|Oregon State Bar Bulletin DECEMBER 2011|
By Daniel Re
In 1943, the Oregon legislature created a retirement plan for Oregon’s supreme court and circuit court judges, the Judges Retirement Fund. Two years later, the legislature created another retirement plan, the Oregon Public Employees Retirement System (PERS), for the state’s public employees. Since judges had their own separate retirement plan, they were not eligible to join PERS. As a result, the judges had no financial interest in the outcome of any PERS case they might hear other than their interest as taxpayers, an interest they shared with all other Oregon taxpayers. Oregon’s judges remained independent regarding PERS for the next 41 years. But that changed in 1983, when HB 2366 was enacted as Chapter 770, Oregon Laws 1983.
Under HB 2366, any person becoming a judge for the first time after Dec. 31, 1983, automatically became a PERS member immediately upon taking office. The only exception was if the new judge was older than 72 when first taking office. This law established a seven percent contribution requirement for each PERS judge member but it also required the state of Oregon to pick up that seven percent contribution for the judges. Judges who had served before December 31, 1983, were given a choice. They could stay in the Judges Retirement Fund or they could join PERS. Every judge who remained in the Judges Retirement Fund would have to pay seven percent of his or her salary into that fund. Every judge who joined PERS, however, would have his or her seven percent contribution picked up by the state of Oregon. That exclusive pick up feature guaranteed that every judge who joined PERS would receive an immediate seven percent salary increase.
HB 2366 not only put the Oregon judges into PERS, it created several unique provisions that applied only to judges. Judges had a seven percent personal PERS contribution but the state was required by statute to pick up that contribution for them. All other PERS members had a six percent personal contribution and while their employer could agree to pick up that contribution, the employer was not required to do so. Judges were the only elected or appointed officials in Oregon who were required by law to join PERS. All other elected or appointed officials had the option to join PERS but they were not required to do so. Judges were also the only persons who became PERS members the instant they took office. All other persons eligible to join PERS, including elected or appointed officials, could not join until they had worked for six months.
After 1983, the judges have had a direct financial interest in the outcome of every PERS case. And, regarding the issue of the pick-up of employee PERS contributions, the judges have had a greater stake in the outcome of that issue than any other PERS members. Unlike the personal interest as taxpayers that the judges had in PERS before 1984, their interest as PERS members was an interest shared with less than 10 percent of Oregonians.
A number of significant PERS cases have been decided by the Oregon Supreme Court since 1983. In each of those cases the justices, by footnote, acknowledged their financial conflict and then invoked the rule of necessity as the basis for deciding those cases. One of the first cases to do so was Hughes v. State of Oregon, 314 Ore 1, (1992). In footnote 2, page 5, the court relied on Woodward v. Pearson, 165 Ore 40 (1940) to invoke the rule of necessity. The Woodwardcourt, on page 58, did so specifically based on the justices’ interest in the case as taxpayers. Other post-1984 PERS cases reaching the same result were Oregon State Police Officers’ Assn. v. State of Oregon, 323 Ore 356, 361 n 3 (1996) and Strunk v. Public Emples. Ret. Bd., 338 Ore. 145, 151 n 5 (2005). There is no indication in any of those cases that any party questioned the applicability of the rule of necessity and none of the cases explained why non-PERS pro tempore judges could not have been appointed to hear them.
The 1983 Oregon legislature deprived Oregon’s judges of their independence in PERS cases. In doing so, the legislature deprived all Oregonians of fundamental fairness when PERS cases, which often involve the taking of property to fund PERS, are decided. While the judges have used the rule of necessity to hear those cases, the rule of necessity does not restore fairness. It does just the opposite. It requires a case to be decided unfairly. If Oregon law does not provide a way for temporary non-PERS judges to hear PERS cases, the constitutionality of Chapter 770, Oregon laws 1983 is in question.
ABOUT THE AUTHOR
Daniel Re is a founding partner and current director and shareholder of Hurley Re P.C. in Bend. He is a past chair of the OSB Estate Planning and Administration Section.
© 2011 Daniel Re