The Gilded Palace of Sin

I have to confess that the title of this Flying Burrito Brothers album jumped into my head after seeing a color news photo of the Capitol Building in Salem with its gilded statue on top.  It also reminded me of the line from an old Gilbert and Sullivan operetta “nothing is ever as it seems”, or its modern incarnation as “objects in mirror are closer than they appear.”  So what is this all about?  I am not a believer in conspiracy theories, blind and willful ignorance, or plain incompetence (I do occasionally make exceptions).  I’m also not one to panic, for myself, or for others.  But, I have to confess that actions in the past week have given me new respect for the power of mean-spirited people, being pursued by an angry and worried crowd, to come up with magician’s tricks to fool people into thinking they’ve won a small (or large) victory, when they have, in fact, won nothing.

Since you all know that I write only about PERS (and recently only about the Legislature and its long history of trying to take benefits away from workers), I have been following the discussion (and contributing to it) regarding the Senate Workforce Committee and its unwillingness to confront PERS in more than a desultory way (I mean that; I take nothing from all the informational meetings except a complete unwillingness to do anything for or against PERS bills except to pick two bills and send them up, with all their attached amendment and without any recommendation, so that the Black Hole known as the Joint Ways and Means Committee can do their bidding in the absence of light).  I think this is a cowardly and unprincipled position, and I suspect there are some deeply hidden agendas being played out by leaders of both parties, the Unions, and a variety of other organizations who want money and don’t really care all that much how they get it.

That’s the background, but what’s new?  In the final analysis, after all the stürm und drang over PERS, two bills seem to have survived and will be forwarded without recommendation (the cowardly act) to the Joint Ways and Means Committee, where the action is done is less-than-public view.  The two bills, well-discussed in previous posts are SB 559 (unamended) and SB 560 (unamended, plus 10 [or possibly only 9, see below] amendments) that will be forwarded without any further discussion.

Last Wednesday, the Workforce Committee held its only public hearing where the public was actually permitted to testify on these two bills.  The primary objection was to the presence of an Emergency Clause in both bills, but especially in Senate Bill 560.  Unfortunately, the magician’s trick worked.  Eyes were distracted from the true problem, and like magicians working an audience, the members of the Workforce Committee promised to amend the bill (SB 560) to remove the Emergency Clause.  And they did in a single amendment numbered dash-15.  But like all magicians, the amendment removed the Emergency Clause from the original bill, as introduced, without touching the Emergency Clause in any of the 9 amendments in which it is replicated.  Worse still, either through willful deception, magician’s tricks, or distraction, the Committee did not grasp (again naivete is not an excuse for this experienced group of legislators), that the REAL problem was not the Emergency Clause (in fact, the Emergency Clause is actually necessary for reasons illuminated in multiple previous posts), but the lack of a date certain in the dash-3 amendment, and the section on the bottom of pages 24-25 of the Dash-10 amendment pertaining to the decoupling of the Money Match annuity rate from the system’s actuarially assumed interest rate.  In both amendments, this particular change is fomenting all the fear, uncertainty, and doubt, not to mention causing untold anxiety for near-term Money Match pre-retirees and leading to a mass exodus of people since the beginning of the year.  In both sections of these amendments, these changes, but NO OTHERS, are targeted to “…take effect on passage”.  All other provisions take effect on January 1, 2018.  With the emergency clause in, the “takes effect on passage” means that the section in question would become law the moment the bill is signed into law (i.e. anywhere from late May to Early July).  Removing the Emergency Clause changes nothing about those sections because the courts would have to decide exactly when the bill took effect.  

