On April 9 in the House Committee on Veterans and Emergency Preparedness, officials from the Oregon Military Department made a remarkable admission.
Agency officials disclosed they'd been making excessive pension payments to firefighters for three decades—and now they wanted the law changed to make their mistake disappear.
"We are retroactively trying to take care of these firefighters," OMD Deputy Director David Stuckey testified.
Marjorie Taylor, a senior policy analyst for the Public Employees Retirement System told lawmakers the agency's request was "rather unusual."
That was an understatement.
Facing the April 9 deadline for bills to move out the chambers in which they originated, the Veterans Committee held a public hearing and work session on House Bill 2196 which, as first introduced, was about as vanilla as a bill gets.
In its original form, the bill's summary said it "directs Oregon Military Department to study and make recommendations regarding improvements to operations of department. Requires department to submit report on findings to Legislative Assembly by January 1, 2021."
But on April 9, OMD officials introduced an amendment that executed what lawmakers call a "gut and stuff," a procedure in which an entirely new bill is inserted into the carcass of an old bill.
In their testimony, OMD officials admitted that, since 1989, the agency had mis-classified the firefighters who work on airbases in Portland and Klamath Falls and fight wildland fires, paying into the Public Employee Retirement System as if they met the legal definition of firefighters.
But as the officials and the agency's attorney from the Oregon Department of Justice acknowledged, that was a mistake: They didn't meet the definition.
Further, it was a mistake the agency discovered in 2016 but only made public with a proposed fix on deadline day in 2019 with the gut-and-stuff.
It's a pretty big screw-up: the mistake affects 26 firefighters who have already retired; 47 who are currently working; and six more who have been hired and trained but haven't started working as firefighters yet.
In the PERS system, workers legally classified as police and firefighters accrue pensions at a higher rate and qualify for full retirement five years earlier than general service employees.
OMD officials testified that the agency's firefighters receive the same training, carry out the same duties and face the same risks as do firefighters in municipal fire departments.
They did not, however, provide any testimony on their workloads. The physical and mental wear-and-tear that municipal police and firefighters experience in their daily duties provides the historical rationale for their more generous pension benefits.
Stuckey testified that one retired OMD firefighter may have been over-paid as much as $650,000.
Taylor, the PERS official, testified that if lawmakers didn't approve changing the law to allow military firefighters to qualify as PERS firefighters, the state would have to claw back "tens or hundreds of thousands of dollars" from affected employees. (Stuckey said they agency hadn't notified the retirees they could be on the hook for massive payments back to OMD.)
"This is a mell of a hess [sic]," state Rep. Lynn Findley (R-Vale) said in response to testimony.
Committee Chair Paul Evans (D-Salem) asked about the source of the payments. OMD officials explained that the firefighters' compensation, including pension payments, is entirely paid for by the federal government. Therefore they said, the over-payment that's been going on since 1989 had not and would not cost the state any money.
"Should this bill pass, it does not add one dime to the PERS deficit," Evans told committee members.
There was no discussion of whether the federal government might seek to claw back over-payments. As The Oregonian reported last year, federal auditors have been seeking the repayment what they determined was $3 million in federal grant money for previous inappropriate spending.
The Oregonian also reported last year that Laurie Holien, the former deputy director of OMD's Office of Emergency Management, has a pending whistle-blower lawsuit against the agency, alleging she faced retaliation after calling attention to wasteful spending dishonesty with regulators and gender discrimination. A 2018 state audit also found significant shortcomings in OMD's emergency preparedness efforts.
In response to questions from WW, OMD spokesman Christopher Ingersoll acknowledges the agency discovered the problem in 2016 but a "miscommunication at the time led the agency to believe it could classify its firefighters as firefighters for PERS purposes without a statutory change."
"We did more research and determined we needed a statutory language change," Ingersoll says in an email. "We were unable to do the foundational groundwork and develop the [bill] for the 2017 session."
He says the timing of the introduction of OMD's bill as a gut-and-stuff amendment was not intentionally late but rather "due to complications associated with getting final legal opinions issued and final agreement by all impacted agencies."
Those agencies included the governor's office, the Oregon Department of Justice and the Oregon Department of Administrative Services.
With some reluctance, the Veterans Committee unanimously approved the bill on April 9 and it will now move to the House floor.
"The proposed change will have no fiscal implications to the state General Fund," Ingersoll says. "This technical adjustment will do right by those firefighters that have supported our agency and state."
Evans, a veteran and former OMD employee, was less than pleased with the agency.
"I find this situation a case-study of the continued mismanagement of the Oregon Military Department," Evans told WW in a statement. "It is absolutely unacceptable and deeply troubling. It is not the organization I knew and served; it is why I have sponsored legislation for structural changes—and shall continue to work for the kind of organization our state needs."
He was also unhappy with the timing of the bill, which he said put his committee in an untenable situation.
"Frankly, I am at a loss for why it took three years for the department to bring this issue to light. More than anyone, I would have preferred a more robust conversation about this policy, unfortunately the information and amendment came very late. Our committee was faced with either moving the bill or allowing individual retirees—folks [with] no fault of their own—to be penalized unfairly. That's not right."
Gov. Brown was more forgiving.
"Our office became aware of this issue last spring during the agency's preparations for legislative session," Brown's spokeswoman, Kate Kondayen said in an email. "There is a level of complexity in this fix as it intersects several state agencies and has overlap with federal regulations. The agency prioritized pushing forward a solution this legislative session but was not able to get the full clarity it needed in time to meet the deadline to create a standalone agency bill."
Kondayen acknowledged the agency's issue with federal auditors but says the current director of OMD, Gen. Michael Stencel, is not responsible for the underlying issues.
"The audits at OMD pre-date its current leadership and this administration, and Governor Brown has full faith in General Stencel," Kondayen said.