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Friday, February 15, 2008

Punish The Monkey

Just when you thought the news couldn't get any worse, the PERS Board managed to come up with yet another way to punish us monkies. You remember that 2% COLA that the PERB so graciously reinstated last August? You remember how they then reinstated all the COLAs back to our date of retirement or 7/1/03, whichever was later, but turned around and reduced our benefit to one based on 11.33% crediting for 1999? You keepin' up so far? Of course, this latter action is the subject of litigation that has officially passed the two year mark without a formal ruling (that would be Arken and Robinson). You may have also read, in my previous post, that PERB is planning to reduce the 8% guarantee for 2009 to 7.97% to pay for legal expenses PERS incurred when they lost in the Supreme Court. Well, guess what? The other shoe dropped today. Retirees will get to shoulder their share of the Strunk legal expenses too. That will be achieved by temporarily (2008) reducing the 2% COLA we would be getting in August to something less than 2%. I don't remember the exact amount, but it will be small. Of course, this all misses the crucial point, which is that when you sue PERS you end up suing yourself. You get to pay for the legal fees whether you win or lose. If retirees/actives lose, PERS collects from the PERS Coalition and/or retiree groups. If PERS loses, it collects from retirees and/or actives. I've officially named this game - "punish the monkey" for it doesn't matter what the outcome, it is a lose-lose proposition. We're the monkeys and PERS just smacks us around no matter what. This is just another example of how PERS acts in the best interests of those whose money is entrusted to them by force.

P.S. I was not at the PERB meeting today. I'm collecting information from a variety of sources and will try to post a more comprehensive report when my sources report back. But this report came in quickly and it seemed important enough to ruin everyone's 3-day weekend.

2 comments:

Bill R said...

I attended and spoke at the meeting on Friday. Apparently there is an established approach for distributing attorney fees amongst all of the parties in order to prevent a single party from bearing the entire cost of a lawsuit. I indicated that I did not find the language they referenced in the Oct 07 decision regarding payment of attorney fees related to the Strunk court case. Specifically, the agenda indicated that the attorney fees were to be paid out of the 8% guarantee. Steve (?I don't know his last name) addressed the questions I raised by indicating that the settlement agreement for the attorney fees was agreed to by representatives for the plaintiffs and defendents and was reflected in a "special master's report". I presume this special master's report also contains language specifically indicating how the attorney fees were to be paid by Tier 1 members who already retired. At the meeting I understood that this special master's report would be posted on the web site at some time in the near future.
In other matters, the board concurred with staff's recommendation to divert the maximum 7.5% of the total PERS fund from the excess earnings to the contingency reserve fund (CRF), $357 million, which brings the total in that account to 652.7 million. The board cited uncertainty about liabilities related to pending legal decisions and uncertainty in the stock market. On behalf of the PERS Coalition, Greg Hartman submitted two letters to the PERS board. The letters advocated that the board follow their previous approach and distribute 50 basis points of the total PERS fund to the CRF and also to be mindful that the legislature has indicated that the rate guarantee reserve should have a zero balance when the last Tier 1 member retires and it was not equitable to withhold earnings from current members that will be paid to future retirees. I can provide you a copy of these letters if you would like.
The board also discussed whether to take a bill to the legislature to create a single exception for members who return to work after retirement. The board did not reach concensus on this issue and decided to take no action. The PERS staff indicated that they anticipate a thin list of bills for the upcoming legislative session and the language in any bills would be given careful thought in order to prevent the bill from becoming "hijacked" for some other purpose.

mrfearless47 said...

Bill, thanks for your first person comments. They are very helpful for understanding the circumstances. After reading through the Special Master's report and the SC's final order, it is clear that the plan to recover attorney fees using the mechanisms PERS is using had the approval of the court and all parties to the dispute. It is unlikely that any further discussion of this will take place. I wish the Coalition had been more clear about this from the get-go. At least I now understand OPRI's eagerness to return donations. I would encourage ALL OPRI donors to recover their money. Otherwise, they are paying for this three times - through PERS, through their benefits, and via donations. This is really pretty underhanded - members pay for the Legislature's ham-handed attempts to reform PERS no matter what.

I wonder who paid for the Hughes case litigation at the end of the game?