It's Alright Ma (I'm Only Bleeding)

David Crosley, PERS Director of Communications, kindly gave me permission to publish his entire email to me yesterday concerning my post of December 14 ("Money Made You Mean"). As I indicated yesterday, PERS pointed out some factual and potentially interpretive errors in my post and wanted to clarify for me. Since David's response is concise and clear, it seemed better to publish it unedited rather than try to summarize an already short email. I'll have comments on this post later (possibly today, possibly not), as we are leaving for our vacation later today, weather permitting. So for your (in)digestion, here is David's complete email:

"We want to let you know that your December 14, 2006 blog posting has inaccurate information. Benefit recipients who retired under the Full Formula method may be affected by the Strunk/Eugene recalculation and your direction to send a letter to certain PERS staff in and of itself may not preserve a member's right to appeal.

The amount of a Full Formula benefit payment may change with a change in account balance depending on whether the member chose to convert the normal Full Formula benefit (as you stated, Final Average Salary x Service Credit x Statutory Factor) to an optional form of benefit. ORS 238.300 directs that the member's retirement be comprised of an annuity funded by his/her account balance and a pension that "tops up" to the highest benefit form (Money Match, Full Formula, or Formula + Annuity, if eligible).

The normal Full Formula calculation initially yields a benefit payable on a Refund Annuity basis (the Refund Annuity Option). If the member instead elects Option 1, 2, 2A, 3, or 3A, the annuity component of the Full Formula benefit is then revised using the actuarial adjustment factors. The resulting difference from the Refund Annuity Option calculation is then applied to the member's payable benefit (higher if Option 1; lower if Options 2, 2A, 3, or 3A). So, changes in a member's account balance under the Strunk/Eugene recalculation would affect the amount of that annuity adjustment if the member had chosen to convert his/her Refund Annuity Full Formula to an optional form of benefit payment (as the majority of members do).

Also, you appear to assume that these benefit recipients can contest their benefit using the Notice of Contest procedure. In fact, depending on several factors (whether the member previously received a Notice of Entitlement, e.g.), their appeal rights may lay in a different direction. The appeal process is specified in each member's letter, particular to that member's status and issues that are subject to review. So, while the Notice of Contest may be appropriate for some members, it is not for others. Members who want to appeal their adjustment need to follow the appeal process specified in the information provided to them in their individual Strunk/Eugene recalculation letter. They can supplement that process with a letter to some or all of the people you mentioned, but those supplemental letters, in and of themselves, may not preserve their appeal rights.

Please let me know if you would like further information or clarification on these issues."

There you have it. My guess is that some Full Formula retirees "in the window" (not many actually), may see invoices they never expected to get.

P.S. I've just heard another rumor (not verified yet) that PERS is also dunning some members who retired in late 1999, BEFORE the *window* defined by the Legislature. It is unclear what statutory authority is involved here, as members who retired prior to January 1, 2000 wouldn't have been credited with 20% for 1999. One can only surmise that PERS may be taking its mandate further than that granted by the Legislature or by Judge Lipscomb in recalculating the benefit for *anyone* who was credited with more than 11.33% in 1999, regardless of when they retired. Perhaps they've decided that 11.33% is the base and retirements during 1999 must somehow be prorated to the final crediting. This would be a significant change in recent policy, as PERS has previously credited retirements during a calendar year with the greater of the 8% pro-rate or the actual earnings at the end of the month preceding the retirement month (e.g. October 31 for December 1 retirements). I understand that the ceiling is currently set at 8%, regardless of actual earnings, but it wasn't set in 1999, nor was 1999 revised to do anything other than credit 11.33% to Tier 1 regular accounts, not somehow change the way the monthly pro-rates work. So, while this is in rumor form, I regard the source as quite reliable and I will be looking into this further when I return from vacation. In the meantime, the fun never stops. Someday I hope to wake up from this nightmare and discover it was all just a bad dream. Unfortunately, sleeping is challenging these days as more of these cockroaches keep climbing out from under the rocks and interrupting sound sleep.

