That seems to be the message retirees are planning to send to the PERB on Friday and thereafter. The PERS Staff released the agenda and packet for Friday's meeting yesterday. In the packet is the staff analysis and recommendation for implementing the settlement agreement for actives, inactives, and "window retirees". You can read the document on my web site here. I've extracted the 18 page memo from the full 155 page packet so that you can focus only on it and not the other issues that the Board has littered the meeting agenda with.
For those who don't understand these documents, here is my *take* on what the Board intends to do with "window retirees". The first thing they plan to do is to WAIT until the next COLA takes effect (July 1, 2006 for payment on August 1, 2006). This allows the recomputed benefit (the one computed as if 11.33% had been credited in March 2000, instead of the 20% we all got), to grow by another COLA and get closer to the current benefit. At that point, most, but by no means all, of the "window retirees" will have their "correct" benefit be very close to, or in excess of the benefit they're currently receiving. Then PERS will go back and figure out how much you've already repaid by the COLA freeze to date (this is really just "play money" because they're going to credit it against what you were overpaid since you've been retired). The net of the total amount of overpayments minus the total amount withheld via COLA freezes will be what you still OWE PERS. Repayment will be discussed below. You will HAVE to receive notification of your outstanding liability by no later than April 1, 2006 because the statute of limitations for notifying members of computational errors in their benefit calculations is 6 years from the data of the alleged error (error supposedly made at end of March 2000). PERS has to notify you in writing and you have to be given an opportunity to appeal the notice. Apparently the only members who will get "contested case" status will be those who have not received a formal "Notice of Entitlement". Those who have will be, no doubt, subject to the quickie appeal whose outcome is a mere formality - you lose!
Repayment. In an effort to be charitable, PERS is planning to offer retirees two options for replayment. Option 1 will be the "lump sum" method, in which you get to duke it out with your tax preparer and the IRS to figure out exactly how to recover the taxes already paid on this money, and how to insulate yourself from any penalty from the premature withdrawal of tax-advantaged funds. It the immortal words of the late Freddie Prinze, "that's not our job, mon". The alternative approach - here's where the charity is (not!) - PERS will amortize your repayment, interest free, over your actuarially equivalent lifetime. In other words, PERS will figure out how long you're expected to live based on their CURRENT mortality tables, and reduce your monthly benefit by an amount designed to exactly recover what you owe -interest free- if you lived your expected lifetime and not a day longer. If you die earlier, they get back less from you; if you outlive the tables, you pay back more. The generosity in this approach is that your COLAs will continue to be paid (on your REVISED benefit, not your current benefit) and so the "hurt" of the repayment diminishes with each COLA. This ain't no free lunch, believe me. You've lost 4 years' worth of purchasing power so far, you'll be effectively frozen or reduced for another year, and then the effect of the 2007 COLA might finally move your benefit past where it has been frozen for as many as 5 years. Morevoer, if you choose to play actuarial roulette (and who wouldn't do this if it were "interest free"), your benefit might still be less than it is right now -- in fact I don't know anyone whose benefit won't be lower on 8/1/2006 than it is now. (Wanna see what this looks like? Download my calculator from the link at the left. The net amount "overpaid" already includes the repayments PERS owes you and what you owe them. That's the amount that will need to be paid back over however long the actuarial tables think you have to live -- from 2006 -- not from the date of retirement).
Who will get dinged? Anyone receiving a monthly benefit check from PERS is guaranteed to get hit; anyone who took a lump sum and still has PERS holding an installment will get hit. PERS acknowledges that it might be difficult to collect from lump summers who moved and can't be located, and it doesn't sound like they plan to be too aggressive in trying to locate them. Indeed, they outline plans for offsetting those losses from the very funds they claim can't be used to resolve the whole shebang.
I can tell you that everything I've heard from all the key plaintiffs groups is that they ARE NOT going to take this without putting up one savage legal fight. Read the staff analysis carefully and read how they completely dismiss options the legislature lays out for resolving this by dismissing them as illegal. It's funny that PERB was disinterested in the Attorney General's opinions while the legislation and litigation was crafted; now they're using it selectively to make precisely the OPPOSITE legal arguments that were made during legislative hearings.
Plan to be at the PERB meeting Friday. Make sure the Board understands that they're gonna have to find other fools and that if we fall, they're going with us. Be nice, be polite, be politic, and be diplomatic. But the Board needs to understand that we haven't seen this much generosity from a public agency since FEMA's initial involvement in Hurricane Katrina. We are just overwhelmingly grateful (NOT!).
