After more than 10 weeks in session, two PERS bills are scheduled for Work Sessions. These bills are SB 559 and SB 560, both of which have been discussed a number of times in the posts below. SB 559 is a relatively straightforward bill that attempts to stretch the computational period for Final Average Salary (FAS) from 3 years to 5 years. The rationale is simple. If your salary is averaged over 60 months instead of 36, there is a strong chance that your FAS will be lower than if it had been calculated based only on a 36 month average. It’s effect is unclear on those still working and who are Tier 1, or even Tier 2. Because the Legislature has to preserve accrued benefits, it can be argued that the 36 month average is a benefit you accrued while working and that the worst anyone could do would be to blend your service periods and use a 3 year average for your pre 2018 work, and a 5 year average for the post-2017 work, producing some obscure and hard-to-calculate weighted average. I don’t envy PERS if this passes.
SB 560 is a far more harsh bill, although the amendments (not accepted yet; that has to happen in a work session) strip some of its obnoxiousness and replaces it with other obnoxious stuff. Taken as a package - the original bill, and the 8 amendments - the bill would redirect the employee 6% pickup to some account that would no longer be accessible to the individual like the IAP is today. It would also cap FAS at $100,000 max, but again the mechanics of this are uncertain and will cause havoc for everyone trying to figure out (especially for Tier 1s) how to implement a bill that preserves the current “no limit” on FAS,while permitting the arbitrary $100,000 FAS. It is going to be a mess to calculate, and you can expect some ugly litigation over this one. Moreover, the bill stops further accruals of sick leave and vacation time for FAS purposes (but permits use of accruals prior to 1/1/2018), it changes the vesting length for PERS membership from 5 years to 10 years, alters the statutory accrual factors for Tiers 1, 2, and OPSRP from their current (general service, P&F) 1.67 (Tier 1 & 2), 2.0 (P&F Tier 1 and 2), and OPSRP (1.5 and 1.8), to a flat 1.0% for general service (all tiers) and 1.2% for Police and Fire (all Tiers). The bill also tries to decouple the existing assumed rate, currently used by PERS for all calculations pertaining to the time value of money, from the pension annuity rate (usually the same as the assumed rate). The bill proposes to use a pension annuity rate of 3.5%.
All features of SB 559 and SB 560 are scheduled to take effect on 1/1/2018 EXCEPT for the last item listed - the decoupling of the assumed rate from the pension annuity rate. That change takes effect on passage, although the language in the bill is a bit confusing in requiring PERS to start using the new factors on 7/1/17.
These work sessions are both schedule in the Senate Workforce Committee on April 17, 2017 at 3 p.m. (Hearing Room A, I believe). There is also another public hearing on SB 560 on April 12 in the same place at the same time. The ONLY way you can have any impact on this is to show that you care enough to try to attend these work sessions. They are often tedious and technical, but you can learn a lot by going. If you don’t go, you are also sending a message that you aren’t concerned, even though there might be perfectly legitimate reasons for not going. I assure you that Legislators do notice your presence. Also keep in mind that the Senate Workforce Committee has 3 D’s and 2 R’s meaning that the bill can’t move until a D crosses over and votes it out of committee with the 2 Rs, or all 3 Ds decide it is worthy of a whole Senate discussion and vote.
I can’t tell you what to do. I know what I’d do if any of this affected me. I would mark my calendar and figure out a way to get to Salem, early is better, and try to buttonhole a couple of the committee members before the meeting and let them know just how strongly you feel against these bills. Both bills are bad; SB 560 is decidedly worse. If ever it was time, the revolution starts now.