For What It's Worth

A few days back David Crosley (of PERS) and I had an email exchange about some questions relating to the implementation of the Attorney Fee deductions that will appear in tomorrow's check/deposit. I put together some questions and PERS has now posted the answers to these questions on their website. You can find the FAQ here. I thank David and the team at PERS for their quick responses to my questions.

Shock and Awe

I'm shocked and I'm awed by the popularity of this blog. It will be less than a week before we turn 600,000 on the old viewer odometer. Who'd a thunk that we'd still be getting about 2500 to 3000 hits per week after all these years. Given the speed at which PERS reform and PERS litigation is taking place, I expect I'll still be here three or four years from now. At the current rate, it will take about three more years before we record number 1,000,000, but there is only a small likelihood that the problem will have been permanently resolved before then.

(So Tim, you still reading? If so, when does your crystal ball say we'll hit 600K?)

Big Yellow Tax[i]

There still exists some confusion in various quarters about the tax status of the attorney fee reduction in benefits on August 1, 2008. PERS has communicated with me that these reductions will be taken POST-TAX. To put this another way, your gross benefit (before taxes) on August 1, 2008 will reflect the 2% COLA. After all taxes are calculated and deducted, the attorney fee will come out once from the net benefit (after taxes). So, it is quite likely that the cost of the attorney fee reduction will be about what your COLA is after taxes. I expect few peoples' net benefit to change significantly from June to July. After this month (August 1), the net benefit should be higher by the exact amount of the attorney fee reduction.

Your Luck Won't Last

As I had suspected, the Bell case won't have any impact on the proceedings in Arken or Robinson. I finally heard from Greg Hartman yesterday. He tells me that Bennett, Hartman, Morris and Kaplan is pleased with the verdict in the Bell case and believe that it is the first step towards securing and protecting the rights of members in relying on figures given to them by PERS. Hartman also agrees that the Bell case probably has little bearing on the rights of PERS members who are already retired.

So, although there is some similarity between Kay Bell's claims and the verdict in her case to the promissory estoppel claim in Arken, the differences in facts and circumstances and approach to litigation are such that it will not bear on the outcome of cases currently in litigation and on retirees affected by Arken/Robinson. For that, we simply have to wait for the higher courts to rule. And, we also have White - a case of profound importance to all of us. If the courts rule that PERB breached its fiduciary duty to members, and the court invalidates the settlement agreement, almost everything done so far will have to be undone. I'd be placing my money on White to dig us out of this hole.

What's Been Going On?

My friend PEG just contacted Judge Henry Kantor's office and confirmed that the White Case (concerning the "settlement agreement") has been postponed to October 23, 24, and 27. It was originally scheduled for August 3 and 4. It looks like I will now be able to attend the hearings after all. There is also a motions hearing scheduled in White for August 7.

White is a very significant case. At its core is the assertion that the PERS Board breached its fiduciary responsibility to PERS members and retirees by entering into a "settlement agreement" with employers in the City of Eugene case. The settlement agreement produced some very detrimental consequences to PERS members and retirees - consequences that would not have happened otherwise because the Supreme Court had issued rulings in the Strunk case that would have prevented them. The problem is that retirees and members were stake holders in the outcome of the "settlement", yet they were not only not consulted about the settlement, they were completely excluded and kept in the dark until the agreement was announced. All the actions taken in the Strunk/Eugene "remediation" (the benefit adjustment) arise out that settlement agreement. Thus, if the Courts invalidate the settlement, PERS will be busy undoing pretty much everything it has done to us over the past few years - except for the attorney fee reductions.

I would encourage those of you within short driving distance of Portland to mark those days - October 23, 24, 27 - on you calendars. I'm a firm believer in the power of the people to impress upon the legal system that their rulings have human consequences. Seeing lots of expectant faces in a courtroom could have some influence.

Lawyers, Guns, and Money

It has been awhile since I used this particular title, but it seems appropriate again.

