Josephine and Jackson counties are suing over a $4.8 million pension debt state officials say is owed over the former Job Council.
The counties disagree they are liable for the debt to the Public Employee Retirement System but are paying it off — for now. Over 10 years, that comes to about $240,000 a year each, or roughly the annual cost of two Josephine County deputies fully equipped with vehicles.
That's a big deal in a county that does not have 24-hour patrol coverage.
The council disbanded two years ago and re-formed under the umbrella of a nongovernmental organization, WorkSource Rogue Valley, which provides workforce training and related services to job seekers and employers. The counties created the council in 1975, although the lawsuit contends the council was always a separate entity.
"It's the Job Council that's responsible" for the debt, Josephine County Legal Counsel Wally Hicks says. "They're an independent agency."
The seven-member board of directors of the council included representatives from each county.
The lawsuit, filed last month in Marion County Circuit Court in Salem, also states that a contingency account available to PERS when an entity is insolvent should be tapped to pay the debt.
The state has not formally responded to the suit, although in a July letter to county attorneys, PERS Chief Administrative Officer Kyle Knoll said the state had "both legal authority and a fiduciary responsibility" to act.
The debt is known as "transition liability," incurred after the Job Council joined PERS. How the debt came to be is complicated.
Hicks and Jackson County Administrator Danny Jordan both said it's related to PERS expecting the council to add employees over time. Instead, the council cut jobs.
"PERS assumed the Job Council would add employees," Jordan said.
More employees would mean more council contributions into PERS. Instead, in 2011, the council reduced its staff from 89 to 50.
At one point, Josephine County officials proposed the council consider bankruptcy.
Hicks characterizes the lawsuit as a "David and Goliath" story, with the counties in the role of David.
"PERS tells us, 'You owe' and we're telling them, 'No we don't,' " he said.
A representative for PERS, Joli Whitney disagrees.
"They're on the hook," she said. "They believe they're not on the hook, and we believe they are."
The dispute is related only indirectly to the troubled public pension system, which has a funding deficit that has soared to $22 billion at last estimate.
The 2017 state Legislature is considering several bills to head off a funding crisis that will result in budget-busting cost increases at PERS over the next six years.