The problem could be solved simply by omitting the passage “…takes effect on passage” and inserting “…takes effect with retirements on or after January 1, 2018”.  So far, the situation is made even more complicated because the Chief Legislative Counsel, Dexter Johnson, issued a memo to the Senate Workforce Committee pointing out why taking the emergency clause out is a bad idea.  The reasons are virtually identical to those articulated here in multiple previous posts, in responses to individual emails, and in posts over on PERS Oregon Discussion (see link to left).  Without the Emergency Clause, PERS is prohibited from recalculating employer rates until on or after January 1, 2018, and litigants are unable to begin the legal process of contesting any element of this bill before January 1, 2018.  There are other reasons as well, but the long and the short of this is that the Emergency Clause is necessary so that the legal status of any of these changes can be largely settled by about this same time in 2019, while the Legislature is undoubtedly dealing with other budget issues.  So, after everything that happened last Wednesday, it is likely that the dash-15 amendment will die, the Emergency Clause will remain, and PERS members trying to sort through their options will be left in the same position they were in last Wednesday before the promise “…not to create a crisis or chaos”.  No one can convince me that members of the Senate Workforce Committee were so ignorant, so naive, and so patronizing that they didn’t know exactly what they were doing.  I’m sure they deliberately agreed to removing the Emergency Clause, knowing full-well that it would be put back for the reasons enunciated here, there, and everywhere.

I don’t think I have ever seen a more concerted campaign to distract attention away from the real problem with any bill as I’ve seen in the Senate Workforce Committee.  In the past, legislators were downright nasty to one another over bills as harmful as these; this year, I’m nearly in a diabetic coma from the sweetness of members on this committee who have polar opposite viewpoints on issues pertaining to budgets, PERS, and workforce.  This all suggests to me that Dems, Repubs, Unions, Employers, Oregon Business Council, organizations like OPRI, the PERS Coalition are all involved in many backroom, off-the-grid discussions of how to balance the budget, partly on the backs of PERS members both near and far from retirement.  And this all leads me to brand the Legislature of 2017, meeting under that gilded dome, the Gilded Palace of Sin.

Believe nothing you hear from a Legislator or a Union at this point in time.  Only when you see something in writing, in the form of a bill, an amendment to a bill, or a complete revision of a bill should you take words seriously.  Written words matter; talk is cheap.  So far, nothing said and certainly nothing written offers any assurance that what is proposed to happen will happen in any other way.  Let those words guide your actions.  Make no assumptions, accept no assurances.  It is time for all these people who have been offering vague assurances to put their words on legal paper rather than in in tweets, emails, or E-lerts.  Only when those words make it to bills that matter do any of those stupid assurances have any meaning.  Beware of Emergency Clauses, but beware even more of clauses that have no certain date in them, or bills being forwarded into a Black Hole with blanks where numbers should be.  If you take those assurances at face value, then you are a sucker, and you are playing right into the hands of the charlatans of the Gilded Palace of Sin.

Note added later:  As predicted, the Senate Workforce Committee punted both SB 559 and SB 560 to the Joint Ways and Means Committee.  The votes were both 3-2 in favor of referring without a recommendation.  Senators Gelser and Monnes-Anderson opposed sending either measure forward.  But, in a seriously bizarre twist, perhaps influenced by this blog, perhaps by the sheer number of panicked members, there were three new amendments sent up along with the original SB 560 and the already extant 10 amendments (including the one to eliminate the Emergency Clause).  Of the three new amendments, only Dash-11 and Dash-12 merit note.  While these amendments seem to be variations on the same theme, there are three elements of note in each:  (1) the elimination of the decoupling of the Money Match annuity rate from the system’s actuarially assumed interest rate (the whole section has just vanished); (2) the inclusion of a clear implementation date for all remaining provisions of the bill at 1/1/2018; and, as predicted (3) the restoration of the Emergency Clause.  It would be nice to claim victory or to offer assurances, but this isn’t the way life works.  The effect of this is simply to add more permutations and more combinations of ways in which Joint Ways and Means can choose to implement changes to PERS going forward.  As I noted elsewhere, it appears that we are nearly back a ground zero, with a new group of people to consider changes to PERS not necessarily based on policy considerations, but solely on the basis of how well the changes help balance the 2017-19 budget.  Since the Senate Workforce Committee made no choices, made no recommendations, Joint Ways and Means now has a Chinese menu of options from which they can select one from Column A, one from Column B, and give current and inactive workers an egg roll and a misfortune cookie.  Sadly, this offers those in the position of trying to time retirements to avoid the impact of these changes no guidance whatsoever.  Not only has nothing been clarified, now people are faced with nearly the same list of options proposed long ago by the Portland City Club (except the COLA change is now off the table).  The list of amendments reads like a recitation of that list of changes, coupled with the spaghetti theory of jurisprudence attached - we magicians of the Gilded Palace of Sin do hereby resolve to throw anything we perceive as legal up against the Supreme Court’s wall, and we will take whatever sticks.  It probably isn’t that bad, but it sure feels that way.  [This will be my last post before the end of April; nothing is happening and I’m leaving town.  I’ll be back before anything worth commenting on takes place].

