Hold On

I'm afraid the Police and Fire posts got a bit out of hand. My post yesterday netted me a few copies of the invoices in which the retirees had raised questions about PERS' reductions. After reviewing all these invoices very carefully, I've concluded that there's no there there. To understand this, you need to keep two different facts completely separate. The Strunk/Eugene remediation plan involves two DIFFERENT reductions that are only tangentially related. The first reduction involves adjusting the retiree's benefit to WHAT IT SHOULD HAVE BEEN if the 1999 earnings crediting had been posted at 11.33% instead of 20%. This requires PERS to go back to the date of the member's retirement adjust the account balance AT RETIREMENT to what it should have been if 11.33% had been credited instead of 20% and then refiguring the benefit on that basis. That benefit is called the adjusted benefit. To the adjusted benefit PERS then adds the COLAs from that point to the date of adjustment. That is now the new benefit. If that new benefit is greater than your current benefit, then you get the higher benefit. If that benefit is less than your current benefit, your benefit is reduced. The second reduction involves the overpayment of benefits (as a result of the 1999 20% earnings credit instead of 11.33%) from the date of retirement until the date of adjustment. For some retirees, the COLA on the adjusted benefit produces a "cross over" where the adjusted benefit exceeds the current benefit. When this happens, the overpayment amount is reduced by the amount underpaid after the cross-over. The OVERPAYMENT amount is subject to the Actuarial Reduction Method whereby PERS agrees to accept repayment of your OVERPAYMENT by reducing your monthly benefit by an amount based on your life expectancy and that of your beneficiary, if one is germane to your benefit.

With that explanation behind us, I can state confidently that PERS is NOT collecting or even documenting the actuarial reduction amount based on the "overpayment". They have been enjoined from doing that by Judge Kantor in the Arken/Robinson cases. The repayment amount has NO bearing on the amount of reductions Police and Fire members have been seeing on their recent invoices. The reduction of benefits being reported is ONLY the benefit reduction resulting from PERS continuing to adjust benefits (and account balances) to reflect the 11.33% crediting for 1999. Unfortunately, some Police and Fire members just happen to be in a situation where they were nowhere near the "cross over point" and were still being overpaid their benefits.

Apropos of those adjustments to benefits, PERS believes -- and so stated to Judge Kantor during the Status Conference on August 16, 2007 -- that Judge Kantor's injunction did not apply to those adjustments. Judge Kantor, in his (slightly incredulous) reply, let PERS attorneys know in no uncertain terms that he would clarify his final order so that PERS would know and understand exactly what he meant in his injunction. We are still waiting for Judge Kantor to issue that and, hopefully, stop PERS dead in its tracks and force them to reverse any adverse actions taken so far. Moreover, we hope that he will require PERS to follow the Supreme Court's ruling in the Strunk case that would restore COLA to the "fixed benefit" (the one you were receiving before you were invoiced). The Supreme Court was, in my opinion, quite clear on that order, but PERS disagrees and refuses to implement that. The Arken case raises that very issue and Judge Kantor is going to have to confront the Supreme Court's ruling directly in his final order. Whether PERS finds a way to parse the order to its advantage remains to be seen. One thing is certain, however. PERS will appeal Judge Kantor's ruling. So hold on to your hats, glasses, pens, computers, and iPods. It's gonna be a bumpy ride for the next couple of years.