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Saturday, February 27, 2016

Over and Over

Now that the end is nigh for the latest dustup in Salem (next week sometime), PERS members have escaped another session without any further attempts to lower future PERS benefits.  But, this is probably not cause for any celebration.  Unfortunately, the mad-at-PERS set will almost certainly set their sights on either the November ballot box, or next February’s long (6 month) session.  Insofar as November is concerned, I’ve heard rumors of at least two ballot initiatives being developed to take the PERS matter out of the Legislature’s hands.  Those are usually very blunt instruments that rarely survive court challenges, but PERS would be obligated to enforce any changes until the Supreme Court rules on their outcome in 2019 or so.  The second route would be the Legislative route.  You can be sure that the Bend Republicans will fine-tune their 2016 “screw all PERS members” bill and reintroduce it in 2017.  And there are probably another half dozen “legislative concepts” floating around for 2017.  Eventually, those will be revealed, as they will require PERS input to evaluate their potential financial impacts.

 

While what I write isn’t much of a surprise to those who keep track of the attempts to alter PERS benefits, the vast majority of PERS members (not retirees) are oblivious to much of this background, yet they will be the ones to suffer the most drastic impacts should any of these succeed.  The Moro court pretty much slammed the door (unanimously) on any changes to benefits of those already retired, so unless I’m completely misreading the tea leaves, rumors, innuendo, and reliable sources of information, there is nothing out there that could potentially harm the already-retired.  All that said, I want to reiterate a point I’ve made over and over.  In Oregon, ELECTIONS MATTER.  Who we choose as Governor, members of the judiciary, DOJ, and members of the Legislature make a huge difference in the fate of PERS bills.  Right now, the Ds have a commanding majority in all levels of Government in Oregon.  I advocate for no candidate and no party, but reiterate that ELECTIONS MATTER.  Pay close attention to who is running.  Make an effort to go to the various town halls, arrange one-on-one with candidates, especially the ones who have no record on PERS support or opposition.  Do not depend on lobbyists or labor to do the heavy lifting.  I’ve found that personal contact makes a huge difference.  Personalize your story, what impact changes will have on you and your family, remind the candidates how many voters are in your family.  Make them hear your story and remind them that 99% of PERS members are ordinary, hard working citizens who have counted on the promised benefits to support them in their retirement.  Also educate them that not one element of the PERS benefits has been under your control, but that your decision to work or leave depends largely on the promised benefits.  Take them away, or alter them negatively, and your incentive to continue to do your hard, necessary job might vanish.  

Finally, for those who just read conclusions, my primary point is ELECTIONS MATTER.  Pay attention and vote in November’s election.  It also might help to influence outcomes by voting in the May primary.

 

Friday, February 05, 2016

Ride The Wild Wind

As they like to say on Marketplace, it was another wild week on Wall Street. Up days, down days, spinning half mad days. Generally not terribly helpful to those dependent on the vicissitudes of the stock market. On the other hand, we now know that 2016 official COLA will be between 1.1 and 1.2%, depending on the rounding used in the CPI-U statistic. For retirees prior to May 2013, this will translate into a 2% increase because of excess COLA banked from previous years. Newer retirees have less of a bank, and are subject to the blending provisions ordered by the Oregon Supreme Court. Those COLAs are likely to be less than 2%, but still greater than 1.5%. I was somewhat surprised that the CPI jumped as much as it did in the second half of 2015.

Keeping with the wild wind theme, those denizens of the Salem jungle convened for their even-numbered year 35 day boxing match. Tim Knopp of Bend introduced his "screw all the actives" PERS bill, but as of today the bill hasn't been scheduled for a hearing. According to those who follow the follies in Salem, this means the bill is effectively dead for this session. While I never seriously considered any anti-PERS bill likely in this short session, I do think it instructive for those still toiling in the system to keep a close watch on this because I expect it to be resurrected in the regular 2017 session. I suspect a number of other bills to be introduced then as well, none of them friendly to any member not retired from the system. There are a number of things that haven't been tried yet, all of them fair game for the still working. The Supreme Court has drawn a bright line around those things the Legislature cannot do - anything retroactive, anything to those already retired - but changes going forward are permissible. The only thing that gets dicey is trying to define the point at which something is prospective and when it is retroactive. That is particularly crucial if the Legislature tries to tinker with the annuity assumed rate, and calculations of FAS eligible for PERS benefit. Be particularly mindful of attempts to cap FAS for PERS purposes at any amount under the IRS limit. Current law caps it at the IRS threshold (about $225,000), but that is a recent development. The reason so many have unusually high benefits is because prior to (I believe) 2011, PERS did not need to adhere to the IRS cap. The 2011 legislature quietly changed that rule to avoid the bad publicity associated with benefits such as those of a certain retired UO football coach.

Anyway, this is all the current news relevant to PERS as of today. In the meantime, we continue to follow the late Freddy Mercury and "ride the wild wind".



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