February 11, 2013 01:59 PM UTC

Taking Accrued Public Pension COLA Benefits is Illegal: Oregon Legislative Lawyers.

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• by: PolDancer

In 2010, the Colorado Legislature passed a bill to try to retroactively change public pension contracts in the state.  Colorado state legislators enacted SB10-001 seizing accrued, earned, fully-vested, contracted Colorado PERA retiree pension COLA benefits.  A group of 17 statehouse lobbyists persuaded Colorado state legislators that year to attempt this retroactive taking of contracted public pension benefits.  In 2010, Colorado legislators abdicated their responsibility to make public policy in this arena to: the state’s pension administrator, Colorado PERA, to public sector unions in Colorado, and to these 17 statehouse lobbyists.

Oregon state legislators are not making the mistake made by Colorado legislators in 2010.  They are taking the time to investigate the constitutionality of pension reform proposals prior to putting them into Oregon state law.  This due diligence on the part of Oregon legislators will ultimately save Oregon taxpayers millions of dollars in costs for fruitless litigation.

Unlike Oregon state legislators, Colorado legislators did not bother to ask their own attorneys for an opinion on the constitutionality of their proposal to seize accrued pension benefits prior to acting.  Incredibly, Colorado legislators ignored a 2004 Colorado Attorney General’s opinion on this subject, as well as on-point Colorado case law.  Colorado state legislators were encouraged in 2010 to seek Colorado Supreme Court guidance clarifying the legality of their proposal to take accrued Colorado PERA pension benefits.  The Colorado Legislature ignored this advice (to submit a clarifying “interrogatory” to the Colorado Supreme Court) and forged ahead with SB10-001.

Prior to acting, the Oregon Legislature requested an opinion on a proposal to take back accrued public pension COLA benefits from their in-house legislative attorneys, the Oregon Legislative Counsel.  Here is the February 4, 2013 response of Oregon’s legislative attorneys:

“You asked about the legality of a proposal to limit the cost-of-living adjustment (COLA) to service retirement allowances of retired members of the Public Employees Retirement System (PERS) by applying the COLA only to the first $24,000 of annual benefits.  The proposal would amend ORS 238.360, which has long required that PERS make annual adjustments to service retirement allowances based on changes to the cost-of-living as reflected in the Consumer Price Index.”

“Based on recent Oregon Supreme Court precedent, we conclude that an attempt to limit the COLA in this way would be found to be a violation of the contract rights of the members.”

“The Oregon Supreme Court has found several times that the 1953 law establishing PERS created a contract between public employers and public employees.”

“The court stated several times in Strunk that there is a contract right to the COLA.  For example, the court found that:

‘We note that the status of the law is particularly clear with regard to retired members, and there can be little question that the COLA is a fully accrued benefit for a member who has retired.’”

Here is a link to the complete February 4, 2013 opinion of the Oregon Legislative Counsel:

https://media.oregonlive.com/politics_impact/other/LC%20Opinion.pdf

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