The past few weeks have been pretty dull in PERS land. Our Governator has been trolling east of the cascades and south of the Willamette Valley trying to round up support for calling a special session to go after that great PERS "grand bargain" along with some targeted tax increases for the well-to-do and for the less well-to-do retirees. The Rs seem hell-bent on agreeing to the Special Session *only* if they get a few tax CUTS for small businesses thrown into the mix. On August 17, the Gub announced that he would make a decision on a special session within 10 days. That means that August 27 would be the date. There are still legislators who want to bring up topics other than PERS and tax increases, like reanimating the discussion of the Columbia River Crossing. I figure that the more topics people want to throw into the mix the less the likelihood of getting the special session.
People have asked what kind of PERS changes would be sought in the Special Session, were one to occur. There are really only two that I can think of right now: first would be further reductions in the retiree Cost-of-Living adjustments, taking them down to near nominal levels (think of it as a tiny tip for bad service). The other area is to tinker with the benefits for inactive members. Last time through the Legislature considered making the annuitization rate, (think "special assumed rate") for those members seeking to retire and qualifying for Money Match, considerably lower than the rate used for active members. Currently all rates are 8%. On January 1, 2014 the rates will be 7.75%, and the Legislature would like the inactive member annuitization rate to be about 4% less than the active rate. The AGs office doesn't like the idea of singling out inactive members and has gone so far as to suggest either doing it for all active and inactive members, or for none at all. This has no bearing on whether the Legislature will listen to the AG -- they certainly didn't in 2003 -- and so I expect that "special" rate to come up again, if not in a Special Session then in February in the short, regular Legislative session.
Just to show how hypocritical organizations can be, OSBA (the school Boards organization) has just joined the SB 822 lawsuit as an intervenor to assist the State and PERS defend the actions taken by SB 822. Do recall that OSBA opposed SB 822 because it wasn't draconian enough. But, here they are making sure that whatever piece of the pie they can steal from retirees, they want to be first in line to get the biggest slice.
PERS itself seems to be wrapping up the Strunk/Eugene collection effort. The absurdities that have arisen have taken comedy to new forms, except when it doesn't. My favorite story (told with permission) is the story of Martha Sartain. For newer retirees, Martha's name may not ring a bill. Martha was the named plaintiff in OPRI's lawsuit against the COLA freeze from the 2003 Legislature. Martha was one of my favorite people, and she was one of the brightest, most sophisticated plaintiffs the PERS Coalition had during the Strunk case. Martha also served on OPRI's Board and she fought regularly with Board members to modernize the organization, update the website, go digital for many aspects, and to bring on more recent retirees who had a vested interest in everything taking place in the Legislature. She dragged a couple of us along to several Board meetings and it was there that we discovered just how archaic OPRI was. (It is better now, but has a long way to go before becoming a fully modern organization). In any case, Martha retired in late 2002 and in early 2007 was diagnosed with an extremely aggressive form of cancer. She died before the end of 2007. Martha was divorced and her PERS benefit was paid out as an option 1 monthly benefit. She had no beneficiary so that when she died, PERS scooped up hundreds of thousands of dollars in funds that were hers the instant before she died. Her estate executor (her son) followed the law to the letter, notifying PERS of her death, dealing with the State and the Federal governments paying the necessary taxes due on the estate and settling with all creditors. The estate formally closed in mid 2008. Several weeks ago a letter addressed to Martha Sartain Decd arrived at her son's house demanding about $12,000 to be paid to PERS because of the 1999 over credit that affected all retirees in the 2000-2004 window as well as a varied group of others who retired before or after the window. Her son got in contact with me. Since I had dealt with one of these before, I advised her son to contact Revenue and PERS to inform them that Martha left no beneficiary (on her PERS account) and that the estate had closed in 2008. This seemed to satisfy Revenue (although I'm sure there was paperwork to be filled out), and satisfied PERS (again, I'm sure there was paperwork there too). PERS, however, could not resist informing Martha's son that although they could not collect the debt, the debt would not be written off, but merely noted as uncollectible. When her son pointed out that Martha's pension account had enough money to pay off the balance 20-30 times over and that PERS recovered all of that, PERS gleefully noted that the two are completely unrelated. No matter what is left in the retirement account, it can't be used to retire this debt.
Since hearing from Martha's son, I've heard from several other people in similar predicaments. Every case is different and sometimes even though it doesn't seem like PERS or Revenue should have the right to collect, circumstances make it difficult to mount a compelling argument.
In these kinds of cases the questions you need to ask are 1) did the decedent ever receive notification from PERS about owing money because of the 1999 over credit? 2) did the deceased have a beneficiary (and if so, who?); 3) how did the decedent structure his/her retirement benefit (i.e. monthly benefit with no beneficiary, monthly benefit with spouse as a beneficiary (full benefit, half benefit, with or without pop up), 15 year annuity certain, refund annuity (who got the refund?), lump sum settlement (full or half). There are lots of complications involved in determining whether the estate has liability for repaying the bill. If there is no beneficiary and the estate is fully closed (Martha's case, there is no one from whom PERS can collect); if there is a beneficiary still getting the benefit, PERS should be collecting from the beneficiary.
They say you can't collect blood from a stone, but it is clear that PERS is definitely trying to collect money from a stone, or from ashes. Make sure you are fully armed with the necessary information before you call PERS or Revenue. No beneficiary, no open estate, no repayment is necessary. In any other circumstances, your mileage may vary. Feel free to check with me or post your situation over on POD (see left for link) to see how we view it. With the right array of information, you may not have to worry about this.