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Please don't post your comments more than once. I moderate all comments and a delay between posting and appearing is part of the drill here. I get to all comments in due time. Please don't continually repost the same comment. Only one will be posted. Also, due to the volume of email I'm getting right now, I am unable to guarantee that I will respond to all personal emails sent to my email address. I am being buried alive under an avalanche of email. Please go to the PERS Oregon Discussion (POD) Group, linked below (left) under LINKS to post your question and get a variety of answers. Thank you.

Wednesday, April 27, 2005

Dancing in the Dark

That's where we will remain for at least another week. No decision forthcoming tomorrow in the City of Eugene (Lipscomb) case. The wake continues.

On an unrelated topic, there seems to be some confusion about what PERS is going to do for those members who retire between April 1 and the time that the Supreme Court finally releases its long-awaited decision in the City of Eugene case. Go over to the PERS site - see link to the site here (left, under "Links") and look closely at the document under Agency News entitled "Estimated Payments". This is the way PERS will calculate your benefits. There is nothing ambiguous about the document. It was presented to the PERS Board on 4/15 and there were no objections to this methodology. It is a fait accompli until a decision in Lipscomb is issued. Once the Supreme Court rules in City of Eugene (Lipscomb), the methodology will or won't change depending on how the Court rules.

Tuesday, April 26, 2005

Standing in the Doorway

Two people have recently asked nearly the same question. The answer may be obvious to some, but since so many are standing in the doorway trying to see what's going on inside, I thought I'd offer a response.

Question: Does the "lookback" as of June 30, 2003 take precedence over the "payback" provision of the PERS Settlement agreement of the City of Eugene case?

Answer: To the best of my knowledge, the "lookback" is part of HB 2004, which was totally upheld by the Supreme Court in the Strunk case. In essence, the Supreme Court held that not only implementing new mortality tables going forward was permissible, but that the "lookback" was an acceptable method of preserving the members' accrued benefits. The City of Eugene case and the "settlement" are different entities altogether. In that case (and the settlement) the issue is whether the 1999 earnings crediting (among many other things) for Tier 1 Regular Accounts was "lawful" or "an abuse of discretion" (I fail to see how one is the antithesis of the other, but that's for the court to deal with). In any case, whether the 1999 earnings crediting decision was legal or not is immaterial for the lookback EXCEPT to the extent that IF the Court rules that the PERS Board unlawfully credited 20% in 1999 when it should have credited 11.33%, THEN the "lookback" amount established effective 6/30/03 would have to be adjusted to account for the effect of the "unlawful" credit. And that, in turn, would affect the balance used to compute the "lookback" benefit. Nothing in the Supreme Court's Strunk ruling challenges the legality of using the 6/30/03 account balance as a floor under the benefits currently accrued by Tier 1 members, but the unstated point is that the "lookback" amount as of 6/30/03 is presumably computed correctly and legally.

Monday, April 25, 2005

Out Come the Freaks

It's that time of year again. We're getting close to June 30th; retirements peak then with schoolteachers and administrators getting out at the end of their contracts, and with new fiscal years beginning on July 1. It is at this time every year that I start getting questions, seeing questions and hearing stories about various "investment people" who are fomenting fear, uncertainty and doubt, on naive public employees. The common ploy is advising people to opt for the "double lump sum" option - equivalent to cashing out your entire PERS account plus the employer match - and rolling the balance into some investment vehicle that the "investment people" can make a boatload of commissions from. While I do not mean to tarnish the reputations of respectable financial advisors, I'm afraid you're outnumbered and outgunned; those looking out for the PERS member's self-interest are few and far between. Investment advisors make their money in one (or more) of several ways: commissions on investment or insurance products they convince you to buy; from management fees that they receive as a percentage of the money you invest with them; from being paid a straight fee to provide you with objective advice. If you need financial advice, try to find someone whose money comes from "fee for service". If a financial advisor makes his money off products you buy, how in the world do you think you're getting objective advice? If this type of advisor had the option of selling you two products, one that pays him/her a small commission or one that pays a large commission, which one do you think you'll be steered toward?

Before you take a double lump sum option, get advice from two or three different financial advisors and stay clear of someone who gives you advice for "free". There is no such thing as a free lunch, and the "free" advice you get may end up being the most costly mistake you can possibly make.

