OREGON AFSCME

e-lert #23 ¥ June 22, 2009

Edited by Don Loving, Council 75 Public Affairs Director

Two PERS-related items lead this edition of the e-lert ... the captive audience bill heads to the governor's desk ... the whole BM 57/public safety conundrum is still a mess ... and more, as always.

Hey, we may be a day late, but we're never a dollar short ... it's the e-lert, starting now ...

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Veteran "subscribers" will recall that in the beginning, the e-lert got its legs as a vehicle for disseminating information about the Oregon Public Employee Retirement System in the midst of the 2003 PERS reforms. With a nod to that history, and even with the end of the 2009 Oregon Legislature impending, we begin this e-lert with a PERS-related story ...

A 'TERRIBLE' DECISION — Last Monday (June 15), just about the same time we sent out last week's e-lert, in fact, a Multnomah County judge issued what we consider to be a very bad decision on a PERS-related case that absolutely will be appealed.

The White case had been pending before Multnomah County Circuit Court Judge Henry Kantor for well over a year. It was filed by the PERS Coalition (of which AFSCME is a founding and primary member) to contest the settlement of the City of Eugene case as entered into by the PERS Board of Directors. You may recall back in the day that City of Eugene was also often referred to as the Lipscomb case.

As a result of the City of Eugene settlement, the PERS Board effectively reallocated retirement system dollars to the tune of well over $1 billion, which in effect lowered potential member benefits. In doing so, the White case contends, the PERS Board violated its fiduciary responsibility to PERS members.

"That's the key issue in the White case," said PERS Coalition attorney Greg Hartman. "Did the PERS Board violate the best interests of the PERS membership in entering into the City of Eugene settlement agreement? Clearly, we believe that to be the case. Unfortunately, Judge Kantor disagreed in what I contend is a terrible decision."

In essence, Kantor's ruling says that the PERS Board has a fiduciary responsibility not only to the members, but to the PERS system itself. Hartman says things can't work that way.

"If you think through the ramifications of that train of thought, then the PERS Board can do anything it wants, regardless of the impact on the members, by simply claiming an 'it's for the best interests of the system' argument," said Hartman. "In other words, if the PERS Board indeed has a fiduciary responsibility to the system, then any claimed fiduciary responsibility to the membership becomes moot. You can't serve two masters."

Hartman believes there is ample state and federal case law underpinning the concept that pension plans and trusts owe such fiduciary responsibilities solely to their memberships.

"Judge Kantor has done us the 'favor,' so to speak, of at least clearly framing the issue for appeal," says Hartman. "So while it's a terrible decision in a sense, it gives the appeals court a clear target: is the fiduciary responsibility to the membership or to the system? It can't be both, as I said, because conferring fiduciary responsibility to the system trumps the rights of the members."

Normal protocol would be for the PERS Coalition to appeal White to the Oregon Court of Appeals, with it being likely that whichever side "loses" there will appeal to the Oregon Supreme Court. Hartman said his staff is studying Kantor's decision to determine if a direct appeal to the Supreme Court is warranted; such appeals are permissible under certain circumstances.

There are advantages and disadvantages to both courses of action, as Hartman has outlined in previous cases. The obvious advantage of a direct Supreme Court appeal is that you receive a final decision sooner. Going through the Court of Appeals takes longer, but offers the opportunity to get more information on the record.

"We'll study this particular case and get back to the PERS Coalition with a recommendation as soon as we can," says Hartman.

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OK, on to the capitol ...

PERS BILL — Let's stick to PERS since we're already on that topic. The major PERS bill of this session is SB 897, which has been moving along slowly but looks to eke through before the session closes.

Amazingly, SB 897 is supported by both the PERS Coalition (employees) and the PERS Alliance (employers). This is akin to a World War II flier coming out with the endorsement of both the Allies and the Axis.

According to Oregon AFSCME Political Coordinator Mary Botkin, SB 897 contains four key points:

á It promotes retirement security and achieves PERS cost savings by expanding the pool of retirees eligible to purchase PERS health insurance benefits. This is accomplished by allowing OPSRP members (which is essentially a Tier 3 of PERS) to purchase the same full-cost benefits already available to members of Tier 1 and Tier 2.

á It fosters shared responsibility in verifying accurate accounting of retirement data. Potential retirees will receive a statement that outlines their years of service per the PERS records and will have the opportunity — and responsibility — to make corrections if needed.

á It ensures all eligible service is credited toward retirement. This is in reference to those who may lose some potential benefits due to wrongful termination.

á It provides for more inclusive PERS Board representation for greater accountability. Of the five PERS Board of Director positions, the law calls for one to be filled by an active PERS member. SB 897 changes that to allow for an "active" or "retired" PERS member. Botkin notes that a PERS retiree potentially understands the system better and has more time to contribute to the board than does a person currently working.

"All sides are OK with this bill, and we hope to push it through before adjournment," says Botkin.

