I feel a bit like the Monty Python "Dead Parrot" skit. I'm not dead; I'm resting. PERS news has been remarkably sparse these days. Good news occurred last week when the Oregon Court of Appeals held for the plaintiff in the case of Murray v PERB. This case has potential ramifications for PERS members who weren't retired between 2001 and 2002. The case involved apportioning administrative expenses from the Variable Annuity Account in two years when there were negative returns. In those two years, PERS deducted the losses from the accounts and then applied administrative expenses on top of the losses deducted from the remaining principal of the individual account balances. The Oregon Court of Appeals held that PERS couldn't do that as losses were not legally defined as "negative earnings" from which PERS could still deduct administrative expenses. This is a particularly complicated case and it isn't clear yet what the outcome will be for people who were still active members at that time. If PERS doesn't appeal, and we might know after today whether that is the case, then it will have to decide how to administer the outcome. It could, theoretically, decide to apply this as a class action case, or it could decide it applies only to the plaintiff. Time will tell, but, in the meantime it is a victory to celebrate for a change.
I attended the PERB meeting today. Meetings like this make you want to chew glass for entertainment. Talk about a terminally boring meeting. The tedium was exacerbated by the lengthy reading of changes to administrative rules, reports on the portfolio value (nothing new to report), and the final turgid explanation of the ETOB (equal to or better comparisons required by state law when a public agency decides to stay out of PERS) comparison methodology to be used this year. The *only* relevant message to be taken from the ETOB comparison is really for those who want to terminate PERS. The methodology for determining whether a plan is comparable to PERS or not has some sobering results. It would be REALLY, REALLY, REALLY expensive to terminate PERS and meet IRS requirements for making members whole. So those in the Legislature espousing this as a "solution" for PERS' (non)problems ought to read this analysis carefully. Compare the risk-free rate of 4.7% to the assumed rate of 8%. Bottom line is that to guarantee all members that they got present value of their accounts would cost billions and billions of dollars. Not gonna happen now or anytime soon. I am very glad that Mercer shown a light on those kinds of calculations. The PERS Board was in shock seeing the cost and they weren't even talking about terminating PERS. This is the take-home message from that.