Let Your Light Shine

Despite my seemingly cranky mood of late, I'm actually in a giving spirit. The health gods have been good to me and to my family this year, and we've celebrated intermittently all year by donating to our favorite charities. We usually double-down at this time of year as all the charities are hit particularly hard at the Christmas season. In the spirit of this season, I want to offer a special challenge to readers of this blog. On Tuesday December 19th, I am participating in a special blogger's event held at Jack Bogdanski's blog site (http://bojack.org). I have already offered $500 to match money contributed to the Oregon Food Bank. In this spirit, I am asking my readers to do something a bit different. Between today and next Friday (December 22), I am requesting that you make a contribution to YOUR favorite charity (not political party or 527 organization, please), in an amount appropriate to your means and what you feel you get from this blog. Send me a note by 12/22 indicating where you've donated and, if you feel comfortable, how much you've donated. We will match the first $1000 worth of donations by contributing that much extra to some of our favorite charities. Let's show the world that we PERS members and retirees are concerned about helping those less fortunate than we are and that we put OUR money where the light shines best.

Have a most joyous holiday.


P.S. If you want suggestions for charitable organizations, please don't hesitate to ask. Here are a few I've given to various readers who've asked: Oregon Food Bank, Virginia Garcia Medical Clinics, Loaves and Fishes, Child Aid, Susan Komen Breast Cancer Research, Your Local Church Foodbanks. This is just a partial list, but includes my wife's and my favorite recipients of our charity dollars. Please do not feel obligated to donate to any of these. We only ask that you consider those less fortunate than you and contribute whatever you can.

Money Made You Mean

Or at least confused as this PERS debacle goes on and on and on without a clear and final resolution. We're now entering the 4th year since the Legislature passed its "PERS Reform" and the 3rd year since the PERS Board entered into its chickenshit settlement agreement that sold the members' farms to the barbarians at the gate - we sometimes like to call them "our employers". But the basic problem here is that the lack of movement has caused people to completely forget what this whole legal rape is all about. I'm not going to remind you here; it just pisses me off and in the spirit of the holidays I try to keep my mood swings to a bare minimum. But I was reminded just how muddled this whole mess is when I started receiving emails from people who were claiming to have just gotten invoiced from PERS for "overpayments" resulting from retirements under FULL FORMULA. Holy cow dung batman, this just can't happen. PERS is dead wrong and is itching for trouble sending these out to people who, by now, don't remember who is and who isn't on the hook for repaying PERS. Perhaps this is simply a diabolical trick by PERS to take money from anyone dumb enough to pay it. After all, PERS is no longer an agency looking out for the fiduciary interests of its members; its only obligation seems to be to the employers, who certainly don't have their members interests at heart. In any case, let me say this as clearly and as loudly as I can. If you retired under FULL FORMULA (look at your Notice of Entitlement to confirm this fact), YOU OWE NO MONEY TO PERS AND PERS CAN GET INTO A HEAP OF TROUBLE IF THEY CONTINUE TO DUN YOU FOR MONEY YOU DON'T OWE. Members who retire under full formula have benefits computed on the basis of Final Average Salary and length of service plus a few other possible addons (e.g. sick leave). Account balance plays NO role in Full Formula retirements. Your benefit is not computed from your account balance; it doesn't matter what's in your account balance and it doesn't matter whether PERS paid 200% in 1999, 20% or 3%; it just isn't part of the calculation.

If you receive an invoice from PERS and you can CONFIRM you retired under Full Formula, you have only 60 days to contest this notice. DO NOT call PERS. Write them a letter - formally a "Notice of Contest" - challenging the invoice. If at all possible, hand deliver the letter to the front desk of PERS and make sure you see it stamped as "received" and make sure you get a photocopy of your letter with the same stamp on it. As a precaution, send carbon copies of your invoice and contest letter to 1) Paul Cleary, Executive Director of PERS, Steve Delaney, Deputy Director of PERS, and Steve Rodeman, Interim Head of Benefits Processing (responsible for sending the letters in the first place). Also send all paperwork to the offices of the PERS Coalition (AFSCME) and to its attorney, Greg Hartman (all addresses are easily obtained). If you want to start a lot of trouble, you might also send a copy to PERS Public Affairs Director, David Crosley, and consider sending your story to certain members of the media who might understand the significance of the problem (i.e. don't waste your time with the Oregonian).

This should not happen and you should be angry and mean if it does happen. Money has a nasty way of making us mean. When someone tries to take it away from you illegally, meanness usually has a way of turning ugly. PERS has run roughshod over us; turnabout is fair play.

