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: