AP NEWS

Court: AG must rewrite ‘misleading’ pension ballot measure

October 11, 2019 GMT

PORTLAND, Ore. (AP) — Attorney General Ellen Rosenblum must redraft the misleading title and explanation that her agency wrote for a proposed ballot measure that seeks to prohibit government employers from taking on any new pension debt, the Oregon Supreme Court ordered this week.

The Justice Department is responsible for drafting ballot measure titles and explaining their effects to voters in a neutral fashion. But backers of Initiative Petition 13 say that’s not what happened when agency officials issued proposed language for their measure in May, The Oregonian/OregonLive reported .

The initiative is straightforward, says Julie Parrish, a former Republican legislator who is one of the chief petitioners. It requires the state treasurer to calculate the unfunded actuarial liability of any public pension program in the state as of Dec. 31, 2022. It creates a constitutional prohibition against government employers accruing any new unfunded liabilities after that date. And it prohibits employers from borrowing money to offset their pension payments, as public employers have in the past by issuing pension obligation bonds.

In fact, it’s not literally possible for government employers to avoid incurring new unfunded liabilities -- temporarily at least. They are created when investment returns fail to live up to expectation in any given biennium, when actual wage growth or mortality rates differ from assumptions, or when employers fail to make adequate contributions to cover accruing benefits.

But practically speaking, backers say the measure would turn public pension systems in Oregon into pay-as-you-go systems, with employers forced to eliminate any incremental unfunded liabilities by paying more money into the system; in effect, zeroing out the credit card balance in any funding period.

Pretty simple, they contend.

But the measure drafters at the Department of Justice apparently had trouble with the concept.

In the draft ballot measure title and in the explanation of what a “yes” would mean, the agency included the notation: “effect unclear.” The Supreme Court said in its unanimous decision that the measure wasn’t clear in every respect, particularly in how government entities would comply with the new constitutional provision. But it said the “effect unclear” comment “is unhelpful and fails to describe the proposed measure’s subject matter, as required.”

Meanwhile, the court said the agency’s “no” vote explanation was misleading, insofar as it “does not summarize the current law accurately or advise voters of the choice they are being asked to make.”

The agency drafters lost the thread in the summary explanation of the ballot measure as well, which the court said contains information that “does not summarize any part of the measure and is not an effect of the measure.”

For those reasons, the court said the draft doesn’t comply with the standards for ballot measures set out in state law and referred it back to Attorney General Ellen Rosenblum for modification.

Parrish contends agency officials deliberately drafted the measure in a way that would confuse voters and make them less likely to support it. She maintains the move was political: That Rosenblum will be up for reelection and be beholden to unions for campaign donations. And that unions won’t like the measure.

“This whole thing is very political,” Parrish said. “And if your makers are quietly saying we should not let these things get past the goal posts, it makes it difficult to use the process the way it’s supposed to work.I don’t have any faith that the ballot titles being drawn up are not partisan.”

Kristina Edmunson, Rosenblum’s spokeswoman, said the agency has a team of lawyers from the Appellate Division that work on ballot measures in consultation with the attorney general. The process, she said, is consistent with statute, including a comment period and a letter of explanation that responds to each comment when the title is submitted.

“Any suggestion that this was politically motivated is incorrect,” Edmunson said. “We simply believed voters should know that, despite the first impression conveyed by its words, the measure may or may not have the effect of preventing unfunded actuarial liabilities. But the Supreme Court has ruled, and we will follow their instruction.”

Parrish isn’t wrong about the unions’ position. The executive director of the union-backed advocacy group Our Oregon submitted a brief in the case, generally in support of Rosenblum’s ballot title language.

Bottom line, the measure would put public employers on a financial hotseat, likely destabilizing budgets and jeopardizing jobs. As it stands, the PERS Board has a number of mechanisms in place to protect public employers from any spike in pension costs, including rules that spread the repayment of any new deficits incurred over 20 years, dampening the budget impact of any new pension shortfall. In fact, in a move backed by unions, state lawmakers just gave employers a major pension holiday by extending the repayment period for the current deficit for an additional eight years.

If the ballot measure were to pass, that wouldn’t fly. Any new shortfalls would need to be covered immediately. In the end, the only choice public employers might have is to replace their current defined benefit retirement plans with defined contribution plans like a 401(k), which are, by definition, fully funded.

At the very least, Parrish contends, “voters should get a chance to see what these pensions are really costing. The way to do that is to put it in your budget every year. You don’t get to kick these obligations down the road in perpetuity.”

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Information from: The Oregonian/OregonLive, http://www.oregonlive.com