Hope you're all enjoying the Christmas holidays. I had fun writing this using my laptop computer and my cellular modem. The house was pitch dark and there I was busily surfing the net, sending emails and carrying on like normal as 375,000 of us were without power for most of the night. I still have a hard time figuring out why so many people lose power, especially where I live, where there isn't an above ground power line for a radius of at least 5 miles. Oh well.

Ain't Gonna Look The Other Way

Last week the Salem Statesman journal published a well-written article about the effects of the PERS Reforms. Steve Law authored the piece and many PERS members and retirees appreciated seeing, for once, some real truth in journalism. Following that article, the editorial page editor, Dick Hughes, posted an entry on the SJ blog asking for input on an upcoming (December 2) editorial on the PERS reform. I posted a blog entry which, instead of getting posted, ended up as a "note" to Dick Hughes. I didn't write this as a letter to the editor. Had I, it would have been shorter and framed differently. This was intended to be a blog comment, which ordinarily have no limit. I've published this comment elsewhere; I post it here as well. Please note that the comment is exactly as I submitted it (typos and various grammatical errors in all their glory). Blog entry to Statesman Journal from me (in quotes):

"I would agree with the latest article summarizing the 2006 PERS By The Numbers. Steve Law has accurately and fairly portrayed the effects of numerous things that have transpired since 2003. In fairness, I would argue that the greatest impact on the PERS condition today has been the superheated stock market that reawakened in 2003 and has continued pretty much unabated since then. The PERS reforms have produced modest results and have resulted in numerous and very expensive and time-consuming litigation, much of which continues unresolved. I agree that PERS is in better health today, but I would for once like to see some coverage of the role that irresponsible public employers played in getting PERS into this mess in the first place. Fair reporting would acknowledge that the public employers badgering and hectoring of the previous PERS Board into granting creative accounting solutions so the employers' wouldn't be required to pay their true costs in a timely manner. Things like smoothing asset gains and losses, amortizing underpayments, and other more creative "solutions" to a non-problem actually accounted for at least 50% of the UAL as the legislature convened in 2003. The employers made the problem out to be one that essentially was the fault of the PERS Board, the Unions, and greedy Tier 1 PERS members, but conveniently ignored their own culpability in creating the crisis of that began in the early 1990's and peaked in 2000 - 2003. Given the same hindsight afforded to the employers by way of the retrospective review of a PERS Board decision to credit arguably excessive earnings in 1999 (earnings that were, by the way, presented to the Legislative e-Board and approved by same before decisions were announced), it could also be argued that the growth from 2003 - present wasn't unexpected and a set of reasonable and completely prospective changes could have been implemented without all the litigation that arose from the clumsy way everything turned out. If legislators and the employers and the governor had been willing to place some faith in market forces, ended the variable contributions, redid the variable match calculations, and enacted a ceiling and floor on Tier 1 regular account earnings at the "assumed rate", adopted the original actuarial equivalency proposal first introduced by the PERS Coalition in 2000 (segmented rates), introduced the new Tier 3, I'd hazard a guess that the system would be nearly as well off as it is now, without endless litigation that is costing the system and taxpayers a large sum of money. And without the rancor, bitterness, betrayal, and massive early retirements that are costing the public boatloads of extra money. Mechanisms were already in place for PERS to absorb the 1999 "overcredit" without reaching in to active members accounts, and retroactively altering certain retiree benefits *after* members had made their retirement decisions and without any option to change their decisions. PERS got a "do over" while retirees got the shaft.

The media continues to overplay the piece about a small number of retirees that ended up with more than their final average salary in retirement. We all acknowledge that it happened, but the actual number of people for which this effect is known is a small number out of the total number of retirees. Yes, it *is* true that about half of the people who worked more than 30 years retired with more than their final salaries. But what gets left out - until the most recent Steve Law piece - is that at the absolute peak, less than 1 in 7 retirees worked that long before retiring and so the percent of "overachievers" actually represents about 1 in 14 individuals. Yet, this one fact, above all facts, is the one that was deemed newsworthy and was used to justify "the sky is falling" media blitz.

The SJ can congratulate itself (and Steve Law) for finally getting the real facts out (a point that is completely alien to the Oregonian, by the way), but getting it right once is no reason to be smug. There are a bunch of us bloggers who write about PERS issues who are watching the media extremely closely and are using our pulpits to call out the media every time it misrepresents or selectively reports facts in a biased way. The Oregonian has been punished in two ways -- by a steep decline in circulation, partly caused by PERS members and retirees absolutely fed up with its anti-PERS, anti-public employee bias; and by refusing to patronize local businesses that advertise regularly in the Oregonian. There is no way one could argue that the Oregonian isn't hurting from this. The point here is that the same fate could befall the Statesman-Journal if we start to see a resumption of the biased muckraking we saw in the near past.

