James v. State of Oregon

The contract rights of a member of the Public Employees Retirement System are impaired if: (1) an amendment functions retrospectively to decrease benefits attributable to work completed prior to the change, or (2) an amendment prospectively operates to reduce future benefits and the prior offer was irrevocable. Moro v. State of Oregon, 357 Or 167, 202-207, 351 P3d 1 (2015).

The Supreme Court has original jurisdiction over challenges to amendments made to the Public Employees Retirement System (PERS), which Petitioners claimed violate the state constitution.  Petitioners asserted that changes made to the PERS—which diverted some of their monthly contributions to an employee pension stabilization account and capped the salary used to compute benefits—were unconstitutional impairments of their employment contracts.  Respondents argued that the changes do not deny any earned contractual benefit and therefore no contractual obligation was impaired; the changes impact future benefits that the employee has yet to earn.  A PERS member’s contract rights are impaired if: (1) an amendment functions retrospectively to decrease benefits attributable to work completed prior to the change, or (2) an amendment prospectively operates to reduce future benefits and the prior offer was irrevocable.  Moro v. State of Oregon, 357 Or 167, 202-207, 351 P3d 1 (2015).  The Court found that the changes did not retrospectively reduce benefits already earned.  The Court also found that the pre-amendment statutes did not include irrevocable offers of future benefits.  The Court therefore held that neither the change to how contributions are allocated nor the salary cap for benefits violated Petitioners’ contractual rights.  Requests for relief denied.