Way Down in the Hole

I've gotten a note from PERS stating that some points I made in my December 14 "Money Made Me Mean" entry are misleading or wrong. Rather than try to summarize a complex response, I'm seeking permission from PERS to publish the email so that it can clarify; not me. I can tell you the general areas of correction: 1) the "Notice of Contest" may NOT be the appropriate form to contest an invoice (it depends on the status of the recipient and whether or not the recipient has already gotten a formal Notice of Entitlement); 2) that copying in all the various PERS people won't preserve a member's right; that can only be done with the official contest (or appropriate equivalent); and 3) there are certain circumstances where a Full Formula recipient COULD owe PERS money. As I said, the email I received is short and very succinct. It would be a disservice to my readers if *I* tried to summarize something already pretty concise. I will post it in its entirety as soon as I receive permission. If I don't receive permission, I will publish a damn close paraphrase. Stay tuned ...

Just a Song Before I Go

I will be out of town for the holidays and probably won't post much while I'm gone. I want to wish all my readers a very Merry Christmas and a Happy Hanukkah or any other holiday celebrated during this time of year. Reader generosity has resulted in about $2200 in charity donations from you, plus another $1000 from us in honor of your contributions. We still have the 400,000 hit challenge going. It ends at noon on December 31, 2006, so there is still time to generate more donations to charity.

Several readers have inquired about the "Bell" case. This is a new lawsuit filed by the PERS Coalition on behalf of a single member as a test case. I know only what AFSCME has published in its weekly e-Lert. It appears to me to be a case testing the proposition that PERS, by failing to inform members considering retirement, of possible changes to retirement benefits resulting from active litigation, misled people into retiring on knowingly faulty information. I don't know the details, but it seems to me that those members who sought to and retired PRIOR TO the Lipscomb decision on October 8, 2002 would be candidates for this, but there is some view that anyone who retired prior to the enactment of HB 2003 (May 8, 2003) would also be candidates. PERS was anything but candid about any of this litigation and legislation prior to mid-2003 and so many members relied on PERS' representations and figures to MAKE retirement decisions. So it appears that the PERS Coalition is going to test this theory out in a separate case, captioned "Bell v PERS". I'm certainly interested in this case, as I retired prior to Lipscomb's decision and I can tell you that PERS never once advertised or informed me of the possible impact of this case on my decision to retire. Indeed, I have frequently remarked that I *might* have chosen to work a year or two longer had I known that the 1999 earnings crediting decision was in jeopardy for an entire class of PERS members.

It is time to start readying the family for our trip. Again, best wishes for a Merry Christmas, Happy Hannukah and a joyous New Year. I had hoped that my final post for 2006 might include the outcome of the Arken and Robinson cases, but it appears that Judge Kantor will wait until 2007 to release his decisions in those cases. I will interrupt my regular vacation to post should Judge Kantor issue decisions before the end of the year.

Don't Cry Sister

Every once in awhile I receive a spam email that is so funny that I spend days trying to figure out the motivation behind it and the people who treat them as real. Since I've been trying to encourage more private (albeit small) philanthropy at this time of year, I thought I'd share with you the text of this hysterically funny "Nigerian scam" (a class of spam) letter. Sister Felicia makes Mrs. Mohommed of Nigeria look like a piker in comparison. So here, complete in the exact format I received it is a view of modern email philanthropology (laugh, it's funny):

"I decided to donate the sum of $5,000,000( five million dollars) to you for the good work of the lord, and also to help motherless privilege
also for the assistance of the widows according to (JAMES 1:27). e motherless

My name is MRS Filicia Bryant .I am a dying woman who have decided to
donate what I have to you in order to use it for the benificial of our nation
and the rest of our citizenry.
i am a native of Russian Federation,but my husband is
from London .I was diagnosed for cancer about 2 years ago, immediately after the
death of my husband, Who had left me everything he worked

I have been touched By God to donate from what I have inherited from my late
Husband to you for the good work of God,. Please pray that the good Lord forgive me my sins. I have asked God To forgive me and i believe he has because He is a merciful God.I will be going in for an operation tomorrow morning.

At the moment I cannot take any telephone calls right now due to the Fact that my relatives are around me and my health status. I have adjusted my WILL and my Executor is aware I have changed my will; you and he will arrange for the change of ownership of the funds as it is presently deposited in barclays bank, and lodged. the box in a coded Security company whose name is Ron basically on security and confidential purposes and would only be released to (you).

I wish you all the best and may the good Lord bless you abundantly, and Please use the funds well and always extend the good work to others. Contact my Executor sirbrown with this specified email; sirbrown@myway with your full names contact telephone/fax number and your full address and tell him that I have WILLED ($5,000,000.00) to you and I have also notified him that I am WILLING that amount to you for a specific and good work. I know I don't know you but I have been directed to do this. Thanks and God bless.

