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Tuesday, June 30, 2009

Soul of A Man

Our feckless Governor - Mr Ted - is demonstrating once again that he lacks soul and is answerable to no one. The issue is SB 897, the only PERS bill with any teeth to come out of this year's legislature. SB 897 has been watered down from its initial form, but passed in both houses of the Legislature by large votes. SB 897 would, in the main, require PERS to "own" the estimates provided to members when they approach retirement. This bill was inspired by the Kay Bell case and others like it where PERS changed benefits on individuals AFTER they had retired, after they had started receiving benefits, and after they'd given up their longstanding public employment. This bill attempts to remedy the problem by requiring PERS to take special measures to insure accuracy in retirement benefit estimates.

Not surprisingly, the bill is opposed by PERS, which argues against it on the basis of expense - an argument I reject as BS. The unions support it (and they effectively re-elected Gov Ted) and OPRI was one of the bill's sponsors.

It is strongly rumored that the Governor will attempt to veto the bill by ignoring it. This concept of a "pocket veto" arises when the Governor chooses to do nothing about a bill following the adjournment of the Legislature. If the Legislature adjourns before Gov Ted has 10 days to review the bill, it is vetoed automatically without the Governor having to do anything. If the Governor does nothing for 10 days and the Legislature is still in session, the bill automatically becomes law. Since the Legislature passed this bill in the days immediately before sine die it is likely that Kulongoski will let the bill die with the Legislature.

I do not understand the Governor. Why is he a Democrat? Why does he accept union money and then stab them in the back? Why do the unions continue to support him? This bill had bipartisan support and passed by large majorities.

I suppose that the Governor, not being up for reelection and term-limited, no longer gives a damn about public employees, their unions, and all the support they've given him throughout his public career. My fondest wish is for the Governor, who will retire with a PERS benefit, gets hoist on his own petard by PERS' continued penchant for "getting it wrong". That would be the only poetic justice in this case - a soulless reaction to a soulless man.

EDIT: late Tuesday afternoon. The Legislature *has* adjourned and this bill's fate rests entirely with the Governor. He must sign it for it to become law; if he wastes the next 10 days doing nothing, it will be consigned to the dustbin, all the effort to pass it wasted. Please, help us persuade the Governor to sign this bill. WRITE, CALL, EMAIL, FEDEX, UPS, Pony Express, whatever. Just push hard on this man who seems to only talk the talk, but refuses to walk the walk.

Tuesday, June 16, 2009

For Whom The Bell Tolls

In a surprise ruling, Judge Kantor issued his opinion in the White case on June 11. Judge Kantor ruled against the PERS Coalition on ALL counts - no breach of fiduciary duty, no improper allocation of funds to various reserves, no failure to consult Coalition before settling the City of Eugene. This comes from the OPRI website and thusfar no copies of the legal ruling have been posted anywhere.

It is clear that the PERS Coalition plans to appeal these cases to the Oregon Court of Appeals, and the delay at that level on Arken and Robinson may well be so that White can join them on appeal. I have no doubt that these three cases will become joined at some point and will be ruled on in a single swoop by the Oregon Supreme Court.

The central issue the courts will have to work out is whether there exists any longer a fiduciary duty to members, or whether the settlement of the City of Eugene case coupled with the Legislative reforms of 2003 more or less abolished that responsibility and leaves PERS members and retirees in the uneviable position of have their money held in trust by trustees who no longer owe them their undivided fiduciary responsibility. This is a truly scary consideration and I hope the higher courts will recognize this responsibility and restore the burden to PERS and its Board.

Friday, June 05, 2009

Is That All There Is?

Then I'll keep on dancing. I spent a near wasted two hours this morning in Judge Kantor's courtroom listening to "arguments" in the White case. I heard overpriced Joe Malkin dismiss every single Coalition claim as fundamentally unsound, unsupported, and basically irrelevant. Bill Gary piled on for the employers. Greg Hartman distilled the case down to the central issue: what does "fiduciary duty" mean in the context of an agency like PERS. It seemed that Judge Kantor agreed with this summary and seemed to be uncomfortable with the concept of having to divine the meaning of ORS 238.601 where we first meet "fiduciary responsibility." Hartman argued that the Judge defer to the case PGE v B.O.L.I. for inspiration, while Judge Kantor seems to think that the Uniform Law of Trusts for Oregon.

