now the teachers union is suing Eugene 4J claiming that money should have been added to the school budget, not just simply switcherooed. Had that been done they argue, there would not have been furlough days and teachers could have made money on those days.

    Now they want to be paid for those furlough days, which apparently could force the firing of a whole mess o teachers. to pay for it.

    I mean this is unconscionable. Is there anything so low that public employees will not stoop to it? You are seriously suing a school district in the middle of a horrendous recession to get paid for days you didn’t even work?

    Look jerks, you didn’t work those days, don’t sue to get paid for them. This should be exhibit number one when showing the face of public employee unions.

    • eagle eye

      Uh, maybe they contracted to have those furlough days based on a certain representation of what those Obama bucks would be used for? i.e. maybe there’s breach of contract going on?

      I don’t know. Let the courts decide. Based on past Oregon government performance, I wouldn’t bet against the union. I’m not the judge, and I don’t have a dog in this (except I live in Eugene), but I know it’s not smart to flout a contractual agreement.

      • Rupert in Springfield

        >Uh, maybe they contracted to have those furlough days based on a certain representation of what those Obama bucks would be used for? i.e. maybe there’s breach of contract going on?

        Uh, Uh, Uh, well, you might want to think about that because it has a glaring logical implication that I doubt you will like very much.

        I’m surprised you didn’t catch it as were your supposition true, it would mean the teachers were even more unconscionable than even I originally suggested.

        So lets go with your made up contractual breech. What does that require in order to be true?

        Well, if this were this breech of contract, then why would the teachers not launch a suit the moment Obama bucks were awarded yet furlough days not removed from the schedule?

        Eugenes budget shifting was not at all a secret and furlough days are known well in advance. So why wait until after taking the furlough days to sue for back pay?

        If one was really interested in working those days, wouldn’t one sue before taking them if the conditions for the suit (your supposition of breech of contract) existed a priori the breech?

        See the logical problem you get yourself into?

        If you suppose breech of contract you are pretty much saying the teachers had no real interest in working those furlough days, just getting paid for them.

        >I don’t know. Let the courts decide. Based on past Oregon government performance, I wouldn’t bet against the union

        No one would. Union thugs absolutely control this state, including the judicial branch. On that you and I have never disagreed.

        I hope you didn’t think for a moment I was addressing the validity of the teachers claim, just the unconscionable idea of pursuing it, valid or not.

        The fact is they didn’t work those days and shouldn’t get paid for them. If they had sued before taking them I would have some sympathy, to wait until after you get the day off to sue is about as low as someone can sink.

        To sue after getting fat raises which you taxed everyone else to pay for is even worse.

        • eagle eye

          “Union thugs absolutely control this state, including the judicial branch. On that you and I have never disagreed.”

          Nonsense. I’ve never agreed to any such thing. In the first place, the unions are not thugs. Second, they don’t control the state. Including the judicial branch.

          Let the courts listen to the claims, and decide.

        • valley p

          “To sue after getting fat raises which you taxed everyone else to pay for is even worse. ”

          Only they (teachers) did not get “fat” raises, and they (teachers) did not tax everyone else.So other than being 100% wrong you are 100% accurate.

  • Marvin McConoughey

    I don’t expect major reform because unions have sufficient power to prevent it. The outlook for Oregon’s future is grim because shortening the number of school days and laying off teachers promotes mediocrity, or worse, in the K-12 system. That means fewer able college students, more remedial higher education classes, and a general watering-down of education standards. It is a high price to pay for biased PERS agreements entered into with considerable lack of foresight.

  • Rob DeHarpport

    As soon as we who know PERS inside & out expose the inherent problems and the devastating effects caused by PERS. The effects PERS is having on all levels of public governance and the PERS party will soon end. A school district can not educate children when 29% of payroll is dedicated to funding PERS–I use the Oakridge School District as an example. As of Jan. 1st Oakridge School Dist. is obligated to pay 29% of wages to PERS–I repeat 29%!!! Many school districts , cities and counties are in the same ballpark. And we know that the next PERS financial report will likely require another increase of 5-8%.
    Bottom line–there are far more common sense Oregonians than PERS participants and public employees. The Unions are well funded and organized– common sense will prevail, IF we educate folks every time a city, county or school district “cries broke.” Another very important fact to remember is; the Teir 2 PERS folks are younger and often have young families–they are just realizing how detrimental Tier 1 is to their future wage & benefits capacity.
    As a Teamster I witnessed the two tier wage system, quite simply it was a divide and conquer plan that worked very well.
    Another key point to ponder is the fact that City and County Administrators, School Superintendents etc. are very often the lead negotiator in contract talks-they also are PERS beneficiaries. Perhaps it’s time for cities, counties & school boards to hire labor attorneys-even for beginning negotiations- that would avoid any and all “potential” or “real” conflicts of interest.

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