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Monday, May 21, 2007

Calling Elvis

Anybody home? Despite widespread efforts to spread the word, the PERS Coalition and its attorney Greg Hartman have not been successful in finding suitable plaintiffs to file suit against PERS for the travesty known as the "Lipscomb Match" for variable account holders at retirement. To refresh your memory, this change in matching methodology was prescribed by Judge Lipscomb in his remand of the 1999 earnings crediting decision to the PERS Board. In response, the PERB entered into a settlement agreement with the suit plaintiffs that, among other things, required PERS to compute the employer match in an entirely different way. This affects retirees with a variable account who retired ON OR AFTER JULY 1, 2004. Aside from the going-nowhere-fast White case, which contests the settlement itself, there are no specific legal challenges to the variable match change. So, the PERS Coalition is looking for suitable plaintiffs. If you retired on or after July 1, 2004, had a variable account, and have substantial evidence that you were financially harmed by this revised approach to the variable match, you should contact the PERS Coalition through its attorney, Greg Hartman.

The Lipscomb methodology deprives retirees of the employer match to actual earnings in the variable account. Instead, the revised method considers employer match only as if the money had been in the regular account for the total length of time the retiree was in variable. There are two calculations done: var@var (the old method which provides a dollar for dollar match to variable account balances) and the var@regular (which matches only what the variable dollars would have earned if the money had been in the regular account). There have been claims of massive harm, but to date the claim has not been backed up with a sufficient number of documentable cases to file suit. If you are in the category of having experienced harm (i.e. lost money that you thought you should have been entitled but for the change in methodology), get in touch quickly. Both the time and motivation for filing suit is getting shorter each day.

Sunday, May 20, 2007

Can't Get No (Satisfaction)

This morning's FAX brought me a copy of PERS' response to a retiree's petition of the Strunk/Eugene remediation. The case was pretty straightforward. The retiree retired under the "lookback" not too long after the 2003 legislation took effect and right around the time of the PERB "settlement" of the City of Eugene litigation. PERS' remediation of said litigation resulted in their recalculating benefits. This retiree was not in the "window" and was expecting a check and/or a small benefit increase as he had retired when 2003 and 2004 were tracking at 0% rather than 8%. When he got his invoice, he was chagrined, shocked, and staggered by PERS' calculations. Indeed, his account balance was adjusted positively, he owed PERS no money - all expected and good outcomes. His benefit would go up - he thought. But no. It didn't go up. Instead it decreased significantly - a fact that just wouldn't compute for him. We've been longtime correspondents and so he sent me his invoice - the first of many I would see. When I looked at it, it became obvious quickly what had happened, although PERS did not make this even slightly clear. After all the adjustments to his account balance resulting from 2003 and 2004 add backs and 1999 take backs, his lookback balance was lower while his at-retirement balance was substantially higher. As a result, the "lookback" no longer produced the highest benefit. The highest benefit resulted from his at-retirement account balance using the NEW mortality tables. Unfortunately, the highest recalculated benefit was several hundred dollars lower than his previous "lookback" benefit. Consequently, his monthly benefit was lowered. Nowhere in any of the discussions surrounding the remediation plan had this unintended consequence been discussed. Even the PERS Coalition had not seen it before.

At my recommendation, he forwarded his concerns and my interpretation to the PERS Coalition attorney, Greg Hartman. Mr. Hartman reviewed the situation and concluded that it was unfortunate but fell within the parameters of the remediation. Only the outcome of existing litigation could possibly change the result. My correspondent then petitioned PERS following the procedure contained in the recalculation letter. Yesterday they responded. After a lot of yada, yada, yada, it concluded: "The appeal is denied because it does not raise a bona fide dispute of material fact, the pertinent statutes and rules are clear in their application to the facts, and there was not an administrative error". Not surprising, but disappointing. He's left now only to appeal to an administrative Judge petitioning for a contested case hearing. In the meantime, PERS has offered to provide him with the material facts of his calculation for a simple toll-free phone call.

I suspect that anyone else who tries to appeal the Strunk/Eugene calculations will find the same result. I don't discourage members who genuinely believe that PERS has MISCALCULATED something to challenge them. But appealing on the grounds that you don't believe you owe the money isn't going to get you anything but a response much like Mr. T.

Wednesday, May 16, 2007

Turn, Turn, Turn

Here's our latest poll, motivated by a lot of discussion on the Oregon PERS Discussion Group and my lack of sympathy for the lump summers who profess to be surprised or stunned by their invoice. I'm sympathetic to the financial burder, just not the surprise of getting an invoice.

Since there is no injunction against PERS to prevent them from collecting overpayments, should members who took lump sum settlements?
Pay the lump sum and wait for the courts to decide on the legality
Consult an attorney and appeal to PERS?
Ignore the invoice and see what happens?
Plead with the PERS Board for mercy?
Sue for installment payment options although no statute currently permits them?
pollcode.com free polls

Sunday, May 13, 2007

Looking at the World from the Bottom of a Well

The blog entries for these last two months have been dominated by various tales of woe from retirees caught in the snare of PERS Strunk/Eugene remediation team. One group that I've singled out for special care has been the not-so-small group of retirees who had the misfortune to retire after 3/1/04 - not window retirees - whose benefit was calculated on the basis of the "lookback". To refresh memories, the Legislature implemented the "lookback" as part of HB 2004, which mandated that PERS implement new mortality tables every two years as part of an ongoing effort to keep the tables current with actual experience. To "protect" a small group of individuals whose service occurred virtually entirely under one set of mortality tables, the Legislature offered a small sop. PERS was to calculate the benefit as if the individual had retired on 6/30/03, use the account balance at that time, use current service, and compute the benefit using mortality tables last updated in 1996 (sometimes called the 1978 tables for reasons that elude me). If the "lookback" benefit was higher than the benefit calculated using the current (at retirement) account balance and the newly implemented mortality tables, the retiree got the "lookback" benefit; otherwise the benefit from the new mortality tables.