You Want It Darker (Part 2)

This post is not likely to make very many people happy with me.  But, I have to say that after watching yesterday’s public hearing on SB 560, I can say that PERS members (except two) did themselves in.  They allowed themselves to become victims by total apathy and disinterest.  The blame is shared with others, but I reserve most of my scorn for the members who will be directly affected by anything and everything in SB 560, in whatever form it becomes law — and it WILL become law, mark my words.  Only two active members testified yesterday.  Both were Tier 1 Money Match on-the-edge of retirement.  Both commented about the harm from the annuity rate reductions and made vague references to its timing from the dash-3 amendment and the dash-10, without either actually pointing out the language of the bill that is precipitating their angst.  (we’ll come back to this point in a minute).  There should have been 5, 10, or 20 people signed up to testify, and the room should have been packed with affected members.  Neither happened.  Inside the room, which was anything but full, were about 2/3 professional lobbyists, and the remaining third a mixed bag of people who may or may not have been affected by any of this legislation.  SEIU testified, and basically sold members down the river by urging the committee to move the dash-10 amendment forward.  League of Oregon Cities testified urging moving the dash-10 amendment forward.  AFSCME didn’t testify and may not have even had a rep in the room; OPRI was nowhere in evidence either.  The PERS Coalition certainly didn’t testify and I didn’t recognize the backs of any of their reps heads.  OEA was absent from testimony, OSPOA was absent, the Firefighters were absent.  In short, the testimony was insipid, basically useless, and certainly ineffective.

The one issue raised during discussion was the presence of the “emergency clauses”, and the committee agreed that “…it didn’t want to precipitate a crisis” and would consider removing the emergency clauses before sending the bills up to Joint Ways and Means on Monday.  But, the committee seemed oblivious to the function of the emergency clauses, and unaware that removing them is going to delay the process of resolving these matters before the Supreme Court and prevent the 2019 Legislature from cleaning up after any mess made by all of this (if there is any mess).  It was painfully obvious that no member of the Committee had bothered to read the dash-10 amendment, which we learned from commentary was NOT a Tim Knopp-originated bill, but was a product of a group of luminaries called the Oregon Business Council (which counts among its sponsors the four big Universities - UO, PSU, OSU, and OHSU - as well as my wife’s former private employer, and every major large corporation in Oregon).  This seemed to lend the dash-10 amendment a caché that brooked no criticism and near awe from members of the Committee and certainly the agencies and Union testimony. (Edit:  more than one person has suggested that they detect the fingerprints of former Labor Leader, Kulongoski staffer, Kitzhaber staffer, and Oregonian occasional columnist, Tim Nesbitt on the OBC dash-10 amendment.  I have no evidence one way or the other, but it is an interesting rumor about a labor traitor).

