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Saturday, September 28, 2013

Your Gold Teeth

Sometimes I feel as though PERS retirees are to the Legislature and Governor as gold teeth were to the Nazis in Germany (if this is offensive to some, I'm sorry.  The metaphor seems entirely appropriate).  We represent the gold teeth the Legislature, PERS, and the Governor get to pluck before we are sent off to our "just rewards".  Yesterday, the PERS Board approved the reduction in the assumed rate used for Tier 1 rate guarantee, mortality tables, and for employer contribution rates.  The new rate, effective 1/1/14 will be 7.75%.  For most caught on the cusp, the difference between 8% and 7.75% is relatively minor.  Longer term, however, the effect is significant.  The mortality tables will be adjusted accordingly, but I haven't seen the new ones yet as the PERB is waiting on the Legislature to do its thing on Monday.  Speaking of Monday, the sop for the poor seems to be a 0.25% one-time payment at PERS' discretion to make them feel like they really got a 1.5% COLA increase.  Of course, it isn't the same.  It is simply a one-time payment, not added to the salary base for compounding on future benefits.  Those in the range between $20,000 and $60,000 *might* get one of these too, depending on finances.  This is entirely at the discretion of the PERB.  It also would be a non-compounding payment.    The only good news in all of this is that the employers will have increased payments resulting from the lowering of the assumed rate.  This will assure the continued employer whining, sniveling, and complaints come 2015, so we should never be complacent that the teeth pullers will ever be through.

Speaking of gold teeth, the amount of money spent on education just continues to amaze me.  That malodorous group called Fix PERS Now and its financial sugar daddies, OSBA, COSA, Oregon Business Alliance, Chamber of Commerce and others, don't seem to be the least concerned about how much money is wasted on the administrative infrastructure in education.  They don't seem to be even slightly concerned about the existence of 987 local school districts, superintendents, transportation systems, negotiators with teachers' unions.  Worse still, they don't seem to be unsettled with the salaries of the people selected to replace one elective position valued at $72,000 per year, with two appointed people earning, respectively $180,000 (Robb Saxton, Head, Department of Education and Deputy Superintendent), $225,000 (Nancy Golden) [both sources from articles in the Oregonian].  That's a lot of gold teeth that no one crying for more money "for the children" seems to be disturbed by melting down.

Right now, my mouth hurts like hell, and after Monday the pain will get greater.  And, like almost everything else in this state, the Dems will allow the rich to get richer off our gold teeth, while the libertarians at the Oregonian slaver for more.


Wednesday, September 25, 2013

Train of Fools

The circus train has left the station and the lead clown, our own Governor Kitzrobber, is sitting like Captain Kangaroo to lead the merry band of fools on another journey to rape and pillage the pensions of PERS retirees (and future retirees).  It wasn't bad enough that SB 822 put the kibosh on over half the cost-of-living increases for about half of PERS retirees, but the latest feast day for fools (September 30th, this year), will now go after the other half of the PERS retirees - the poor ones.  

During the entire discussion of SB 822, the objective was to protect the poorest retirees from any cuts, and subject those who weren't the very poorest to a progressively lower COLA as benefits rose.  Thus, for the nearly 40% of PERS retirees making less than $20,000 per year, they could continue to get the measly 2% COLA spelled out in statute.  Once the benefit exceeded $20,000, brackets at $20,000, $40,000, and $60,000 per year kicked in and progressively lowered the marginal COLA received on each dollar in excess of the last bracket.  So, for people earning between $20,000 and $40,000, the COLA would be 2% on the first $20,000 and 1.5% on the amount over $20,000 and less than $40,000.  Basically, a worker at the top of the second margin, earning $40,000 per year would receive a 1.75% COLA until the benefit exceeded $40,000.  With each bracket the marginal COLA declined so that the marginal bracket at $60,000 would drop to 0.25% on excesses above $60,000.

On the surface, the original cuts from SB 822 look pretty small, but the compound effects of the cuts become dramatically larger the greater the amount of time.  The cumulative losses to retirees become staggeringly large at about 20 years post-retrement, with inflation adjusted benefits being reduced by nearly half at one's most vulnerable point in life.

All of that was draconian, but the newest proposal shephered by the Bhutanese Cowboy would make SB 822 look positively generous.  No longer does he even  pretend to protect the poorest PERS retirees.  Now, he's just slavering for money, however he can get it.  The new proposal, to be voted on next Monday (Feast Day For Fools), simply takes the existing SB 822 proposal and cuts it essentially in half.  Now, there is no modicum of protection for the poorest (see next paragraph); the first $60,000 gets 1.25% COLA, period.  After $60,000, the marginal rate drops to 0.15%.  In viewing spreadsheets comparing the impact of SB 822 (described in the previous two paragraphs), and the new proposal, the 20 year inflation adjusted benefit has been reduced by nearly 70%, with the hardest hits accruing to the lowest paid members.  This is not only greedy; it is downright cruel.  It is money-grubbing at its worst, and SAIF-like as its best.  PERS members and PERS retirees have now been fully trotted out, skinned, skewered, and stuck on a spit to roast for every sin ever committed by public education in this state.  