There has been considerable conversation both back channel and in the two newsgroups that cover Oregon PERS about the deductions for attorney fees on August 1, 2008. From the postings, it appears that the size of the deductions bear only a slight relationship to the size of the benefit. Obviously there is a fixed amount of money needed, and there is *some* (unknown) basis for apportioning that amount over the 21,000 retirees required to chip in. But, the relationship between the attorney fees, the ostensible 8/1/04 COLA and the 8/1/2008 COLA are highly variable. It has taken me a bit of time to figure out what is going on. I haven't determined precisely what influences the amounts, but these are facts I do know:

For retirees who retired prior to 8/1/2002, the 8/1/2004 COLA was 2% and the 8/1/2008 COLA will be 2% (This is slightly incorrect. Retirees between 7/1/00 and 7/1/01 get 2%; those between 8/1/01 and 7/1/02 get 1.73%. An alert reader brought this to my attention. Thanks Jim.)

For retirees who retired between 8/1/2002 and 3/1/2004, the 8/1/04 COLA was 1.36% and the 8/1/08 COLA will be 2%.

Some retirees have been "adjusted" due to the Strunk/Eugene remediation. This adjustment means that the 1999 earnings have been reduced downward to 11.33%, the final account balance duly adjusted, and the base benefit refigured. These people also have had all COLAs applied from first eligible date through to 2007 and will be getting the 2% on 8/1/08.

Some retirees have not been adjusted and are still receiving the fixed benefit, although they got a COLA on 8/1/07 and will, presumably, receive one on 8/1/08.

Taken together, these facts produce some disparities in the relationship between the attorney fee reduction amount, the 8/1/04 COLA, and the 8/1/08 COLA. The bottom line is that I've seen examples of retirees whose attorney fee reduction exceeds the 8/1/08 COLA (which means that on 8/1/08, their actual benefit will be reduced for that one month), retirees whose attorney fee reduction is only slightly less than the 8/1/08 COLA (which means that the August check will be almost the same as the 7/1/08 check), and finally, there are cases like mine, in which the 8/1/08 COLA is almost double the amount of the attorney fee reduction and will receive an 8/1/08 check larger than the 7/1/08 check. In all cases, the attorney fee reduction is ONLY FOR THE MONTH OF AUGUST. Normal checks resume again on September 1, 2008.

One thing is obvious. PERS explanation of how the attorney fee reductions affect individuals is both simplistic and suspect. It isn't the simple relationship explained in the reduction letter. All sorts of variables come into play. Rather than spell this out for the Supreme Court or for us, we are left to PERS' machinations to trust the calculations. They cannot be replicated without further information. So far, PERS hasn't offered a clear explanation of how these reductions were calculated, and we're again left wondering just exactly what PERS is doing. I suppose this de rigeur for those folks. Although PERS' motto is "transparency", this latest actions clearly fails the test for even remote clarity. Opaque would be too kind.

Make It Go Away

At Friday's PERB meeting, staff admitted there had been a "computer glitch" (there is generally no such thing; human "glitches" yes, computer "glitch" no) that delayed sending out all the notification letters to retirees eligible to participate in the big giveaway back to PERS, for attorney fees in Strunk. In any case, all letters were resent and most retirees affected by this should have received the letters in yesterday's mail, or will receive them early next week. The letter tells you what your share of the attorney fees will be for the COLA freeze win in Strunk. From what I can figure, the attorney fees pretty much consume the entire 2004 COLA on the "fixed benefit" - a COLA we never received. While I don't agree that the winners should have to pay for their own win, Oregon law provides that in beneficiary/trust law, the "winners" should have to pay in proportion to what their share of the "victory" is.