When PERS set out to do the Strunk/Eugene remediation, it decided that it would completely recalculate the benefit by reviewing the entire employment history to make certain that as the new computer system was phased in, it began with entirely accurate information. As a side effect of this, the Strunk/Eugene remediation also adjusted the 1999 account balance to reflect the revised earnings crediting for 1999 (from 20% to 11.33%), and to recalulate 2003 and 2004 balances using 8% earnings rather than the 0% mandated by the legislature and struck down by the Oregon Supreme Court. Unbeknownst to most, the one group for which this recalculation was about to produce a most curious and deleterious effect was the "lookback" group. The "lookback" recipients had benefitted from the 20% in 1999 and received a pro-rate of 8% for 2003 at the time of retirement. No further additions occurred to their accounts. When the recalculations occurred, a curious thing happened. The "lookback" was no longer the winning benefit method. As PERS is obligated by statute to give the highest benefit to an individual, this should a moment for happy celebration. Unfortunately, "winners" in this situation found themselves with a significantly higher at retirement account balance, a lower balance for the "lookback", and a higher benefit from the non-"lookback". Paradoxically, the higher benefit is lower than the current benefit. Thus, "lookback" winners have been turned into big losers with a lower adjusted benefit and a higher repayment amount than they ever imagined. They expected a check; instead they got an invoice for a lot of money and a monthly benefit sizeably lower than their former benefit. Moreover, because these people were outside the "window", they had no COLA freeze dollars to rely on to offset some of the debt.

At my encouragement, several of my correspondents did two things: (a) appealed to PERS following the procedures described in the invoice and (b) communicated directly with Greg Hartman. To date, there has been no response from PERS, and very discouraging responses from Greg Hartman. In a nutshell, unless the White case wins and holds through appeals, there is no litigation potential for these folks. Talk about your caught between a rock and a hard place. Hence the title for my entry today.

I wonder how many other surprises still lurk out there? Back to celebrating Mother's Day. A reason to take pictures, look at a slide show, and not think about PERS for half a day.

Saturday, May 12, 2007

Soul Suckers

Things continue to be quiet in PERS-land. PERS is quietly invoicing anyone with a pulse who had an account in 1999 including quite a few lump summers who have been cruising in another galaxy while this whole debacle has been unfolding over the past 5 years. I guess I find it amazing that anyone residing in Oregon could be unaware of PERS issues at this time. You'd literally have had to have had your head buried deeply in the sand these last five years to be caught out unaware right now. Yet, each day my mailbox brings new surprises and I have to write the same pathetic reply to let them know that "no, there isn't an error. You have won the negative lottery and you don't have much choice but to pay PERS back or start finding yourself facing some rather severe efforts to recover that money.

For a brief moment last week, an unsubstantiated (and incorrect) rumor was floating that Judge Kantor was going to release one or more of his PERS-related rulings. For those of you who've forgotten, Judge Kantor is the Multnomah County Circuit Court Judge who heard the Arken and Robinson cases last September 28, 2006. He promised all in attendance - lawyers, reporters, PERS members and others - of a relatively quick resolution. We're starting to measure quick in geological time, not clock time. I don't have any sense that Judge Kantor is any closer to releasing a verdict in either case anytime soon. Maybe I'm wrong, but he's managed to redefine "relatively soon" so many times that I no longer know what it means.

Our Quebec foreign exchange student left this morning and we're all feeling a bit sad. It is wonderful to have the opportunity to spend time with young people from another culture. They try so hard to speak English and we try so hard to speak French. Regardless of language barriers, we and our daughter had a wonderful time. And, by way of symmetry, our daughter had a great time staying with our student in Quebec.

I hope I have some interesting, relevant, and useful PERS news before we leave on our next trip to New York City in June. At the current rate, that seems unlikely.

Friday, May 04, 2007

Cutting Board Blues

PERS began mailing some invoices to retirees who had taken lump sum distributions (either single or double) upon retiring. These invoices demand full payment of amounts reputed to have been overpaid as a result of the 1999 earnings crediting decision. For many people, the demand for full payment constitutes a severe, if not crippling, financial imposition. The PERS Coalition, through its attorney Greg Hartman, has published some general observations and discusses the various options available to individuals receiving these invoices. You can read this memo here. The memo isn't entirely helpful and advises members faced with these invoices to seek advice from their own attorneys. Nevertheless, regardless of what the attorney advises, the options listed in the Coalition memo seem to be exhaustive. I can't think of any other option that isn't listed.

Tuesday, May 01, 2007

New Train

Or at least a greatly revised web site. The first in a series of changes to the PERS web site went live today. Many of the changes are the result of input from a focus group PERS selected (yours truly is included). If you haven't been to the PERS website in awhile, you should find the new site much easier to navigate and important information more prominently displayed. I'm not much of a style maven, but the color scheme seems a bit garish to me. But that's my opinion and I have no room to quibble, especially after the color choices I've made in putting together blogs and websites.

In other news, a PERS-sponsored bill to eliminate the "Break In Service" statute enacted in 2003 has gotten its first hearing. This statute has created more havoc, more unintended consequences, and more headaches for PERS and for many employers and employees than anyone imagined when HB 3020 (formerly 2020) passed in 2003. The City of Portland has blessed PERS' efforts to eliminate the rule, as has the PERS Coalition. Our friendly Oregon School Boards Association is opposed to eliminating the rule, in part no doubt because they were instrumental in drafting it during 2003. Hopefully this statute is headed for the dustbin of history.