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Thursday, June 30, 2005

Gypsies in the Palace

Just a little "fun" for today. To all those many (nameless, but tilted more towards one side of the aisle than the other and particularly in the Oregon House) legislators who *think* they're doing the people's business, but are simply wasting time and money in Salem, while getting (in my opinion) absolutely nothing worthwhile done, this one's for you:

Gypsies in the Palace
(c) 1985, Jimmy Buffett, Glenn Frey, and Will Jennings

So long boss, knock ’em dead, don’t worry ’bout a thing
Wish that we could come along, we’d love to hear you sing
Limo’s here, your bags are packed, the list is by the phone
Me and snake will watch your place and treat it like our own

Look at all this liquor
Look at all this food
It’s only gonna go to waste
We’re not really being rude
But the good stuff’s in his closet, I swear he wouldn’t mind
Hell we’ll just shoot the lock off, I do it all the time

We’re gypsies in the palace, he’s left us here alone
The order of the sleepless knights will now assume the throne
We ain’t got no money, we ain’t got no right
But we’re gypsies in the palace, we got it all tonight

There’s damsels in distress out there and we got all this beer
We’ll free them from their condos and bring ’em over here
We’ll show them his gold records
We’ll play his music loud
We’ll party just like bubba does
We’ll do the old man proud

We’re gypsies in the palace, there ain’t no wrong or right
We’re gypsies in the palace, and a’ goin’ wild tonight

He’s the greatest guy to work for, man he’s really cool
Hey snake this party’s gettin’ dull, throw someone in the pool
Hey let’s all take our clothes off and form a conga line
Watch out for that broken glass, hey snake we need more wine

We’re gypsies in the palace, there ain’t no wrong or right
We’re gypsies in the palace, and we’re raisin’ hell tonight

Oh hi there boss, what’s goin’ on
You say you’re coming when?
I’ll send snake out to pick you up tomorrow night at ten, okay!
Everybody outta here, this joint is closin’ down
We gotta find someone to clean this up, he’s comin’ back to town

Hi there boss we waxed your cars, we raked and mowed your lawn
We couldn’t find enough to do in the short time you were gone
Man it sure is peaceful here, you’ve really got it all
If you ever hit the road again, give me and snake a call

We’re gypsies in the palace, he’s left us here alone
The order of the sleepless knights will now assume the throne
We ain’t got no money, we ain’t got no right
But we’re gypsies in the palace, we got it all tonight

Wednesday, June 29, 2005

Pacing the Cage

Still waiting for that decision on Lipscomb that was rumored to be "soon." It isn't going to be tomorrow. Maybe the Supreme Court is taking off early for their 4th of July celebration. In the meantime, we'll celebrate another July 4th in uncertainty. The fact of no decision by now suggests to me that a very early prediction of mine -- that the Court might wait until the Legislature adjourns -- could be what's going on here. For the life of me, I can't figure out the politics of waiting since the Governor could call the Legislature back into special session on a week's notice. About the only thing we know is that it would be unlikely (but not impossible) for the Court to delay a decision until after it resumes hearing oral arguments on cases in September. In the meantime, the Legislature continues to play some of the most childish games I've seen since ---- last session. They seem to be in active competition with 2003 for the longest regular session in history. But even if they lose, it will win hand's down for the LEAST productive session in Oregon history. And if the Court is truly waiting for the Legislature to finally get its act together, we could be in for a gloomy few months spent pacing the cage.

Enjoy your 4th of July weekend. I doubt I'll have much else to add before next week.

