Opinion ID: 835784
Heading Depth: 1
Heading Rank: 8

Heading: COST OF LIVING ADJUSTMENTS (COLAs)

Text: The majority also concludes that Oregon Laws 2003, chapter 67, section 10(3), direct the Public Employees Retirement Board (PERB) to breach the promise of annual COLAs on certain fixed service retirement allowances. 338 Or at 225, 108 P.3d at 1104. I conclude that the cited section of the 2003 legislation regarding COLAs purports to eliminate a contractual obligation of the state. As a consequence, that that provision of the 2003 legislation impairs an obligation of contract in violation of Article I, section 21, and is invalid for that reason. The legislature's attempt to suspend COLAs on properly calculated service retirement allowances for the affected retired members is void. The majority rests its breach of contract theory on its reading of Eckles v. State of Oregon, 306 Or. 380, 760 P.2d 846 (1988). In Eckles, this court examined two provisions of a statute, Oregon Laws 1982 (Special Session 3), chapter 2 (the Transfer Act). One provision of the Transfer Act, section four, eliminated the state's statutory contractual obligation to employers to use certain surplus funds in a statutory trust fund only for purposes related to the workers' compensation laws. A second provision, section two, directed the State Treasurer to transfer $81 million from that statutory trust fund to the state General Fund. The court concluded that section four of the Transfer Act impaired the state's contractual obligation under preexisting contracts with employers and was unconstitutional in that respect. The court also concluded that section two of the Transfer Act did not alter the state's contractual obligation to employers. Requiring the State Treasurer to transfer funds did nothing to change the state's contractual promise to use the funds solely for purposes related to workers' compensation laws. In the court's view, however, section two did breach the state's promise; the transfer of the funds exposed the state to a legal obligation to compensate employers for the breach. In my view, the elimination of COLAs in the 2003 PERS legislation is closely analogous to the elimination of the statutory contractual duty effected by section four of the Transfer Act, as discussed in Eckles. The majority's attempt to compare that aspect of the 2003 PERS legislation to the operation of section two of the Transfer Act, as discussed in Eckles, is unconvincing. I conclude that the majority misreads Eckles. Nevertheless, I see no reason to dissent from the result that the majority adopts following its breach of contract analysis. The majority returns the parties to the position that they occupied before the legislature adopted its 2003 amendment, and declares that that amendment is void. As Eckles demonstrates, that is the proper remedy when legislation impairs the obligation of a statutory contract in violation of Article I, section 21, of the Oregon Constitution. As a consequence, I concur in that aspect of the majority opinion.