To mollify the poorest, the head legislative clowns, chief among them, Peter Buckley have offered the possibility of an adjustment - roughly equivalent to a tiny one-time payment - as a sop to the poorest.  The bad news is that it will be really tiny; the worse news is that it won't increase the benefit base.  That's cynical and evil as far as I am concerned.

I've been a life-long Democrat and have donated thousands of dollars to support various legislators in their election and re-election campaign.  But now, that support no longer exists.  Thus far, every House Democrat and every Senate Democrat supported SB 822.  There are a couple of really easy, low-hanging fruits in that basket and I can promise them - Devlin, Kotek, Buckley - not a penny of support, but active support for any Democratic opponent regardless of philosophy.  I don't really care any more.  The incumbents disgust me.  They cynically took money from labor and then turned around and stabbed organized labor and all public employees in the back, without a moment's regret.  They have completely lost our trust in their ability to protect working class, labor, and middle class families.  As for the Governor, the leader of the clown brigade and architect of this "grand bargain", he's done as far as I'm concerned.  To be honest, and not the least hyperbolic, I'd sooner vote for Dennis Richardson than John Kitzhaber.  Why?  Because Richardson doesn't even try to hide his contempt for public employees.  He's so disgusting that he could be more easily neutralized than the country-bumpkin from Roseburg.  Dr. John needs to go back to fishing, hunting, and seeking spiritual awakening in Bhutan.

Once more I will say to the critics of PERS.  You've been lied to, you've been misled.  Little that you read about PERS stands up to any critical scrutiny.  PERS has been incredibly transparent, more so than many of us wish, and the result of that transparency has been for the shrill critics to cherry pick facts and figures that describe very few people I know (and I probably know more PERS members than the average PERS member or Legislator).  PERS members and retirees did absolutely nothing wrong.  We entered into agreements with our employers to perform certain tasks in exchange for salary, benefits, and the deferred compensation of the pension system we had no choice in.  The number of ways the system can be gamed are few and far between and very few people even have a clue how to do it; it also requires the complicity of the employer to get away with (think about that for a minute).  Most of the stories involving people with very high incomes are of people who (a) had high paying jobs, (b) worked for very long periods of time, and (c ) took advantage of the variable annuity program where they were willing to forgo a guaranteed rate of return in exchange for market rates for as much as 75% of their portfolio.  There's no gaming there.  Those people could just as easily lost their shirts.  That they were willing to risk their own money completely should be rewarded, not criticized.  As for the COLA, it has been a promissory part of the PERS contract (yes, contract) since 1973.  It isn't anything new.  The COLA has NEVER been guaranteed to be paid out annually at 2%.  That was the ceiling on the COLA.  Many of us started our retirements in the early aughts and received either no COLA or a minimal COLA.  That's because the cost-of-living increase in the years we retired was minimal.  The new way guarantees a minimal payment regardless of the cost-of-living increases or decreases.  It completely decouples the thing called a COLA in statute with the statutory meaning of the word COLA.  

Legislators who vote for this latest attempt to blame PERS members for problems of the public schools will pay a heavy price for that vote.  I predict that some 150,000 or more PERS members and retirees might decide to either sit on their hands in 2014 and let the chips fall where they may, or may actively support opposition candidates.  This is an ugly place for the Ds to be.  Just remember that we already know what to expect from the Rs, so having them would produce no surprises.  What surprises us is the Ds contempt for its natural constituency.  It begs labor for endorsements and, more importantly, cash.  Now that they've spit in the eye of organized labor, I expect that money will be a little harder to come by.  What's worse, I expect, is that after all of this, the court is likely to overturn the legislation concerning the "COLA".  And so, you will have expended all of your political capital and then some, only to be hoist on your own petards when the court gets through with you.  Think about this simple question:  when does a COLA cease to be a COLA, by definition?  And, then, "PERS shall not pay a benefit to which a COLA does not attach", Strunk, 2005.  Good bye, and good luck.  You deserve your own fate.



Wednesday, September 18, 2013

Not Gonna Beg

The clown of Mahonia Hall is at it again, running around with all the little people trying to figure out a way to stab us PERS members (actives, inactives, retired) in a variety of evil ways.  More than that, it isn't enough to beat up on retirees, they want to take away the $183 personal exemption for individuals earning more than $100,000 per year, or families earning more than $200,000.  And just when you thought it couldn't get any worse, discussion is circling around the "senior" medical deduction, setting the benefits only for those over 67.  All you PERS retirees between 62 and 67 can just bite the little man's weenie.