We don't ask for much. We want the truth to be told - the good, the bad, and the ugly. There are plenty of culprits in all this. We, as both public employees and now public retirees, are just tired of being made out to be the only cause of whatever problems resulted from legislative tampering, employer whining, and inept PERS administration. We worked hard and accepted the pension system we were offered, not the one we desired or the one we would necessarily have chosen if we were given a choice. We had no choice. We accepted the employers' representations that while they understood our salaries were low, the best they could do was to pick up our 6% contribution instead of giving us a pay raise. Deferred benefits sounded good to the employers and the legislature when they were reaping all the financial savings, but they became a disaster when the bill came due in the late 1990's. So, we want the correct villians singled out here. We didn't cause the problem; we had no choice in the system foist on us; we performed our work in good faith and accepted the retirement representations of PERS, the Legislature, and our employers. Why should WE be expected to be financially responsible for the mess left by others?

Instead of congratulating yourselves too much, why not call for an end to the litigation. Editorialize for the state and the employers to settle these current cases (Arken and Robinson) out of court and back off collection efforts from retirees. This would end the uncertainty for all parties and would let PERS (the system) move forward on more productive uses of their staff and their earnings. It can't be very cost-effective any more to be tying up expensive analysts time to continue to produce reports just for the purpose of litigation. These cases are doomed to drag on for several more years unless some settlement is reached. Call for a retiree-friendly end to the current litigation and we shall be in your debt and you will have performed a genuine public service. "

Weird Science

Nothing exciting in PERS-land today, but I thought this was a fun exercise. You might enjoy it too.

Still Crazy After All These Years

Or at least months. Betsy Hammond and the Oregonian have both claimed their places in my private vision of hell - a place shared with driving through Beaverton at rush hour, and accompanied by the overstuffed sacks of mouse turds, Donald Rumsfeld, Bob Nye, Randy "Duke" Cunningham, Billy Dalto, Wayne Scott, and Karen Minnis. Steve Law's article on PERS in yesterday's Salem Statesman Journal was picked up by the AP and reprinted in the Eugene Register Guard and the Seattle Times. It is pretty pathetic when the Oregonian ignores an opportunity to undo some of their past damage, while the Seattle Times finds it newsworthy enough to report. Apparently some people are too biased or stubborn to learn from their mistakes, or too stupid to recognize they've made them in the first place.

P.S. PERS has a new summary study of Replacement Ratios posted at their website today. I'm sure Betsy and the Oregonian will find some way to use this document to villify more PERS retirees. I can hardly wait to see what kind of "picking and choosing" will take place with these data. After all, we don't seem to be getting poorer fast enough.

Waiting on the World to Change

Or at least for Betsy Hammond and the Oregonian to change. It seems that the Salem Statesman Journal has found religion and has decided to report on the PERS situation as it is now, not as it was once upon a time. Steve Law's piece in today's Statesman-Journal does an excellent job of summarizing all the recent data PERS has compiled on the effects of the various changes brought about by the 2003 reform legislation, the litigation, and the settlement agreement in the City of Eugene case. As I've been trying to explain to Betsy Hammond and the Oregonian, the lame canards of the past are no longer germane to any report on the state of PERS today. I challenge Betsy Hammond and the Oregonian to get off their collective nasty, biased, a**es and write a fair piece about the current state of PERS and recent PERS retirees. Moreover, I want to see such an article NOT repeat any "used to be" stories and partial truths. But if she does, at least put it in a relevant context, such as that which Steve Law does. Otherwise, we've heard it all before and it is no more relevant today than it was when the Oregonian first reported it years ago. The Oregonian needs to stop resting on its Pulitzers and get back to the job that won those awards - first rate reporting, accurately and fairly! You don't need to be the anti-government hacks your absentee East Coast owners seem to expect. Be independent. Get some intelligence. Give people the NEWS, not your biased opinion. Oh, and in case you want to read some enlightened reporting, you can read Mr. Law's piece here.

We'll be watching you Ms. Hammond. Will you be a mensch and report fairly, or will you continue to massage the data into another anti-public employee screed, or will you simply ignore the topic altogether because it doesn't conform to your biased world-view?

