Better Days

St Pat's Day turned out to be the magic day when this site crossed the 1,000,000 visitor mark.  Thanks to all who have made it possible.  Many eyes keep our legislators on the ball; many eyes keep PERS on the ball; many eyes TRY to keep the media in check.

I have been complaining for some time since the Supreme Court finally overturned the Robinson verdict that PERS was engaging in financial chicanery in calling their "actuarial recovery method" an "interest free" way of repaying money paid to "window retirees" (retired between 4/1/2000 and 3/31/2004) erroneously.  We may disagree with the verdict, but we are stuck with it.  In recognizing that fact, and also recognizing that collections would resume soon, I have been on a tear trying to convince people that the ARM is fiscal "sleight of hand".  Apparently, my words and the pressure brought to bear by OPRI, the PERS Coalition, and others have finally resonated inside PERS.  At their next Board meeting, members of the PERS Board will vote to implement a significantly revised recovery method for the 28,000 "window retirees" who haven't yet started paying, and to presumably revise the terms of repayment for those who began repaying before Judge Kantor enjoined PERS from further collection efforts.

The revised method, to be discussed and/or voted on March 22, 2011, will recover ONLY what an individual owes, not a penny more.  The mechanism for those eligible (monthly benefit recipients or alternate payees or beneficiaries receiving monthly benefits) is to set 2% of the gross benefit as the minimum repayment amount.  If implemented in August, as originally proposed, this would result in the sacrifice of the 2012 COLA until the bill is paid off - approximately 6.5 years for the typical retiree.  Retirees who want to accelerate their repayments can choose a larger amount (say 5%) and shorten the repayment period.  Of course, anyone can still write a check for the whole amount and be done with it.  This method, as far as it goes, satisfies my two requirements for fairness:  1) no interest is charged and 2) retirees obligated to pay ONLY what they owe, not a penny more.

There are some unanswered questions about PERS' proposed methodology.  First, will the deduction be taken pre-tax, as logic and tax fairness dictate it be (otherwise, we are subject to being taxed on money previously taxed).  Second, does the repayment amount remain constant at the initial 2% of the 2012 benefit as of August 1, 2012,or does the amount change every August when a new COLA is granted? Finally, will the 1099-R report this amount as an adjustment to box 2 (taxable amount), reducing further the obligations since the amount repaid has already been taxed?  The analogy here is that for those of us who worked prior to 1979, our PERS contributions came from our own money that was taxed at the time of contribution.  Thus, a small portion of our current retirement benefit is not subject to any taxes.  That amount is the difference between Box 1 and Box 2 on the 1099-R, it is also shown in Box 5 (Employee Contributions) on the same form.  Since we have already paid income tax on the money that we will be repaying, there is no reason why we should have to either (a) be taxed on it a second time, or (b) have to do anything special to try to recover it.

It strikes me that if PERS can clarify and resolve these questions/objections/challenges, those of us facing a large bill for amounts we had no control over will see better days ahead.

I will save my comments about the Sunday Oregonian editorial for another day.  Onwards towards 2,000,000.