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Wednesday, January 19, 2011

Street Fighting Men

The OPRI Board met on Monday to plan strategy for the upcoming Legislative session.  OPRI is the only organization that directly represents PERS retirees.  They have read through the 23 bills currently proposed and have categorized them into one of three groups:  group 1 is a "fight to the death" group - these are bills that directly affect retirees and will mean less money for them either immediately or in the future:  OPRI will fight all the bills proposing to make any changes to the retiree COLA (HB 2456 and HB 2991), as well as bills that reduce the COLA, or bills that propose to kill the income tax subsidy for out-of-state retirees (HB 2115, HB 2444, HB 2445, HB 2450, and HB 2453).

OPRI is also planning to provide support to the PERS Coalition in its effort to defeat the following bills:  HB 2161, HB 2436, HB 2447, HB 2454, HB 2455, HB 2984, HB 2985, HB 2986, HB 2990, and HB 2996.  These bills will be a level 2 priority for OPRI.  These bills do not directly affect existing retirees, but will affect members planning to retire in the very near future.  These include bills to eliminate the 6% pickup, to cap the pension to no more than 100% of FAS, and several bills that redefine how FAS is computed.

OPRI will merely watch SB 34, HB 2113, HB 2114, HB 2343, HB 2505, and HB 2814.  You can read about any of the bills mentioned above at the Oregon Legislature's web site.  The site tracks the bills as the go through the committee process and is documented carefully.  Also be aware that the Legislature offers audio for hearings that you might be interested in listening to.  The correct internet protocol will be put on the Legislature's web site after February 1, when the Legislature reconvenes.

OPRI has bitten off a great deal in this legislative session - an indication of how important these bills are to its members.  If you are not a member of OPRI, please consider joining.  Dues are inexpensive $10 per year or $75 (?$100) for a lifetime membership.  You can find out about joining at OPRI's http://opri.org.  In addition, OPRI has two funds that it welcomes contributions for.  You may contribute to the OPR PAC, a political action committee that is responsible for funding all the legislative lobbying you will see in full force this year.  Lobbying is expensive and OPRI can use any help it can get.  Donations to the PAC are tax deductible ($50 for individuals; $100 joint).  OPRI also has a legal defense fund.  While there are legal cases in which OPRI is currently participating, this session is bound to produce some clinkers that will require Legislation.

You would do yourself and all your fellow retirees a great service if you would join OPRI and help it in its fight to keep these onerous bills from passing.  You don't even need to be a retiree to join.  OPRI welcomes members from all classes of public employees - active, inactive, and retired.  You will get more than your money's worth from membership (including a newsletter), and a contribution to the PAC.

Thursday, January 13, 2011

Details in the Fabric

The 3-day feeding frenzy that is the opening organizing session of the Legislature has just ended.  The boys and girls of Camp Silly will convene again on February 1 to begin the daunting task of winnowing through almost 1700 bills introduced this session.  Some might call this the "full employment act for lawyers, lobbyists, and legislative counsels".  Of the 1700 bills, twenty three (23) are related to PERS, although I think 2 of the 23 are not PERS bills at all.  The bad news is that these bills touch every category of PERS member including current retirees.  Bills affecting retirees all pertain to the COLA.  One eliminates the "COLA banking" provision, one limits the "COLA" to members with 10 years of creditable service (not applicable to current retirees), and one limits the COLA to the first $2000 per month of benefits.  There are three different bills that cover the same topic, namely to eliminate the income tax subsidy provided to retirees who do not live in the State of Oregon.  All these bills will be challenged by OPRI and, presumably, the PERS Coalition.  The remaining bills deal with active members.  Two seem to do with the OPSRP program, one renaming it officially to Tier 3, and another terminating the OPSRP for newly hired employees who become eligible for PERS on or after July 1, 2011 (a Tier 4, if you will).  For active employees, there are two classes of obnoxious bills.  The first eliminates the 6% pickup, and various forms of this bill make it either impossible for employees to contribute on their own, or impossible to contribute at all.  The second class of bills reduce significantly what is included in calculating the Final Average Salary (FAS).  One eliminates overtime in excess of the average for employment category; another eliminates the use of sick leave and vacation time.  Finally, the most obnoxious bill in this category would limit the PERS benefit to no more than 100% of this redefined FAS.   Several bills redefine who can and can't work for a PERS employer after retirement, and one bill directs PEBB to offer high deductible plans and HSA, and another changes how PEBB deals with spouses who are both public employees.  The final insult is a bill that would neuter the most important elements of SB 897, passed in 2010, and hold PERS harmless for errors made by employers in reporting service and related matters to PERS during the verification process.  This is an insult to all those who worked hard to secure passage of SB 897 over the Governor's veto.  Ironically, the revision was introduced at the request of our new Governor.