American Idiot

As observant readers may have noted, I have taken a special dislike to Betsy Hammond, the Oregonian reporter currently assigned to cover PERS stories. I've never met Ms. Hammond, nor do I want to, but her "over-the-top" coverage of PERS issues has particularly infuriated me. Rarely have we witnessed such blatant examples of media bias than reading Ms. Hammond's recent articles. While Ms. Hammond may not write the headlines to these articles, the articles persist in repeating old canards, distorted choices of "facts", and overall loathing of public employees and their unions. At the same time, she gives a free-pass to public employers who contributed more to the unfunded actuarial liability (UAL) that led to the "crisis" of 2003 than anything done by unions, retirees, or active members. By Ms. Hammond's own admission, the 1991 - 1999 employer rates were artificially low and contributed significantly to the system's shortfall that emerged when the stock market boom turned into a bust in mid-2000. This fact has been carefully omitted from any of the hit pieces done on public employees; apparently, the Public Employers have managed to get the Oregonian to drink the Kool-Aid and the Oregonian's sympathies are obviously with the employers, not the employees. Ms. Hammond (as well as her prececessors) fails to report this crucial detail in any of her recent pieces, but she gleefully repeats the fact that some PERS members retired at more than their pre-retirement income. At this point, who the f*ck cares? It's no longer relevant. Employers have successfully played both sides of the street from the middle - victors and victim simultaneously. Not bad if you can do it. And it is especially sweet if you can get the local newspaper to pimp for you.

Despite repeated complaints (not by me) to Ms. Hammond and to all cognizant Oregonian editors and to the publisher, Ms. Hammond has yet to write a piece that honestly reports how specifically the stock market returns, the reform legislation, the settlement of the City of Eugene case, and all the litigation have dramatically changed the picture of PERS' finances and those of past and recent retirees. Tom Grimsley, a PERS Board member, has protested this persistence of misleading information in an OP-ED piece in the Eugene Register Guard a few weeks ago. I've repeated that in its entirety in an earlier blog entry. In addition, PERS itself just released the 2006 update to its invaluable "PERS: By the Numbers", which you can read for yourself here.

If, in the face of all this updated information, the Oregonian, in general, and Ms. Hammond, in particular, fails to report on this very newsworthy document, it merely underscores its own bias, and earns Ms. Hammond a special place in my "American Idiot" Hall of Fame.

So, Ms. Hammond, are you going to take up the challenge of reporting up-to-date and accurate information about the fiscal status of PERS and the status of retirees since 2003? Or, are you going to keep your anti-public employee chip on your shoulder? Between Bob Caldwell's single-minded decision to have the Oregonian endorse Ron Saxton, and your continued assassination of public employees, it is little wonder that the Oregonian's paid circulation has one of the largest declines of large metro newspapers in the country. Clue: it ain't just the Internet contributing to the Oregonian's decline. Look in the mirror.

P.S. I hope all my readers have a wonderful Thanksgiving. I'm cooking for a big crowd of friends and family and will be taking time off from my anti-Oregonian crusade until Thanksgiving. But, have no fear. As Ahhhnold says in The Terminator - "I'll be back".

Donkey Town

Lots of reasons to call Portland "Donkey Town" (in a deliberately pejorative sense). The Oregonian and its lead PERS donkey, Betsy Hammond, really do suffer from an incredible bias, which is shown every time Ms. Hammond writes anything about PERS. Compare the Oregonian headline (from today's edition) "Schools' 2007-08 rates for PERS at record high", with the Salem Statesman Journal's headline for the identical subject "Lower PERS rates mean most public agencies will see savings". Ms. Hammond always focuses on the "half empty" glass, while others seem to see the "half-full". Now, just to prove that it isn't just the headline that is biased, consider a couple of internal quotes in the Oregonian article: "This is great news", quoting Mike Pittman, PERS Board chair, and "Overall, those two developments [huge returns, court upheld reforms] mean that state, local school districts and local governments are saving a collective $600 million or more per year...", and finally "Portland Public Schools will pay almost nothing in retirement costs apart from debt payments it must make on pension bonds it sold". I'm having a hard time reconciling the unfathomly biased headline with the actual news reported. Of course, Ms. Hammond manages to find a way to stick the knife in yet again - as if she has some sort of weird defect that causes her to repeat this same fact again and again regardless of the context - that *some* (about 4.5% of ALL) retirees from 2000 - 2004 managed to retire at more than their pre-retirement income. News flash to Betsy: "no shit Sherlock. Your investigative reporter skills are just awesome, dudette!".

Oh well, we really can't expect much better from the Oregonian. With few exceptions, their reporters repeatedly demonstrate that the concept of "journalistic bias" is axiomatic. No wonder the common nicknames for the Oregonian are the BOregonian and, better still, the WHOregonian. Richly deserved for Donkey Town's asinine "newspaper".