NB: I will appreciate your utmost confidentiality in this matter until the task is accomplished as I don't want anything that will Jeopardize my last wish. Pls keep the faith My Prayer for you.Father, I ask You to bless my friends, relatives and
those I care deeply for, You Who are reading this right now. Show him/her a new
revelation of Your love and power. Holy Spirit, I ask You to minister to their spirit at this very moment. Where there is pain, give them Your peace and mercy. Where there is self-doubt, release a renewed confidence through Your grace. Where there is need,I ask you to fulfill their needs. Bless their homes, families, finances, their goings and their comings. In Jesus' precious name.
Amen.

Regards,

YOUR EMAIL RESPONSE SHOULD BE DIRECTED TO Executor sirbrown PROCESSING OFFICER Email: sirbrown@myway.com

FILICA

"

Breathe In, Breathe Out, Move On

One of my regular readers treated me to a "great" (alas, way too familiar) PERS story. My commentator retired in January 2004 and received an estimated benefits statement in March '04. He's been asking PERS since then when he'll be getting his final Notice of Entitlement. They keep shining him on with new dates. First it was late 2004, then November 2006, now it is January 2007. At this rate - although we wouldn't wish this on anyone - this person, his beneficiary, and their children could all be deceased before PERS gets off its incompetent ass to get these legal documents out to retirees. It infuriates me that "simple" things like this get dragged on interminably, while PERS continues to waste member money on high-priced legal help that will only result in PERS having to redo whatever they've done already. Perhaps they're deliberately dragging their feet to avoid having to do anything at all until the Court finally speaks with finality (can the court ever do that?). I know, breathe in, breathe out, move on.

3/5ths of a Mile in 10 seconds

Time to crank up the hit-o-meter. We're close to the 400,000 mark. To help us reach that mark, I'm offering up an incentive. Our goal is to reach 400,000 before New Year's Day. At the current rate, we won't make it. So, to encourage readers to visit my site more often, I'm offering to contribute $1 to the Oregon Food Bank for every visit over 400,000 and before January 1, 2007. I'm a big believer in the Oregon Food Bank and hope you can help me help them.

Let Your Light Shine

Despite my seemingly cranky mood of late, I'm actually in a giving spirit. The health gods have been good to me and to my family this year, and we've celebrated intermittently all year by donating to our favorite charities. We usually double-down at this time of year as all the charities are hit particularly hard at the Christmas season. In the spirit of this season, I want to offer a special challenge to readers of this blog. On Tuesday December 19th, I am participating in a special blogger's event held at Jack Bogdanski's blog site (http://bojack.org). I have already offered $500 to match money contributed to the Oregon Food Bank. In this spirit, I am asking my readers to do something a bit different. Between today and next Friday (December 22), I am requesting that you make a contribution to YOUR favorite charity (not political party or 527 organization, please), in an amount appropriate to your means and what you feel you get from this blog. Send me a note by 12/22 indicating where you've donated and, if you feel comfortable, how much you've donated. We will match the first $1000 worth of donations by contributing that much extra to some of our favorite charities. Let's show the world that we PERS members and retirees are concerned about helping those less fortunate than we are and that we put OUR money where the light shines best.

Have a most joyous holiday.


P.S. If you want suggestions for charitable organizations, please don't hesitate to ask. Here are a few I've given to various readers who've asked: Oregon Food Bank, Virginia Garcia Medical Clinics, Loaves and Fishes, Child Aid, Susan Komen Breast Cancer Research, Your Local Church Foodbanks. This is just a partial list, but includes my wife's and my favorite recipients of our charity dollars. Please do not feel obligated to donate to any of these. We only ask that you consider those less fortunate than you and contribute whatever you can.