The good news (if there is any) is that the Legislature chose NOT to micromanage PERS.  This means that issues pertaining to actuarial tables, assumed rates, and the rate guarantee are nowhere to be found in this set of bills.  This doesn't mean these won't appear, but at this point it is highly unlikely.  These are functions that are assigned to the PERS Board and PERS Staff, and these considerations will be taken up in due course at PERS Board meetings and through public hearings, if they are taken up at all.

Collectively, these bills will take a lot of effort to lobby and to defeat.  For active members, the PERS Coalition and each of the unions will be working hard on your behalf.  For retirees, OPRI and its lobbyist(s) will be defending our benefits at the Legislature.  If you go to my newsgroup (see PERS OREGON DISCUSSION) at left, join the group, you can see the summary of all of these bills by number, and participate in the discussion.  It is really important to join the group, not just read the messages.  Strength comes in numbers and the more we have, the louder our voice will be.  In the meantime, OPRI will be meeting on Monday Jan 17, 2011 to discuss these bills and to decide how to prioritize their lobbying effort.  Please make your opinions known on PERS OREGON DISCUSSION before Monday so that you and have a voice in what OPRI chooses to work on.  You can also send contributions (MAY BE TAX DEDUCTIBLE) to OPRI's PAC, which pays for lobbying expenses in the Legislature.  You can find information http://opri.org.

Wednesday, January 12, 2011

Saving Grace

By the grace of counting posts, it dawned on me that I had hit my magic number of 1000 posts since 2003.  I'm not precisely certain when I crossed that mark, but it has been sometime since the first of 2010.  That is a lot of writing and a lot of people who have read my thoughts.  I want to thank you for making this site the preeminent source of all things PERS.  I don't know if I will make it to 2000 as my energy will wane eventually and my family will want me to travel and be away from all of this.  Nevertheless, this web site is closing in on one million unique hits and more than 1000 unique entries.  Thank you all for your support and your continued reading.  This year could be the final year of this blog as I have reached my threshhold of the things I am willing to keep track of.  I will keep it going for 2011, but once my wife retires on November 30, 2011, I am "outta here".  We will start travelling extensively, visiting our dispersed family and making connnections we've had to miss over all these years.  Keep reading this year and there is lots to report.

Wrong Side of The Street

The Oregon Legislature and our new Governor both showed up in Salem yesterday and work began today.  The Legislature has until January 23rd to get the initial draft of legislative concepts worked into bill form.  Some say no more legislation can be introduced after that date; others claim that bills can be brought anytime.  With that in mind, the first wave of bills have already been introduced and there are 15 of them that affect everything from the way final average salary is calculated, to multiple bills relating to the retiree COLA, and almost everything in between.  So far nothing concerning the assumed rate has appeared, but there are 10 days to go yet.  I expect the list will grow daily, and I will try to keep you updated as much as I can.

Note that virtually ALL of these bills have emergency clauses, which means that they will take effect the moment they are passed and signed by the Governor.  So retirement planning and trying to "beat the clock" takes on a real dicey format.  As far as I am concerned, the last day to get out and be assured that you won't be affected by these emergency bills is February 1.  That said, the COLA bills, as they are currently designed, would affect anyone already retired so that even if you miss the impacts that will serve to lower your benefit, the COLA provisions will affect your pension growth after you retire.  Even current retirees, such as myself, would be affected by the COLA modifications if they pass.

