Oregon’s highest court is the latest jurisdiction to curb legislative pension reforms. In 2013, the Legislature passed changes to the Oregon Public Employees Retirement System (OPERS) that focused heavily on cutting cost of living allowances (COLAs). The court ruled that these cuts can be applied only to prospective employees (i.e., those hired after the effective date of the legislation). Retirees and employees on the books prior to the 2013 enactments are protected by the ruling. Going forward, the estimated aggregate increase in contributions from the state and from municipalities is $800 million or so. In addition, OPERS must fund make-up payments to cover the shortfall in COLA payments to protected employees and retirees. The two main impacts of the ruling are (1) future pension costs will rise sharply for state and municipal employers, particularly labor-intensive ones like K12s, community colleges, cities and the state itself, and (2) OPERS will face immediate pressure on its assets and, consequently, on its funding ratio as it remits make-up payments to protected employees and retirees. This ruling, along with a pensioner friendly ruling by the Illinois Supreme Court last week are a good reminder that pension liabilities are another form of debt, and must be taken into consideration when analyzing credit quality.