All that said, the Committee announced (in effect) that it was throwing up its hands on PERS, that it could come to no consensus on the bills or amendments, and that it would forward both SB 559 and SB 560 and ALL NINE amendments to the Joint Ways and Means Committee with no recommendation.  Only Senator Laurie Monnes-Anderson objected to this approach, feeling that the Committee was abdicating its responsibility for recommending policy to Joint Ways and Means - a budget committee that normally does not make policy.  This drew agreement from Senators Taylor and Gelser, but no change to strategy.  The form of what goes up remains to be seen on Monday.  Editorial amendments were promised, like taking out the emergency clauses, but a date with Legislative Counsel may change that when they realize what removing those clauses does to the legislation.  Again, they seem completely oblivious to the language pertaining to the decoupling of the assumed rate and the annuitization rate for Money Match retirements (and since dash-3 is still in play, other retirement forms as well if they involve a beneficiary or alternative payee or disability).  They seemed to want to provide a date certain (like 1/1/18) for the effective date of the changes and think that removing the emergency clause would do that, but I don’t see it that way unless either the dash-3 amendment is changed significantly, or somebody actually reads the language related to the same issue in the dash-10 amendment.  Again, the Committee seems to think the Emergency Clause itself is the issue, but that’s a red herring (read my previous post for an explanation of why the emergency clause is there).

So what makes this darker?  First, no effective representation of member interests in the ONLY meeting in which you would have been directly allowed to testify.  That signals apathy, and encourages malice (it sends a message of resignation to Legislators that PERS members are resigned to being screwed over some more).  Second, a complete abdication by the the Senate Workforce Committee whose function was to recommend policy changes, and it punted to Joint Ways and Means.  This empowers Ways and Means to literally do whatever they feel is necessary to make the budget balance, and PERS is a large component of their thinking about ways of balancing the budget.  No more likely public hearings; virtually everything in Joint Ways and Means will be done in closed session except possibly final votes or invited testimony.  The voice of critics has effectively been silenced, and control has passed from a policy committee that didn’t recommend policy to a budget committee concerned only with budgets but being given the opportunity to choose from a cafeteria menu of many expensive (to members) options without any constraint on committee members.  Oh, I encourage you to write to members of the Joint Ways and Means Committee to express your concerns, but I don’t expect those letters, emails, or phone calls to have much impact.

Anything that happens from this point forward will probably come as a surprise to all members.  While I had hoped that members would have something specific to target for Ways and Means, the complete refusal of the Senate Workforce Committee to take a principled stand on these measures, and the complete apathy of affected members have left the door open for any and all of the possible concepts introduced in SB 559 and SB 560 (and all its many and varied amendments) to become reality.

Moreover, there seems to be a cavalier attitude among many of either of two views:  (1) the Supreme Court will invalidate most or all of these; or (2) I can’t do anything about this because I’m not close enough to retirement to matter; I’m generally screwed.  With the possible exception of the $100,000 FAS cap (still there mind you), I see virtually all of the changes meeting the prospective test of the Moro Court.  So, depending on what ultimately comes out of Ways and Means, there is a high probability that much will be upheld as meeting the Moro standard of prospective.  As for those who say, I’m screwed, let me remind you that the graveyard of history is filled with victims who never raised their voice against the injustices perpetrated again them.  I’m not blaming the victim here, yet, but I do have to remind you that there has been an opportunity presented and then squandered.  From here on out, it becomes much harder to make the kinds of changes that might have happened in Workforce if there had been a more concerted effort to get out and actually protest the changes in real time.

So, the original “You Want It Darker” post a couple of weeks ago, has now become “You’ve got it darker”.  Remember, I’m only the messenger.

NB.  Even if the Senate Workforce Committee successfully removes the Emergency Clauses from everywhere in the two bills, there is nothing to stop the Joint Ways and Means Committee from adding them back if it means revenue sooner, or litigation resolved sooner.  In fact, I expect this would happen to facilitate getting the litigation started immediately.  Second, by making no recommendations, not only does Ways and Means have a cafeteria menu of choices, they could also gut and stuff either SB 559 or SB 560 or both to do whatever they wanted to PERS members.  Finally, and this may not be obvious, but from Monday forward, we will be in a nearly complete information blackout with Joint Ways and Means operating largely in the dark, leaving all members in the dark, leaving me in the dark except for the few inside contacts I may have.  Not only does this NOT REDUCE STRESS, it may actually INCREASE STRESS because now we will have little to no advance warning what is coming, and only the projected close date of the legislature of June 23 or the mandatory close date of July 8 to guide us.  As I’ve tried to say, you’ve now got the worst of all worlds while trying to make your decisions.  Tim Knopp’s assurances that “…we don’t want to precipitate a crisis” is meaningless.  Just remember that Betsy Johnson (DINO in chief) is a significant player in Ways and Means, and she was Knopp’s partner in crime in the pre-session PERS Workgroup with a particular animus towards inactive members (of which Dash-10 makes all dual ORP-PERS members the newest victims of Betsy’s animus).  (EDIT:  The dash-15 amendment, introduced 4/14 removes the emergency clause from the original bill, but retains it all of the amendments.  You are left to your own devices to figure out what that scam is about).

