I’m going to be spending this Legislative session not only appearing missing, but actually missing. I write this from an undisclosed location at a beach far way where I’ve been for the past three weeks. I will return for a brief period in mid February for my wife’s foot surgery, after which we’ll be gone again. My exposure to the Oregon Legislature is largely limited to the news, and the occasional email to/from one of the few folks I still know and rely on at PERS.
Speaking of PERS, the 2019 Legislative Session has opened with a half dozen or so PERS “reform” bills introduced by Tim Knopp of Bend, and at least one has a Democratic Co-Sponsor in Arnie Roblan from some burg on the Coast. No bill has been assigned to a Committee yet, if ever. Although the Dems have a supermajority in both houses, and own the Governor’s mansion for awhile longer, I don’t expect this session to pass without *some* changes to PERS, although I don’t anticipate anything dramatic to happen. What concerns me is the stürm und drang generated by the media over the Unfunded Actuarial Lianility. This is not a real number, but a number actuarially computed to represent the deficit that would have to be filled if every single PERS member retired today, and would receive the benefits promised. Since the retirement ages vary by Tiers, and the demography of the workforce varies all over the map, the UAL is mostly a fiction used to depict the “health” of the system. PEW has injected even more chaos into the interpretation of the UAL by talking of “cash flow” (money in versus money out). Again, the PEW report tends towards the hysterical, while the OIC and the Treasury Department regard PERS as “a mature system”.
PERS is going to be altered this session. I have no doubts about it anymore. The changes can’t be retroactive, but they can be prospective or voluntary. I expect to see both approaches used. If you are eligible to retire, you might want to watch the session closely, but I don’t regard 2019 as a “panic time”. If you are an inactive, already eligible to retire, I’d think about getting out soon. While the Legilslature might not do anything unreasonable, the PERS Board will be revising the actuarial tables AND the assumed interest rate again for effect on 1/1/20. I’m willing to bet quite a bit that the assumed rate will fall into the 6% range, which will affect both future earnings on Tier 1 accounts, and lower the payouts of benefits for both actives inactives retiring after 12/1/19. I’d also be concerned about a number of ballot measures (one a Constitutional amendment) currently floating in the ether that would trigger more damaging changes to PERS, but are likely to be challenged in the Supreme Court, where their chances of being struck down are reasonable, near certain, if they are retroactive. The lead petitioner on the constitutional amendment is my recently defeated, sore-loser, former House member, Julie Parrish (R - West Linn, South Lake Oswego).
So while all of you are watching the Legislature, I’ll remain hidden in my undisclosed beach location, letting Stella run at Dog Beach chasing frisbees and tennis balls. I will remain missing.