If you want to see the ugliness that will get considered in this session, please go to our PERS Document Library .  There you will find everything proposed for the 2011 session so far located under legislation, with the final item on the list representing the captioned summary of all bills introduced as of 1/11/11.  When you get there and start reading, you know you have landed on the wrong side of the street this year.

Thursday, January 06, 2011

Weaver of Lies

Yesterday I attended the Supreme Court oral arguments in the Arken and Robinson cases.  These two cases, along with the White case, which still remains docketed in the Oregon Court of Appeals, represent the last of the litigation over the 2003 Legislative reform, the City of Eugene case, and the subsequent settlement agreement.

The Arken case hinges on the impact of the Strunk's decision to strike down the COLA withholding provision of HB 2003 from the 2003 legislature.  Central to this argument is the fact that with the COLA provision gone, the plaintiffs argue that this left the statute and the "window retirees" in the position they were in on July 1, 2003 - still with 20% credited to their accounts, but not receiving the COLA.  The court ordered the COLA restored in Strunk (2005) while the members were receiving their "fixed" benefit.  PERS argues that because the trial court judge in the City of Eugene case (Lipscomb) had already entered his judgement and order, that the 20% had been vacated and that the only rate in effect, although not formally adopted by the Board at this time, was 11.33%  Thus "window retirees" had no expectation of retaining the 20% when the Legislature adopted HB 2003 in May of 2003.  So far, Arken has failed at the trial court (Kantor), and the issue for the Supreme Court to decide is whether the Legislature intended that window retirees be held harmless if the COLA provision had been struck down.   Much of the questioning focused on the exact status of the Lipcomb order at the time the Legislature enacted HB 2003.  Justice Durham reminded both Bill Gary and Joe Malkin that there is a significant difference between final order, and final justice.  Clearly the final order had been entered, but the case was under appeal at the time the Legislature acted.  PERS had not been granted a stay pending appeal.

The Robinson case pertains to a slightly different portion of HB 2003 and affects a slightly larger cohort of individuals.  At the end of HB 2003, the Legislature late in the process added section 14b (around revision 10 of the bill) to provide an exclusive remedy for the City of Eugene case.  In it, it described two methods PERS could use to recover for the errors identified in the City of Eugene case.  One method was the "COLA freeze", while the other was the use of "administrative expenses".   Since the errors identified in City of Eugene had to do with improper crediting of 20% to regular accounts in 1999, failure to fund reserves, use of outdated mortality tables, and improper calculation of the Money Match benefit, PERS was ordered to correct these.  Because HB 2003 saw so many drafts before it finally fell into its final form, language was entered and removed and it has been difficult to discern either the reason for dropping things from the enrolled bill, or the reason for adding them.  One such word was "Exclusive remedy".  These words were dropped from the final preamble to Section 14b.  Jim Coon, attorney for the defendants in this case (us), argued that the Legislature intended to be done with the City of Eugene case by providing the only remedies that PERS could use to collect.  He argued that the collection statute 238.715 was superseded - in this instance - by section 14b and that PERS improperly billed retirees for monies owed by the City of Eugene errors.  PERS argued that the removal of key words from the final drafts of HB 2003 meant that the Legislature had no such intention to hamstring PERS, but instead offered 14b as *additional* tools that could be used to collect overpayments.  Moreover, Malkin argued that the City of Eugene case involved only 8 employers, not all employers and therefore could not be viewed as the overarching collection mechanism for all PERS employees.  Justice Kistler spent a fair bit of time trying to tease from Malkin why it mattered to the employers what mechanism PERS used since the employers were excluded from bearing the costs, and why also did the money issue, which related to individual retirees, matter to the employers.

The arguments were tedious in the extreme.  I wanted to shout out several times to ask why the justices weren't pursuing a particular line of questioning, but of course it doesn't matter.  No case that I've ever sat through was influenced by oral arguments.  The oral arguments are a dog and pony show where each side gets to take its best shot at the other side while also trying to show the justices why they are so smart.  Similarly, the justices try to get inside the heads of the lawyers by asking some twisted and bizarre questions.  In the meantime, the case is adjudicated entirely through the legal briefs filed on both sides, along with all the pieces of evidence cited in support of the argument.