Money Made You Mean

Or at least confused as this PERS debacle goes on and on and on without a clear and final resolution. We're now entering the 4th year since the Legislature passed its "PERS Reform" and the 3rd year since the PERS Board entered into its chickenshit settlement agreement that sold the members' farms to the barbarians at the gate - we sometimes like to call them "our employers". But the basic problem here is that the lack of movement has caused people to completely forget what this whole legal rape is all about. I'm not going to remind you here; it just pisses me off and in the spirit of the holidays I try to keep my mood swings to a bare minimum. But I was reminded just how muddled this whole mess is when I started receiving emails from people who were claiming to have just gotten invoiced from PERS for "overpayments" resulting from retirements under FULL FORMULA. Holy cow dung batman, this just can't happen. PERS is dead wrong and is itching for trouble sending these out to people who, by now, don't remember who is and who isn't on the hook for repaying PERS. Perhaps this is simply a diabolical trick by PERS to take money from anyone dumb enough to pay it. After all, PERS is no longer an agency looking out for the fiduciary interests of its members; its only obligation seems to be to the employers, who certainly don't have their members interests at heart. In any case, let me say this as clearly and as loudly as I can. If you retired under FULL FORMULA (look at your Notice of Entitlement to confirm this fact), YOU OWE NO MONEY TO PERS AND PERS CAN GET INTO A HEAP OF TROUBLE IF THEY CONTINUE TO DUN YOU FOR MONEY YOU DON'T OWE. Members who retire under full formula have benefits computed on the basis of Final Average Salary and length of service plus a few other possible addons (e.g. sick leave). Account balance plays NO role in Full Formula retirements. Your benefit is not computed from your account balance; it doesn't matter what's in your account balance and it doesn't matter whether PERS paid 200% in 1999, 20% or 3%; it just isn't part of the calculation.

If you receive an invoice from PERS and you can CONFIRM you retired under Full Formula, you have only 60 days to contest this notice. DO NOT call PERS. Write them a letter - formally a "Notice of Contest" - challenging the invoice. If at all possible, hand deliver the letter to the front desk of PERS and make sure you see it stamped as "received" and make sure you get a photocopy of your letter with the same stamp on it. As a precaution, send carbon copies of your invoice and contest letter to 1) Paul Cleary, Executive Director of PERS, Steve Delaney, Deputy Director of PERS, and Steve Rodeman, Interim Head of Benefits Processing (responsible for sending the letters in the first place). Also send all paperwork to the offices of the PERS Coalition (AFSCME) and to its attorney, Greg Hartman (all addresses are easily obtained). If you want to start a lot of trouble, you might also send a copy to PERS Public Affairs Director, David Crosley, and consider sending your story to certain members of the media who might understand the significance of the problem (i.e. don't waste your time with the Oregonian).

This should not happen and you should be angry and mean if it does happen. Money has a nasty way of making us mean. When someone tries to take it away from you illegally, meanness usually has a way of turning ugly. PERS has run roughshod over us; turnabout is fair play.

Hope you're all enjoying the Christmas holidays. I had fun writing this using my laptop computer and my cellular modem. The house was pitch dark and there I was busily surfing the net, sending emails and carrying on like normal as 375,000 of us were without power for most of the night. I still have a hard time figuring out why so many people lose power, especially where I live, where there isn't an above ground power line for a radius of at least 5 miles. Oh well.

Ain't Gonna Look The Other Way

Last week the Salem Statesman journal published a well-written article about the effects of the PERS Reforms. Steve Law authored the piece and many PERS members and retirees appreciated seeing, for once, some real truth in journalism. Following that article, the editorial page editor, Dick Hughes, posted an entry on the SJ blog asking for input on an upcoming (December 2) editorial on the PERS reform. I posted a blog entry which, instead of getting posted, ended up as a "note" to Dick Hughes. I didn't write this as a letter to the editor. Had I, it would have been shorter and framed differently. This was intended to be a blog comment, which ordinarily have no limit. I've published this comment elsewhere; I post it here as well. Please note that the comment is exactly as I submitted it (typos and various grammatical errors in all their glory). Blog entry to Statesman Journal from me (in quotes):