The Bottomless Lake (Again, A Long Post)

Did you ever feel like you are falling into an abyss with no bottom?  If you haven’t, then you aren’t a still-not-retired PERS member.  Today brought the latest salvo from a malign, myopic, and malignant group of Republican frat boys in the Senate  who have wet dreams just thinking about ways to screw all PERS members not yet retired.  It came in the form of a 52 page amendment to Senate Bill 560, that seems to consolidate the various features of the 8 previous amendments to the bill, while adding a few new bits drawn from other bills (SB 559, SB 913, HB 3103), and sparing no one not yet retired from the mercenary greed of employers who simply don’t want to pay for the retirement benefits they promised when you started work.  Of course, they will  state piously that accrued benefits won’t be touched, but that is laughable after reading this bill.  Of course, it might just be true, but would require PERS to do mathematical gymnastics that would make Stephen Hawkings’ symptoms 10 times worse just thinking about the math.   In short, I know no other less-offensive way of saying this, but SB560-10 is a royal clusterfuck to anyone still drawing a breath but not PERS benefits.  Oh, and there is advance notice, sort of.  I’ll explain below.

First, for a possibly good piece of news.  The dash 10 amendment conspicuously removes the egregious FAS salary cap of $100,000 previously proposed in an earlier amendment.  Just to douse your good feelings, do be aware that all of the 9 amendments remain in play, so this might be one of those magician’s tricks to get you looking at the big object, while they busily perform sleight of hand to distract you from the smaller object.   Don’t get excited yet.  Remember the axiom:  objects in mirror are closer than they appear.

Now for the elements of the bill, made necessarily brief to keep this post readable.  They are in order of my memory, not the order they appear in the amendment:

1.  5 year average instead of 3 for Final Average Salary (this is actually from SB 559, but seemingly greatly elaborated here).

2.  Lowering the Full Formula service multipliers from their current 1.67% and 2.0% for Tiers 1 and 2, and from 1.5% and 1.8% for OPSRP to some UNKNOWN amount.  This version removes the specific 1.0% and 1.2% multipliers and literally replaces them with blanks, to be filled in at some point so you can be surprised.  I’m guessing that the numbers will be higher than the 1.0% and 1.2%, but still significantly lower than they are now.  This might be their way of waiting until the end to fill the “right” numbers to make the budget balance.  Beware of blank spaces on forms.

3.  Redirecting the employee contribution from the IAP to a individual pension account that basically serves to offset some employer liability for paying out its part of your pension.  This isn’t new, but what is new is that the statutory requirement for employee contributions has been amended from its current mandatory 6% to a vague series of blanks ranging from a low of ___% to a high of ___%.  Again, because of the labor contracts, it is likely that employers will have to offset elimination of the pickup with a salary increase for many employees, but what is diabolical is that by changing the mandatory contribution from 6% to some range, I can envision the employee contribution being made artificially low so that the employers will only have to offset a small part of your salary.  The rub here, of course, is that it requires PERS reevaluate member (employee) contributions every two years and recommend lowering or raising them to meet whatever targets are set for the employee to contribute to his/her own retirement.  Of course, that won’t require a salary offset because the contracts will have negotiated out the replacement for the pickup and will have no language to anticipate this potential time bomb (unless Unions are smart enough to see this coming). It kind of makes you wonder whether members will get the same benefits as employers when employee contribution rates are calculated.  Will there be smoothing?  Will there be rate collars and all the other ways that the PERB and employers have come up with to lead us down the path we find ourselves in today.  Employer greed knows no bounds.

