Lowdown

There is considerable debate, speculation, and prediction afloat about what, exactly, Judge Kantor meant in his recent ruling in the Arken and Robinson cases. In an effort to get the lowdown from one of the attorneys involved in the Arken case - Greg Hartman - I dropped him an email this morning. Greg was kind enough to respond and give me some general answers about what is coming down the line. Obviously we are not alone in being unclear about some elements of the ruling. Hartman (and Coon?) are trying to schedule a hearing with Judge Kantor in order to clarify some of the issues under discussion. From the looks of things, this hearing will be scheduled sometime in the early part of August. The plan is to submit a proposed order that would clarify a number of issues relating to the "scope of the ruling." In addition, Hartman shared with me that he believed Judge Kantor had ruled that 14(b) (the "exclusive remedy") precludes the application of 238.715. He observed "...even if it turns out that the alternatives provided in 14(b) don't work that does not mean that the legislature's decision to limit the application of 238.715 can be attacked." He also remarked that there were a number of issues in Arken that were independent of Robinson and 14b and that he hopes to "encourage" Judge Kantor to address them. In short, it is probably the case that the debate, speculation, and prediction will remain ongoing (or not) until the outcome of August's hearing is known. Once the date of the hearing is known, I will let people know. It would be encouraging to have retirees once again pack Judge Kantor's courtroom.

Whoa Bessy

Or was that Betsy? You might want to take a look at Greg Hartman's memo to PERS Coalition members concerning the accuracy of the Oregonian and Statesman Journal reporting on the Arken decision. In case you don't know how to use Google, you can find it here. Bottom line is that administrative chargeoffs were not an issue in the Arken case. Until and unless PERS tries to charge the Arken victory to active and inactive PERS members, there is no fight. If they do - a point they argued was illegal on its face - they can expect a knock on the door from Greg Hartman and the PERS Coalition. So, Betsy, take your bias and that of your newspaper and shove it.

Get Miles

Questions are starting to arise about contributing to legal defense funds to force PERS to start distributing COLAs on the fixed benefit. Personally, I think it is too early to send money. Moreover, I don't know where I'd send it. OPRI is not my favorite organization these days. Their attitude toward window retirees has been less than stellar although their new Board now has 3 window retirees on it. They participated in Arken by joining the PERS Coalition. The PERS Coalition is mostly about unions representing active employees. They've made it clear that if PERS moves to compensate retirees at the expense of actives, they will fight it (and retirees). There is no evidence that PERS is planning to do much of anything yet. I think waiting until PERS decides whether it will appeal or not would be the most prudent course of action right now. If you do contribute to a legal defense fund, make sure you get miles for doing so.

To keep you up to date, the Oregon Supreme Court has yet to rule in the fee award dispute in the Strunk case. Both OPRI and the PERS Coalition have argued that they should be awarded attorney fees. If OPRI is awarded attorney fees, they will receive back much of what we, as individuals, contributed to their legal defense fund. Should we find ourselves in a position of having to pursue additional litigation, I'd want OPRI to use recovered funds first before asking me for more - especially since they promised to return my donations if they won fees in the Sartain/Strunk case. So, first I want to see if they win. Second, I want them to offer to return my donations and only if they do that would I consider letting them keep those funds and receive more to pursue the final phase of this shaggy dog legal case. I just wouldn't rush to send money to anyone quite yet.

How Much Did You Get For Your Soul?

The Oregonian's Betsy Hammond swallowed the kool aid again with her latest editorial (oops, was that supposed to be a news article?) on the outcome of two related PERS court cases in the Multnomah County Circuit Court.   In her article "New Retirees will pay for old mistakes" (Oregonian, 6/21/07), Ms Hammond again fails to read either (a) the court's opinion or (b) the legislation to which the court's opinion refers.  Nowhere in Judge Kantor's decision does it say that "new retirees" (or active members) will pay for Judge Kantor's decision.  Judge Kantor merely ruled that the Legislature established two methods for dealing with the actions of the 1999 PERS Board - either to freeze the cost-of-living increases for those retiring between 4/2000 and 4/2004 or to charge the expenses to administrative costs.  Since the Oregon Supreme Court ruled that withholding cost-of-living increases was illegal, Judge Kantor ruled that the Legislature left the PERS Board with only one viable option - the administrative charge off.  It is true that administrative expenses are taken out before earnings are distributed and so the potential exists for active members to subsidize benefits for this small group of retirees; HOWEVER, PERS has been reserving funds like crazy since 2003 and now has nearly $2 BILLION in reserves from which these expenses could come.  These reserves are not available to any members and charging expenses to them will not reduce the benefit of ANY member now or in the future.  Instead of pointing this important fact out, Ms. Hammond draws the financial implications out of the air and creates a potential conflict where there is none.  In so doing, Ms. Hammond again wears her bias on her sleeve and continues the Oregonian's long history of bashing public employees.   

