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Tuesday, February 22, 2011

Hit The Road Jack

And don't you come back no more.  Just got a note from a friend that ALL of PERS' fill-in-the-forms sessions for a March 1 retirement date and an April 1 retirement date are full.  I don't know how common this is, but the Legislature's 23 bills no doubt has some of those 60,000+ members eligible for retirement planning to kiss their employers' goodbye.  This isn't a surprise given what is going on in Wisconsin, the huge anti-PERS sentiment here in Oregon (lest you doubt this, just follow up on any PERS-related article published in any of the various newspapers around the state, and you will see the venom spewing out towards PERS members and retirees in the letters column or on the blog comments).  I have suggested since these bills were first published that March 1 or April 1 would be the optimum date to depart to avoid "most" of the legislature's more draconian actions.  The only bills that *could* affect new (and old) retirees would be one of the bills intended to meddle with the COLA provisions.  I think that these bills face an unlikely future given how carefully woven into the statutes the COLA provisions are.  The current provisions - 2% maximum COLA, banking of excess COLA, 5 years vesting to COLA, and COLA on full benefit have been in their current places since 1971.  If ever there were statutory and contractual issues, these we be at the top of any list.

In the meantime, the state and other public employers may not have to cut as much from their budgets when huge waves of eligible retirees decide that "enough is enough".    I suspect that many more may decide to "hit the road" before July 1.

Thursday, February 17, 2011

Don't Think Twice

The mailbag overflows with questions from worried PERS members wanting to know how to time their retirement to miss anything the legislature might do.  There is no simple answer to this question.  If you weren't planning to retire now, thinking about it as a way to avoid what the Legislature might do is just plain silly.  If you aren't READY to retire, you shouldn't give up your job and retire just to protect some benefits you might get.  The Legislature is in its third week and not a single PERS bill has been scheduled for a hearing.  This leads another group of members to wonder whether they should worry at all.  Also the wrong answer.  Just because bills haven't been heard yet doesn't mean they won't be heard.  It is true that a fair number of the 23 PERS bills are off in the danger zone of potential contractual violations.  The House leadership has made it clear that they want NO bills on PERS to pass that will be undone by the Oregon Supreme Court.  That doesn't leave very many bills to pass that avoid that potential fate.

What to do?  Let me go back to my principle that if you weren't already planning to retire this year, then you shouldn't be thinking about retiring this year.  You aren't ready and you won't like retirement because you'll be worrying about all the money you aren't making by working.  If you were already planning to retire in 2011 anyway, then timing might be an issue.  Since a few of the bills, especially those pertaining to the retiree COLA, are presented currently as applying to both new and pre-existing retirees, you don't gain anything by retiring early.  Bills that attempt to cap the pension benefit at the Final Average Salary are potentially devastating to some actives on the verge of retiring.  If you are in that category and want to be ahead of that prospective change, then getting out before the end of March would be the best plan.  This date slips the longer the Legislature doesn't take up such legislation.  Bills to eliminate the 6% pickup have little impact on someone retiring later this year.  The 6% doesn't make much of a dent in anyone's retirement, yet.  So, if you were to lose this, you really aren't risking enough to sacrifice a few extra months of income.  But if any of the legislation worries you to the point that you can't sleep at night, AND you were planning to retire anyway, then don't think twice - get out now.  You'll be happier, your sleep will improve, and you will avoid the worst of the possible changes.  But, if you do get out now, don't come back blaming me for inciting your decision.  Remember, I don't give advice.  I give information and it is up to people to decide what to do with that information.

On an unrelated note, congratulations to Paul Cleary of PERS.  He's one of the lucky Agency Directors who gets to keep his job in the Kitzhaber administation.  Maybe I should send a sympathy card instead.  It is going to be a tough year to be in charge of PERS and spend those days after days trying to be patient and cheerful while giving good answers to nasty legislators like Dennis Richardson who'd sooner take away his mother's PERS pension than allow us to continue to survive on ours.    Good luck Paul.



Friday, February 11, 2011

Strange Overtones

The Oregon Legislature has been in session for two full weeks now.  Not one of the 23 PERS-related bills have yet been scheduled for a hearing.  Rules devised by the split leadership in the House may be contributing to the slow pace of these bills.  For a bill to be heard, both co-chairs of the House Business and Labor Committee (Mike Schauffler and Bill Kennemer) have to agree.  For a bill to leave the committee, at least two members of each party must vote for the bill's movement.  This puts a fairly high barrier to these bills and probably works to the advantage of members and retirees hanging by a thread right now waiting for the Legislature to move.  Recent reports in the media have included brief quotations from various House members that make it appear that PERS bills may be difficult to move this session.  There is nearly unanimous agreement amongst the movers and shakers of the Legislature that they do not want to pass any bills that will be struck down by the Oregon Supreme Court.  At a minimum, this takes a few of the bill categories off the table as they would run into "contract" challenges from the Court.  Adding to this is Governor Kitzhaber's desire to negotiate with the unions to "solve" some of the issues in bargaining rather than legislation.  By bargaining, there is no possibility of a legal challenge.  Legislation always carries a legal challenge.

If we put all this together, I'm beginning to think that there may be lots of work going on behind the scenes to consolidate some of the bills together, to drop the duplicate bills, and to bring forward only one or two larger bills that have excised some of the legal barriers.

This is no cause for celebration.  PERS members *will* pay for changes somehow.  I can predict what some of them will be, but it is too early to offer my comments, believe it or not.  The changes will be ones that can be made without triggering a legal challenge, are permissible without triggering heat, and will demonstrate that the Legislature is trying to solve the problem.  The bottom line is that PERS is actually nowhere near a trouble point that media makes it out to be.  There are only a few systems nationally better funded than PERS.  The latest earnings for 2010 and the fast start for 2011 PERS at nearly the 90% funded level.  Most actuaries would simply yawn at that number.

This is also no reason to take your eyes off the Legislature.  In fact, I'd be watching it closer than ever.  But I'd also be watching the union negotiations, and the Governor's decision regarding future leadership of PERS (watch the news next week to see whether Mr. Cleary remains as the Executive Director of PERS).