Little Help from My Friends

For the past several weeks leading up to today's election, there has been a media blitz from reporters and op-ed writers to remind voters that "PERS is a mess". My complaints about the Oregonian's Betsy Hammond are well-known by now, but on October 30th, the Eugene Register Guard published an Op-Ed piece by Fred Starkey, reputedly a former muckity muck with Shearson Loeb on Wall Street. The piece was about as factually out-dated as one could find and many of us wrung our hands in despair as we contemplated how we could turn the anti-PERS media tide around. How could we get the message out that the "PERS Problem" was non-existent now - between the "reforms" and the great stock returns in the past three years, PERS had righted itself, employer rates were dropping, and the system was fully solvent. Mr. Starkey managed to turn that message on its head using outdated as well as incorrect statistics from god-knows-where. Thankfully, PERS Board Member Tom Grimsley published his own reply to Mr. Starkey's misinformation in yesterday's Eugene Register Guard. I repeat Mr. Grimsley's piece here in its entirety:

GUEST VIEWPOINT
After reforms, state retirement system on sound financial footing
By Thomas Grimsley
Published: Monday, November 6, 2006

Fred Starkey's Oct. 30 guest viewpoint, "Just say no to PERS
disaster," does a disservice to taxpayers and voters with outdated,
incorrect or misleading information.

The Oregon Public Employees Retirement System is on firm financial
footing, and costs to school districts, local governments and the
state are declining. Public employers are paying less as a result of
PERS reform and good investment earnings. Reform alone has saved
Oregon taxpayers close to $1 billion in the last three years.

It's true that in 2003, PERS faced financial difficulty and had a
significant gap in funding to provide the pensions promised to public
employees. However, PERS reforms approved in 2003, good investment
returns and employer pension obligation bonds dramatically
strengthened the system. Unlike Starkey's dire portrayal, the facts
show a system that is financially stable - as recently confirmed by
the system's independent actuary, Mercer Human Resource Consulting.

Starkey fails to mention that PERS is currently funded at 104 percent
when counting employer pension obligation bonds (compared to a
national average funding level of 85 percent for all public pension
systems). Even without counting employer pension obligation bonds,
PERS has banked 91 cents of every dollar needed to fund member
retirement benefits.

Employer contribution rates for PERS members will average less than 15
percent of payroll beginning July 1, 2007. Rates for many employers
will be about half that amount due to the investment leveraging effect
of their pension obligation bonds and advance deposits.

Starkey asserts, "25 percent to 30 percent of the budget for each
Oregon government entity is spent on pension costs." Not so. PERS
costs represent less than 5 percent of total state and local spending
in Oregon.

Starkey stated that PERS costs for the city of Springfield's Police
Department equal 42 percent of its budget. Springfield currently pays
less than 13 percent of the city's covered payroll, which is just a
portion of its entire budget. The Rainbow Water District's employer
rate is likewise less than 15 percent of payroll. The Eugene Water &
Electric Board's employer rate is currently higher because of unique
factors related to that entity, and not to the PERS system in general.

Starkey correctly recognizes the importance of earnings to PERS' financial
stability. But here again, his opinions are not supported by facts.

According to a 2006 study conducted by the PERS actuary, the expected
long-term investment return on PERS assets should average 8 percent,
which is the amount needed to cover costs. This expectation is not out
of line with other U.S.-based pension systems.

Moreover, PERS investment returns have averaged about 11 percent per
year over the past 35 years through a fully diversified portfolio
managed by the Oregon Investment Council.

For readers who are interested in facts rather than opinions, the PERS
Web site - http://oregon.gov/PERS - has a document titled "PERS by the
Numbers" that accurately reflects the system's funded status and
benefit levels as of last year. PERS will be updating this document
shortly with information from the most recent actuarial valuation.

Thomas Grimsley of Eugene is a member of the PERS Board of Trustees.
He has taught in the Bethel School District since 1981, and has served
as a member of the district's Joint Benefits and Insurance Committee
for the past 17 years.



Copyright © 2006 — The Register-Guard, Eugene, Oregon, USA RSS


On behalf of thousands of PERS members and retirees, thank you Mr. Grimsley for taking the time to provide this important and refreshing antidote to the constant media pummelling we've been taking for the past half dozen years. Now if some investigative reporters would do their job and publish the straight facts, unselectively, perhaps the wider Oregon public might get the message.

Bottom of the Barrel

Thank god we're in the final weekend of the 2006 political campaign. If I have to see/hear/read another political ad I'm gonna barf. Politicians have no shame; they are the bottom of the barrel and deserve whatever befalls them. That said, I hope that all of you have taken the time to read your ballots carefully, mark them, and SEND THEM IN. They have to be in the hands of your local voter registrar by 8 p.m. Tuesday (November 7, 2006) night. NOT POSTMARKED but IN THEIR HANDS.

