David Crosley of PERS recently emailed me to respond to a series of pointed questions I asked him about the methods and process PERS will use in attempting recovery from "window" retirees. David indicated that much of his response will be posted on the PERS website real soon now, so I will try to paraphrase what he told me.
David asserts that the planning document and report on Strunk (from March and April 2005) Board meetings was a project associated with implementing the recrediting of 1999 earnings. At the time, PERS estimated it would take 6 - 8 months to reprogram the system for the recrediting. Now that they have done the necessary preparation, the recrediting of accounts will take place in the fall (of 2005).
As for recovering overpayments from "window retirees", David claims that no decision on whether, how, or to what extent this should take place has been made. This is a Board policy decision that will follow from PERS staff recommendations (or not) at the September 23, 2005 Board meeting. Again, according to David, the staff gets no input from the Board before putting together the range of options and recommendations. Staff analyzes the various statutes, legal decisions, and administrative rules, and makes a series of recommendations of possible approaches for the Board to consider. The Board makes all final decisions and directs PERS staff.
The most confusing part of David's response has to do with the restoration of individual COLAs. David writes that the Court found the COLA freeze to be unlawful, but that the Court also found that retired members will owe money back to the system for overpaid benefits (where, exactly did the court rule this David?). David goes on to report that an element of the staff recommendation will be to use the COLA payments to partially compensate PERS for the money retirees owe. It is here that logic eludes me, because I'm not understanding exactly how this would work. Since PERS explicitly has given examples of both lowered benefits and invoices, and the Court has state clearly: 'more specifically, does the "fixed" service retirement allowance represent payment of an "allowance" that the member was not 'entitled to receive?; The answer to that question is no." So if the "fixed allowance" (as of 7/1/03 or date of retirement, whichever was later) is something that retirees are "entitled to receive", then lowering the benefit to below what the "fixed allowance" is right now doesn't seem to be a legal option for PERS. And if that is true, the only way I can envision PERS going after the "overpayments" is not to go after what has already been paid out, but rather to go after the entire 1999 overcredit plus interest, less owed COLAS. This is an entirely different "kettle of fish" than described in the March 29,2005 "plan".
In any case, expect something along these lines from PERS soon, but it surely won't describe the "big payback".
P.S. More information is now available here at the PERS website. I don't find it very helpful, but at least it confirms that PERS has more than just "ideas" about what they plan to do. And, Board approval or not, the examples illustrate the method that PERS staff is obviously going to propose. The Lipscomb calculator (see left for link) should give a pretty good indication of the impacts to "window" retirees. It isn't designed for other retirees.
David asserts that the planning document and report on Strunk (from March and April 2005) Board meetings was a project associated with implementing the recrediting of 1999 earnings. At the time, PERS estimated it would take 6 - 8 months to reprogram the system for the recrediting. Now that they have done the necessary preparation, the recrediting of accounts will take place in the fall (of 2005).
As for recovering overpayments from "window retirees", David claims that no decision on whether, how, or to what extent this should take place has been made. This is a Board policy decision that will follow from PERS staff recommendations (or not) at the September 23, 2005 Board meeting. Again, according to David, the staff gets no input from the Board before putting together the range of options and recommendations. Staff analyzes the various statutes, legal decisions, and administrative rules, and makes a series of recommendations of possible approaches for the Board to consider. The Board makes all final decisions and directs PERS staff.
The most confusing part of David's response has to do with the restoration of individual COLAs. David writes that the Court found the COLA freeze to be unlawful, but that the Court also found that retired members will owe money back to the system for overpaid benefits (where, exactly did the court rule this David?). David goes on to report that an element of the staff recommendation will be to use the COLA payments to partially compensate PERS for the money retirees owe. It is here that logic eludes me, because I'm not understanding exactly how this would work. Since PERS explicitly has given examples of both lowered benefits and invoices, and the Court has state clearly: 'more specifically, does the "fixed" service retirement allowance represent payment of an "allowance" that the member was not 'entitled to receive?; The answer to that question is no." So if the "fixed allowance" (as of 7/1/03 or date of retirement, whichever was later) is something that retirees are "entitled to receive", then lowering the benefit to below what the "fixed allowance" is right now doesn't seem to be a legal option for PERS. And if that is true, the only way I can envision PERS going after the "overpayments" is not to go after what has already been paid out, but rather to go after the entire 1999 overcredit plus interest, less owed COLAS. This is an entirely different "kettle of fish" than described in the March 29,2005 "plan".
In any case, expect something along these lines from PERS soon, but it surely won't describe the "big payback".
P.S. More information is now available here at the PERS website. I don't find it very helpful, but at least it confirms that PERS has more than just "ideas" about what they plan to do. And, Board approval or not, the examples illustrate the method that PERS staff is obviously going to propose. The Lipscomb calculator (see left for link) should give a pretty good indication of the impacts to "window" retirees. It isn't designed for other retirees.
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