Saturday, April 23, 2005

I Got the News

That AFSCME is planning to post some example retirement benefit calculations on its website next week. The examples will be from real (but nameless) people and will illustrate various scenarios to try and explain in plainer terms the effect of the Supreme Court ruling. I don't know whether they will include the potential effects of the Supreme Court upholding the City of Eugene. It it were me, I'd want to know the effects in either case (uphold Lipscomb, overturn Lipscomb). In the meantime, I've gotten 2003 statements from half a dozen people. I started looking at these and realized that if I'm going to do a credible job of unrolling the 1999 earnings crediting decision, it will actually require statements starting in 1999 and running through 2003. It is trivially easy to deal with Strunk; it is extremely complex dealing with Strunk *and* the "settlement" of City of Eugene. I don't know whether people are anxious to entrust me with that much information. If you are willing, email me to discuss further.

Thursday, April 21, 2005

Shaking the Tree

PERS has updated information on how retirement benefits will be estimated for the period prior to the final ruling on the City of Eugene case. You can read this on the PERS website. As you will see, PERS is taking an extremely conservative approach to estimating benefits for the near term. Of course, others might disagree and think that PERS is shaking the tree a bit too vigorously and with a bit more confidence than may be justified at this point. Only time will tell. On the upside, if Lipscomb is overturned, recent retirees won't owe PERS any money.

Wednesday, April 20, 2005

Just Another Day

No Supreme Court ruling in the City of Eugene appeal is posted for Thursday April 21, 2005. There is a curious interesection of dates coming up soon. April 28 is a Thursday that happens to coincide with the currently stated date for all Oregon Senate Committees to shut down. It is also the case that the Oregon Supreme Court "typically" releases its decisions on Thursday. So, could next Thursday be the day? One might hazard a guess, but for the fact that there is one committee in the Senate that doesn't and probably won't shut down on April 28. That is the Senate Rules Committee, which has an indeterminate "close" date. Interestingly, virtually all the significant PERS-related bills have been referred to the (guess where?) Senate Rules Committee. In any case, the wait goes on and tomorrow is just another day and your guess is as good as mine on whether a decision is imminent.

Tuesday, April 19, 2005

Postcards from Paraguay

I'm getting tons of these now, many from mid-career Tier 1 members for whom reality is just beginning to dawn. Not too many describe the specifics, but several have requested that I put together some more "real" examples of how Tier 1 members who are in the 5 - 12 year range from retirement can expect to fare at retirement time. I'd be happy to do this if I had real data to work with. So those of you out there who might find such analysis useful, please supply me with your specific data -- identity blind, of course -- to use as a starting point. You may fax your most recent PERS statement to me (just make a copy of it, black out every piece of identifying information on it, and then press the send button) so that I have information. I'm looking for about a half dozen of these from people in the specific group named above so I can do a little simulating of the world as it might be when you choose to retire. There are no guarantees that these analyses will be right; all depend on assumptions that could easily change. The Lipscomb decision, which could be announced at any time, could alter the landscape dramatically as well. [I'm not going to publish my fax number here. If you'd like to supply me with the relevant information, email me and I'll give the number to you].

Monday, April 18, 2005

Just a Little Light

Shed on how PERS will compute estimated benefits in this period post-Strunk and pre-City of Eugene. This document was handed out at the PERS Board meeting on April 15, 2005. It should explain pretty clearly how PERS will estimate your benefits if you've retired since Strunk.

I expect the "hit counter" to appear erratically today. The GoStats server is undergoing maintenance. The odometer will still register; it just may not display with each visit.

Sunday, April 17, 2005

Shadows and Light

Rather than wait for PERS to post the Mercer presentation, I discovered that my new scanner will take a two-sided document and scan it in automatically. I just put the Mercer document in and let er rip. You can read the Mercer Study by clicking on the highlighted link. (This is now the "official" copy direct from PERS, in living color).

The objectives of this study are rather clearly stated on the first page. The goal is to show how recent legislation and litigation has affected both member benefits and employer costs. One immediate point that emerges from Mercer's study is that Tier 1/Tier 2 members who retire under Full Formula will be much better off than they would have been without the Legislation (because of the IAP and assuming Full Formula no matter what). Money Match retirements are expected to fall off significantly in 9 - 11 years, even with Strunk and upholding Lipscomb. It might take a bit longer if the court holds that the 1999 earnings distribution was legal.

