SENATE SPECIAL COMMITTEE ON PERS STABILIZATION

 

September 04, 2002   Hearing Room 50, H-170

10:30 AM Tapes  1A, 2A, 3A

 

MEMBERS PRESENT:            Sen. Roger Beyer, Chair

Sen. Ryan Deckert

Sen. Charles Starr

 

STAFF PRESENT:                  Cara Filsinger, Committee Administrator

Patricia Nielsen, Committee Assistant

 

MEASURE/ISSUES HEARD:            Organizational meeting

SB 1028 – Public hearing and work session

SB 1029 – Public hearing

SB 1030 – Public hearing

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 1, A

005

Chair Beyer

Calls the meeting to order at 10:32 a.m.  Opens organizational meeting to consider proposed committee rules (EXHIBIT A).

WORK SESSION – RULE ADOPTION

010

Sen. Starr

Moves to adopt proposed committee rules.

015

Chair Beyer

Without objection, the motion CARRIES.  Excused:  Sen. Deckert.

018

Chair Beyer

Opens public hearing on SB 1028, SB 1029 and SB 1030.

SB 1028, SB 1029, SB 1030 – PUBLIC HEARING

020

Joe Schweinhart

Associated Oregon Industries (AOI).  Testifies in favor of all three bills.

029

Pat West

Oregon State Fire Fighters Council, PERS Coalition.  Testifies in opposition to all three bills.  Argues contract rights are violated.

050

Brian DeLashmutt

Oregon Nurses Association, Oregon Council of Police Associations, Association of Oregon Corrections Employees, Federation of Oregon Parole and Probation Officers, PERS Coalition.  Testifies in opposition to SB 1028.  Urges the committee to allow the process already in place to continue working and propose an alternative system or improvements to the current system.

085

Sen. Deckert

Asks about contracts already in place, and what new system would be in place following the June 30, 2003 end date.

095

DeLashmutt

Responds there is no replacement.

100

Mark Nelson

Association of Oregon Faculties, Oregon Judges Association.  Testifies in opposition to SB 1029, relating to retirement system for judges.  Describes separate system currently in place for judges.  Expresses confidence in decisions by judges who are members of this separate system.

135

Jim Voytko

Public Employees Retirement System (PERS) Executive Director.  Offers to answer questions.

140

Sen. Deckert

Asks what replacement system is contained in SB 1028.

145

Voytko

Responds there is none in SB 1028 but discussions are ongoing.

150

Sen. Deckert

Inquires how passage of SB 1028 will affect his ability to manage PERS.

155

Voytko

Describes two actions which would be needed:

·       Abolish PERS system as required by SB 1028, and put in place implementation procedures for the cessation of active membership.

·       Receive direction from legislature about what to do.

Advises this is a compensation policy decision, personnel management decision, pension policy decision, and fiscal decision.  Points out the bill does not state what system is the desired replacement.  Comments the cost of PERS is not affected by this bill.

185

Sen. Deckert

Poses hypothetical about employees ready to retire.

195

Voytko

Responds the current compensation package includes PERS retirement, and if PERS is changed the effect is uncertain after the end date.  Continues each retirement benefit would include benefits accrued up to the date of the expiration, and after that it is uncertain what additional accruals would be owed to the retiree.

215

Sen. Deckert

Asks whether the bill addresses the Tier 1 shortfall.

220

Voytko

Answers it stops accrual of Tier 1 and Tier 2 benefits while those already accrued are still owed and would remain in place, so financial consequences of Tier 1 are still owed to members.

235

Chair Beyer

Clarifies what would be owed up to the end date.

240

Voytko

Responds.

255

Paul Phillips

AFSCME Council 75.  Testifies in opposition to all bills.  Asks questions for members to contemplate:

§         What are accrued savings (no analysis presented)

§         Analyze cost to individual employees and retirees

§         Recruitment issue (need high-quality employees)

§         Cooperation is the key to the process, and task forces are in place

§         Analyze existing contracts

§         Analyze how PERS change to mortality tables is affected

§         Is it reasonable to abolish without a successor system

Suggests there would be litigation so the committee should build record what is being attempted and how.

330

Chair Beyer

Seeing no further request for public testimony, closes public hearing on SB 1028, SB 1029 and SB 1030.  Recesses the committee at 10:55 a.m.  Committee will meet at the call of the chair.

 

 

 

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RECESS       *****************************

 

 

 

****

Move to hearing room H-170 after recess     ****

 

 

 

TAPE 2, A

005

Chair Beyer

Reconvenes the meeting at 1:57 p.m.  Opens work session on SB 1028.

SB 1028 - WORK SESSION

010

David Heynderickx

Legislative Counsel.  Reviews SB 1028-1 amendments dated 9-4-02 (EXHIBIT B).

030

Chair Beyer

Reviews section 2, subsection 2.  Clarifies exclusion.

