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Sunday, August 17, 2014

Before the Deluge

We are less than one month away from the official start of “silly season” - the date where serious campaigning for the November elections begins in earnest.  As PERS retirees, we face a series of choices ranging from bad to awful, coupled with a few other nasty ingredients to make our lives an uncertain hell.

In the near term, the Supreme Court will hear oral arguments in the Moro et al cases (those involving the COLA cuts and the changes to the out of state income tax remedy) in early October.  This will put a final Court ruling into the window during which the 2015 Legislature will convene.  If the past is a prelude, I would expect the Court to decide these cases by early March, 2015, in plenty of time for the Legislature to make decisions about what, if anything, they will do in case the ruling goes against the defendants in these cases.

The decision made by the Legislature in response to an adverse (to the State) ruling in Moro et al, will in turn depend on two outcomes that will be determined in November.  The first involves the choice of who will be Governor for the next 4 years. One candidate, the incumbent John Kitzhaber, has claimed in public debates with his opponent and in other forums that regardless of the outcome of the Moro cases, he is through with PERS modifications and wants to move on to other issues.  His opponent, Dennis Richardson, has made a career out of trashing PERS, PERS retirees, and PERS members.  He has made it equally clear that if the court rules against the State in Moro et al, that he will propose an omnibus bill that includes every possible modification of PERS that hasn’t already been ruled on by the court.  This approach - the spaghetti theory of legislation - takes all the various ideas that have been floated in the past and rejected for one reason or another, and burdens the Oregon Supreme Court with the final authority to rule on every single one once and for all.  Besides the sheer political impracticality of such a bill, the chaos that would result between the bill’s passage and the Court’s final adjudication would be unmitigated catastrophe as PERS always implements every legislative mandate until they are told to stop.

This then brings up another squirrelly matter - the composition of the Legislature.  In the past sessions our two former Governors - Kulongoski and Kitzhaber - have had majorities in one or both houses of the Legislature.  That made it possible for each Governor’s wishes to prevail to a large extent in getting through the legislative gauntlet.  This year, as is normal, nearly half the legislature is up for election.  Many incumbents have chosen not to run again, and many others are in highly contested races.  This combines to make the composition of 2015’s Legislative Assembly a potential minefield.  It is possible for 6 different outcomes in the combined Legislative and Gubernatorial races.  Each outcome has a different potential for more or less PERS change in the future.

Needless to say, this Fall’s election will have significant implications for PERS members and retirees contingent on how the results combine with the Supreme Court’s ruling on the Moro et al cases.  Some of those outcomes will not matter to PERS members and retirees; but others could matter a great deal.  I’m not going to suggest how people vote, but I do want people to understand the implications of voting (or not) on their potential or current pension.  This is NOT an election without potential consequences.  The gubernatorial decision could not present any more diametrically opposed choices with respect to PERS.  In one case, the status quo is the WORST possible outcome; in the other case, the status quo is the BEST possible outcome.  

If all this weren’t enough, we have the added problem that the Executive Director of PERS for the past 10 years - Paul Cleary - has given his retirement notice to the PERS Board, effective December 1, 2014.  The Board, which is not particularly member friendly these days, has already held its meeting to establish criteria for Cleary’s replacement, and whoever is selected is going to be a total newbie going into 2015 Legislative session.  All previous directors have discovered that serving the Legislature is a very harsh, nasty, and brutal challenge.  On the one hand, your job is to represent the agency, whose total existence is to service the membership and retirees; on the other hand, the agency can’t run effectively without money from the Legislature to keep and update personnel and equipment to serve an ever-growing portfolio.  Reading the position description and the salary requirements (or limitations) is quite worrisome in that the Board wants pretty much a combination of the last three directors rolled into a single person.  The obvious candidate is not someone I think has a particularly good public persona, but is a known commodity.  That may doom his chances.  I really have no idea who and what is out there looking for a thankless job such as this.  Good luck to the Board on finding Mr or Ms Right.  Moreover,  the Board Chair has adopted a real take charge attitude with respect to everything PERS, but unfortunately, his “take charge” mentality isn’t one driven by the welfare of public sector employees.  As an individual mostly counseling private corporations and private individuals on managing their own assets in retirement plans, he isn’t one who is particularly fond of the PERS structure or benefit arrays.  This could have a significant influence on who gets selected to run the agency in the next month or so.

Putting all these pieces together forms a complex dynamic, with a large number of permutations and combinations.  Here we have a scenario in which a new agency chief will confront a new (or returning) Governor, a largely restructured Legislature, and a undecided set of Supreme Court cases that can alter the economic landscape for PERS members and retirees for the foreseeable future.  

Anyone who says that elections don’t matter better rethink that again, at least for now and in Oregon.  This next election could be the most significant for PERS members and retirees for the next decade or two.  Whatever else, VOTE in favor of YOUR pension, however that works out for you.  For me, it will probably mean that I have to hold my nose in a couple of places, but I didn’t just fall off a turnip truck.  I don’t have to like who I’m voting for, and maybe I’ll really be just voting against someone else.  Whatever works for you best, think carefully before marking your ballot.  The outcome WILL matter.