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NO CAPTIVE AUDIENCES PASSES HOUSE — We reported last week that a House committee passed SB 519, the Worker Freedom Act. That's the measure that would allow employees to opt out of "captive audience meetings" with employers if those meetings were about religion, politics or union organizing. The bill was a top priority this session for AFSCME, the Oregon AFL-CIO and other unions.

On Friday (June 19), the "Worker Freedom Act" passed the House floor 34-24. It has already passed the Senate, so it's on to the governor for his expected signature soon.

Opponents repeated their exaggerated claims on the House floor that SB 519 would muzzle an employer's ability to speak to employees about certain issues — with some even alleging the bill would defy employer's First Amendment free speech rights. But supporters calmly explained what has been the bill's basis all along — that employers can still say anything that they want, employees just aren't obligated to stick around and listen.

"It allows workers to say 'thanks but no thanks, boss,' " explained state Rep. Chip Shields (D-Portland).

"Given the power differential that exists between employer and employee in the workplace, this is a policy that makes sense and will in fact be good for business," said Rep. Michael Dembrow (D-Portland), who carried the bill.

Last week's House Rules Committee hearing on SB 519 included testimony from Oregon AFSCME Executive Director Ken Allen, Oregon AFL-CIO President Tom Chamberlain and Council 75 Organizer Hilary Mortensen, among others.

"Oregon's elected officials have proven that they stand with the working people in our state," said Chamberlain upon the bill's House passage. "Workers should be able to opt out of a meeting on personal topics without worrying that they'll be disciplined or worse."

Once signed by Gov. Ted Kulongoski, the bill will go into effect Jan 1, 2010.

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THE BIG DEBACLE — You likely heard via the regular media that the proposal to delay implementation of Ballot Measure 57 failed late last week. It needed a super-majority of 40 votes to pass, meaning if all 36 Democrats toed the party line they still needed a minimum of four Republicans. AFSCME is supporting the Measure 57 implementation delay because otherwise, some $77 million will have to be cut from other public safety budgets.

When the dust settled last week, delaying Measure 57 had three GOP votes — but only 37 total. State Rep. Vicki Berger (R-Salem), Rep. Bob Jenson (R-Pendleton) and, amazingly, Rep. Dennis Richardson (R-Central Point) all voted "Aye." Berger and Jenson weren't a surprise; both are relatively moderate R's, frequently vote with AFSCME and have won our union's endorsement in previous elections. Richardson, on the other hand, is an ultra-conservative who rarely votes 1) with the Democrats, 2) with the unions, and/or 3) against his caucus' wishes.

"No idea what happened there," said Botkin. "I'm still scratching my head over his vote."

Alas, four Republican votes were needed, those were only three and two Democrats left the fold. One, Rep. Debbie Boone (D-Cannon Beach), voted "No," the only D to do so. Another, Rep. Betty Komp (D-Woodburn), "made herself unavailable for the vote," to use Botkin's words.

This is high stakes poker, and the issue could come back for another vote before the session's end. But for now, budget writers are ploughing ahead as though there is no deal. Today (June 22) the Ways and Means Public Safety Subcommittee reviewed a list of proposed cuts totaling $33.8 million that would be the first wave of cutbacks if Measure 57's implementation isn't delayed. Of that list, some $14.5 million directly impacts AFSCME-represented agencies — Corrections, Oregon State Police and the Oregon Youth Authority in particular.

Because this situation is so fluid, it's really senseless to go into much greater detail at this point, as it could literally change in 60 minutes. Understand that Botkin is on top of this 24/7, and we'll provide another update come Friday if there is new news to report.

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ONLINE VOTER REGISTRATION — Council 75 Political Coordinator Joe Baessler reports that HB 2386, the online voter registration measure, finally passed the Senate floor today.

"The bill took a weird turn, as often happens in this building," says Baessler. "It flew through the House committee and floor and looked like it would have an easy time in the Senate, but stalled out."

The bill allows Oregon citizens to register online or update their registration if their signature is on file with the Oregon Secretary of State or the DMV. Baessler notes that every registration is checked right away and the system ends up being more secure than a paper method.

"However, there were several red herring discussions about illegal immigrants voting — which is actually less likely to happen under this system," said Baessler. "The bill makes sense and will be a great help in our efforts to register members in rural areas and with younger members."

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NO BEER TAX (YET) — That whole beer tax scenario we told you about last week? Never mind.

Thanks to diligent lobbying (and lots of large campaign contributions), it's been 32 years since Oregon's beer tax has been increased, and 2009 seemed like a ripe year. A compromise proposal, which we outlined last week, would have divided an increase between the giants of the industry and Oregon's microbrewers to an extent that the "local little guys" wouldn't haven't taken much of a hit. Similar measures had passed in other states, and all of a sudden there was some late momentum.

It's off the table now, although not so much because of the beer lobby as due to practical politics. Democratic leadership in both the House and Senate decided to pull back the beer tax idea for now because they don't want to endanger a likely referendum vote on the previously passed corporate income tax increase and increased personal tax rate for wealthy Oregonians. Those two measures are targets of the anti-tax crowd, which expects to gather signatures and get them on the ballot.

