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Friday, September 23, 2005

The Long Arm of the Law

Attended two events today. The first was the OEA "rally" before the PERS Board meeting. I met quite a few regular readers there and had an opportunity both to chat with Greg Hartman and to listen to Greg's take on what the Board was planning to do. Hartman stated that he believed that nothing would derail the PERS Board from proceeding with the plan outlined by PERS Staff. That said, he also pointed out that new litigation was already being planned and that the trigger would be pulled once the PERS Board made its final decisions or implementing the recovery plan. He is convinced that acting on behalf of "window retirees" is the first order of business and that the White case would probably cover everyone active, inactive, and who retired outside the "window". He revealed a bit of the legal strategy, but I would prefer to withhold any remarks until I better understand what the significance of the strategy is.

The second event was the PERB meeting itself. There was a fairly large crowd that extended out into the antechamber outside the actual PERS Board Room. I'd guess that there were about 150 members/retirees there along with a remarkably small press contingent - no TV cameras at all. I guess that this has become so "ho hum" that wire service reports are sufficient. The meeting began with a presentation by Steve Rodeman and Craig Stroud on the implementation plan outlined in the memo to the Board. Staff and counsel continue to believe that section 14b of HB 2003 is not legal, yet interestingly in the very same breath argue that section 14b2 denies them any ability to charge employers for this. I was left wondering how one could selectively decide which parts of section 14b were legal and which weren't legal. In any case, this was followed by brief presentations from Greg Hartman, Bill Gary, and Joseph Malkin. Hartman argued that the Board was taking an illegal path, prevented by the Supreme Court in Strunk; Gary argued that Hartman misrepresents what the Court said in Strunk and that he also misunderstands HB 2003. Malkin simply offered advice to the Board on the "box" they were in and that their options were really limited. All three lawyers (including Hartman) agreed that the approach that staff had come up with was the fairest and most humane way of dealing with an admittedly bad situation. This was then followed by a couple of named panels testifying both against and for what the Staff had recommended. Finally, the Board allowed about 12 retirees to give brief statements. After that the Board, at the request of Paul Cleary, gave the okay for the PERS Staff to further flesh out the proposal and offer a more detailed implementation plan that would be brought back to the Board in October and, if necessary, November. Final approval of the plan is still a month or two away. The public testimony revealed a couple of issues that the staff was directed to explore. Among them, to consider the potential tax implications for members repaying in a lump sum, to consider a request for an "installment plan" that extended over some fixed period of time (in addition to the actuarial plan), to consider a request to reopen the 60-day window for retirees to revisit their optional payment method. There were also questions raised about whether it was appropriate for PERS to collect more than what a member owed (i.e. the actuarial roulette), whether the reduction in benefit would extend to a beneficiary or alternate payee after a member died, and exactly how the amount owed would be calculated.

There was one surprise issue that I hadn't expected to be an issue. It has always been assumed that no member who retired prior to 4/1/00 would be affected. Apparently there are approximately 547 members who retired as early as 1996 or 1997 that could be affected. The effect arises because the earnings crediting for 1999 included anyone who had taken some form of lump sum payment and then withdrew the money in installments from the time of retirement until some point no more than 5 years later. If there was any lump sum money on deposit with PERS at the time the 1999 earnings were credited in March 2000, there would be some liability for repayment there. That came out of the blue to me.

All in all the meeting was conducted in an orderly manner and members/retirees behaved well. While the Board members fell all over themselves to express empathy and sympathy for the retirees' plight, they all -- including Tom Grimsley -- concluded that they were boxed in by the Courts, the statutes, and the settlement agreement. These expressions rang hollow in two instances: one was James Dalton's callous remark (disguised as an attempt to be funny) that some of the emails were clearly angry and reflected more of a desire to ventilate than to express much of a reasoned position. Dalton then commented that one needed to be a "human dialysis machine" at times to have the job of being a Board member. It was intended to be funny -- and many laughed -- but I didn't find it humorous. I found it insulting and offensive. The second comment was from Board Chair Mike Pittman. Before anyone was allowed to testify, he publicly stated that he doubted that anything anyone would say was likely to be new and that, as a result, he was going to limit testimony. Again, this was probably true to some degree, but it rubbed me the wrong way. It was Pittman's way of basically saying: "you're wasting your afternoon here. I've made up my mind and you might as well leave now". Against that background, professions of empathy and sympathy ring mighty hollow.

A fellow OPRI member recorded the entire meeting and will be making the audio available to me shortly. Hopefully I'll be able to post an audio transcript of the meeting on my website in a day or two for those who want to listen.

In the meantime, I've put in my request to PERS for more implementation information so that I can make the necessary revisions to my calculator. I don't support anything PERS plans to do -- if that weren't obvious -- but I want members to be as well-prepared as possible for whatever comes down the pike. There is little hope of derailing the Board's current freight train, so we might as well get a better description of its shape as it bears down on us. The lawsuits will come in due course.

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