Before screaming bloody murder, remember a couple of things: 1) the PERS Coalition signed off on this fee arrangement - our own attorneys and the organization representing us agreed to the payment system; 2) this is a ONE-TIME reduction, payable only on August 1, 2008 when the benefit naturally rises from the new COLA applied to the benefit. We get 2% on August 1; we will lose about 1/2 of that due to the one-time payment, but the full benefit resumes on September 1, 2008; 3) I do not know whether the reduction will come pre-tax or post-tax; I'd prefer it be pre-tax, but fear it will be post-tax.

I hope to have more information tomorrow. Stay tuned for the next installment of "As PERS Turns (on us)".

Stop The Bus

New information available. At yesterday's PERB meeting, there were two announcements of interest. The first was the announcement that the October 2008 Board meeting would be cancelled because of its conflict with the "rescheduled" White Case hearings. Apparently, though not yet confirmed, the White case just continues to drag on, with the August 4-5 hearings postponed until sometime in October. This would hardly be a shock since the White case has been "in limbo" for nearly 4 years now. More confirmation and clarification to follow early next week when official offices are open. The second, less exciting, piece of news is the availability (soon) of a new PERS By the Numbers. It was handed out at the meeting, but not yet posted electronically. A copy will be available at the PERS Document Library as soon as it is available electronically. It is way too long to scan.

Belief

Is what will be required for the Kay Bell verdict to have any long term benefits for PERS members. The following email was sent out to a general distribution list of SEIU members.

"On July 16, 2008, a Marion County Circuit Court jury unanimously found the PERS Board liable for $200,707.04 in damages for negligent misrepresentations made to a PERS member in the case of Kay Bell v. Public Employees Retirement Board (Marion County Case No. 07C11097). PERS Coalition attorney, Aruna Masih, represented the PERS member at trial.

Prior to trial, Marion County Circuit Court Judge Claudia Burton found that the PERS Board owes a “special duty” of care to PERS members to protect them from economic loss caused by false information or other material misrepresentation made by PERS. Trial evidence established that, in this case, PERS had provided the PERS member, a school teacher and counselor, incorrect information on annual statements and estimates over a period of many years. The PERS member resigned her position and retired in reliance on that incorrect information. Only months after the PERS member retired did PERS reveal that the information it had provided her was inaccurate by over $1,100 per month. Of course, by this point, the PERS member’s former position had already been filled, and she had lost the seniority she had accrued. The PERS member testified that had PERS provided her accurate information in a timely manner, she would never have resigned her position and would have continued working until age 62.

The jury unanimously found that the PERS member reasonably relied on the false information provided by PERS and that she suffered loss of salary and benefits of $200,707.04 as a result of giving up her job in reliance on the false information provided by PERS. The PERS Board has already notified the trial court of its intent to challenge the $200,707.04 jury verdict as exceeding the caps set by the Oregon Tort Claims Act. Once the tort claims caps issue is decided by the trial judge and a judgment is entered, the case will likely also be appealed by the PERS Board.

The appeal will give the Oregon appellate courts not only the opportunity to set precedent on whether the PERS Board owes a special duty of care to PERS members to provide them accurate information but also whether the Tort Claims Act should limit damages between a fiduciary and beneficiary like the PERS Board and PERS members. The jury verdict can also be used to support legislative and administrative reform of the PERS retirement audit process, requiring PERS to perform such an audit before a member retires to allow both the member and PERS sufficient time to challenge the accuracy of the information before retirement. Possible reform proposals at the next PERS Coalition meeting."

Of particular interest are the last two sentences of this email (forwarded from Hartman's office to Coalition members). Also is the question of the applicability of the "tort cap" in an instance where the tortious act arises from a fiduciary trustees' actions against a beneficiary. This is quite a different circumstance than a case of medical malpractice. PERS was screwing with Kay Bell's retirement account and denies any responsibility for accurate information. If you can't trust PERS to give you accurate information before you retire, who can you trust? The answer is that no one else has the information to enable you to audit their figures and insure they are correct before you irrevocably give up your job. It seems to me we've heard this claim before, but no Judge has felt quite the same way as a group of outraged jurors. Let's hope that this case finally pushes PERS into accountability. It is probably too late for those of us already ensnared in the web of lies fed us when *we* retired, but hopefully future retirees will be insulated against such arbitrary and capricious acts.