In any case, much of the argument seems to have taken place in email back and forths between the Judge and the attorneys. I can honestly say that I learned nothing new from this hearing. I still don't understand why Judge Kantor decided he needed to have all parties in the room at the same time.

In any event, I don't sense any urgency in Judge Kantor. He did promise that he would issue a ruling (when?). He then adjourned and we all (about a half dozen PERS retirees also attended) scattered to the wind, puzzled.

One oddity did surface after the hearing. I learned that the lobbying firm working for OPRI now employs none other than the anti-public employee favorite, David Reinhard. Talk about politics making strange bedfellows.

Wednesday, June 03, 2009

Black Tables

One of my readers just sent me a note linking to a source that reports the IRS will be issuing (or has already issued) new withholding tables to pension plans. The revised withholding tables correct for the "Making Work Pay" credit for which retirees are not entitled, but which have been getting since April 1. I will provide a link in an update to this post since I have to run off now. It isn't at all clear when PERS will adopt these - June 1 - is the obvious date, but perhaps they won't do it until the COLA adjustment is made on the check to be received on August 1. When I update, I hope to have PERS' answer by then. In the meantime, this should help retirees plan more easily for the unanticipated and undeserved (at least according to the IRS and Congress) windfall. Update: the link to the article and a link to the IRS web site can be found here. Update #2: I just heard back from PERS. The "new tables" are not new withholding tables per se but include a supplemental withholding table that helps to get retirees back to near parity. PERS is studying the various options given by the IRS and will post an announcement once they have determined whether the cost of implementing the change versus the benefits gained are actually worthwhile. It is, by no means, a certainty that PERS will adopt these supplemental tables. Stay tuned for more information as it becomes available. In the meantime, you can adjust your withholding to offset the gains from the tax break if you want by filling out a new W-4P. And here you thought retirement would be a bowl of cherries.

Tuesday, June 02, 2009

The Last Carnival

Begins on Friday June 5 at 9:00 a.m. in the Multnomah County Courthouse. Judge Henry (the slow) Kantor will be holding taking oral arguments (or something like that) in the case captioned "White." This case has been hanging around since mid 2004 and is the last remaining case in a long string of cases emanating from the City of Eugene litigation. White challenges the legal authority of the PERS Board to enter into a "settlement" of the City of Eugene case without notifying, involving, or engaging the PERS Coalition, which was a party in the City of Eugene litigation.

White argues that the PERS Board ignored their fiduciary responsibility to PERS members and retirees by entering into an agreement to settle the City of Eugene case on terms unfavorable to members and retirees. In particular, the Board agreed to the revised mechanism for calculating the employer variable match for Tier 1 retirees, it agreed to the recovery mechanisms that became known as the Strunk/Eugene method, and it agreed to a variety of other measures that were designed to thwart any ruling against the Legislature and PERS in the not-yet-decided Strunk et al cases stemming from the 2003 Legislative reform.

Judge Kantor has resisted any efforts to move this case along, deciding instead to rule on Arken and Robinson before deciding White. The former two cases are now before the Oregon Court of Appeals. White has the potential to undermine both the rulings in Arken and Robinson, especially in the unlikely even that Judge Kantor rules in favor of the White plaintiffs.

While I am not encouraged by Judge Kantor's speed in deciding any case, I am hopeful that we will finally see some movement in White at week's end. There is no way that any decision will be rendered in Court on Friday, but we should be able to judge from the questions and answers whether Kantor is in any way disposed towards the White group. It is yet another chance for us to see the PERS Coalition attorneys, led by Greg Hartman, go up against a very overpaid (by us) California "wideboy", and probably another highly overpaid Stoel, Rives local "wideboy."

I strongly recommend that retirees and actives in the Portland and Salem area plan to be here to see the carnival up close and personal. There is nothing quite like seeing the actors all playing their roles on the stage rather than waiting for someone else to summarize the play through an admittedly biased lens.

The activities begin at 9 a.m. in Room 560 (Kantor's Courtroom) at the Multnomah County Courthouse in downtown Portland. Plan to arrive at least 30 minutes early as security in the Courthouse resembles airport security stations. There are a variety of parking options on Fourth Avenue (the Courthouse entrance side) including Smart Parks where you ought to be able to park for under $5 for a half day. You can also take public transportation into downtown Portland and be less than two blocks from the Courthouse. Please try to make it. The more actual members and retirees present, the harder it is for the Judge to claim disinterest or to suggest that there is no impact on retirees or actives. When you show interest by attending, you send a very powerful message. Let's do that.