Best of All Possible Worlds

By now it should be pretty common knowledge that the PERS Coalition was the big winner in the Arken and Robinson cases. Judge Kantor's combined ruling in both cases earlier today - after a 9 month wait - pretty much puts the kibosh on PERS' plans to recover anything from retirees. In Arken he invalidated PERS' January 27, 2006 collection order (the subject of the March 2006 "letter" we all received), and enjoined PERS from recovering anything from affected retirees. Moreover, he ordered PERS to return payments that retirees have made in response to now illegal invoices. To put the icing on the cake, Judge Kantor did a careful review of the legislative history of section 14 of HB 2003. In so doing, he hoist non-state defendants' attorney Bill Gary on his own petard. He quoted Gary's remarks to the legislative committees that took testimony on HB 2003. In that testimony, Gary explained that the intent of section 14 was to insure that retirees would not have to pay anything "out of pocket" and would simply be subject to a COLA-freeze. On the basis of such testimony, and the Governor's declared statement that retirees would not have money taken away from them, Judge Kantor concluded that the legislature's clear intent was to make section 14 the EXCLUSIVE remedy for the City of Eugene case, thus removing PERS' right to collect under ORS 238.715. As a result, Judge Kantor ruled that the Robinson plaintiffs were correct in arguing that PERS has no choice but to recover the overpayments from administrative expenses, not by invoicing retirees.

As in any legal proceeding, this battle is far from over. There is the Court of Appeals and the Supreme Court that still await. But for now, we can savor the victory that we have waited several years to have. It feels good right now. It would feel a lot better if Judge Kantor had explicitly told PERS to start paying COLAs on the fixed benefit immediately. The next COLA is payable next month and it probably wouldn't be too much of an effort for PERS to start that process now while taking a bit more time to restore the previous 4 COLAs that have been frozen. That's probably too much to expect right now. It will probably require PERS to be told at the point of a legal gun that it has to do that. Apparently the Supreme Court doesn't haul enough big steel to make PERS quake in its boots. Perhaps now the thought might cross their minds. THAT would be the best of all possible worlds. In the meantime, I'll savor this moment of complete vindication. Frankly, I didn't think I'd live to see this day.

I Got the News

This just in from Joe DeNicola, SEIU president:

Sisters & Brothers,

Judge Kantor, Multnomah County Circuit Court, has issued opinions in both the Arken and Robinson cases. He has ruled in our favor in both cases and has enjoined PERS from additional collection efforts
with regard to PERS retirees. Additional analysis from our attorney. Greg Hartman, will be forthcoming soon.

I am seeking independent verification, but it appears that stage one in the long waiting game may be over.

P.S. 11:50 a.m. Judge Kantor's office confirms that the decisions were filed this morning. I will have copies of both rulings by FAX later this afternoon and will try to have them posted by tomorrow.

Here is a copy of the decision.

Girl They Won't Believe

Really a woman, but it doesn't really matter.  I spent more than an hour on the phone yesterday afternoon with a woman whose husband - an active Tier 1 PERS member and PSU colleague - had died unexpectedly in his early 60's.   Her story is most perplexing and qualifies as one of the more difficult issues I've heard about in quite some time.  She's been dealing with PERS' death unit for several months and has, thusfar, been unsuccessful in prying any money from them.  The issue hinges on PERS' belief that her husband died without officially naming her as a beneficiary.  Leaving aside the question of whether he did or didn't officially name his wife as a beneficiary, it has always been my understanding that one's spouse is always the beneficiary unless an individual is (1) unmarried at the time of death or retirement or (2) explicitly declaims the spouse *and the spouse agrees in writing to the declamation*.  Otherwise, the spouse is the default beneficiary.  According to PERS, in the absence of an official beneficiary form, the only way the spouse can recover benefits from the account of a deceased non-retiree is via probate of the will.  Since the husband was very careful to put all property in both of their names, had explicitly named his wife as the beneficiary of the IAP account, had a current will naming his wife as personal representative and recipient of his entire estate, how likely is it that he *forgot* to name his wife as the beneficiary of his Tier 1 account?  I find this nearly impossible to believe.  So, she's left arguing with PERS that they've misplaced the relevant information, while PERS claims that they don't have it.  She's left to pursue probating a will that otherwise doesn't require probate (and the legal fees involved), or she can enlist the aid of a lawyer to sue PERS.  The challenge is that few people ever get a copy of the information PERS receives when it enters a new member into the system and so many people may be unaware of the beneficiary status of their PERS account.  I'm hopeful that this can be resolved favorably and quickly.  I've certainly pointed her in a direction that will, if at all possible, lead to a quick resolution.  (Answer to obvious question:  wife and husband married a very long time.  Husband began work at PSU long after he and his wife married).