The latest "leak" from Mahonia Hall  is that retirees will see yet another smack to the COLA before the next one is awarded in 2014.  The "plan" is to set the COLA at 1.25% for everyone, and then for those earning more than $60,000 per year, the benefit would drop at the margin to 0.15% of the amount over $60K.  There is a very tricky legal definition floating in the sewer the legislators are swimming in.  The word COLA stands for "Cost of Living Adjustment".  The legal question is how can a fixed and invarying amount be considered a "Cost of Living Adjustment".  The COLA is an amount determined annually by the bureau of labor statistics to measure the increase or decrease in a market basket of goods and services that the average consumer must buy.  Perforce, the amount varies from year to year, and prior to SB 822, there was a cap on the size of the COLA increase, but the amount over the COLA would be banked and drawn on in years when the actual COLA was less than the 2% cap.  Since the 2013 legislature, the concept of a COLA has been shredded. They have unlinked the COLA from the annual BLS market basket change (a true measure of COL), they have removed the "bank", and so the "cost-of-living" has become a gratuitous 1.25% benefit increase annually without any regard to inflation.  Just think, when inflation roars back to 8% or 9% and seniors can no longer afford their medicine, expect to see them applying for food stamps at Mahonia Hall.   Left in the mess, is the question that the legal beagles will have to sort out:  when is a COLA not a COLA, because the Strunk court mandated that PERS cannot pay a benefit to which a COLA does not attach.  So, if what is changing is ruled a gratuity, not a COLA, then the Legislature will lose again on this spawn of satan.

Buried inside a sentence discussing the changes to COLA, is another time bomb intended to hit inactive PERS members who haven't yet retired.  Although not specific, the general consensus seems to be that the inactives who are eligible to retire under Money Match will see their annuity rate decrease from 8% (7.75% after December 31) to something in the vicinity of 3.5%.  This will cut the prospective benefit by about 37%.  Many inactives are all over the country.  They vested in PERS, PERS would not let them take all their accrued benefits out (including the employer match), and so they've been stuck in PERS all these years, expecting that they would retire and have a decent pension for the time they worked in PERS and compensating them for the time value of their money kept in trust for them because they had no other way out.  Now that there are quite a few of these people out there, it is time to retroactively change the rules.  Sure, you can still retire under the different benefit arrays, but you will no longer receive the benefit you thought you were going to get.

Related to the inactive issue is another, far more perverse and cynical.  These are people still working for public agencies in Oregon full time.  In 1995, just before Tier 2 began, OUS offered its faculty the option of moving to their own (OUS) retirement system, called the Optional Retirement System.  Members were allowed to join up into the new system, advertised as equal to or better than PERS, and have all future contributions directed to the ORP.  Members electing this were assured in person and in writing that their PERS benefits would remain as they were and that accounts would continue to grow as the money is being held in trust for them.  The new ORP works more like a 401-K and many are discovering that it is anything but equal to or better than PERS.  Nonetheless, people accept the choices they made, but now they've come to discover that they are classed as "inactive" PERS members and will fall into the same morass that all other truly "inactive" members will be.  So despite the fact they were promised their PERS benefits as contracted, the Legislature is now trying to take away about 37% of their benefits earned while they fell victim to the OUS' bait and switch routine.  

As the title says, "not gonna beg", but you can bet your life that these issues - ALL OF THEM - will be played out in full Shakespearean drama before the Oregon Supreme Court.  And when all the various questions are asked and answered, it would not shock me to see the PERS member side win a few for the hipper.

One thing is also fairly certain.  This blog will not support a single member of the Legislature who votes in favor of this bill.  It doesn't matter what party, what else he/she may have done.  The buck stops right here.  If you are a legislator and you are reading this, I promise you I will use this space to campaign for every one of your primary rivals in May.

Friday, September 06, 2013

50 Ways To Leave Your Lover

In this case, it only takes one, but the decision has been forced upon us by the continued saga with Yahoo Groups.  As of today, we are no longer accepting messages posted to Yahoo Groups and are actively encouraging users to join us at the new site of our PERS Oregon Discussion Group located on Google.  You can get there easily https://groups.google.com/d/forum/persoregondiscussion .  You will need to register.  If you run into difficulty, contact one of the group moderators back channel (via email) and we can assist.  You do not need Google Mail to participate.  You merely have to register and provide the same information that you are required to provide the first time you try to use a closed group at Yahoo.  There are still clean-up efforts going on and we will keep the Yahoo site open for members indefinitely as the archives of nearly 6 years of posts are there.  Until we can figure out a way to capture that archive for use elsewhere, we feel obligated to maintain the Yahoo Group at a minimal level so that the archives are available.  Please keep in mind that to access the archives, you have to remain a member of the Yahoo Group, which is why we discourage users from necessarily closing their Yahoo accounts or resigning from the group.  You may, if you wish, but should you ever want to access those archives, like looking up something said two years ago about a particular issue that is reoccurring today, this would be the way to do it.

