Opinion ID: 835784
Heading Depth: 3
Heading Rank: 1

Heading: Handbooks and Other Materials as Contract Terms

Text: Whitty petitioners are each employees of SAIF, and they named PERB and SAIF as respondents to their petition for review. Whitty petitioners' opening brief asserts, in part: In addition to the [a]rguments stated by the Strunk Petitioners, the Whitty petition[ers] are relying upon the Respondent SAIF Corporation's written policy concerning retirement, stated in the SAIF Employee Handbook, as part of their contract with their employer.    The SAIF policy also refers the employee to the PERS Handbook, `for complete details of the retirement program.'         The language used by SAIF Corporation in its retirement policy statement, words such as `established,' `secure' and `guarantees,' is language of contract.    In response, respondents argue that (1) the PERS statutes do not reflect a legislative intent to delegate either to PERB or to SAIF the power to bind future legislatures; (2) even if the legislature had purported to delegate that power, the delegation would be an unconstitutional abdication of the legislature's lawmaking authority; (3) even if such a delegation were permissible, there is no evidence that the legislature intended to delegate such authority to PERB staff or SAIF, as opposed to PERB; and (4) at least insofar as the SAIF employee manual is concerned, it promises nothing more than the ability of its employees to participate in PERS like all other state employees. In reply, Whitty petitioners argue, in part, as follows: Respondents argue that the SAIF policy on retirement and the PERS Handbook are not part of Petitioners' contract because the language of the PERS statutes does not reflect an intent to delegate the power to bind future legislatures to an administrative agency. The language of the PERS statutes also does not delegate to SAIF Corporation, or any other governmental agency the power to enter into any contract with its employees. Yet, this court has held that a Multnomah County Ordinance is a sufficient basis for a retirement benefit contract. Taylor v. Multn[.]    Dept[.] Sher[.] Ret[.] B[d.], 265 Or. 445, 451, 510 P.2d 339 (1973).    If a county can contract with its employees through enactment of an ordinance establishing a retirement benefit, certainly an independent public corporation, SAIF, can contract with employees through adoption of a policy conferring retirement benefits.         As to whether the PERS Handbook is a part of Petitioners' contract with SAIF, the SAIF policy on retirement incorporates the benefits conferred in that Handbook by reference.    It did not adopt the Handbook as a `legal reference.' [27]
Petitioner Dahlin's opening brief asserts, in part: Petitioner Dahlin relied on the PERS statutes, rules, handbooks, annual statements and web site estimates when planning his retirement. Based on his review of the communications from PERS, Petitioner Dahlin believed that the Money Match would produce a greater retirement benefit than the Full Formula. Petitioner Dahlin's understanding that the Money Match calculation would exceed the value of the Full Formula benefit was confirmed by annual statements that he received from PERS beginning in 1998.      At all relevant times, the PERS handbooks    stated that `vesting means you cannot lose your benefit rights, even if you stop working in covered employment.' Respondents offered essentially the same arguments in response to petitioner Dahlin as they did to Whitty petitioners, summarizing their response as follows: [P]etitioner Dahlin asserts that his contract rights  to the extent they exist  arise from PERS handbooks and his annual statements, in addition to the PERS statutes and regulations. This assertion is incorrect. There has been no legislative delegation to PER[B] that would allow the agency to bind future Legislative Assemblies. Indeed, such a delegation would be unconstitutional. Moreover, these documents on which petitioner Dahlin relies actually contain language disclosing the fact that they are not legal references or complete statements of the PERS statutes or rules, and that in [the event of] any conflict the statutes and rules shall prevail. In reply, petitioner Dahlin states: [Respondents] respond that as of 2001 the Handbooks contained a disclaimer that indicated that if a conflict exists between the PERS statutes and the Handbook, the statute will control.    [Respondents'] response, however, missed the point of Petitioner Dahlin's argument. Petitioner Dahlin is not arguing that a conflict exists between the PERS statute[s], its administrative rules, and the PERS Handbook. Rather, Petitioner Dahlin is arguing that the PERS Handbook is consistent with Oregon Law and the lack of a `reservation of rights clause' is the recognition of and an embodiment of the contract theory of pensions.
To the extent that petitioner Dahlin and Whitty petitioners argue that the PERS handbooks, PERB communications, and the employment policies of SAIF form part of the PERS contract, we reiterate that this court has held that PERS is a statutory contract. Hughes, 314 Or. at 25, 838 P.2d 1018. Therefore, the question whether the materials on which petitioners in part rely constitute terms of that statutory contract is a question of legislative intent. See generally PGE v. Bureau of Labor and Industries, 317 Or. 606, 610-11, 859 P.2d 1143 (1993) (statutory construction involves ascertaining legislature's intent; to do so, court first examines text and context of statute at issue); ORS 174.020(1)(a) ([i]n the construction of a statute, a court shall pursue the intention of the legislature if possible). Even disregarding respondents' argument that the legislature lacks the power to delegate to an administrative agency or other subdivision of the state the authority to set the terms of the PERS contract, the predicate question remains: did the legislature intend to do so? In that respect, petitioners point to no Oregon statute indicating that the legislature intended to permit PERB or any other entity as a general matter to set or alter any terms of the PERS statutory contract. [28] Nor has our own research revealed any support for the idea that the legislature intended to permit PERB or any other governmental entity  through the issuance of handbooks, policy statements, account summaries, or otherwise  to provide binding pronouncements of the retirement benefits that PERS will provide. We hold that the PERS handbooks, communications from PERB to PERS members, and SAIF's employment policies do not constitute terms of the PERS contract. That holding does not meet directly the separate argument of Whitty petitioners that the 2003 PERS legislation breaches or impairs their separate employment contracts with SAIF. They analogize those contracts to the ordinance at issue in Taylor, 265 Or. 445, 510 P.2d 339. That analogy is inapposite, however, for the simple reason that nothing about the retirement policy at issue in Taylor implicated a state statutory contract or any other legislative policy. [29] For Whitty petitioners to succeed in that argument, the retirement policy that SAIF provides to its employees would have to be independent of PERS. But that is not the case. SAIF offers its employees the PERS retirement plan, not a SAIF retirement plan or some sort of PERS hybrid. And, as we determined above, nothing in the PERS statutes indicates that the legislature intended to authorize public employers to set the terms of the PERS contract. Accordingly, we reject the arguments of petitioner Dahlin and Whitty petitioners that the PERS contract includes terms outside the PERS statutes (and applicable administrative rules) and the argument of Whitty petitioners that the 2003 PERS legislation breaches or impairs their employment contracts with SAIF.