By PETER PRENGAMAN
Of The Associated Press
SALEM - Key elements of the Legislature's state pension reform package violate public employees' rights and likely will be thrown out by the Oregon Supreme Court, Oregon Attorney General Hardy Myers says in a written opinion.
It will be up to the state's highest court - and not Myers - to decide the fate of pension reform laws passed this year by the Legislature.
But his written opinion - obtained Friday by The Associated Press - casts doubts on the new laws and on the hundreds of millions of dollars in state savings that legislators are budgeting.
Union officials are in the process of filing challenges to the laws. If they are overturned, the courts may order that benefit losses be returned to those who would lose them under the changes.
"This says what we've been saying all along," said Brian Delashmutt from the Oregon Nurses Association, a union with about 7,500 pension members. "There is a right way and a wrong way to go about fixing PERS."
Mary Ellen Glynn, Gov. Ted Kulongoski's spokeswoman, said the governor had not read the opinion but he was confident the new laws would pass muster.
"There are sometimes different opinions between a governor and an attorney general," Glynn said. "But as a former attorney general himself, the governor believes the bills are constitutional."
The opinion came at the request of Sen. Tony Corcoran, D-Cottage Grove, a leader of pension reform efforts. Calls to his office Friday afternoon were not immediately returned.
In May, the Legislature passed a package of sweeping reforms of the Public Employees Retirement System. The changes sharply scaled back pension benefits by slowing the growth of accounts and eliminating the cost-of-living increases for some current and future retirees.
Taken together, the reforms shaved about $9 billion from the $16 billion longterm shortfall facing the PERS system. They also freed up hundreds of millions of dollars that school districts and local governments can use over the next four years.
Citing recent court decisions in 1992 and 1996 that involved the pension system, Myers' opinion examined three areas of benefit changes set to take effect July 1.
First, it evaluated a provision in a new law to update the life-expectancy tables used to calculate pension members' monthly benefits.
The so-called "look back" provision in House Bill 2004 guarantees that workers retiring after July 1, 2003, when the new tables take effect, won't make less in pension benefits than they would have retiring June 30.
The opinion said the new provision "does not adequately guarantee contract rights" because pension accounts won't continue to grow for workers who continue past July 1.
Second, the opinion examined shifting the 6 percent contribution - called the "employee pick-up" but often paid by the employer into employee accounts - to a non-PERS account.
Legislators made the change, contained in House Bill 2003, to slow the growth of member accounts.
The opinion said the courts will likely find that the "cessation of employee contributions to the PERS plan constitutes an impairment of some PERS members' contract rights."
Finally, the opinion said eliminating the 8 percent annual return guaranteed to workers hired before 1996, also contained in HB2003, will likely be viewed as "an unconstitutional impairment of contract rights."