The "defense" to that public vote is that those two measures, worth $733 million to the General Fund, are aimed at those who can afford them. Adding an increase to the beer tax and/or the cigarette tax (another topic of discussion), the theory goes, could pull those into a referendum vote as well. What leadership doesn't want is a "Vote No on all These Increases" campaign that ties the so-called "sin taxes" to the other proposals.

But Oregon AFSCME Political Coordinator Ralph Groener says the beer tax idea isn't completely dead. State Sen. Floyd Prozanski (D-Eugene) is among several lawmakers who said they'd like to revive the issue in 2010, when the Legislature meets again in February to review and amend the state budget.

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State capitol odds & ends ...

Ÿ Scary Sight — Yours truly was having lunch with Botkin earlier today (June 22) in the state capitol cafeteria to talk abut public safety issues when the table next to us began to fill up. Among those in a group of five or six: Russ Walker of FreedomWorks (you'll read more about him just below) and a "blast from the past," Ruth Bendl. If Bendl's name sounds familiar, it is because for many years (most of the 1990s), she was in league with Bill Sizemore and Loren Parks and was often listed as a chief petitioner or co-petitioner on some of the big ballot initiatives that we fought. But something happened inside the ultra-conservative clique and circa 1998 Parks fired Bendl from her position as "petitions manager." She sued him, got some back wages but didn't win anything for her alleged "defamation" charges against him. We haven't seen a lot of her since, but there she was today, bending Walker's ear wanting help on something. (I wasn't properly eavesdropping per se, but they were close enough — and senior citizen Bendl talks loud enough — that you couldn't help but hear parts of the conversation.) At one point, Bendl did say "I've already talked to Bob Tiernan about this." Tiernan is a former state legislator who was also very anti-public employee and an early crony of Sizemore's. He disappeared for several years but recently returned to public view as the newly elected chair of the Oregon Republican Party. Frankly, Walker didn't appear more than courteously interested in what Bendl had to say, but any time you mix Bendl, Walker and references to Tiernan, the hairs on your neck just involuntarily rise!

Ÿ HB 2867, the public contracting bill we detailed last week, passed out of its Ways and Means Subcommittee and is moving to the full Ways and Means Committee soon. "It looks like it will get out of the building before I do," said Baessler.

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Away from the capitol this week ...

STATE MEDIATION BEGINS — Today is the first day of mediation in the Central Table negotiations for most AFSCME-represented state employees. (Corrections Security unit negotiations are run separately.) The union was scheduled to present its latest counter-proposal to the state today through State Conciliator Robert Nightingale, the Employment Relations Board's senior mediator.

Allen chastised the state for "prematurely" pushing the talks to mediation when the two sides last met on June 11. (You can still catch the audio of that on our website.) Today's session ended with some minor progress; the next mediation date will be announced soon. For those wanting to keep up on the talks, there is a Central Table Update tab in the Main Menu of the Council 75 website. Please note it generally takes a day or two after a session ends before notes are scrutinized and double-checked and the latest update gets posted.

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ANTI-CARD CHECK — To date we have purposely pretty much avoided reporting to you on all of the potential initiative petition filings for 2010. First off, we've been busy enough keeping up with the 2009 Legislature. Second, a lot of initiative proposals get filed and never go any further than that. And third, we've got plenty of time ahead to talk about them!

But we'll take just a moment here to let you know that something called the "Secret Ballot Protection Act" was filed last week with the Secretary of State's office. The listed chief petitioners are the aforementioned Walker, head of the Oregon chapter of FreedomWorks, an ultra-conservative group, along with state Rep. Kim Thatcher (R-Keizer).

Walker and Thatcher have a history. It was Walker's group — then known as Citizens For a Sound Economy — that primarily backed the then-politically-unknown Thatcher in 2004 and helped her oust incumbent state Rep. Vic Backlund (R-Keizer), whom Walker deemed as "too moderate."

But back to the initiative proposal. It's a constitutional amendment that does several things. It starts out talking about "requiring all elections by the Legislative Assembly be made by voice and not by ballot" — which seems a direct contradiction to its title. It goes on to say ... "Also all state, local and federal elections must be made by secret ballot, as well as designation or authorization for employee representation."

Bingo! Therein lies the real purpose behind the measure. This initiative really has nothing to do with the Legislative Assembly or other government elections and everything to do with banning the union card check legislation that organized labor fought so hard for and passed at the state level in 2007.

Card check is, of course, the key component of the Employee Free Choice Act currently being debated in Congress as well. The consensus from Baessler and an official in the Secretary of State's office is that should EFCA pass, it would most likely trump this initiative's language.

"But depending on how the proponents say this should be interpreted, they could always litigate it and take it to court," says Baessler. "And who knows if this even gets on the ballot. It got its initial required 1,000 signatures, that's what we know for sure. Other than that, it's wait and see."

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