I try to stay apolitical on this blog, except for matters related to PERS. This election presented me with a bit of a challenge as I tried NOT to let PERS be the ONLY issue influencing my vote. In the end, I pulled the lever for Ted. I never considered Ron Saxton as he represented the absolute bottom of the barrel, tell them what they want to hear, beat up on public employees, make your rich friends richer, kind of candidate that I loathe and despise. Another tough call was for Supreme Court Justice. Given the judiciary's role in furthering the rape of PERS retirees, I spent a lot of time before pressing the lever for Virginia Linder. Jack Roberts has a lot of political experience, but his legal experience seemed a bit sparse for someone sitting on the Supreme Court. I'm not enamored of voting for a career judge to occupy the highest judicial seat in Oregon, but I'm less enamored of a career politician sitting anywhere, especially on the Supreme Court. I've read a few of Virginia Linder's decisions and they are well-written, well-reasoned, and take positions that I'm comfortable with. I also polled many of my friends in the legal community whose opinions I value. To a person they all recommended Linder over Roberts. That was enough for me. On the ballot measures I mostly voted no on everything. I simply do not trust the law of unintended consequences. The ballot measures may sound reasonable -- and they may be -- but I've been in Oregon long enough now to see how well-intentioned measures, ENSHRINED IN THE OREGON CONSTITUTION, are hijacked by malign interests. Constitutional amendments have too high a threshhold to get removed if they turn out to be bad public policy. Moreover, I do not think that any public policy matter should be placed in the Oregon Constitution. Statutory changes are sufficient for these and require a much lower threshhold for removing if they turn out to be "wolves in sheeps clothing." I didn't have much choice in my state representatives. I live in Richard Devlin's Senate district, and Greg MacPherson's House district. Devlin has done a good job, and he voted the right way on PERS matters. No problem there. MacPherson has done a good job too, EXCEPT for his role as the Governor's water-carrier on the House PERS Committee in 2003. The opposition was weak (was there any?), and so, absent any plausible choice, I voted for MacPherson anyway. MacPherson knows I'm still mad at his involvement in the PERS reforms. I've told him via email and in person, and continue to remind him when I run across him around my district. But, basically, his heart is in the right place. He's a bright guy and his other legislative work is really stellar.

The PERS media firestorm has calmed down a bit, although some loony Eugene writer contributed another anti-PERS screed to the Register Guard. Watch the Register-Guard for responses to this hit piece of mis- and disinformation.

Off for the premiere of Borat tonight. I need something to distract me from the malaise of election season sensory overload.

Not Ready To Make Nice

I'm hearing from a whole bunch of people that Oregonian reporter Betsy Hammond is blaming my blog entry on October 26 ("One Track Mind") for the spate of nasty phone calls and emails she's gotten about the piece she wrote earlier in the week about a PERS legal case. In writing about the latest news on the Robertson case (the PERS Coalition appeal was denied by a 3-member panel of the US 9th Circuit Court), Ms. Hammond could not resist repeating the correct, but highly irrelevant, fact about 30-year retiree benefits under PERS. PERS retirees rightly take umbrage with the continued repetition of that fact, not because it is incorrect, but because it isn't really very meaningful when the group of retirees about whom Ms. Hammond writes represents a very small fraction of all retirees in that period. They resent this characterization because the Oregonian has been reporting that same fact since 2002, but never placing it in its proper context. To be honest, I retired after 32 years of public service and I receive considerably less than 100% of my Final Average Salary. And the vast majority of PERS retirees I know receive less than 100% of their Final Average salary. Yet, each of us has been accused by god knows how many people of ripping off taxpayers for more than our salaries when we worked. It ain't true, but the Oregonian's continued repetition of this same isolated fact has persuaded the typical Oregon taxpayer that "the typical PERS retiree earns more in retirement than he/she did while working". I understand quite clearly that the Oregonian has chosen its words carefully and I've not accused Ms. Hammond or anyone else of incorrectly reporting the fact. But biased reporting is, among other things, when reporters write correct facts but fail to put them in their proper context. By failing to point out that 30+ year retirees represent only 8.9% of the retiree pool, and that the average retiree pension from PERS is considerably less than the amount she reports for this one cohort, she effectively distorts the picture and leaves readers with the impression that her isolated fact has more importance than it really does.