The next major finding, which wouldn't surprise anyone except Legislators, is that "Contributions to the system are dwarfed by expected investment earnings." Typically, investment earnings represent about 3x contributions to the system in a year where the assumed rate is earned. In 2003 and 2004, the earnings were about 7x contributions and resulted in a significant reduction in the savings expected at the time the 2003 reform legislation passed. Mercer also notes that the volatility in investment earnings creates the volatility in contribution rates, exacerbated by PERS' policy of "smoothing". As of now (pre-City of Eugene appeal decision), the total change in the UAL is only 3.07% or approximately $3 billion instead of the $7.5 billion (7.64%) projected originally. Mercer lays out all the components of how this came to be (see page 11 of the handout). One interesting finding (page 10) is that after the 2003 reform adjusted the 2001 system valuation, there was a temporary surplus and PERB dropped employer rates below the "normal cost" (this is an important point that has ramifications later).

Page 13 contains an important table, which notes that "Over 60% of PERS accrued liability is for retirees and inactives". Moreover, closer inspection of the table shows clearly that retirees and inactive members will be worse off if the City of Eugene settlement stands than they are right now without Strunk implemented. It isn't clear to me from the numbers on this page whether the effects are equal across retirees and inactives, but the numbers speak for themselves (especially compare the effect on actives).

Mercer also reports and explains how high earnings will not have a significant impact on employer rates in the short run, but will have a substantial mitigating effect farther out (pp 16 & 17 of report).

Finally, page 19 of the report offers the clearest insight to date on what both employers and members might expect by way of recommendations from Mercer to the PERB. Under short term measures, they clearly recommend using the Contingency and Capital Preservation reserves to mitigate the effects of the Strunk decision. They also feel that the Board needs to develop a formal policy on interest crediting. It was at this point where the 8% floor discussion arose and where no one challenged the assertion. The discussion was about what to do with earnings above 8% (not above the "assumed rate") and it was here that Mr. Green and Mr. Hartman discussed the role of HB 2001 and agreed. You'll also note the "intermediate term measures" here. You should pay particular attention to the note about "Entry Age Normal" funding, "alternative methods to smooth contribution rates", and "other actuarial methods and assumptions." Expect a Board meeting relatively soon in which Mercer will recommend that the PERB use a different (and actuarially accepted) method to calculate the "normal" funding. This method will differ from the method used by Milliman and will result (almost assuredly) in slightly different actuarial tables. Mercer has much experience with other Public Employee retirement plans and clearly differs with Milliman on the best approach to calculating the "normal" cost for each employee in the system. Mercer also seems to have some concern with the method PERS currently uses to smooth investment returns and diminish volatility in employer contribution rates.

For PERS wonks, this is the opening salvo from a new actuary. Mercer's philosophy appears to be different from Milliman's. This presentation reveals the areas of shadow and light in a picture that is just beginning to develop. Enjoy your read.

Saturday, April 16, 2005

Candy Everybody Wants

But only one person gets. Congratulations to Pamela Craig for coming the closest to guessing when the hit odometer would turn 150,000. It was a close race until midnight last night, when it became clear that Pamela, who had guessed April 15th, would win. Congratulations Pamela. Please email me at my PSU address so that I can get your gift card to you.

Check back tomorrow or Monday for the summary of the Mercer presentation that was mentioned in today's Oregonian and in my post "Don't Crash the Ambulance" yesterday. So far, neither Mercer's presentation nor the PERS Staff memo concerning estimated benefits has appeared on the PERS website. I'll try to get electronic copies of both and post links to them here next week.