Monday, June 27, 2005

Darkness at the Edge of Town

Few people (outside of PERS member and retirees) understand the physical and emotional toll all the legislation and litigation is taking on PERS retirees. Yesterday's Oregonian reports the obituary of the first documented PERS retiree to have committed suicide after feeling forced to retire prematurely in order to preserve the benefits he'd accrued over 26 years. While the person committing suicide had a lifelong history of depression, the PERS retirement seem to put him over the top. We don't know how many other PERS retirees' lives have been shortened by all this. I'm loathe to impute motives to anyone, but it is hard not to think that a cynical reason for all this uncertainty has been to shorten the life expectancy of PERS retirees and, in so doing, reduce the benefits actually paid out (this reduces UAL's too). I know this is a really cheap shot, but after reading the obituary of such an accomplished public employee, I can't help feeling a bit of enmity towards all those responsible. When the anger gets particularly acute, I relieve it by singing a few bars of Shawn Colvin's perky little sonnet called "Sunny Came Home".

Saturday, June 25, 2005

Money for Nothing

And the IAP ain't free. In response to Oregonian reporter Jim Mayer's question (actually my question, which Jim Mayer kindly asked for me), Steve Rodeman of PERS answered that interest on IAP money deposited with PERS but not yet invested in member accounts accrues to PERS to help defray administrative costs. Rodeman was not specific about "administrative expenses" and Mayer didn't follow up with the obvious question: "Administrative expenses for what?" We all know that the IAP costs money to administer. We also know that all PERS programs (Tier 1, Tier 2, OSGP, IAP, OPSRP) have administrative costs. Typically, the administrative costs come out of earnings before earnings are credited to member accounts. Presumably PERS also makes money on the float from contributions to those funds too. What is puzzling to me is that PERS also charges IAP members a monthly account fee (currently $2.37), which is specifically designated to cover "administrative fees". In addition, members report that Citistreet, the third party recordkeeper PERS contracts with to handle the IAP records, charges an additional $1.17 per month per account. So, all these fees really beg the important question: "If PERS is keeping the interest earned on the 30-45 day 'float' of member contributions, and the unit value is always adjusted take out administrative and management fees, and every member gets charged $2.37 per month by PERS for 'administrative fees', exactly which administrative fees do the 'float' earnings on IAP contributions actually defray?" It seems to me that these 'float' earnings just go into a big pot called "administrative earnings" and PERS covers administrative expenses for all programs from this pot. As I've noted before, I don't have any dog in this fight, but it still galls the hell out of me that members have no choices about any of this and they're just getting hammered by this creature of the legislature. Even if PERS makes members whole, will the "wholeness" include rectifying all these excessive charges? All these various ways of extracting "administrative expenses" from IAP contributions (which belong to members), seem to violate the fundamental principle that the costs of the IAP program be borne by IAP members. It strikes me that the member's IAP account costs rank up there with the most expensive investments an individual can make. I'd guess that the total fees (both explicit and hidden) per account, expressed as a percentage of income managed is higher than the most expensive and poorly managed mutual fund out there. I'd be happy to be proven wrong. In the meantime, I stand by my assertion that members are spending money for nothing, and getting nothing for free.

Friday, June 24, 2005

Over The Rainbow

There might be a pot of gold, or at least some sense of "wholeness". The PERS Board met today and listened to Steve Rodeman's report on the issues with the IAP as were outlined in his memo (see my Monday entry) to the Board. Rodeman's group will be studying the various remedies further and reporting on them at the August board meeting, where PERS Staff will make recommendations for the Board to consider at its September meeting. There will be a public commenting period before the Board makes any final decisions on the IAP. Rodeman tipped his hand today in suggesting that the PERS Staff would be recommending that IAP members be made "whole" for 2004/2005 in the sense that they be credited with what they would have gotten if the system had worked correctly from 1/1/04. This will probably mean adjustments for most IAP members and settlement adjustments for all members who retired after the IAP was implemented. Rodeman also intimated, and the PERB seemed to concur, that going forward -- starting on 1/1/2006 -- the plan would change so that crediting was done annually rather than monthly. This would obviate the need for purchasing "units" and would render irrelevant the whole issue of when the employer actually got the money to PERS. The consequence of this change would be that there would be no obvious need for a 3rd Party (Citistreet) to handle the recordkeeping, but also no possibility -- at least in the short term -- of IAP members having any self-direction of their money. As I understand what is being floated, the IAP would simply become the equivalent of what currently is Tier 2, but without the employer match. Down the road, the question of self-direction, 3rd party management, and the conversion to something obviously more like a 401-K would have to be raised.