As for Ms. Hammond's source of angst, I'm flattered that she thinks my blog is so influential that it inspired all those not nice emails and phone calls. To be honest, I don't know when Ms. Hammond's article appeared in the Oregonian as I refuse to read its coverage of PERS issues any more. I learned about it on Wednesday and saw an emailed copy of it the same day. I started getting copies of other people's emails to Ms. Hammond long before I wrote my blog entry so it is hard for me to connect the two. Nevertheless, I'll take it as a compliment that Ms. Hammond is perturbed by my blog. The purpose of my blog is to inform and to piss people off. One of my agendas is to call out the media every time I think they distort issues. And I think the Oregonian is the worst offender of all the papers, followed closely by the Salem Statesman Journal. The Oregonian has had a particular chip on its shoulder about this small group of PERS retirees for a long time. I've lost count of the number of times this one fact has been inserted into a story about PERS. The Oregonian has repeated it so many times that it has become a catechism for the electorate and a flash point for me. Let me say this one more time: approximately 9% of ALL PERS retirees between 2000 and November 2004 retired with 30 or more years of public service. The average member of that particular cohort does, in fact, earn a pension greater than their salary. But the fact omitted is that 91% of all PERS retirees between 2000 and November 2004 retired with less than 30 years of service and earn a pension significantly less than their salary. The fact that the Oregonian continues to report is quite irrelevant in the larger scheme of things - it didn't drive the PERS crisis, which, by the way, has long passed.

If Betsy Hammond is upset with my pointing out that the Oregonian has no clothes, tough beans. If she repeats this fact again without properly contextualizing it, the next blog post will be far less temperate than "One Track Mind" was.

P.S. The Associated Press report that was fed to other papers around the state doesn't bother to include the canard in Hammond's article. Since it was irrelevant to the content of the article, they obviously and correctly omitted it.

P.P.S. I'm also aware that Ms. Hammond has actually confounded two different elements of the PERS report to write what she wrote. In fact, the number of 30+ year retirees is less than the number of retirees earning more than 100% of FAS. Ms. Hammond has equated 100%+ with 30+ year retirees. This just makes an even greater mess than reporting the data correctly. But I don't even want to bother going there. I'm willing to accept Ms. Hammond's "fact" as correct even though, as reported, it isn't technically true.

One Track Mind

The Oregonian's Betsy Hammond continues in classic Oregonian (one track mind) tradition of repeating the misleading canard that the "typical PERS retiree" with 30 years of service retired between 2000 - 2004 with a monthly benefit of 106% of Final Average Salary. I don't dispute the statistic, but would object strongly about its relevance to anything. Ms. Hammond claims that her conclusions derive from the 2005 Replacement Ratio Study commissioned by PERS. If you wish to read this document, you can download it from my web site here. Ms. Hammond told retirees, who complained about her misleading statistics, that this document was more thorough than the more widely circulated "PERS By The Numbers", which PERS staff distributed widely and is posted on PERS' own website. Its purpose, according to PERS, is to provide accurate numbers for the media and others who write, speak, and litigate about the PERS system. I don't want to quibble with an esteemed Oregonian reporter, but the idea that the bigger document is somehow better or more comprehensive is hogwash. The abridged "PERS By The Numbers" contains precisely the same information less the pretty colored graphs. Perhaps Ms. Hammond is unable to see the patters in numbers and so, for her, a picture converts into more than a thousand words. If pictures work for you then by all means use them. But the raw numbers tell a much broader story and give the reader a very different picture than the concatenation of information from 4 bars on a single graph.

The source is really a distraction. More important is the fact that Ms. Hammond repeats this same piece of information in nearly every PERS article, and she carefully (conveniently?) leaves out the rest of the picture. By doing so, she leaves the uninformed reader with a generalization that isn't borne out by the facts themselves. Ms Hammond writes: "...Oregon's expensive public pension system, which allowed the typical 30-year public employee who retired between 2000 and 2004 to make slightly more money in retirement than while working...." (italics not in original). Let's clarify a few things that Ms. Hammond failed to mention. First, between 2000 and November 2004, 17466 PERS members retired. Of these, 1556 (8.9%) had 30+ years of service. So the first observation one can make is that the cohort Ms. Hammond chooses to focus on represents less than 1/11 of the ENTIRE RETIREE POPULATION during the period in question. It may be an interesting fact that a typical member of this group earned more than 100% of final average salary (FAS). However, to focus on that fact to the exclusion of the OTHER 91% of the retiree cohort is journalistic malpractice IN MY OPINION. Why is this one fact, out of dozens of other facts in the same report, interesting? What conclusion or inference does Ms. Hammond want the reader to draw? It isn't hard to connect the dots. If you keep mentioning this fact, and only this fact, the average reader would conclude that all other retirees in the same time period must be receiving some scandalously high benefit. Of course, this is untrue as any careful analysis of the entire report would show you.