It is hard to predict when the Court will rule.  I do believe that the court will NOT rule in time for the 2011 Legislature to do anything to fix any errors the Court identifies.  On the other hand, I do think there will be a decision available for the 2012 Legislature to work with, and so I continue to hold that 2012 will be the year of the remedy, for better or for worse.

Only five of the justices were present for the hearings.  Justice Martha Walters was absent but will participate in the ruling.  Justice Jack Landau who joined the Court only earlier in the week recused himself from the case because his son is an Attorney for the firm representing the defendants in the Arken case and consults on the Robinson case.


Monday, January 03, 2011

No Expectations

Happy New Year to All.  The next year promises to test our mettle and our souls.  Between the Legislature, the media, and the public, PERS members aren't expected to be treated with respect, kindness, or consideration.  We need to get past this and not take is so personally.  The Legislature is charged with the task of balancing Oregon's budget; they have limited ways to do this.  Our objective is to remind the legislature that we performed our tasks and our work in GOOD FAITH and we expect the Legislature and the State Government (and local government) to honor the agreements we made with them.  We accepted substandard pay to get above standard retirement.  That's a fact that is beyond dispute.  Honoring contracts is a good thing and states that do not honor employment contracts will find that private employee unions dislike doing business with public employers when they don't live up to their contracts.  Our objective this year should be to 1) not whine; 2) present facts clearly; 3) assert the primacy of the contract and that bilateral contracts cannot be changed unilaterally.  Contract, contract, contract, contract is the word for the day.  Keep that word front and center in your discussions with friends and legislators.  The American system of democracy is found on the Uniform Commercial Code, which holds that contracts must be upheld by both parties.  If one party does not wish to uphold its part of the contract, its only choice is to seek concessions from the other party.  The rules do not permit one party to unilaterally pick up its ball, arbitrarily change the terms of the contract, and expect all problems to disappear.  The courts are cluttered with instances where contracts have been broken and the courts have to set the parties back on the correct path.

So as we enter into the Legislative silly season, please keep the fact on contract uppermost in your mind.  You, as a public employee or retiree, did everything that was asked of you to keep your part of the employment contract.  You, in turn, expect the public employers and PERS to do everything it is required to do to uphold its part of the multilateral agreement.  Period, end of discussion.

Thanks to all my readers for using the Amazon links to the left of this blog to purchase their goodies and gifts from Amazon.com.  Those links bring a small commission from every purchase you make from Amazon and apply them to the costs of time, energy, and hosting of this blog and the associated web site.  You pay nothing extra for using these links, but I get a small referral fee for anything you purchase through Amazon.  Believe it or not, it is possible to receive enough income from Amazon to keep a website like this blog running efficiently for a full year.  Do not feel obligated to purchase the advertised items from Amazon.  You can simply use these links to get you to the Amazon site.  Once there from this site, anything you purchase will be credited to a referral from this site.  So, keep the support rolling in by purchasing goods you'd purchase anyway by going through this PERS blog.  Its the way we keep life interesting and by inspiring new posts on a semi-regular basis.  The more money I receive for referrals to Amazon, the more I feel like writing because I know that my extra words will not end up costing me more.  I thank all who have purchased Amazon goods through a referral on this site.  It really helps cut down the expenses of running this blog.

The Legislature convenes on February 1, 2011.  I expect to be posting every couple of days to keep you updated on what our friends in the land of the sillies are proposing.  Obviously I won't post on things unrelated to PERS, but things related to health care and others related to retirement will be covered.

This coming Thursday - January 6 - the Oregon Supreme Court will hold oral arguments in the Arken and Robinson cases.  These cases both apply, primarily, to window retirees and I expect to be at the Oregon Supreme Court at 1:30 to listen to testimony and arguments.  While I don't expect an instant verdict, I do expect the Court to issue their final ruling in a relatively short period of time since the Legislature is in session and they may want to Legislature to take some action that will facilitate the final ruling.  Watch this space on Friday for a possible court update.