Viva Las Vegas

As promised, here are a few of my pictures from our helicopter flight into the western part of the Grand Canyon. Several pictures were shot from the canyon floor; several were shot from the air as we cruised over the canyon; finally, there is a single shot of Hoover Dam and the Colorado River (Lake Mead is in the foreground, cropped out for size uniformity) taken at dusk from about 3 miles away inside the backseat of the moving helicopter. The combination of speed and low light made the photo challenging. Nevertheless, it didn't turn out too badly.





On an unrelated topic, there is an excellent set of PERS-related discussions on our newsgroup - PERS Oregon Discussion. This group, hosted on Yahoo Groups, is easy to join. You can read messages there and post there. See the link on the left to get to the group's membership page. We're pushing to have about 25 new members this week. Read PERS and retirement news there; our motto is "Politik Kills". No political discussions will be found there.

Long Road Out Of Eden

We are finally back from our long drive to Southern Nevada. We managed a great trip without gambling a cent (OK, I did play a few slot machines and won a few bucks, but that was to pass a few minutes of idle time waiting for my daughter). We saw some spectacular scenery flying into the Grand Canyon and landing. I'll be posting some pictures soon. We also saw a bunch of great shows (Cirque De Soleil - Mystere, Blue Man Group, Jersey Boys, the Titanic Exhibit), had a great visit with my sister and her family, and my wife and daughter got a lot of shopping in.

While I was gone, Kay Bell won the first stage in her battle against PERS in open court. Kay was victorious on a claim that PERS gave her faulty information before she retired and at her retirement. The jury sided with Kay on a 12-0 verdict. PERS plans to appeal both the verdict and the fact that the case was allowed to get to trial in the first place. Many retirees have asked the obvious question: does Kay's victory have any benefits for others of us who also got "faulty" information from PERS prior and at retirement (and since)? The immediate answer is unknown since Kay's verdict has not been viewed by the Appelate Courts. More significantly, however, is the fact that Kay's victory was individual. It was filed using a completely different route than other class-oriented retiree cases. It also followed after Kay had exhausted all internal PERS mechanisms to appeal their decisions along the way. The gist of Kay's case follows loosely the lines of the "promissory estoppel" claims filed in Arken (which we lost), and in Strunk. Thus, while I'd like to believe that Kay's verdict will have positive implications for other retirees, I'm not entirely sold on the notion that it will. Kay's circumstances were quite different (see Peg's reports on PERS_Oregon_Discussion for the details), and the verdict quite individual. Moreover, what Kay was asking for was altogether different than what the PERS Coalition asked for in the Arken case, and what was posed in Strunk. In the meantime, all we can do is hope that Kay's verdict will be upheld in the higher courts. Kay's victory gives me hope, but I don't for a moment think that we will see any long term benefit from her case. I hope I'm wrong, but I'm having an extremely difficult time generalizing her case to those of us victimized by PERS' perfidy.

Ring Them Bells

Thanks to my friend Peg for her excellent reports on the civil trial of Kay Bell v PERS. You can read Peg's reports on the PERS_Oregon_Discussion Group (see left for link). To make a long story short, Kay Bell sued PERS for their faulty advice. She went through all the PERS hoops and lost at every stage. Finally, fed up with a system stacked against appellants, Kay decided to fight PERS in civil court. She received a jury trial and the jury ruled AGAINST PERS and in favor of Kay Bell (unanimously). The jury awarded Kay $200,000 in total. Of course, PERS will appeal the verdict, but unless the judge has made some egregious error, her 12-0 verdict may well stand. I could not be more pleased for Kay Bell. She fought the system on its own terms, and she beat PERS at its own game. Good for her.

