Challenge to PERS cuts is filed with state high court

The first challenge to the public retirement cuts passed by the Oregon Legislature in September has been filed before the Oregon Supreme Court, judicial department spokesman Phil Lemman said Tuesday.

The Legislature passed two sets of bills this year that cut back how much people will receive through the Public Employees Retirement System. The first (Senate Bill 822) was passed in the summer during the regular legislative session, and the second (Senate Bill 861) was passed in September during a special session called to increase school funding.

Legal challenges to SB 822 already have been filed, and the deadline for filing challenges to the second, SB 861, is this week, Lemman said. The bills do the same thing: reduce the annual cost-of-living adjustment for retirees. The second one simply cuts the COLA further, but it doesn't use a different mechanism to do it. For that reason, the Supreme Court will hear appeals to both bills together, former Department of Justice spokesman Jeff Manning said.

The challenge filed Tuesday came from PERS member George Riemer of Sun City West, Ariz., who also challenged SB 822. Riemer is the executive director of Arizona's Commission on Judicial Conduct.

The suit alleges violations of the contracts clauses in both the Oregon and U.S. Constitutions and claims the law is "taking without just compensation."

Attorney Greg Hartman, who represents Service Employees International Union Local 503 and the PERS Coalition, said in October he plans to file an appeal of SB 861.

When Hartman files his lawsuit, it will join the three appeals of SB 822 and Riemer's SB 861 appeal that already are going before the court.

The most prominent of the SB 822 lawsuits came from the PERS Coalition, a group of current and retired public employees represented by Hartman. Two others were filed on behalf of individuals: Michael Reynolds, a retired Oregon public employee who lives in Washington, and Wayne Stanley Jones, a retiree who lives in Utah.

Hartman made 12 claims for relief in his filing.

He said SB 822 is unconstitutional because it "impairs the contracts" between state workers and their employers and because it constitutes a "taking" of property rights without compensation.

He also argued that the bill is a breach of contract for anyone who is or was a public employee because they were promised 2 percent COLAs when they were hired, and that can't be changed retroactively.

If the Supreme Court decides it is, in fact, a breach of contract to reduce the COLA, there's no indication the Legislature will try to cut PERS benefits again. Kitzhaber has said PERS is now "off the table" for him, and House Majority Leader Val Hoyle backed him up.

"There is no Plan B" if SB 861 is thrown out in court, she told Democrats at the their biennial summit in Sunriver. She said Kitzhaber told Democrats he would drop the PERS issue even if the court appeals are successful.

"That, to me, was worth (passing the bill)," Hoyle said at the summit. "Getting PERS off the table for the next five years."

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