I suppose this is good news insofar as the staff and the PERB Board have actually stated, in public, that the only innocent parties here are the members -- they did the work, contributed the money, and the system responsible for getting their money to PERS to invest in a timely manner simply failed to work as members and other stakeholders expected. It was also important for the Board to acknowledge, as several did during the discussion, that PERS cannot ever function like a single company 401-K because there are 775 different entities that report monthly contributions. It is easy to talk the talk about converting PERS to a 401-K, but administratively it is a nightmare to have 775 different reporting entities trying to funnel money so that all public employee funds are treated equally. This seemed to be a revelation to some of the private-sector Board members.

There will be a combined July/August board meeting on August 5th, and nothing after that until mid-September.

Wednesday, June 22, 2005

Here We Go Again

No Lipscomb this week. How's that for a simple post?

Monday, June 20, 2005

Almost Gothic

In the way PERS moves. Friday's (June 24) PERB meeting will take up the issue of the IAP under an agenda item entitled "IAP Remediation Policy" (agenda item D.3). The difficulties PERS is having are outlined in a 6 page memo to be distributed to the Board on Friday. You can read a copy here. It would be an understatement to say that the program has been nothing short of a complete disaster. You have the Legislature, specifically Representative Greg MacPherson, and the Governor to thank for pushing this "compromise" bill through and expecting it to be implemented seamlessly in 4 months. Moreover, if you go back to the original legislation, it would appear to the layman that PERS overstepped its statutory authority in setting this up and by making it infinitely more complex than was required, and set up impossible-to-meet milestones virtually guaranteed to antagonize employers and to deprive members of earnings that rightfully belong to them. It would be positively laughable if it didn't affect so many people. But now that it is so royally screwed up, it looks like there *might* be some movement to fix it. But first we have to "study" it. Read the memo carefully and explore the various options out on the table. While some options would help most IAP members, other less invasive options would leave the status quo pretty much in place and fix the problems in the future (but not retroactively). If I were affected by this (and I'm not), I'd be unrelenting in exerting pressure to fix it retroactively. In the meantime, this whole pile of stinking dung smells like some almost (but not quite) gothic outhouse next to Mary Shelley's abode.

Friday, June 17, 2005

The Royal Scam

Where are our IAP contributions? Who's earning the interest on the "float"? Why can't we access our IAP accounts? Why does my IAP settlement check (after retirement) not reflect all contributions, or why is the amount significantly less than I contributed? It just seems that the more I hear about the IAP fiascoes (for members, not for PERS, not for Citistreet, not for employers) the worse the scam appears. Members from dozens of agencies are complaining about delayed postings, no postings, settlement checks that differ by more than 10% (less) than what was contributed; no PIN access and a variety of other concerns that leave one wondering just where the money is. Members who've complained to their employers have been told that their money has been submitted to PERS. Members who call PERS are told that their money has been submitted to Citistreet, or that their employers really haven't submitted the money, or that PERS holds the money and submits it "...all at once". Whatever the excuse, members' money is being "held" by some entity for some indefinite period of time and members are losing out on earnings. When members ask PERS who is going to reimburse them for losses or non-earnings for the posting delays, they're told, in effect, that this is "too bad." No windfall awaits IAP members, but it appears that someone is being enriched by all these delays. This money isn't being stuffed into a mattress until it shows up in members accounts. As far as I can see, the IAP is just a royal scam so far. (Oh, and lest anyone think I'm affected, I have no dog in this fight. I retired more than a year before the IAP went into effect. If it was *my* money, I'd have already been on the phone to the Governor, every Representative and Senator who voted for this scam, to Paul Cleary [executive director of PERS], to Hardy Meyers, Oregon Attorney General, to Randall Edwards [Oregon Treasurer], to Senator Vicki Walker, and to the Oregonian, the Salem Statesman Journal, the Eugene Register Guard, and any of the other newspapers who've enjoyed skewering PERS members for so long. This just appears to be a scandal waiting to be exposed --- just my opinion of course).