I continue to be on vacation and do not expect to post much of anything until after I return next week. I'll try to post some of the spectacular Grand Canyon photos when I'm through running them through Photoshop. It is always spectacular to see, but my pictures were taken from a helicopter flying directly INTO the Canyon.

In Praise of the Vulnerable Man

And woman. The Kay Bell hearings begin next Tuesday in Marion County Circuit Court. The White case will be heard on August 4-5 in the Multnomah County Circuit Court (Judge Kantor again). The Bell case tests a novel theory of whether an individual can recover damages from PERS for being given incorrect information prior to retirement. This seems to me to be a reformulation of the same legal question of "promissory estoppel," which was raised in the Strunk case (and ignored) and directly in the Arken case (and overruled).

The White case challenges the settlement agreement between the City of Eugene Plaintiffs and PERS and the State of Oregon. In particular, it tests whether the PERS Board breached its fiduciary duty to PERS members and retirees by entering into an agreement that violated the rights of those members and retirees.

I will not be around to sit through these hearings. I trust others will do so and share information with me. I'll be out of town for both cases.

Vegas

Just a quick note - an experiment really with Google's new Blogger editor - to remind readers that I'll be out of town quite a bit over the next 6 weeks.  I'll be in Southern Nevada, Utah, and Arizona from July 12 to July 21, and then at our house in Central Oregon again August 1 to August 8th.  During these getaways I don't take as much time to monitor the newsgroup or post new things to this blog.  Of course, if anything really significant comes up, I will post something.  And, you do know that there are two PERS-related legal cases scheduled for hearings during the periods I'm gone.  One case - the "Best" case is scheduled for the second week in July in Marion County Circuit Court, while the "White" case is finally on tap before the inestimable and painfully slow Judge Henry Kantor of the Multnomah County Circuit.  I'm pretty sure there will be spies at both hearings and so I expect to have something useful to post here during those vacation interludes.



Supposedly, this new editor gives me better controls and access to pictures so I'm going to try a few just for fun.  You'll get to see our dog "Emma", possible a cat or two ("Pot" and "Minh"), and perhaps the Mini.  This won't be a regular feature, but as a beta tester, I'm supposed to try this kind of stuff.  So here goes:

Ok.  So the cats aren't here this time.  And you got the old picture of me with the giraffe.  I like giraffes and this one was particularly fun.  I'll get the hang of the picture posting as I go along.  Bear with me.

Kill To Get Crimson

Last night, my wife and I attended our third Mark Knopfler concert. To say we are fans would be an understatement. The founder and lead guitarist and singer of the group "Dire Straits" has been on his own (in a manner of speaking) for about 16 years now. He's done 6 solo records and has scored at least a half dozen sound tracks for films. He puts on a fantastic show that highlights his guitar virtuosity and makes him, in my opinion, one of the three or four best guitarists in the world. The set last night was wide-ranging, covering tracks from all his solo albums as well as digging deep into the "Dire Straits" catalog for crowd favorites. All in all we had a great time.

Mark Knopfler is an artist whose fame doesn't seem to extend so much to the younger set. Last night's crowd was mostly baby boomers. I ran into at least a dozen PERS retirees who recognized me from my pictures posted hither and yon on the net. It was really fun to chat up these fellow music fans and retirees. Judging from the crowd, I'd hazard a guess that I met only the tip of the iceberg at the show. I'd imagine that there were lots more PERS members/retirees there. We all have good taste, except for the few idiots so drunk that they could barely speak, much less walk or follow instructions.

If you were at the show, leave a comment. PERS retirees have a life, just like everyone else. I like concerts and evidently quite a few of you do too. Incidently, if you were at the show, you may have been as perplexed by the same two things I was: the opening act was positively awful, something typically unheard of at a Mark Knopfler show, and second, the absence of the title track from the new CD and name of the tour. That hasn't been on the set list for any part of the US tour.