Friday, April 15, 2005

Don't Crash the Ambulance

Whatever you do. At least that's the way it felt after attending the PERS Board meeting today. It turned out to be more interesting than I expected, though for none of the reasons I thought it might be. I posted an earlier version after I returned from the meeting, but some gremlin in the bit bucket ate my homework and it didn't appear. Consequently, I'm posting another account that will probably be slightly different than my earlier report because I've had a glass of wine with dinner. :-)

The interesting parts of the meeting involve two handouts that were not in the initial Board packet. Speaking of Board packets, Executive Director Paul Cleary more or less apologized to Board members and stakeholders for the confusion over the reserving memo that appeared in the initial packet and was "pulled" (his term this time) from the packet by Tuesday. I explained the genesis of the document in an earlier post (see "Desperadoes under the Eaves") and won't repeat it here. Suffice it to say that at the March meeting, the Board had questions about their statutory authority and responsibility for the various reserves. They directed PERS staff to prepare a report about these things for a future meeting. The staff did as directed and prepared a draft document that was included as an agenda item for discussion at today's Board meeting. Apparently, shortly after the Board's agenda and packet were first made available, Greg Hartman sent Mr. Cleary and PERS a letter that caused PERS to revisit the agenda item and to withdraw the memo from the agenda. While I have no direct information about what Mr. Hartman said in his letter, Mr. Cleary made a remark that allowed me to infer its contents. He noted that much of the memo was a fairly straightforward recitation of the relevant statutes under which each reserve exists, but he then noted that there could be differences of interpretation of what the Board's authority and responsibility are with respect to funding those reserves (and presumably using the proceeds of those reserves). So, at the moment, I stand by my earlier assertion that PERS "pulled" the memo and agenda item deliberately; it wasn't included by accident, but its contents concerned Mr. Hartman and PERS decided to withdraw the memo for the time being.

The first new item was a memo from PERS staff describing how they planned to estimate retirement benefits for that subset of members who retire between now and the time a decision is reached in the Lipscomb "City of Eugene" appeal. PERS has decided that the most economical approach is to estimate benefits based on one known fact and one assumption - Strunk is the fact and Lipscomb is the assumption. PERS is going to calculate benefits for new retirees with Strunk implemented (8% 2003, 8% 2004) and on the assumption that Lipscomb is upheld (11.33% in 1999 instead of 20%). This methodology will result in the least variation between estimated benefits and actual benefits and will be guaranteed to not OVERESTIMATE benefits for any, may turn out to be correct and require no further changes to those accounts, and in the worst case will require PERS to calculate adjustments to recent retiree accounts at the same time every other account affected by these decisions will be affected. I have the memo but I'm hoping that PERS will post it. I don't have time to scan it in and assemble a 4 page document.

The other significant items of business were dealing with the legislatively mandated mortality comparison of P & F with General Service Members. This was Mark Johnson's swan song and his report is part of the published PERS packet. I'll spare the details of this relatively lengthy discussion, but did enjoy watching the PERS Board squirm when they had to make a tough decision. In the end, the Board voted 4 - 1 to accept Mark Johnson's recommendation that the differences in P & F mortality relative to General Services were not significant enough to warrant developing a separate set of actuarial tables. Pat West, representing the Oregon Firefighters, made a compelling argument in favor of separate tables, but in the end the Board held with the actuary.

The most interesting item - for me at least - was the presentation by Marcia Chapman and Bill Hallmark, the Mercer actuaries assigned to PERS (Chapman is the Principal Actuary; Hallmark is the Principal Financial Modeller) entitled: "Oregon PERS: Recent Benefit Changes & Future Employer Rates". This was a 35 minute Powerpoint Presentation (20 pages long; I have the handout, but no electronic copy) covering a broad area of topics. To save my hands right now, I'll post a separate summary of that presentation tomorrow. However, I do want to make one point that emerged during their presentation because it isn't obvious from reading the document. At several points during the presentation and during questions and answers both by PERS Board members, PERS Staff, and by stakeholders, it became obvious that everyone is operating on the principle that in the Strunk decision, the Supreme Court determined that 8% was the minimum rate that can be used as the "assumed interest rate". I listened very carefully during this back and forth discussion and heard 8% referred to in lots of different ways, but someone (perhaps one of the actuaries, perhaps someone else) plainly said that Strunk established 8% as the floor, and not a soul in the audience challenged the assertion. That I heard it doesn't make it so. But it does, at least for the moment, offer a small bit of good news. Use this information at your own risk. (It will be amusing to see how long it takes for someone to try to correct my memory).

