Soon As I Get Paid

I now have permission to share with you the Special Master's Report to the Supreme Court in the matter of Attorneys' fees in the Strunk case. The report is here. I also have a copy of Stipulation 1, which pertains to OPRI's attorneys' fees. It is here. It appears from reading these reports that retirees have won their battle for attorney fees, but it unclear how they might benefit from this ruling. If OPRI keeps its promise, those of us who donated to their Legal Defense fund might expect a refund of our donations -- that was the promise Jack Sollis made to members who donated. It seems only reasonable since PERS is going to "ding" retirees for their "win". Of course, all of this is predicated on the assumption that the Supreme Court accepts Judge Breithaupt's recommendations without modification. The unfortunate news is that there is nothing in the Special Master's report that would compel the Supreme Court to clarify its Strunk ruling as it pertains to the "fixed benefit" and its computation "without error". We had hoped that in the attorney fee hearings that this issue would be forced in order for the Supreme Court to declare how retiree's had "won". Alas, nothing in the report seems to force that clarification. On the other hand, having this out of the way removes any further obstacles to getting rulings in Arken and Robinson. Many believe Judge Kantor was waiting for the Special Master to issue his report and for the Supreme Court to clarify its Strunk ruling. Since that isn't likely to happen, Judge Kantor will be forced to rule on the merits of the cases before him without any "help" from the Supreme Court. Enjoy your reading.

On a totally unrelated subject, I will be out of the country from March 23rd to March 31st on a family vacation. I will have no access to email, the internet, or phone service. Do not expect anything posted here, on my other web site, or on the PERS Discussion Group at Yahoo. I will be truly out of contact (the sound you hear is my family cheering).

Call Me

I have been selected as one of 9 retirees to participate in a PERS focus group. Its purpose is to deal with communication issues and other problems relating to PERS' interactions with PERS retirees. If you have any specific concerns you'd like to share with me to share with the group when we get organized, please feel free to drop me an email at a special email address I've set up for these communications. Send your note to me here: enochroot1947-persissues@yahoo.com Try to keep your "issue" focused and clear. I want to represent retiree issues fairly and competently. You can help me by a concise statement of the problem/issue you have. A word of caution: I doubt the group will deal with matters currently the subject of ongoing litigation. They may get into issues related to communication about these matters, but the nitty-gritty details may not be up for discussion.

Everybody Have Fun Tonight

Over on Jack Bog's site there is a lively and fun discussion of names you would give to the Portland City Council if they were a rock group. The proposed names are fun. It seems that we could have a similar good time if we poked fun at (a) the PERS Board (b) the PERS and Employers Attorneys (c) the various Media and (d) the various Judges involved, including the Supreme Court. What IF each of these were rock groups. What would you call them. To start, I'd be inclined to propose a name for the PERB, including Paul Cleary, and call them "Paul Cleary and the Raiders", or "Mike Pittman and the Mechanics". For the PERB lawyers - Joe Malkin and Bill Gary - "Stoned Temple Pilots". Use your imagination. Go to my interactive website and leave your suggestions over there. The winners will be honored by having their names used in place of the real names in some of my posts. This is good, clean fun and is a nice way to divert attention from the real problems we all are dealing with. Let your creative juices run wild. PERS can't take those away.

Hungry Heart

You'll notice a new element on the upper left of this site. I've joined Kevin Bacon's "Six Degrees" web network. The goal of "Six Degrees" is to raise money for charity. At a certain level, Kevin Bacon himself will match the donations made to Oregon Food Bank through this site on a dollar for dollar basis. Since the sight of hungry people in our affluent country really angers, bewilders, and frustrates me, I have decided that it is my "pet" cause. My wife and I give substantial amounts of money annually to the Oregon Food Bank. My daughter does volunteer work there through her school's community service program. I know that I can't single-handedly stamp out hunger in our community, but I want to do whatever I can to raise people's awareness of this significant problem in our society. I provide the news and commentary here with no expectation of financial remuneration. Many people have indicated how valuable they find the site. If you really find the site valuable, please consider making a small (or large) donation to the Oregon Food Bank through this site. Not only will you be helping people in genuine need in our own communities, you will also be indirectly showing support for the work I'm doing on your behalf. My only regret with the "Six Degrees" organization has been their inability to get the credit card companies to donate their fees and charges so that 100% of the money donated can go directly to the Oregon Food Bank. You can offset this yourself, or let "Six Degrees" deduct it from your donation. It is up to you. Regardless of how you feel about this feature, please do consider making a donation. It is the least you can do to make me feel that my efforts here are worthwhile. Thank you.