Thursday, June 16, 2005

No Spill Blood

Life just gets ever more complicated for the PERS retiree. While there is no decision yet in the Lipscomb appeal, more and more questions keep getting raised about mechanisms for implementing the decision should the court uphold it. A few posts back, I raised the issue of the "repayment" of the "overcredit" from 1999. I wondered aloud whether PERS would be required to send all retirees revised 1099-R forms so that they could adjust their taxes for the overcredit. In a word, the answer is "no" because 1099-R recipients are considered "cash" payees for the purpose of income tax. Income is taxed in the year it is paid out, whether there is an overpayment or not. The tricky part comes in when the "repayment" occurs. If a retiree agrees to a benefit reduction for the purpose of repaying any excess interest credited, the 1099-R form issued for each year in which the benefit reduction occurs will reflect a lower benefit and, hence, the "tax" issue is solved annually. But, if a retiree opts to repay the overcredit in a lump sum, PERS walks away from the matter and the retiree and his/her tax adviser have to work out all the complex tax issues that arise. How much can you "repay" a pension plan in a given year? How much excess can be carried forward to future years, if at all. PERS offers NO tax advice in the situation. Their strategy seems to be: "if you owe us money because WE made a mistake, it is YOUR problem to work out any tax consequences of repaying us."

(what is the law)
No spill blood
What is the law
(no spill blood)

(who makes the rules)
Someone else
Who makes the rules
(someone else)

The rules are written in the stone
Break the rules and you get no bones
All you get is ridicule, laughter
And a trip to the house of pain!

Wednesday, June 15, 2005

Sounds of Silence

The thundering you hear is the sound of silence from the Oregon Supreme Court. No decision in Lipscomb is scheduled for tomorrow (June 16th). Back to vacation.

Monday, June 13, 2005


Isn't it ironic that the 2003 Legislature worked so hard to create a "PERS-lite" (OPSRP) that would reduce benefits for new employees? They even went overboard to make sure that PERS Tier 1 members who took a "break in service" for longer than 6 months would NOT be able to return to Tier 1 membership upon returning to work. The "break in service" language created headaches for PERS, headaches for employers, headaches for unions, spawned a lawsuit, and the language is now being cleaned up in the Legislature. But, as hard as everyone has worked to clarify the language, no one really anticipated one consequence of the new law that was only exposed once the Supreme Court ruled in the Strunk opinion. When HB 2020 passed and the Break in Service language put in, the expectation was that Tier 1 members who returned to work after a 6 month or longer break in continuous service would be placed in the less generous system and overall benefits would decline for those people. They assumed that the Court would uphold the "lifetime guarantee", and that poorly performing market would quickly reduce the impact of "money match". With Strunk, theory and reality collide.

Strunk overturned the "lifetime guarantee" provision of HB 2003 and made clear that Tier 1 members' rate guarantee is an annual guarantee, not a lifetime guarantee. Thus, members are entitled to receive a guaranteed minimum rate of return (currently 8%) on all Tier 1 benefits. So, now, when a Tier 1 member takes a break in service for longer than 6 months, he/she can return to the same (or a higher) position, continue to earn 8% on the old Tier 1 benefits, continue to have 6% dropped into the IAP, *and* receive a defined benefit of 1.5% of FAS for each year of service UNDER THE OPSRP. If the member had remained working without a break in service, he/she would only receive Tier 1 account balance plus the annual rate guarantee and the 6% non-guaranteed IAP. A member with 25 years of Tier 1 service, a break in service of 6 more months, followed by 5 years of OPSRP would receive an extra 7.5% of FAS on top of the Tier 1 "Money Match" benefit and the IAP contributions plus earnings/losses.

So, while there aren't that many people who'd benefit in this situation, I'm sure that the Legislature, the employers, and all the other people who argued for this "punitive" break in service provision are finding out what a great deal they gave a small group of Tier 1 members -- probably mostly career senior administrators who seem to recycle in and out of public employment the way the poor go through public housing. Isn't it ironic, or is it?

