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State Supreme Court Strikes Down PERS Reform

SALEM, OR -- The Oregon Supreme Court struck down cuts made to the state's public retirement system, Thursday morning. As part of what was called the 2013 "Great Bargain," legislators cut benefits by $5.3 billion to help fund schools, when so much of state funding was going to the Public Employees Retirement System (PERS). Public employees challenged the changes, claiming they violated contracts signed with the state. 
State Senator Tim Knopp (R-Bend) says there is no way to appeal the decision, since it was based on the state Constitution. However, he hopes lawmakers will consider other changes. "I would encourage Legislative leaders to go back to the only option that hasn't been adjudicated as it relates to PERS, and one of those is the redirect the 6% individual account program that we set up in 2003 as part of the PERS reforms. What we did, we took the employee money and put it in a separate account. Essentially what that did was break the back of money-match and bend that cost curve back down." He says the only solution to eliminate the crippling PERS liability is to establish a market-based fair retirement plan for new public employees, like those found in the private sector. 
House Republican Leader Mike McLane (R-Powell Butte) and Senate Republican Leader Ted Ferrioli (R-John Day) issued the following joint statement regarding Thursday's decision: "Today's Supreme Court decision represents a step backward for our state and reverses much of the bipartisan work done to address Oregon's skyrocketing PERS liabilities. The 2013 Great Bargain compromise was negotiated in good faith and allowed us to streamline state government, reduce taxes on small businesses and put millions back into Oregon classrooms. Once again, Oregon faces billions in unfunded PERS costs that will hurt schools, police departments and other local critical services. It is clear that we will need to work together again to streamline government and create jobs in order to protect Oregon from a looming fiscal crisis."
Governor Kate Brown released a statement on the decision, as well. "I will be reviewing the ruling and assessing next steps, including the short and long term fiscal needs of PERS, and I will be working with the PERS Board to determine what next steps they will take."
In a statement issued shortly after the ruling was made public, Jim Green, Deputy Executive Director of the Oregon School Boards Association, said:  "This is a very disappointing decision. If the Legislature does not take additional action, the decision wipes out the bulk of the savings contained in the [2013] PERS legislation, which means that schools across the state are going to face significantly higher PERS costs going forward. That translates to teacher layoffs and higher class sizes. It also creates an actuarial nightmare in calculating retiree benefits for those individuals who have not yet retired. Our attorneys are still analyzing the decision and weighing our legal options."
In the High Court's 83-page decision, the justices ruled that changes to how Cost of Living Adjustments (COLA) are calculated would not apply to those receiving PERS prior to the 2013 legislation. 

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