4.  Cutting the annuity rate for Money Match retirements.  This was confusing and confused in the dash-3 amendment.  The current revision is clearer now, but you have to search very hard through the existing statutes to reassure yourself that it only affects annuities for Money Match retirements.  Instead of committing to a fixed rate of 3.5%, they have instead substituted a reference to the annuity rate recommended by the Pension Benefit Guarantee Corporation, an entity that governs private sector pension insurance and sets minimum interest rates on annuities from private pension plans.  This rate is variable and changes periodically, up or down, with the economy.  Rest assured that the current figure sits around 3.5% or possibly a bit lower (I really didn’t bother to look).  The most important fact here is that this change is the ONLY change that does NOT take effect on January 1, 2018.  This piece takes effect on passage of the bill and its signature by the Governor, if this piece of the bill survives that far.  Thus, if you are not willing to gamble, if you know you’ll be retiring under Money Match (a few very long term Tier 1s still working, plus a boatload of inactive Tier 1s) you might want to give serious thought to a May 1, 2017 exit.  I’ve noted elsewhere and in comments that because of the process involved in getting this bill to “YES” is going to take awhile, it is likely you could wait until June 1, 2017.  But, trust me, waiting an additional month isn’t going to make a noticeable difference in your pension, so I still advise May 1, 2017 to play it safe.  But again, ONLY if you are 100% certain that Money Match is going to be your mode of retirement.  If not, then you can wait until December 1, 2017 to retire without feeling the effects of any of the above changes, and this one is irrelevant to Full Formula retirements).  Please also note that the biggest victims will be those people, inactives primarily, who aren’t paying attention.

5.  Elimination of further accruals of sick leave and vacation time AFTER 12/31/17 that apply to FAS.  All existing accruals will be honored through 12/31/17.  After then, you can still accrue sick leave and vacation time as before; they just won’t add anything to the calculation of your FAS at retirement.  This piece, plus the longer averaging period, combine to lower FAS in most cases by possibly as much as 10%.  Add the fact that the statutory 6% contribution will likely be lowered, and the salary offset equally lowered, will also serve to diminish FAS going forward.  For long term employees with lots of accrued sick leave and vacation time, this probably won’t have a huge effect in the near term after January 1, 2018.  But for younger employees, the effect could be more noticeable.  (Edit:  One additional question does arise in all this.  I wonder how use of sick leave post-January 1, 2018 will be charged. Is it FIFO - first in, first out, which would be a real downer - or LIFO - last in, first out, which would be the desired outcome.  If you are in a union, this is something you might want to ask because it WILL make a difference if you need to use sick leave Edit Later:  I just discovered that Tim Knopp introduced a dry run of this particular concept in the 2016 short session that explicitly states that the implementation is to be FIFO, which confirms my worst fear about this piece of the bill.  Far from being a benign freezing of benefits already accrued, you’d be going backwards to withdraw from your accrued sick leave if you used any after 1/1/18.  This makes this malignant instead of benign).

6.  Declares Oregon University System members who left PERS in 1996 to join the ORP to be officially inactive PERS members.  Allows ORP members in this situation to move PERS funds (employee accounts only, not employer match) to ORP and sever all relationship with PERS.  Under the current scenario, this would be foolish to do because the employer match is worth nearly as much (if not slightly more) than the member account balance in the inactive PERS Tier 1 account.  Why would any sane person sacrifice half their benefit?  It also permits Community Colleges to form their own ORP for existing and new employees.  There are some other provisions here, which seem to let those who chose to remain in PERS rather than ORP, transfer membership again to the ORP but without the employer contributions tagging along.  This is only sensible for a new member just realizing the disaster that they’ve signed up for.