"I would agree with the latest article summarizing the 2006 PERS By The Numbers. Steve Law has accurately and fairly portrayed the effects of numerous things that have transpired since 2003. In fairness, I would argue that the greatest impact on the PERS condition today has been the superheated stock market that reawakened in 2003 and has continued pretty much unabated since then. The PERS reforms have produced modest results and have resulted in numerous and very expensive and time-consuming litigation, much of which continues unresolved. I agree that PERS is in better health today, but I would for once like to see some coverage of the role that irresponsible public employers played in getting PERS into this mess in the first place. Fair reporting would acknowledge that the public employers badgering and hectoring of the previous PERS Board into granting creative accounting solutions so the employers' wouldn't be required to pay their true costs in a timely manner. Things like smoothing asset gains and losses, amortizing underpayments, and other more creative "solutions" to a non-problem actually accounted for at least 50% of the UAL as the legislature convened in 2003. The employers made the problem out to be one that essentially was the fault of the PERS Board, the Unions, and greedy Tier 1 PERS members, but conveniently ignored their own culpability in creating the crisis of that began in the early 1990's and peaked in 2000 - 2003. Given the same hindsight afforded to the employers by way of the retrospective review of a PERS Board decision to credit arguably excessive earnings in 1999 (earnings that were, by the way, presented to the Legislative e-Board and approved by same before decisions were announced), it could also be argued that the growth from 2003 - present wasn't unexpected and a set of reasonable and completely prospective changes could have been implemented without all the litigation that arose from the clumsy way everything turned out. If legislators and the employers and the governor had been willing to place some faith in market forces, ended the variable contributions, redid the variable match calculations, and enacted a ceiling and floor on Tier 1 regular account earnings at the "assumed rate", adopted the original actuarial equivalency proposal first introduced by the PERS Coalition in 2000 (segmented rates), introduced the new Tier 3, I'd hazard a guess that the system would be nearly as well off as it is now, without endless litigation that is costing the system and taxpayers a large sum of money. And without the rancor, bitterness, betrayal, and massive early retirements that are costing the public boatloads of extra money. Mechanisms were already in place for PERS to absorb the 1999 "overcredit" without reaching in to active members accounts, and retroactively altering certain retiree benefits *after* members had made their retirement decisions and without any option to change their decisions. PERS got a "do over" while retirees got the shaft.

The media continues to overplay the piece about a small number of retirees that ended up with more than their final average salary in retirement. We all acknowledge that it happened, but the actual number of people for which this effect is known is a small number out of the total number of retirees. Yes, it *is* true that about half of the people who worked more than 30 years retired with more than their final salaries. But what gets left out - until the most recent Steve Law piece - is that at the absolute peak, less than 1 in 7 retirees worked that long before retiring and so the percent of "overachievers" actually represents about 1 in 14 individuals. Yet, this one fact, above all facts, is the one that was deemed newsworthy and was used to justify "the sky is falling" media blitz.

The SJ can congratulate itself (and Steve Law) for finally getting the real facts out (a point that is completely alien to the Oregonian, by the way), but getting it right once is no reason to be smug. There are a bunch of us bloggers who write about PERS issues who are watching the media extremely closely and are using our pulpits to call out the media every time it misrepresents or selectively reports facts in a biased way. The Oregonian has been punished in two ways -- by a steep decline in circulation, partly caused by PERS members and retirees absolutely fed up with its anti-PERS, anti-public employee bias; and by refusing to patronize local businesses that advertise regularly in the Oregonian. There is no way one could argue that the Oregonian isn't hurting from this. The point here is that the same fate could befall the Statesman-Journal if we start to see a resumption of the biased muckraking we saw in the near past.

We don't ask for much. We want the truth to be told - the good, the bad, and the ugly. There are plenty of culprits in all this. We, as both public employees and now public retirees, are just tired of being made out to be the only cause of whatever problems resulted from legislative tampering, employer whining, and inept PERS administration. We worked hard and accepted the pension system we were offered, not the one we desired or the one we would necessarily have chosen if we were given a choice. We had no choice. We accepted the employers' representations that while they understood our salaries were low, the best they could do was to pick up our 6% contribution instead of giving us a pay raise. Deferred benefits sounded good to the employers and the legislature when they were reaping all the financial savings, but they became a disaster when the bill came due in the late 1990's. So, we want the correct villians singled out here. We didn't cause the problem; we had no choice in the system foist on us; we performed our work in good faith and accepted the retirement representations of PERS, the Legislature, and our employers. Why should WE be expected to be financially responsible for the mess left by others?

Instead of congratulating yourselves too much, why not call for an end to the litigation. Editorialize for the state and the employers to settle these current cases (Arken and Robinson) out of court and back off collection efforts from retirees. This would end the uncertainty for all parties and would let PERS (the system) move forward on more productive uses of their staff and their earnings. It can't be very cost-effective any more to be tying up expensive analysts time to continue to produce reports just for the purpose of litigation. These cases are doomed to drag on for several more years unless some settlement is reached. Call for a retiree-friendly end to the current litigation and we shall be in your debt and you will have performed a genuine public service. "

Weird Science

Nothing exciting in PERS-land today, but I thought this was a fun exercise. You might enjoy it too.