Blowin' in the Wind

The answer my friends, is blowin in the wind. My email box runneth over. The dogs have been unleashed and all those people who retired around mid-2004 are now discovering just how much of a "do over" PERS got. I've heard from about a dozen post April 1, 2004 retirees of the following scenario. You've gotten your recalculation letter. Your "at retirement" balance is higher AFTER the Strunk/Eugene adjustment than before (in one case, more than $20,000) higher. First, for the good news. The reason your balance is higher is because PERS was forced to pay you 8% for 2003 on both contributions and balance, and a pro-rate of 8% for 2004 on your beginning 2004 account balance. They also reduced your 1999 balance, but the 2003 & 2004 earnings were larger than the 1999 reduction; hence an increased account balance at retirement. Now for the really bad news. If you go back to your original Notice of Entitlement - the one you got when you originally retired, you should see that your benefit was calculated on the basis of the "Lookback" (surely you've forgotten that by now). The "lookback" was created by the Legislature to give you a "floor" under your benefits so that you could still get the benefit of the "old" actuarial factors, but at a price. The price was that your account was frozen at its balance as of June 30, 2003 - nothing else was added. If, when you retired, your frozen benefit on June 30, 2003 was higher than your benefit accounting for all additional earnings and contributions after that date using the NEW (less generous) actuarial tables, you got the higher benefit. So now, four years later, they go back and they are forced to give you additional money. The consequence is that although you left money on the table to get the higher benefit, it no longer works out that way when they add in even more money. They recalculate your benefit and lo and behold, the "lookback" doesn't "win" anymore. Now, your benefit is higher using the new (higher) account balance than it is using the "lookback" in the same comparison. Voila. You get the higher benefit. Unfortunately, the higher benefit is lower than your benefit when you had the lookback because you're under the NEW actuarial tables. Still more unfortunately, PERS is obliged to "give" you the highest benefit. And sadly, the higher benefit is still lower than your previous benefit because you're now using different actuarial tables. Remember that the lookback preserved the "old" tables (the ones usually called the 1978 tables). After the Strunk/Eugene adjustments, you end up, by pure computation, under a set of tables that went into effect on 7/1/03 and are less generous than the 1978 tables.

PERS should have explained this in the letter. It would have saved them a ton of grief. Now, the only thing I can offer is that people appeal their benefit. I'm afraid the appeal won't show much except you'll get the details of the calculation so you can see how this all worked out.

I remember this topic coming up in a PERS Board meeting and the PERS staff cautioning that a complete review of calculations could end up in situations like this. Unfortunately, they underplayed their hand. It looks like it is happening in every single case I've heard about. So far, every single example I have where the "lookback" was the winning procedure originally, it now loses and produces a smaller gross benefit. This is a sick and cruel joke. Appeal the invoice. Make PERS do the extra work to provide you with the explanation. Make sure you thank your legislator. After you've done that, consider a contribution to one of the legal defense funds to help the litigation to stop this dead in its tracks.

P.S. In an answer to an obvious followup question. Why doesn't the "lookback" still work? Because the original lookback was formed on an assumption that is no longer legally correct. PERS calculated your "at retirement" actual account balance assuming 0% earnings for 2003 and 2004. Since the "lookback" used a pro-rate of 8% to simulate the June 30, 2003 balance, the "lookback" balance upon recalculation is actually lower than it was when originally calculated. The original "lookback" continued to "freeze" the 20% for 1999 without the 0% freeze. If you reduce 1999 but not the 2003 earnings rate, the revised "lookback" balance cannot possibly be higher. However, the total account balance is likely to be significantly higher because it was originally formulated with 20% for 1999, 0% for 2003, and 0% for whatever period you worked in 2004. The 1999 adjustment is common to both balances, 2003 had already been adjusted for the "lookback" but not the final account balance, and so there is virtually no way that the actual account balance adjusted for the Strunk/Eugene matter could be anything but significantly higher. And so, the "lookback" has little chance of "winning" against a significantly higher account balance after the recalculation.

Math Sucks

Even though Jimmy Buffett sings of his despair with math (tough sell for one shrewd moneymaker), the PERS math turns out not to be as hard as people are making, although PERS certainly makes life more difficult for itself by putting in extra filips on its forms that confuse rather than help. If you want the "411" explanation of what is happening, consider the forms published yesterday- particularly the first form - as our example. We have a "Before Recalculation" benefit and an "After Recalculation Benefit". One represents what you are currently getting as a result of the 1999 overcredit. The other represents what you *should be getting* after the recalculation of the 1999 interest at 11.33%. Down at the bottom of the page is a list of the COLAS that need to be applied to the revised benefit. The final number represents what your new revised benefit will be, before actuarial reduction. For the amount labeled "Your initial actuarial reduction", subtract that to get "Your recalculated benefit starting [date, 2007] under the ARM". Consider this your NEW REVISED BENEFIT and forget everything else. Nothing more will be done to you. From that benefit forward - assuming it is computed correctly - you will get COLA adjustments on the NEW REVISED BENEFIT. You should never see another ARM reduction as they've just taken it away from you forever in "one touch". Presto, your account is in PERS harmony and PERS doesn't have to fiddle with anything related to your account again except for those annual COLAS. The ARM amount is a one-time reduction to your permanent benefit. The issue of increased ARM payments is a "red herring" as this is invisible to you. PERS is simply banking your ARM monthly and has to apply the COLA to it in the same way it applies a COLA to your benefit. Unless PERS is looking to needlessly complicate its life, there is no reason for it to do anything else. You'll be repaying for the rest of your life in the form of a permanently reduced benefit. I sincerely hope this helps people understand what is going on.