Fruitcakes

OK. A bit of an inside joke for those who know Jimmy Buffett music.  Mea culpa, mea culpa mea maxima culpa.  In my last blog post, "Dark Side of the Moon", I made an error that Ted Sickinger of the Oregonian took the time to point out.  In the case of the "true up" of Mike Bellotti's final PERS benefit, the mismatch between his account balance plus the employer match is made up by the Employers' Rate Reserve fund, which is charged to all employers in the rate class, not just the University of Oregon. This means that, in Bellotti's case, the way the University of Oregon computed his salary (including all the top ups from outside sources) ended up strongly underestimating what his final pension benefit would be.  Thus, when Bellotti retired the bill for that underestimate is shared amongst all the employers in the State pool regardless of the source of the money.  This leads to a whole series of interesting questions about how things like taxes were handled on this income when it was being earned and how the University of Oregon and PERS could have been so off the mark in funding his benefits.  After all, if Bellotti's endorsement income and Nike income all passed through the University and some of it on to Bellotti, wouldn't the University have paid PERS premiums on the money at the time it was earned.  Or does this count as income and Bellotti is expected to pay his own taxes on it, but at the end the University of Oregon saddles other employers with part of the bill?

I stand by the rest of my piece, but the "true up" was most definitely wrong.  Because the University of Oregon only bore a small part of the bill for Bellotti's retirement, there is a scandal there.  But the scandal belongs at the feet of the University of Oregon, not PERS.  PERS just administers the system it is given and has to pass through the rules as they are applied.  I don't know when individual employers were let off the hook for these types of errors and omissions, but it had to be after 2002.

One thing I find quite curious in this whole matter.  The IRS limitation on pension income passed in 1994.  It applied to all working people regardless of when they were hired.  I know this personally because my wife, who was hired in the same year as Mike Bellotti by a private employer, was hit by this and continues to be affected by it until she retires.  There was a limit in existence prior to 1994, but at the time it exceeded my wife's salary.  The change in 1994 set the limit back to $150,000 and increased by $10,000 chunks until it was at $200,000.  At that point, the limit went up in $5000 chunks where it rests at $245,000 today and will be $250,000 next year.  What I don't understand is how anyone who retired after 1994 could have escaped that limit, as Bellotti and all PERS retirees hired prior to 1994 seem to have been.  Call it envy or call it curiosity.  What IRS ruling did PERS get that permitted Bellotti to draw a pension of $500,000 on salaries that weren't eligible beyond $245,000.

I leave that for the investigative reporters in the group to figure out.