I'll post my thoughts on the Mercer presentation over the weekend. Perhaps PERS will be kind enough to post it electronically as it will be an interesting read for those willing to invest the time and energy. I'll close with a final story. Near the end of the meeting, there was a brief discussion of HB 2001 and its implications for earnings crediting in the future. Jim Green of the Oregon School Boards Association (OSBA) reminded the Board that future discussions of earnings crediting must take into account the restrictions of HB 2001. Greg Hartman was asked to comment. He reported that HB 2001 was drafted as a cooperative effort and that Mr. Green was correct. As he was walking back to his seat, Mr. Hartman looked over at Mr. Green, who was sitting near me, clutched his hand to his heart, and mouthed with a big smile "this really hurts me to agree with you".

Adios, until another day. Off to my Friday night orgy of CSI reruns.

Everybody Pays

Tax day. Send check to Feds to pay for AMT. Send check to Multnomah County. (Small consolation - PERS benefits not taxable for Multnomah County ITAX). Shift 2004 records to "done" box. Move 2005 box from "pending" to "current". Just think, only 364 days until we have to do this again.

Watch this space for an update later today on anything significant that transpires at the PERS Board meeting this afternoon. The agenda looks pretty mundane for members although a few items might be interesting for future reference.

Thursday, April 14, 2005

Power of Two

There's genuinely nothing to report today. PERS Board meeting is tomorrow and I'll probably attend since it falls at convenient time. If anything interesting occurs, you'll read it here first. If you look at the "hit" counter on the lower left, you'll notice that we're very close to hitting 150,000. I'm holding two guesses right now that are potential winners and the rest won't be close. I'm guessing that we'll hit the magic mark sometime over the weekend and the winner will be determined by the "earliest" time stamp on the guess.

Wednesday, April 13, 2005

Be True

I've been mildly rebuked by one of my PERS sources for jumping to conclusions about why the memo on statutory reserves (see "Desperadoes Under the Eaves") was removed from the April 15, 2005 Board packet and agenda. The item was never supposed to be on the Board agenda for April 15, nor was the memo supposed to be in the packet for the same meeting. It was a draft memo circulating for internal review and the memo will be taken up at a future meeting discussing 2004 Earnings Crediting. It was mistakenly added to the agenda and mistakenly included in the packet. As I pointed out in response, everyone would have been fine if PERS, as in the past, had posted an updated agenda that referenced the change and the removal of the document from the packet. It was the silent removal of the document and the silent change of the agenda that concerned me most. In the past, PERS was very upfront and public about agenda changes so I neither asked nor felt I had to ask. It just didn't feel right. As for the memo itself, nothing in it surprises me even mildly as it follows quite obviously from reading the ORS.

This is Radio Clash

We interrupt our regular programming to put in a plug for two books that everyone should read. The first is new and is called What's The Matter With Kansas? by Thomas Frank. It is due in paperback in early May. The book is about both Kansas as a place and as a metaphor for the origins of modern American conservatism. The second book is actually pretty old (1991) but seems as current today as when it was written. It is called Parliament of Whores and is written by conservative humorist P.J. O'Rourke. It attempts to explain the entire US Government, but could just as easily apply to the Oregon Legislature.

Gnawing on it

You'd think the carcass had already been picked clean. The Supreme Court will not issue its ruling on the City of Eugene appeal tomorrow. While I have no basis to make this argument, I continue to speculate that the Court will wait to release its ruling until after the Legislative Committees shut down. For the Senate, the date is April 28th; the House date is not publicly known but is expected to be somewhere around the same time. This means that if I'm right, we won't see a Lipscomb decision in April.

On an unrelated subject, I do know now that the reason Mr. Baker withdrew from representing the PERS Board as outside counsel, is because he left the law firm hired to represent the PERB. His replacement, Townsend Hyatt, remains with Orrick and is now the principal representing the Board. Don't know anything about why the other two lawyers assigned to PERB are no longer representing same.

A footnote to yesterday's post is that a study of the relevant statutes cited in Steve Rodeman's "pulled" memo (see yesterday for link to the post), suggest that the PERS Board has pretty unlimited authority to fund the Capital Preservation Reserve as it sees fit. There is no statutory upper limit on how much can be placed directly into the reserve. A close reading also suggests (to me anyway, a devout non-lawyer) that funds can be placed in the CPR (great acronym) from earnings on capital, and/or by transferring excesses from the Contingency Reserve.

