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Public workers file suit to protect PERS retirement benefits

SB 1049 is a breach of contract, an illegal taking, and violates the Constitution

By Keep Oregon's Promise Coalition

A diverse group of nine Oregon public employees filed suit against SB 1049 in the Oregon Supreme Court on August 8, 2019. The lawsuit shows the broad impact of retirement cuts imposed by the Oregon state legislature this year. 

In the filing, a Molalla school secretary joins a Salem firefighter, nurses from OHSU and Multnomah County, a Lebanon state employee, a Gresham community college employee, a child welfare worker and a water mechanic in Portland, and a Multnomah County District Attorney. The plaintiffs shared with the Court how much SB 1049 would reduce their retirement security if it were allowed to go into effect. Their total individual account program losses are between 5 and 14% each.

SB 1049 targeted working people by taking money out of personal accounts to pay employer's pension obligations to retirees. In James v. the State of Oregon, et al, plaintiffs assert that the loss of retirement benefits violates the Constitution, is a breach of contract, and is an illegal taking without compensation.

Jennifer James, the lead plaintiff in the case, has been a secretary at Molalla River School District for 19 years and is a member of the Oregon School Employees Association. After nearly two decades of service, she earns less than $40,000 a year in salary. She is counting on every penny of her PERS for retirement security. SB 1049 reduces her PERS individual retirement account by more than 13%.

“I love my school district and have been faithfully doing my job for nearly 20 years with the promise of a secure retirement. Now that promise has been broken. SB 1049 is unjust, unconstitutional, and should be overturned by the court. The idea of a poverty-level retirement benefit is terrifying to me,” says James.

Plaintiff Regina Thompson of Lebanon will suffer the largest percent reduction among the plaintiffs. She works on highway improvement projects for the state and is a member of the Association of Engineering Employees of Oregon. With just four years left until she is eligible for retirement, SB 1049 takes more than 14% of her PERS individual account program

“I keep my promises to the public of Oregon to work hard and provide them with the services they deserve. In turn, I expect the state to keep its promises made through the PERS retirement program."

— Regina Thompson

“I left a higher paying job in the private sector for the promise of a secure retirement,” says Thompson. “I keep my promises to the public of Oregon to work hard and provide them with the services they deserve. In turn, I expect the state to keep its promises made through the PERS retirement program." 

All PERS members are facing a less certain future under SB 1049, and many do not have the time or income to replace the lost dollars. 

SB 1049 targets working people by taking money out of their account to pay employer's pension obligation to retirees. In James v. the State of Oregon, et al, plaintiffs assert that the loss of retirement benefits violates the Constitution, is a breach of contract, and are an illegal taking without compensation.

“The plaintiffs and all PERS members accepted a job in good faith for a salary and benefits package, did the work they promised to do, and planned their futures based on the package they agreed to accept. Their service for public employers creates certain contract rights to retirement benefits. As the Oregon Supreme Court has ruled in the past, the State cannot breach the terms of those contractual promises,” says Aruna Masih, lead attorney on the case for Bennett Hartman, Attorneys at Law LLP, the same firm that won billions in restored benefits by challenging similar cuts before the Oregon Supreme Court in the 2005 Strunk ruling and the 2015 Moro ruling. 

Moro v. the State of Oregon, et al case that was filed after state lawmakers cut PERS benefits the last time. If SB 1049 remains in effect, he will lose $26,000 in retirement benefits. 

“It is deeply disappointing to be in this position again. Lawmakers keep coming back for more cuts to benefits from public workers like me who are not the cause of the unfunded liability problem, and I have to again ask the Supreme Court to help protect my contract rights,” says Silence.

The full lawsuit is linked here

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