7.  Eliminates some forms of buyback of service time for employees who leave the system before retirement and withdraw the member account balance.  To be more specific, it limits the ability of members who withdrew from the system and they rehired back into the system from buying back the service time they cashed out when leaving the first time.

8.  Orders immediate recalculation of employer rates to reflect savings from these changes.  What a ginormous, bigly surprise.  Let’s spend the money again before the court rules on the legality of some or all of the changes.  That’s the same mistake made in 2013; these idiots never learn.

9.  Declares an emergency and establishes the bill as effective on passage.  Aside from 4 and 8 above, none of the other features actually take effect until 1/1/18, as clearly stated in the bills various parts.  The real purpose of the emergency clause in this case is to start the clock rolling for the Supreme Court case.  If the bill were to take effect on 1/1/18 and not on passage, any litigation would be viewed as “not ripe” until the bill actually took effect.  This would, in turn, make it unlikely that a court decision would be rendered until it is too late in the 2019 Legislative session, delaying any budget adjustments until at least 2020.  This way, the legal ball can start rolling the minute the bill is signed into law.  The clock is very short.  Litigation against any part of this bill has to be filed with the Supreme Court within 60 days of the bill’s effective date; hence the emergency clause.

As is evident from the above, the frat boys put a lot of effort into making sure that all categories of PERS members from all Tiers, of all ages, and from all retirement forms get hammered pretty good by this obnoxious piece of legislation.  Not only do they force you to stare into the bottomless lake, they are also dosing you with Sarin gas while you are looking.  I sense two things are going to happen regardless of how this all plays out ultimately.  There are 70,000+ PERS members eligible to retire today.  The previous record for most retirements in one year came back in 2003, when nearly 19,000 PERS members retired.  I’m guessing that this year the number will break that record by at least a factor of 2.  My private betting is on 40,000, which creates a monstrous problem for PERS itself.  Not only do they not have the resources to manage a retirement load of this size, they have begged the Legislature not to do anything that would inspire a “race to the door”.  This bill virtually guarantees the very thing that PERS warned against.  If this happens, and the court does not uphold many of these proposed changes, the PERS UAL will increase again, employer rates will rise through the roof, and we’ll be back (I won’t, but maybe someone else will) circling the same drain in 2019.  At the moment, I think our Bend frat boys ought to be on the front lines battling Bashar Al-Assad rather than pushing PERS members into the bottomless lake.

The BIG day for all this is tomorrow, April 12, in Salem.  The Senate Workforce Committee is scheduled for a public hearing (which means you can testify if you get there early enough to sign up) on how this bill, or the individual amendments -2 to -9, plus SB 559 (which seems irrelevant in the context of this bill, but never underestimate the strategy of our frat boy pranksters from Bend) directly affects you and your family.  The meeting is at the Capitol at 3:00 p.m. in Hearing Room A.  The room isn’t huge, but I would love to see it packed inside and outside with hundreds of PERS members affected by this (these) bill (s), and as many people testifying as possible.  Keep your testimony short and too the point.  I can be cavalier, nasty,  and accuse them of malice and stupidity.  I wouldn’t counsel YOU to do that to their faces.  But, to many of these people, PERS is simply a math problem or a financial problem, it doesn’t really involve people’s lives, often into their 90s or beyond.  Your job should be to remind them of the human cost of their decisions.

The Revolution Starts Now

After more than 10 weeks in session, two PERS bills are scheduled for Work Sessions.  These bills are SB 559 and SB 560, both of which have been discussed a number of times in the posts below.  SB 559 is a relatively straightforward bill that attempts to stretch the computational period for Final Average Salary (FAS) from 3 years to 5 years.  The rationale is simple.  If your salary is averaged over 60 months instead of 36, there is a strong chance that your FAS will be lower than if it had been calculated based only on a 36 month average.    It’s effect is unclear on those still working and who are Tier 1, or even Tier 2.  Because the Legislature has to preserve accrued benefits, it can be argued that the 36 month average is a benefit you accrued while working and that the worst anyone could do would be to blend your service periods and use a 3 year average for your pre 2018 work, and a 5 year average for the post-2017 work, producing some obscure and hard-to-calculate weighted average.  I don’t envy PERS if this passes.