Tuesday, April 12, 2005

Desperadoes Under The Eaves

At the March 29, 2005 PERS Board meeting, there was a discussion of the uses and limits of various reserves. This occurred in the context of a discussion about reserve crediting. After some brief discussion, it became apparent that both the Board and PERS Staff were somewhat uncertain about the specific uses and funding limits for the Capital Preservation Reserve. At some point, board member Brenda Rocklin asked whether there was any statutory upper limit on the Capital Preservation Reserve. The response suggested that there wasn't and that the 7.5% funding level from 2003 earnings was selected because it was consistent with the Contingency Reserve funding. Following this discussion the Board asked PERS Staff to prepare a report indicating the statutory authority for each of the reserves PERS is authorized/required to fund and maintain, what the funding limits/requirements are, and what are considered authorized uses for each reserve. There was more than a bit of suspicion from some attendees of this meeting that the Board was exploring whether they could put more into the Capital Preservation Reserve than 7.5% of earnings, which further suggested that the Board might be considering this as a place to sequester any of those earnings in excess of the assumed rate.

Yesterday, the PERS Board posted its agenda and handout packet for the April 15th meeting, which included a memorandum from Steve Rodeman, head of the policy group at PERS, outlining the answers to the Board's questions. I read the memo and concluded that the Capital Preservation Fund had no statutory upper limit, which may or may not be significant (see above). I downloaded the packet and was planning to post a link to this memo for readers of this Board. In fact, what I had really intended to do was post a direct link to the April 15, 2005 agenda where this memo could be found. I went back today to find the exact link and discovered, to my surprise, that the memo had disappeared from the PERS packet and the packet cut short by two pages. No explanation was given. Moreover, the agenda item (C.2) vanished completely. I don't know the significance of this, although as you'll be able to read in the "pulled" memo, it hadn't been reviewed by PERS' outside legal counsel. One could assume that there might be some legal issue, or some other technical issue, but given the contents and the origins of same, it does prick my ears a bit to find out what might have been the problem. You can read a copy of this memo here.

Monday, April 11, 2005

Shakedown Street

According to the bond rating firm Fitch, Oregon General Obligation bond have been upgraded from A+ to AA-. Among the reasons given is the fact that the Strunk ruling on PERS, while potentially increasing the UAL by $2.1 billion, has given more "credit certainty" to the State. While this sounds like good news, the story also notes: "While state debt is still moderate, it has tripled over the past three years, principally as a result of the deficit and pension borrowings. Net tax-supported debt is now nearly $5 billion, equal to $1,452 per capita, or 4.7% of personal income. Debt is expected to continue to grow, as the state has embarked on a seven-year $1.9 billion transportation bonding program." I figure that despite the fact that an upgrading of creditworthiness will mean lower interest rates for GO bonds (and the cost-savings that go with them), the flip side will be used to continue the Legislative shakedown of any pocket that looks ripe for the picking.

Cleanin' Out My Closet

The Senate Rules Committee finally appears to be cleaning out its closet of PERS "housekeeping" rules. Hearings and a work session will be held on Thursday April 14, 2005 at 8:30 a.m. on a group of rules intended to clarify some of the changes made in 2003. These bills and changes include:

Public Hearing and Possible Work Session

SB 105
Modifies break in service rule governing membership in Oregon Public Service Retirement Plan by person who leaves public employment for more than six months.

SB 188
Modifies break in service rule governing membership in Oregon Public Service Retirement Plan by person who leaves public employment for more than six months.

SB 1019
Modifies break in service rule for members of Public Employees Retirement System.

SB 1020
Provides that member of Public Employees Retirement System who retires under Oregon Public Service Retirement Plan and who is also receiving retirement allowance under ORS chapter 238 may be reemployed for period of time allowed under ORS chapter 238 and continue to receive pension under Oregon Public Service Retirement Plan.

SB 1021
Requires that Public Employees Retirement Board credit community college employee engaged in teaching with hours of service based on number of credit hours taught.

SB 1022
Requires that Public Employees Retirement Board commence payment of death benefit under Oregon Public Service Retirement Plan as of date of death of member.

SB 1023
Provides that member of Public Employees Retirement System does not have break in service by reason of period of time during which member leaves employment with participating public employer pursuant to agreement with employer.