Thursday, June 09, 2005

Take The Long Way Home

I'm off on vacation early tomorrow morning. As I said earlier this week, I probably won't update this site at all unless something truly momentous occurs. I do plan to update on Wednesday June 15th to let readers know whether or not the Supreme Court plans to issue its Lipscomb decision on Thursday June 16th. Occasionally the Court releases an opinion early, so if I hear of something before Wednesday I'll let you know. Otherwise, expect the western front to be quiet for the next 4 or 5 days. If the Lipscomb decision is released on Thursday, I WON'T have any comment until early evening that day. I'll be in transit all day on the 16th.

I hope the weather turns out better than it is right now -- its Rose Festival weekend and we're going over to Central Oregon as we always do when the fleet comes to Portland. As we like to say when we leave: we're taking the long way home.

Wednesday, June 08, 2005

Natives are Restless Tonight

No Lipscomb decision this week. Big surprise. I guess "soon" means exactly what I thought it meant. It means that "we will issue our decision when we're good and ready".

In the "restless" category, there has been considerable discussion over at OPDG about the tax ramifications for retirees who might have to "repay" PERS for any "excess benefits" received as a result of the 1999 "overcredit". If Lipscomb were to be upheld and retirees dunned to pay back excess benefits, there is the very interesting question of how the retiree would receive tax adjustments for taxes already paid on those "excess benefits". I'm wondering whether PERS will be required to issue revised 1099-R forms for every year that excess benefits were paid. If there are any CPAs out there reading this, I'd love to know what obligation retirees and PERS would have in this situation. It just seems to me that this little "implementation" issue is going to fall simultaneously on PERS and PERS retirees, not to mention the IRS, the Oregon Revenue Department. Perhaps we should all email Judge Lipscomb and ask him how we should resolve this problem, should the Supreme Court hold that he "got it right."

In the meantime, we're all twiddling our thumbs waiting for the gravity storm to hit.

Tuesday, June 07, 2005

Get On The Natch - Part 2

In my continuing effort to explain how people feel about these legal deliberations, I've begun a series of blog entries called "Get On the Natch". Below is the second installment in the series, from an active participant over on the Oregon PERS Discussion Group (OPDG). These are NOT my words, but those of someone known only as "Retiree Robert".

"I just all of a sudden felt a rant coming on.

I hope to high heavens the Supremes deliver us some justice in its opinion on Lipscomb--some unambiguous, definite justice.

I slaved a whole career thinking my gnat-sized thimblecup-of-gold, my PERS pension, was waiting for me at the end of the line. I reached the line, applied for PERS, and was ready to live happily ever after.

Then AFTER I retired, they changed the rules. Then AFTER I retired and several years after the duly constituted PERS Board--with full legislative knowledge--distributed 20% to member accounts for 1999---only then did the powers that be say---uh,oh, the PERB made a boo-boo. They shouldn't have been so generous in 1999. Now I face the possibility of having to pay back part of the benefits granted to me---by a duly constituted PERB!!

Why in the hell should I, an innocent bystander who played by all of what I "thought" were the rules, have the rug pulled out from under me now---AFTER I have no choice to "undo" some of the decisions "I" made. Why in the hell should "they" "undo" their decisions years after the fact, and when I am stuck with my decisions, given no second chances to rearrange my affairs.

And these complaints hurt the active workers with 15, 20, 25 ,30 years in just as much as they hurt me.

If the Supremes don't do something in the Lipscomb case to provide some real justice, I am going to be thoroughly disillusioned."

Monday, June 06, 2005

Carry On Regardless

Of the Supreme Court. Friday's AFSCME e-lert reported that Greg Hartman crossed paths with an Oregon Supreme Court justice in Salem last week. As they passed, the Judge "winked" to Hartman and whispered "soon". "Soon" as in when? Since "soon" has been on everyone's lips since the Court ruled in Strunk, it is hard for me to get up much enthusiasm for the prospect that "soon" means anything but "whenever we feel like it". For me, I'm not gonna hold my breath. I'm carrying on regardless of these predictions that Lipscomb will be decided before I'm old(er) and gray(er).