The moral of this story is that if you are an active PERS member, make sure you have a named beneficiary attached to your PERS account.  Don't make any assumptions.  If you are in doubt, fill out another form to make double-dog sure you're covered.  

Handle With Care

As a result of many complaints to me and suggestions to PERS from me, the online PERS Retirement Benefit Estimate Calculator will have some updated verbiage to clarify what it does and doesn't do. Rather than paraphrase, I'm going to use David Crosley's response to me for the rest of this entry. David is PERS' official spokesman and is coordinating the PERS Retiree Focus Group, of which I am member. Here is David's description of the changes to be made to the Calculator verbiage:

"I reviewed the verbiage in the disclaimers and will have some changes made. Also, we corrected the "2005 ending balance" to 2006 for the variable portion.

The disclaimer at the beginning of the calculator will be changed to read: "The PERS Benefit Estimate Calculator calculates an estimated retirement benefit based on the data you provide. The calculator is not connected to your earnings record, PERS information file, or your employer's information file. As a result, near-term retirement dates tend to produce more accurate results. The accuracy of your estimate
will depend on how closely the information you provide matches the information used to calculate your benefit at the time you retire."

I will also have the updated disclaimer highlighted in bold. A member must agree to the statement before he/she can produce an online estimate.

I will also have information bolded regarding the calculator's limitations (what the calculator does not do):
· Estimates for judges, legislative members, and TIAA-CREF members.
· Costs and impacts associated with optional purchases. For information on purchases, please contact PERS Customer Service.
· Estimates if any part of an account balance has been or will be distributed to an alternate payee, or if a benefit will be adjusted as a result of a divorce decree.
· Disability retirement benefits.
· Estimates where any of your total service time includes time accrued under the Oregon Public Service Retirement Plan (OPSRP).

Our Benefits Calc section tells me that the calculator provides an estimate that is within pennies of a written estimate for Money Match.

If Money Match provides the highest benefit estimate for a member, the verbiage at the top of the estimate page states: "The information you have provided indicates you MAY BE affected by the City of Eugene vs. PERS settlement. The impact of the settlement is not included in the figures below. If you would like to estimate the impact of the settlement on your benefit, please click here."

The member is then directed to a page with a disclaimer that will be updated to read: "This calculator is not connected to your earnings record, PERS information file, or your employer's information file. As a result, near-term retirement dates tend to produce more accurate results. The accuracy of this estimate will depend on how closely the information you provide matches the information at your retirement."
This will be in bold text as well.

Our Benefits Calc section tells me that the calculator provides a "var at reg/var at var" estimate that is very close to a written estimate."

Hopefully, these clarifications and disclosures will make the benefit calculator more useful for members and will make transparent the areas where the calculator is apt to produce either too optimistic or too pessimistic estimates.

Everybody's On the Phone

Only been gone a week, but the old voicemail box has runneth over. The PERS news is pretty mundane, although if you are a lump sum retiree already faced with or soon to face a large lump bill to pay, HB 2397 may be your remedy. In little-noticed action during the week, HB 2397 passed both the Senate and the House and is on its way to the governor for either his signature, or him sitting on it and allowing it to go into law without his signature. There seems to be some disagreement whether he will sign it or not. Basically, HB 2397 allows those who owe PERS a lump sum from a lump sum retirement settlement to make the payment using a custodial transfer to PERS from an IRA, 401K, or other tax-sheltered account without incurring any tax or early withdrawal penalties. It does not change the obligation to repay in a lump sum, but it will allow the repayment to take place from a tax-advantaged account without triggering adverse tax consequences. The effective date is unclear, as is whether those who have already paid with non-tax advantaged money will be given a retroactive opportunity to pay this way. Actually, for those who have already paid, it isn't clear whether this bill has any benefits, but at least it makes the option available in the future. You can read the text of HB 2397 on the Oregon Legislature's web site (sorry for not having the link immediately at the tip of my fingers; I'm still adjusting to time changes).

In another development, PERS released its latest "PERS By The Numbers" with a June 2007 date. It continues to prove the point made by the PERS Coalition that had the Legislature done nothing in 2003, the structural problems with PERS would have resolved themselves and the PERS Board could have made incremental fixes along the way that would have been relatively benign for all members and retirees. I doubt we'll see the media touting this document as proving *this* particular point; if it gets mentioned at all, it will be cited as further proof that the reforms were both necessary and are working. It completely belies the Ron Saxton claim that the reforms were too little, too late. You can read the whole document here

As expected, Judge Crater is still missing. He didn't release any decisions in the Arken or Robinson cases, and the White case continues to spin slowly. The Legislature will adjourn for this year on June 29th; perhaps we'll see decisions after they go sine die for 2007.

