SALEM — State and local governments have spent more than $50,000 on legal advice as they try to devise cuts in pension benefits that can withstand an inevitable court challenge.
By getting the lawyers involved early, proponents hope they can avoid repeating the fate of the state’s last big pension cuts in 2003, which were partially struck down in court. The pension fund had to pay $2.1 million in legal fees for the retirees who sued and won their case. The result has been a barrage of dueling legal opinions on the legality of various proposals to trim pension costs.
“You want to make sure that anything you want to propose is legally justifiable,” said Jim Green, deputy executive director of the Oregon School Boards Association, one of the most vocal proponents of pension-system cuts.
The $50,000 total includes money spent by lobbying organizations for cities and school districts and by the Public Employees Retirement System. It doesn’t include legal bills paid by private organizations that also are backing pension cuts.
The League of Oregon Cities has spent $14,845 on lawyers, and the School Boards Association has spent about $21,000. Both are funded partially by dues from local governments. The Public Employees Retirement System, the state agency that runs the pension system, was billed $16,000 by the state Department of Justice for legal analysis through February. The DOJ acts as a law firm for the state and gets much of its funding from the state agencies that are its clients.
Legal opinions made public include analyses by the DOJ and Legislative Counsel, lawyers for the executive and legislative branches, respectively. Bill Gary, a prominent lawyer and lobbyist from Eugene, provided an analysis for the school boards group. W. Michael Gillette, a former Supreme Court justice who helped decide one of the key precedent cases, provided an analysis for the cities.
Public pensions will cost taxpayers at all levels of government $2.9 billion over the next two years, an increase of $900 million over the last two years. Some state and local elected officials would rather spend the money on reducing class sizes in public schools.
The extensive early legal analysis is done in part to ensure the proposals will survive court muster, but also to counter assertions by opponents that cutting the cost-of-living increases would be unconstitutional. The most substantial cut lawmakers are considering would be a reduction in the annual 2-percent cost-of-living increases to retirees’ checks.
Pension beneficiaries point to the 2005 Oregon Supreme Court decision, Strunk v. Public Employees Retirement Board, which stemmed from the Legislature’s 2003 pension cuts. Justices threw out a suspension in the cost-of-living adjustment, ruling that the COLA is part of a binding contract between the state and its workers.
“We tend to point back to the Strunk case and say ‘been there, done that,’” said Gregory Hartman, a lawyer representing pension beneficiaries who argued the last dispute in the Supreme Court.
There was one major legal analysis done before the 2003 pension cuts, said Greg MacPherson, a former Democratic lawmaker who shepherded them through the Legislature. The Department of Justice said all three of the legislation’s major reforms would not likely stand up in court, MacPherson said, but two of them ultimately did.
MacPherson, a lawyer in Portland, is now working with pension-cut proponents to analyze options.
“The Legislature ... has to make policy decisions about how to balance the budget and how to deliver the services that we all need,” MacPherson said. “And too much focus on what might happen in a court decision is a distraction from the tough issue the Legislature faces.”
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Copyright 2013 The Associated Press.