I'm leaving town this coming Thursday and won't be back until the following Thursday. Unless I'm truly bored -- unlikely -- or unless the Supreme Court issues a ruling, my postings will be sporadic, if at all, during that week's vacation.

Thursday, June 02, 2005

Lovers in a Dangerous Time

I'm feeling a bit pensive today. I taught my last class this morning. Aside from the usual end-of-term grading, I'm finally at the precipice of real retirement. On June 15th I go off the PSU, OUS, and State payroll for the first time since 1970. Of course, I remain a ward of the state, drawing my PERS benefit until either I or my wife dies (whichever comes last). I draw my PERS benefits unbowed and unfazed by all the criticisms we public employees have had to endure (and continue to endure) for most of our careers. Regardless of what people say to you or about you -- we all EARNED our benefit, however large (or small) it might seem to others. I taught these past 3 years since I started drawing my PERS benefit with as much enthusiasm, preparation, and dedication as I had in teaching each of the 32 years that preceded the last 3; I'm simply unable to do my job any other way. And I have no doubt that every other public employee and retiree can look themselves in the mirror each morning and say proudly that "I gave my all at the office, whether anyone 'appreciated' me or not. I am not a slacker, seeking succor at the teats of Oregon taxpayers." Recite this like an anthem every morning. When you're done doing this, look carefully at the song lyrics below, for they are what keep me going every day. They're not a prayer, although they could be. They are simply a set of beautiful and haunting lyrics that remind me daily what tasks lie ahead. Peace all.

Lovers in a Dangerous Time
(c) 1983 Bruce Cockburn

Don't the hours grow shorter as the days go by
You never get to stop and open your eyes
One day you're waiting for the sky to fall
The next you're dazzled by the beauty of it all
When you're lovers in a dangerous time
Lovers in a dangerous time

These fragile bodies of touch and taste
This vibrant skin -- this hair like lace
Spirits open to the thrust of grace
Never a breath you can afford to waste
When you're lovers in a dangerous time
Lovers in a dangerous time

When you're lovers in a dangerous time
Sometimes you're made to feel as if your love's a crime --
But nothing worth having comes without some kind of fight --
Got to kick at the darkness 'til it bleeds daylight
When you're lovers in a dangerous time
Lovers in a dangerous time
And we're lovers in a dangerous time
Lovers in a dangerous time

If you want to 'hear' these lyrics, you can find a dozen different versions by Bruce Cockburn, or one spectacular cover of the same song by Barenaked Ladies.

Enjoy your weekend. I'll be back on Monday.

No Birds Today

Telling me that the Supreme Court will release Lipscomb this week. In fact, the Supreme Court website indicates that the Court will release two decisions tomorrow, but neither one is the City of Eugene case. There is a bunch of speculation -- as usual, all without any substantiating evidence -- that the Court is planning to wait out the Legislature before releasing this decision. Since the Lipscomb decision really has no budget ramifications for the 2005-2007 biennium (new employer rates already approved; PERS has funds in reserve to cover costs of reversal of Lipscomb) I can't see why there would be any benefit to waiting. Indeed, if there were a financial crisis, the Governor could always call the Legislature back into special session within days after adjourning the regular session. I think the court will simply release the decision when it's ready to do so, whether the Legislature is in session or not. I'm still holding to my "before the 4th of July" estimate. I figure it is as good an estimate as anyone else's.

Wednesday, June 01, 2005

Call Me

When the Supremes decide to wake up and release the Lipscomb decision. This is a short week and the court posted no announcement today of any opinions to be released tomorrow. Perhaps they're taking the week off, or perhaps they'll make some sort of announcement that no decisions will be issued this week. They've a habit of not issuing decision in weeks that include a holiday, so it wouldn't surprise me that they don't release anything at all. Check back tomorrow.