SB 1024
Modifies definition of "final average salary used to compute pension of member of Oregon Public Service Retirement Plan.


You can log onto the Oregon Legislature's website to get more details about Committee scheduling here.. Many committees appear to be shut down, but there are others that continue to operate and hear bills. Bills die if they are not voted out of committee (or heard at all) before the Senate President and the Speaker of the House shut down committees. While the Legislature isn't there quite yet, it is getting pretty close to the end for the Committee process.

Sunday, April 10, 2005

Mystery Train

Wonder why it is that PERB replaced counsel James Baker, Virginia Perkins, and Heather Reinschmidt with (?heavier) hitters Townsend Hyatt, Joseph Malkin, and Emily Epstein? They all work for the same law firm, which is based out of San Francisco and has an office here in Portland. I've heard Baker argue in the Special Master's Hearing on the Legislative Reform, and before the Supreme Court in the same case. I came away with the distinct feeling that this young fellow was supremely arrogant, incredibly naive, and impressively underqualified to take on the Oregon Supreme Court or go toe-to-toe with Greg Hartman. I kept wondering why the PERS Board would invest OUR money to hire these guys to try and take OUR money and give it to the employers. The Board would have gotten as effective results by hiring some of the 7th graders at my daughter's school. I have no idea where the "new" lawyers are in the pecking order of the same law firm. Methinks they might be from the "A" team instead of the rookie team.

For those contemplating a trip to California and hoping for an escape from the Oregon weather, trust me here. I've just come back from TWO trips to different parts of California at the beginning of last week and at the end of last week. The weather there (both Northern and Central California) is worse there than here. Check out Arizona or Northumberland.

Friday, April 08, 2005

Don't Count Me Out

I am aware that the "hit counter" is not currently working. The server hosting it - somewhere far from here - is down for maintenance. I've been told that the "hits" are still being counted, but the server hosting the iconic registers are not recording them for public display. I don't know how long this condition will last, but be assured that your visits here will "count" in the Borders/BN gift card contest. If you haven't already entered, do so today as voting closes at 8:00 am tomorrow. Remember, the contest is to guess when the site will record its 150,000th visitor. FWIW, at 6:15 am today, the counter registered 146,090. If you want any other helpful information, you'll need to return to my old website to get it. So, no one is counting you down and out yet.

I'm off for a weekend visiting my sisters and their families. Although the blog gives me easy access to posting, I'm probably not going to have time to post anything. Besides, everything that is going on right now is too boring for words. I'll be back on Sunday. Enjoy the weekend.

Thursday, April 07, 2005

Further On Up The Road

PERS members who paid inflated costs to purchase service time after 7/1/03 may receive refunds. According to PERS sources, they know of all individuals via cases contested by the member. They are handling these contested cases one at a time and will issue refunds as the cases are resolved. As you might imagine, there are quite a few of these that will be resolved further on up the road.

You Gotta Move

I've been astounded by the comments I've received on this new blog. It is virtually unanimous that I should move my ongoing monologue over here. I'm going to leave the old site up permanently, but will do virtually all future posting here. The PSU site will host electronic copy links to documents that I want to post publicly, but I'll have links from this site within the text of any entry to take you there.

With every change there are critics. None have criticized this site itself, but I've had design and layout suggestions from lots of people. As I become more familiar with XML and CSS, I'll begin to tweak fonts. For now, I'm done tweaking. I've changed default fonts and font sizes, manually added a links section, and moved the web hit counter here (the contest is still on, BTW). For now, that's all I have time to do as I'm going out of town again this weekend. (I *could* tweak it from my sister's house, but that assumes I'll have time. Gotta catch up on all the gossip from the old home town. :-)

Running on Faith

This seems to be the story for many recent PERS retirees. I've been reading and hearing stories about PERS members who've retired in the past year who are still receiving estimated benefits. PERS is running far behind in calculating actual benefits. However, every once in awhile I hear a story about someone who has seemingly "jumped the line" and is getting actual benefits long before those who retired much earlier. Worse still, in several of these cases, the actual benefits appear to be incorrect - even when looking at the data PERS provides in its Notice of Entitlement. It's gonna take a lot more than faith for PERS to put all the pieces back together again once the Court finally either gives us nirvana or the gas pipe. I think that whoever expects PERS to be able to rebuild all its databases and unroll all the pieces of Legislation that have been struck down by the court by August 2006 is simply dreaming. If they can't send out correctly calculated benefits under a clear set of rules, just imagine what they'll do in the future. It would be optimistic to expect all the backlog and the to-be backlog to be cleared before 2007, if then.