P.S. Keep the checks coming to OPRI's Legal Fund. Retirees and actives alike have huge stakes in this. See yesterday's post for address.
For those who don't understand these documents, here is my *take* on what the Board intends to do with "window retirees". The first thing they plan to do is to WAIT until the next COLA takes effect (July 1, 2006 for payment on August 1, 2006). This allows the recomputed benefit (the one computed as if 11.33% had been credited in March 2000, instead of the 20% we all got), to grow by another COLA and get closer to the current benefit. At that point, most, but by no means all, of the "window retirees" will have their "correct" benefit be very close to, or in excess of the benefit they're currently receiving. Then PERS will go back and figure out how much you've already repaid by the COLA freeze to date (this is really just "play money" because they're going to credit it against what you were overpaid since you've been retired). The net of the total amount of overpayments minus the total amount withheld via COLA freezes will be what you still OWE PERS. Repayment will be discussed below. You will HAVE to receive notification of your outstanding liability by no later than April 1, 2006 because the statute of limitations for notifying members of computational errors in their benefit calculations is 6 years from the data of the alleged error (error supposedly made at end of March 2000). PERS has to notify you in writing and you have to be given an opportunity to appeal the notice. Apparently the only members who will get "contested case" status will be those who have not received a formal "Notice of Entitlement". Those who have will be, no doubt, subject to the quickie appeal whose outcome is a mere formality - you lose!
Repayment. In an effort to be charitable, PERS is planning to offer retirees two options for replayment. Option 1 will be the "lump sum" method, in which you get to duke it out with your tax preparer and the IRS to figure out exactly how to recover the taxes already paid on this money, and how to insulate yourself from any penalty from the premature withdrawal of tax-advantaged funds. It the immortal words of the late Freddie Prinze, "that's not our job, mon". The alternative approach - here's where the charity is (not!) - PERS will amortize your repayment, interest free, over your actuarially equivalent lifetime. In other words, PERS will figure out how long you're expected to live based on their CURRENT mortality tables, and reduce your monthly benefit by an amount designed to exactly recover what you owe -interest free- if you lived your expected lifetime and not a day longer. If you die earlier, they get back less from you; if you outlive the tables, you pay back more. The generosity in this approach is that your COLAs will continue to be paid (on your REVISED benefit, not your current benefit) and so the "hurt" of the repayment diminishes with each COLA. This ain't no free lunch, believe me. You've lost 4 years' worth of purchasing power so far, you'll be effectively frozen or reduced for another year, and then the effect of the 2007 COLA might finally move your benefit past where it has been frozen for as many as 5 years. Morevoer, if you choose to play actuarial roulette (and who wouldn't do this if it were "interest free"), your benefit might still be less than it is right now -- in fact I don't know anyone whose benefit won't be lower on 8/1/2006 than it is now. (Wanna see what this looks like? Download my calculator from the link at the left. The net amount "overpaid" already includes the repayments PERS owes you and what you owe them. That's the amount that will need to be paid back over however long the actuarial tables think you have to live -- from 2006 -- not from the date of retirement).
Who will get dinged? Anyone receiving a monthly benefit check from PERS is guaranteed to get hit; anyone who took a lump sum and still has PERS holding an installment will get hit. PERS acknowledges that it might be difficult to collect from lump summers who moved and can't be located, and it doesn't sound like they plan to be too aggressive in trying to locate them. Indeed, they outline plans for offsetting those losses from the very funds they claim can't be used to resolve the whole shebang.
I can tell you that everything I've heard from all the key plaintiffs groups is that they ARE NOT going to take this without putting up one savage legal fight. Read the staff analysis carefully and read how they completely dismiss options the legislature lays out for resolving this by dismissing them as illegal. It's funny that PERB was disinterested in the Attorney General's opinions while the legislation and litigation was crafted; now they're using it selectively to make precisely the OPPOSITE legal arguments that were made during legislative hearings.
Plan to be at the PERB meeting Friday. Make sure the Board understands that they're gonna have to find other fools and that if we fall, they're going with us. Be nice, be polite, be politic, and be diplomatic. But the Board needs to understand that we haven't seen this much generosity from a public agency since FEMA's initial involvement in Hurricane Katrina. We are just overwhelmingly grateful (NOT!).
P.S. Keep the checks coming to OPRI's Legal Fund. Retirees and actives alike have huge stakes in this. See yesterday's post for address.
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