More speculation floating around these days. Some wonder exactly what PERS would be permitted to do if Lipscomb were upheld. Take some time to read HB 2003 (passed in the 2003 Legislature) in context with the Strunk decision that voids several sections of HB 2003. The court nullified section 10 of HB 2003. Section 14b describes the specific remedies permissible in the City of Eugene cases specifically. Note that section 14b.1 (COLA freeze) was nullified by the Court, leaving 14b.2 as a valid mechanism for recovering the "excess crediting" identified in the City of Eugene case. This section reads: "(b) The board may treat all or part of the present value of the benefits erroneously paid and payable to retired members as a result of the erroneous benefit calculations as an administrative expense of the Public Employees Retirement System, to be paid exclusively from future income of the Public Employees Retirement Fund, and to be amortized over an actuarially reasonable period not to exceed 15 years." Some people are viewing this section as preventing the Board from recovering money from retired PERS members. While I'd like to share this optimism, I note that the language uses the term "may", not "shall". This suggests to me that the Legislature did not intend to preclude the Board from invoking other legal mechanisms (i.e. ORS 238.715) to collect the money; it simply offers them another option. On the other hand, the Legislature did tip its hand clearly in the run-up by including the preamble statement in 14.b: "If the Public Employees Retirement Board is required to correct one or more of the erroneous benefit calculation methods identified in City of Eugene et al. v. State of Oregon, Case Nos. 99C-12794, 00C-16173, 99C-12838 and 99C-20235, the board shall recover the cost of benefits erroneously paid to retired members as a result of those erroneous benefit calculations by one or both of the following methods:" Note the word "shall" in this section. The court then struck down the "a" option, leaving only the "b" option above. So, while I might speculate that the "may" in 14.b.1 seems permissive, the "shall" in 14.b appears compulsory. Thus, there are causes for optimism amidst the darkness, but the PERS Board seems to be guided by forces other than the law and its fiduciary responsibility to members. I suspect that no matter what the Court rules, we're in for a long haul before this mess is settled.
7/28/05 - A correction. The Supreme Court did NOT nullify section 14b.1.a of HB 2003. They nullified section 10, which creates a "fixed benefit" to which no COLA attaches. According to others, section 14b hasn't yet been applied and so is not yet "ripe" for litigation. So to all of us who haven't seen a COLA at all, or since 7/1/2002, you've haven't yet experienced a COLA freeze. Quit yer complainin :-). What I want to know is: when is a COLA freeze NOT a COLA freeze? If this sounds like Monty Python's "Dead Parrot" skit, it's probably not an accident.