040

Heynderickx

Responds and explains vesting.  Clarifies any employees not vested by January 1, 2004, will receive back their contributions plus interest thereon.

050

Chair Beyer

Asks about employees who leave employment and return.

055

Heynderickx

Responds and explains it does not change the effect on those who leave and return.

065

Chair Beyer

Clarifies date of 2002 special session.

070

Sen. Deckert

Asks about precedent for shutting down retirement system without another in place.

075

Heynderickx

Describes rights of public and private employers.

090

Sen. Deckert

Asks about legislature’s legal standing to take this action.

095

Heynderickx

Discusses issue of contract rights.  Explains the advantage is savings to public employers.  Describes court decisions so far, including litigation over Ballot Measure 8.

125

Chair Beyer

Asks about court’s discussion of issues in the case.

130

Heynderickx

Responds the court decided Ballot Measure 8 was void under the federal constitution contract clause.

140

Chair Beyer

Inquires whether there might be litigation if successor system benefits are equal to or better than current plan.

150

Heynderickx

Responds the court would probably sustain it, but difficult to predict because the system is so complicated.

155

Sen. Deckert

Asks how often a judge reverses himself.

165

Heynderickx

Replies it is not unheard of, for example SAIF case.

175

Chair Beyer

Asks if Measure 8 was 1996, and when the Oregon Supreme Court decided it.

180

Heynderickx

Responds.

185

Chair Beyer

Closes work session on SB 1028.  Reopens public hearing on SB 1028, 1029 and 1030.

SB 1028, SB 1029, SB 1030 – PUBLIC HEARING

195

Sen. Harper

District 28.  Testifies on SB 1030, commenting the concept is long overdue.  Urges the committee to pull legislature, governor and judges out of PERS to eliminate conflict of interest with decision-makers.

235

DeLashmutt

Asks technical question for the record:  When does someone have standing to sue, and whether that has an impact on benefits.

265

Sen. Starr

Asks how emergency clause affects standing.

275

Heynderickx

Returns to advise that same problem exists because the plan doesn’t change until the end date passes.  Opines a party has standing as soon as law goes into effect.  Continues if no standing, could add another provision to next bill making it effective immediately, to encourage quicker decision by courts.

320

Chair Beyer

Clarifies there is a limited period of 60 days to challenge the bill.

330

Heynderickx

Confirms it is meant to limit challenges to a specific period.

345

Chair Beyer

Closes public hearing on SB 1028, SB 1029, SB 1030.  Reopens work session on SB 1028.

SB 1028 – WORK SESSION

350

Sen. Deckert

Asks about likelihood the task forces will act.

360

DeLashmutt

Describes progress of Speaker’s PERS task force and work group.  Continues and describes progress of Governor’s group.  Suggests the movement in SB 1028 is premature.

TAPE 3, A

015

Sen. Deckert

Asks when the task force will report back to the legislature.

020

DeLashmutt

Refers question to Rep. Knopp, but expects some specific suggestions by the 2003 session.

030

Sen. Deckert

Asks about possible court challenge.

035

DeLashmutt

Responds any individual can challenge, but the likelihood is diminished by having the interested parties involved in the process.

045

Chair Beyer

Refers to fiscal statement (EXHIBIT C).

050

Sen. Starr

MOTION:  Moves to ADOPT SB 1028-1 amendments dated 9/4/02.

055

 

VOTE:  2-1

AYE:               2 - Starr, Beyer R

NAY:               1 - Deckert

 

Chair Beyer

The motion CARRIES.

060

Sen. Starr

MOTION:  Moves SB 1028 to the floor with a DO PASS AS AMENDED recommendation.

065

Sen. Starr

Discusses legislative attempts to modify PERS for the past 10 years.  Suggests it is time to make meaningful changes to the system.

080

Sen. Deckert

Expresses frustration that there is no opportunity for deliberation before PERS is abolished without a replacement system in place.  Explains he will vote no if one side is left out.

100

Chair Beyer

Comments on the need for a new system which is simpler but which does not necessarily provide a lesser benefit.

140

 

VOTE:  2-1

AYE:               2 - Starr, Beyer R

NAY:               1 – Deckert

 

Chair Beyer

The motion CARRIES.

SEN. BEYER will lead discussion on the floor.

150

Chair Beyer

Recesses committee at 2:35 p.m.

 

 

The committee did not re-convene, and was adjourned by the adjournment of the Senate at the end of the session day.

 

Submitted By,                        Reviewed By,

 

 

 

Patricia Nielsen,                        Cara Filsinger,

Committee Assistant                        Committee Administrator

 

EXHIBIT SUMMARY

 

A – Committee rules, staff, 1 p

B – SB 1028-1 amendments dated 9-4-02, staff, 2 pp

C – SB 1028-1 amendments fiscal statement, staff, 2 pp