Wednesday, April 06, 2005

The Aftermath

The Strunk decision is history. People are wondering what might happen next. So far not much. But there are some people out there who are crying in the wilderness for direction. These are the people who, in the aftermath of 2003 Legislative reforms, found themselves faced with a tenfold (or more) increase in the price of full-cost purchases of service time. These were catch-22 situations for the most part. Members anticipated retiring based on a set of assumptions in force a month earlier. Imagine their surprise when they got their final estimate for the cost of purchasing enough time to permit them to retire. It was a huge shock to discover the actuarial ramifications of the 0% crediting assumption, for example. So what do you do in this situation? Some members sucked it up, paid the money, and retired. Others stayed on until they had enough service credit or age (or both) to retire without purchasing the time. Some continue to work. The question for today is whether any of the Strunk "fixes" will result in PERS revisiting, recalculating, and refunding with interest the excess cost retirees paid to get out of the system. Since these excessive costs were built on now-illegal assumptions, it strikes me that a remedy for this problem should unfold in the same way that adjustments to the COLA freeze and to the 0% crediting for 2003 arise.

Those interested in answers to some common questions about the Strunk decision may find the following link helpful.

Forget About It

Those expecting the Oregon Supreme Court to issue an opinion in the City of Eugene appeal (Lipscomb) can forget about it for this week. No opinions will be released tomorrow.

On the PERS website is a notice to Tier 1 & Tier 2 members informing them that 2004 Member Annual statements will not be coming soon. Instead, the Board authorized all 2004 earnings to go into a "pending" reserve until the Supreme Court issues its opinion in the Lipscomb case. In the meantime, IAP and OPSRP members should start to see their 2004 statements May.

The "remand" rumor is just that -- a rumor. It is simply an option the Supreme Court has in disposing of a case, especially when they think that legal errors have been made, or when they think that subsequent rulings they've made (e.g. Strunk) might have an impact on the outcome of a related case.

A Simple Twist of Fate

There is a heated discussion going on over at the Oregon Pers Discussion Group about the possibility that the Oregon Supreme Court will "remand" the City of Eugene decision back to the Marion County Circuit Court ruled by Judge Paul Lipscomb. The reason given for this is that the Court may ask Judge Lipscomb to rework his decision in light of the Court's ruling in the Strunk et al case in early March. Speculation is rampant on what such a remand might accomplish and how it might affect active PERS members and "window" retirees (4/1/00 to 3/1/04). The twist (of fate) might be that PERS members and retirees, quick to celebrate victory after Strunk, might find themselves impaled by a passing remark Judge Lipscomb made in his October 2002 ruling. For those wanting to know where Judge Lipscomb was heading, read the Oregon Revised Statutes ORS 238.715 and ask yourself how and whether this might be a way for PERS to recover money that the Court ruled couldn't be collected by the means devised in HB 2003.

Later. While the initial sturm und drang has died down a bit on this issue, there continues to be a disagreement over the relationship between the "fixed benefit", as defined by the Court in Strunk and the 1999 revised earnings order adopted by the PERS Board at a meeting last year following the settlement. Since the Strunk language was clear on the "fixed benefit" and the COLA freeze (the benefit that would have been the case on 7/1/03, and the illegality of the COLA freeze mechanism), hope continues that the Court won't undercut itself or members/retirees and rule in the City of Eugene appeal that the Board overstepped its legal authority in its 1999 crediting decision. It just isn't clear how the Court will deal with the matter of the 1999 earnings decision and the whole "abuse of discretion" verdict that Lipscomb handed down.

Tuesday, April 05, 2005

It Makes No Difference

This is an just experiment to see whether or not blogging is a suitable substitute for my normal web page. I'm not ready to abandon the current format, but since I'm travelling more than before, I will need a new way to keep people updated on PERS happenings. If you like this format, let me know. If you don't like this format, also let me know.