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Public Employees Sue Over Lost Retirement Benefits in State Supreme Court

Senate Bill 1049 would cut individual account programs 5-14 percent. The bill is now being challenged before the Oregon Supreme Court. (Cacophony/Wikimedia Commons)
Senate Bill 1049 would cut individual account programs 5-14 percent. The bill is now being challenged before the Oregon Supreme Court. (Cacophony/Wikimedia Commons)
August 12, 2019

PORTLAND, Ore. — Nine Oregon public employees have filed a lawsuit in the State Supreme court, claiming the Legislature violated the state Constitution when it changed the way retirement benefits are paid.

In June, lawmakers passed Senate Bill 1049, which cut benefits to current employees in the Public Employee Retirement System, or PERS. Lead plaintiff Jennifer James is a school secretary who said she put in 20 years of service and makes $39,000 a year, so these cuts will cost her retirement account $18,000.

"PERS was designed to recruit and retain people into public service, which generally pays less than the private sector, and people go into public service for that secure retirement,” James said. “And 1049 takes it away. It's breaking a contract."

The public retirement system has an unfunded liability of $26 billion, left over from the 2008 market crash. These changes would only address a tiny portion of that amount.

Hundreds of thousands of public-sector workers pay into their retirement accounts through this system. Specifically, SB 1049 would take away some contributions that employees make toward an Individual Retirement Account program, and remove some of the final average salary calculations.

The attorney for the nine plaintiffs, Aruna Masih, called reversing the changes a matter of basic fairness.

"A contract is a contract, and these benefits are promised to these individuals,” Masih said. “They have provided service under that particular offer of benefits, and they're entitled to receive those benefits."

The bill included a provision allowing challenges to go directly to the state Supreme Court. Employees have won similar cases before Oregon's high court twice before, clawing back benefits in 2003 and 2008.

Disclosure: Oregon Education Association contributes to our fund for reporting on Budget Policy & Priorities, Children's Issues, Education, Livable Wages/Working Families. If you would like to help support news in the public interest, click here.
Suzanne Potter, Public News Service - OR