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Monday, August 16, 2010

A Hard Rain's Gonna Fall

The usual bunch of the "sky is falling crowd" have awakened from its summer slumber to announce that PERS is in trouble. We have the Oregonian (yesterday) describing the different poisons the legislature and PERS might have to choose from to make the system less expensive, the Register-Guard whining over the conflict of interest that exists because the Legislators and the Judges are all PERS members, and Phil Keisling, new to his bully pulpit at PSU, publishing a shortened version of his PERS "white paper" in the PSU Real Estate Review (god knows, why there?).

Let's face facts. PERS is a very unpopular topic these days. Everyone from Dennis Richardson to Phil Keisling have ideas for further fixing the system. From looking over all the various suggestions, there is only one possible change that could affect a small percentage of retirees. Right now, ALL PERS retirees who worked in the system prior to October 1991 receive a "benefit increment adjustment" to offset the loss of the income tax waiver that PERS members had prior to October 1991. Some are now proposing that people who choose to live out of state should not be getting an adjustment meant to offset Oregon income taxes since they don't pay Oregon income taxes now. This is a very old topic that has been around since HB 3349 was enacted in 1995. Back then, both PERS and the Oregon Department of Revenue argued that they didn't have the resources to be the "residency police". They are worse off today than in 1995, so I'm hard-pressed to see how this bird will fly during the next session. Neither party responsible for enforcing this change wants to do it because it is a giant resource sink. The savings are comparatively small - $72 million *before* overhead. This is likely to net less than $40 million. Other grand ideas include renegotiating the 6% pickup so that employees, not employers pay the bill. This was originally negotiated in lieu of a salary increase; it is only fair then that it be renegotiated and be replaced by a salary increase. Of course, no one wants to do this; it would negate any savings that could be netted from taking away the benefit.

There are a variety of other ideas out there too. They include a forced lowering of the assumed rate. The Oregonian finally gets it that this is a money loser for the system, but it is even worse for PERS actives. This will be a very hard sell with both employers and employees initially aligned together in opposition. Another idea is to change the way PERS interprets the COLA adjustment for new retirees. Basically, what is being suggested is that new retirees not get a COLA for the first year or so after retirement. It is more complicated than this, but it relates to why so many people choose to retire on July 1. This one can be enacted by the PERS Board, but will be entangled in litigation for years if they try it.

Finally, various parties have suggested that health care benefits for actives be less generous by making active employees pay some greater share than they pay now. Again, this is a negotiation item, not a legislative action.

Between the Legislature, a new Governor, a bunch of rabble-rousers, and a hapless PERS Board that capitulates to almost anything the employers want, I can see the next year being brutal on active PERS members and new retirees. It is going to be a difficult contract negotiation for the unions, unclassified employees might find themselves with changes shoved down their throats without any option, and the Legislature could enter the act and inflict new forms of horror on actives and new retirees. A new Governor, elected on a platform of fiscal reform, could be just like our current Governor, perhaps worse, not likely better.

Get out your umbrellas. The hard rain is coming.

Sunday, August 08, 2010


Sorry for the rude invitation to engage with Yahoo.  I'm not exactly certain how that post got there except to say that it was something I did in the fog of being jet-lagged from our trip to Europe (Netherlands, Italy, Croatia, Greece, and Turkey).  In any case, I *think* I inadvertently accepted an invitation to link my PERS blog with another PERS blog.  It turns out that I had linked to an invitation to receive updates from my own blog - what a moron I was to do that.  I have deleted the offending and stupid post along with any links that may have been created inadvertently.  We now return to our regular programming.

The only news I have to report is that the Oregon Court of Appeals will hear the appeals of the Arken and Robinson cases on Thursday September 2, 2010 at the Supreme Court in Salem at 9:00 a.m.  The cases are scheduled to be heard sequentially, not simultaneously as was originally reported.  Each side in each case will get only 15 minutes to present the essence of its argument.  This clearly means that the case will be argued through the briefs, not on the basis of what anyone says during the oral hearings.  This may be one of those instances where you will expend a lot of energy to get to the hearings, only to discover that not much of value is said and that you will come away knowing just as much as you knew before you left.  Nevertheless, these judicial exercises are always entertaining so if you have some time to kill, I urge you to attend.