100 Miles and Runnin'

Nothing to post. I'm out of town and have brief access to a computer in one of those fancy-schmancy airport clubs for frequent flyers. Nothing again until at least June 17t. According to weather reports, the Rose Parade will have rain. It wouldn't be Oregon if it didn't rain on the parade. Everyone be safe and on your best behavior. As Ahnold vould say in da Terminator: I'll be back.

Jet Lag

News from the PERS front is pitiful right now. There are three lawsuits awaiting action from Judge Henry Kantor of the Multnomah County Circuit Court. Despite promising a "quick" ruling, both the Arken and Robinson cases have been awaiting Judge Kantor's decision since September 28, 2006 - 8 full months now. Both of these are high stakes cases that could affect the way PERS is currently handling the invoicing and collection from "window" retirees (Arken) as well as a broader segment of PERS retirees (Robinson). Judge Kantor has had several high profile cases on his calendar since he made the prediction of a relatively quick decision, but those cases have come, gone, and are in various stages of appeal. Resolution of the Arken and Robinson cases would hardly be definitive at this legal level. Parties on both sides of both cases have promised to appeal any adverse ruling, so both cases are ultimately heading for the Oregon Supreme Court. However, to get to the OSC, both cases would have to go through the Oregon Court of Appeals first, leaving final resolution in limbo until at least 2011 by current estimates. Justice moves very slowly.

There is considerable debate among window retirees and others targeted for collection efforts as to whether the PERS Coalition should push for an injunction to stop PERS from its collection efforts if it wins either or both cases at Judge Kantor's level. PERSonally (sorry, couldn't resist), I'd prefer PERS continue its collection efforts rather than stop part way through. There is no way I can imagine that PERS would suddenly decide to grant COLA raises on the original benefit. Consequently, I could see an injunction having the effect of freezing our original benefit indefinitely. I'd rather be getting COLA adjustments on my revised benefit than to have my current benefit frozen for another few years. Most window retirees are at or near the point where the revised benefit with COLAS exceeds the current benefit. Not seeking an injunction at this point would probably mean that we'd all get something more than we're getting now (MOST would; a few continue to be screwed by some bizarre unintended consequences that make their benefits significantly smaller). And we'd continue to get COLA each August 1. I hope the PERS Coalition sees the disadvantage of trying to force an injunction unless they pursue one that restores the COLA to the original fixed benefit.

This will probably be my last post until after June 16th. I will be on the East Coast visiting friends and family (and catching a few plays) for the next several weeks. As always, I will monitor email and try to respond to urgent issues. I will also keep watching for any significant events that are "of the moment" and will attempt to update this blog from a distance via Internet Cafes. I can get email on my phone, but I can't do blogging from it and I'm not taking a notebook computer with me this time. Enjoy the great weather while it lasts. Since the Rose Festival has started, it is a given that crappy weather will soon be upon us. Just remember the Oregon summer law - "in Oregon, summer begins on July 5th".

Note added at 5:30 p.m. In my haste to write this, I omitted a couple of other significant issues that remain to be resolved. The "White" case challenges the settlement agreement itself. Should this case finally get a hearing and a ruling, it has the potential of overshadowing any of the other extant cases as it would invalidate the settlement and make both Arken and Robinson unnecessary. Similarly, the Supreme Court appointed a Special Master to take up the matter of attorney fees in the Strunk case. To apportion attorney fees, the court has to decide who are the "winners" and who are the "losers". In a perverse twist of fate, the Special Master concluded that the "window retirees" won their case, while the opposition argued that the "window retirees" won nothing and are worse off now than they would have been if the Sartain case had never been filed. The special master recommended that PERS pay attorney fees and PERS has decided that "window retirees" should be dunned for "winning". PERS has no independent money to foot these bills and all such judgements eventually come out of administrative expenses. The Supreme Court has not accepted the Special Master's conclusions and has not issued a ruling. Those of us who think deeply about such things think that the SC may be trying to dodge a ruling here as a declaration of "window retirees" as "winners" and their attorneys as deserving of attorney fees might require the SC to clarify what it meant in its ruling. Nothing would please me more than to see the SC forced to explain its ruling in the Sartain (COLA freeze) case. If they explain it the way they wrote it, PERS has a very difficult time justifying what it is doing now and it would trump all existing legal cases. Some part of me is enjoying imagining the SC squirm. The other part of me is wondering how the "current" SC can interpret what a "previous" SC might have meant. Needless to say, the SC will eventually have to issue a decision and no matter how they choose to parse it, it *will* clarify (or further obfuscate) the Strunk decision. This is one of those few legal decisions I await with some glee. I like watching the SC twist slowly in the wind.