Right now, the action on PERS seems to be a combination of the PERS Board finalizing the new assumed interest rate (7.75%), the effective date for new rates and new mortality tables (January 1, 2014), and approving the final set of assumptions for the 2013 experience study that will determine employer rates for 2015-17.
The only area where no real hints are available is in the construction of the new mortality and AEFs. The new tables go into effect of 1/1/14 and I've received conflicting information on how those tables might affect individuals who retire on or after January 1, 2014. Early information suggested greater longevity for the PERS population, which would lead to actuarial equivalency factors that result in lower monthly benefits to members. This would happen anyway since the assumed rate will have been lowered, but the information initially received suggested that the PERS member experience was unusual and that the tables would have a far greater impact on benefits than expected. Lately, however, I'm getting a completely different set of rumors. While it may be true that the PERS experience data indicate longer life expectancies, the general population data show exactly the opposite. Actuaries and epidemiologists have been noting this effect since mid-2012 and the overall population numbers suggest that mortality rates are declining by several years. They've correlated this impact with education attainment and have noted that those with either less than a high school education or only a high school education have mortality reduced by more than 4 years over the rest of the population. This results in general population mortality figures that are shorter than in the past. If this is true, and the data certainly seem to support the claim, then what may happen is that PERS' actuaries will have to revise the mortality tables downward and report lower life expectancies. Ironically, this will have exactly the opposite effect for members. In the main, it would probably return the mortality tables back to the point where they would have been in the mid-1980s, slightly better than the 1978 tables, but worse than the 2003 revision. If this happens, the lower interest rate will be offset by lower mortality and member benefits would be higher than expected because they aren't expected to live as long. I see no resolution of this issue until the new tables are reported out, possibly at the September 27, 2013 Board meeting.
In the meantime, our illustrious Governor Kitzrobber is pacing the state trying to build support for more PERS cuts and higher taxes to support the public schools. The Governor has hinted at what he wants as part of the "grand bargain", which seems to be similar to Senate Bill 857. Recall that SB 857 had two parts: further cutting the retiree COLA (amending SB 822 from 4 tiers to 2 more punitive steps), and cutting the annuitization rate for inactive members seeking to retire at some point in the future. SB 857 died when the House failed to pass HB 2456, which would have increased taxes for several different groups of people. The net effect of these two bills would have been to increase revenue in the state by about $250 million per biennium and further reduce employer costs by lowering the unfunded actuarial liability of the PERS fund.
The issue now is that the possibility of enacting a cut to inactive members retirement benefits shook the tree pretty heavily. Recall that during his testimony on SB 822, Paul Cleary, PERS Executive Director, noted that 4% of the inactive members were responsible for 40% of the liability of all the inactives (not ALL PERS members). From various sources I've concluded that many of those people retired June 1, July 1, or August 1, thereby reducing the amount of money that would be available to recapture by cutting the annuitization rate for the remaining inactives. Thus, any bill including the inactives would probably generate about half the savings as before, and possibly less if the Legislature gives inactives a free-pass for a few months before implementing the rule. Since the AG warned the Legislature that passing a bill that provided essentially no notice, or trapped people with no option to get out before the effect date, would be viewed negatively by the Supreme Court. So, it appears that the inactive cut would not be very lucrative for the employers or PERS, and would force the burden back on retirees, again.
I have no sense of whether a Special Session will be called or not. I know that the Governor wants to call the session in September, if at all. I've heard that some legislators are balky at the idea of more cuts to retirees, while the Rs are balky at the prospect of tax increases without some tax cuts to help small businesses. I do not regard the special session as a done deal by any stretch of the imagination, but if the Gov can keep all the Ds together, he needs only 2 Rs to pass everything he wants. The bar is not high, but it still will require some hard sales pitches. In the meantime, keep those cards and letters going to your legislators. They need to know what you think of these ideas.