SB 560 is a far more harsh bill, although the amendments (not accepted yet; that has to happen in a work session) strip some of its obnoxiousness and replaces it with other obnoxious stuff.  Taken as a package - the original bill, and the 8 amendments - the bill would redirect the employee 6% pickup to some account that would no longer be accessible to the individual like the IAP is today.  It would also cap FAS at $100,000 max, but again the mechanics of this are uncertain and will cause havoc for everyone trying to figure out (especially for Tier 1s) how to implement a bill that preserves the current “no limit” on FAS,while permitting the arbitrary $100,000 FAS.  It is going to be a mess to calculate, and you can expect some ugly litigation over this one.  Moreover, the bill stops further accruals of sick leave and vacation time for FAS purposes (but permits use of accruals prior to 1/1/2018), it changes the vesting length for PERS membership from 5 years to 10 years, alters the statutory accrual factors for Tiers 1, 2, and OPSRP from their current (general service, P&F) 1.67 (Tier 1 & 2), 2.0 (P&F Tier 1 and 2), and OPSRP (1.5 and 1.8), to a flat 1.0% for general service (all tiers) and 1.2% for Police and Fire (all Tiers).  The bill also tries to decouple the existing assumed rate, currently used by PERS for all calculations pertaining to the time value of money, from the pension annuity rate (usually the same as the assumed rate).  The bill proposes to use a pension annuity rate of 3.5%. 

All features of SB 559 and SB 560 are scheduled to take effect on 1/1/2018 EXCEPT for the last item listed - the decoupling of the assumed rate from the pension annuity rate.  That change takes effect on passage, although the language in the bill is a bit confusing in requiring PERS to start using the new factors on 7/1/17. 

These work sessions are both schedule in the Senate Workforce Committee on April 17, 2017 at 3 p.m.  (Hearing Room A, I believe).  There is also another public hearing on SB 560 on April 12 in the same place at the same time.  The ONLY way you can have any impact on this is to show that you care enough to try to attend these work sessions.  They are often tedious and technical, but you can learn a lot by going.  If you don’t go, you are also sending a message that you aren’t concerned, even though there might be perfectly legitimate reasons for not going.  I assure you that Legislators do notice your presence.  Also keep in mind that the Senate Workforce Committee has 3 D’s and 2 R’s meaning that the bill can’t move until a D crosses over and votes it out of committee with the 2 Rs, or all 3 Ds decide it is worthy of a whole Senate discussion and vote.   

I can’t tell you what to do.  I know what I’d do if any of this affected me.  I would mark my calendar and figure out a way to get to Salem, early is better, and try to buttonhole a couple of the committee members before the meeting and let them know just how strongly you feel against these bills.  Both bills are bad; SB 560 is decidedly worse.  If ever it was time, the revolution starts now.

 

Flowers In Your Hair

It was time.  Today I changed the theme of the blog to a more modern look.  I’m still tinkering, trying to get all the various widgets where I’d like them.  So far as I can tell, everything that is supposed to be here is here, but it may take people awhile to get used to the new format.  Let me know in the comments what you like, what you dislike.  I can’t promise I’ll change it, but I plan to move some things around.  Plus ça change; plus la meme chose.

Ain't Gonna Do It No More

Just a quick bit of news today.  In a tersely worded email to members of the Senate Workforce Committee, PERS Executive Director Steve Rodeman and PERS Consulting Actuary Matt Larrabee told the Committee that they were "sick and tired of answering the same questions over and over again from ill-prepared Committee members.”  They further noted that “… if the members would simply bother to read the Statutes and Administrative Rules, the answers to their questions would be self-evident and would save PERS time and money sending two highly compensated individuals to waste time with people who obviously don’t have the time and interest to do the job they’re getting PERS benefits to do”.  They concluded with the admonition to “…find your own flunkies to do your work.  We’re so done."