The new Google Group has a lot to like about it.  There are some operational differences, but none very complicated that users will find the interface very different from the old Yahoo.  If you have any problems, all of the moderators are around and with access to the Internet to help you out.  We are trying to make this transition as seamless as possible under the circumstances.  So, if you point your browser at the address hyperlinked above, or go to the left side of this blog and look for the very top link under Links, it will take you to the new group.  The link to Yahoo is gone and it isn't coming back.  As of early today, we had already gotten 375 users to move over. There are still slightly less than 500 members not accounted for.  If you are one of those, and you are still interested in the real-time discussion of PERS issues, PERS Oregon Discussion on Google is the place to be.

It is probably going to require some expensive software to try to capture the archives at Yahoo.  If you want to help out with that project, you can feel free to use the donate button here to help out.  No matter what we do, this move has been extremely time consuming, the fight with Yahoo tiring, and all of the moderators are pretty worn out from the recurring and unrelenting battle against spam.  We won, but as they say, it was a pyrrhic victory.  Our win came at the cost of the group and shutting down all posting without moderation.

I, along with the group moderators, look forward to seeing you over at Google (which also hosts this blog) Groups.  I think you will like the format, and some of the options we have that we didn't at Yahoo.  Again, any difficulty accessing the group, check with one of the moderators - addresses still posted on the Yahoo Groups site.

Monday, September 02, 2013

Across The Great Divide.

Tomorrow is the big day. The Moro et al legal case (contesting SB 822 and SB 861, passed during the two legislative sessions during 2013) will have its day in court. The cases - 4 in total - will be argued before the Oregon Supreme Court. The plaintiffs in these consolidated cases are arguing the legality of the cuts to the retiree COLA that were part of both bills, and the discontinuation of the income tax remedy for retirees living out of Oregon and, on the basis of residency are not required to file Oregon Income Tax on their PERS benefits. The out of state tax remedy takes two different forms and affects individuals differently. One of the two remedies appears to be a straightforward contractual element; the other a bit more complicated. In any case, the oral arguments are tomorrow in Salem, with a final decision expected in four to six months.

The PERS Coalition has asked that any affected or to be affected retirees or actives to have a visible presence in the courtroom tomorrow. Sorry for the late notice but I've been traveling for the past month.

Movin' on Up

Not to the eastside but to Google.  We owners and moderators of POD (PERS Oregon Discussion) have not made a formal decision to leave Yahoo Groups, but things are going disastrously bad since Yahoo rolled out the update called NEO.  It is happening to random people right now, but all but one of our moderators have been affected (infected) by the NEOization of Yahoo Groups.  In short, NEO is a disaster.  It prevents the most basic control, it destroys the formatting of messages and replies, it opened the floodgates to spam (more than 100 in the past three days), and it makes management a nightmare.  To prevent some of the worst issues (the spam), I've shut the group down to any unmoderated content.  It keeps out the chaff, but it is a pain for moderators and the members trying to post legitimate questions and add content.  While we plan to give Yahoo until the end of September to sort itself out, I'm not optimistic.  To prevent the complete destruction of the group, I have already created a new POD on Google.  To get to the site go to https://groups.google.com/d/forum/persoregondiscussion .  You will have to join the site, but we are starting to take legitimate, unmoderated, PERS-related questions from all members there.  You must be a member to read and to post.  Things work similarly to the way the old Yahoo worked.  There are a few differences and as we note them and implement them we will post a document (a FAQ) comparing the old functions in Yahoo with the new way to do things in Google.  Most of the 125 or so members of the Google group seem to like it so far, so I would encourage anyone interested in keeping up with PERS information in real time to join the new group.  I'm going to remove the link to the Yahoo group from here, principally because I don't want new members to join there; I want them to join Google.  You can join Yahoo easily enough if we end up keeping the old group, but the actions and behavior so far make it highly unlikely that is going to happen.  This last week of NEO has been the biggest time-sink of my life, having wasted no less than 50 hours trying to work around, avoid, undermine, seek help, going outside of Yahoo, and creating the new group, all to maintain continuity for all members and other interested parties.

Please join the Google group.  It has some wonderful search features that simply don't exist on the Yahoo side.  I wish the move didn't have to happen - and in the end in might not - but being prepared is the only way I know to being able to Move on Up.

Again, thats https://groups.google.com/d/forum/persoregondiscussion