PERS published these reports and let the world in on them for a reason: so much misinformation was floating around about what PERS retirees were receiving (or not receiving) that PERS felt an obligation to publish the data and let those interested in them pick and choose pieces of interest. And pick and choose they do. The ONLY fact the Oregonian, in particular, seems to be interested in is the one Betsy Hammond wrote about in her most recent piece on PERS. I'm convinced that the Oregonian is willfully distorting reader perceptions by selective reporting of facts. I'm willing to bet that if you were to survey a truly random group of Oregonians about PERS, the ONLY thing they could tell you is that the "typical PERS retiree makes more in retirement than when they worked". This isn't what the Oregonian wrote, but by repeating the same isolated fact exclusively, the only conclusion that the average reader could possibly draw is that the average PERS retiree is living "la vida loca". Untrue! False! Deceptive! Misleading! Biased! -- all signs of a one track mind.

Lowdown

I've finally gotten information that settles the question of how PERS will implement the recovery after year one. This is explained and confirmed in this document from the actuarial firm contracting with PERS - Mercer. You can read the explanation here. The Mercer explanation matches almost exactly with how I interpreted the implementation method in my Lipscomb calculator. The most important "bullet" point is the last one on the page. I think it is self-explanatory. My thanks to David Crosley and Mercer for supplying this needed clarification.

Dirt and Dead Ends

During the week, I spent a lot of time wrestling with stupid compiler tricks trying to get my Lipscomb program to compile so it would run on several flavors of Macs. Thanks to a couple of persistent testers and one particular Mac expert and PERS retiree, I solved the problem and learned a lot in the process. Thanks Dick! The program now available is the penultimate version. I still haven't added the wider age range (sorry Peg). That is on hold right now until I complete a backlog of other work. Give me a week or two and the Lipscomb project will be as complete as I can make it.

Apropos of Lipscomb, the wide boys representing PERS were busy assuring Judge Kantor (in Robinson) that they weren't invoicing anyone yet. That was only a small prevarication as I'm in possession of a real invoice carrying the date of 9/26/2006. Rather than quibble over the PERB lawyers' bending of the truth, I'll focus today's angst on the invoice itself. Despite repeated assurances from PERS that the recipient would be able to see clearly how PERS arrived at the adjusted benefit, that too is an even larger prevarication. The invoice is a 5 page document consisting of a two page 'explanatory' letter, which cuts to the chase (what you owe, when the payment is due, and how much the actuarial reduction in the benefit will be). They include a phone number for Strunk Eugene questions and a number of other pieces of helpful information. The other 3 pages are of numbers, but none truly useful. One curious page is a revised Notice of Entitlement (yep, one of those) with the new benefit. Its most curious feature is a Notice of Entitlement just like the one we got when we retired. It even includes the SAME statutory right to change benefit options within 60 days and the right to appeal the calculation over 240 days. Since the PERB specifically disallowed changes to benefit options this time around and they limited the contest period to 60 days, this is yet another small distortion that may have legal ramifications for PERS. Surely they didn't intend to offer these options to people again. Perhaps they just had a lot of extra old Notices of Entitlement laying around and were trying their hand at sustainability. The truly pissy thing is that anyone trying to challenge PERS (within 60 days or 240 days) wouldn't have enough information from this 5 page "invoice" to do it. That flatly contradicts what PERS told the assembled masses at their 9/23/05 meeting that would happen. Not there in any form.

During the 2005 and early 2006 discussions of the implementation method, PERS staff recommended against allowing retirees who wanted to pay the full lump sum of the "invoice" by rolling over tax sheltered assets (e.g. IRA, 401-K, 457, 403-B, etc) directly to PERS. PERS claimed there was no IRS basis to permit them to do this. Well, now there may be. A newly passed Federal law trumps PERS on this matter and may require PERS to permit this kind of payback. It was discussed at Friday's PERB meeting, but no decision was made. Before long, however, this option may be forced on PERS over its own objections. It will certainly make their bookkeeping a headache. Poor things.

On the labor front, Gene Mechanic, the lawyer handling the Robinson case will be leaving his firm at the end of December. In fact, the entire firm is disbanding with the principals going in different directions. One of the partners will continue to handle the outstanding labor cases, which presumably is the Robinson case, but Gene himself is taking a position in Miami with the SEIU. I have no idea what the ramifications of this will be.

Finally - at least for today - I'm now officially a voting member of Clackamas County. We got our property tax bill last Thursday and our ballots today. I'm still studying many of the ballot measures (I tend to follow the motto that if it takes me a long time to read and to understand a measure, there are too many unintended consequences and so I vote NO. It is a principle that has served me well through many initiatives. I don't care how much I agree with the ballot title or the central intent of the measure, if it takes me long to read it and longer to try to understand it, it is too complex to be enshrined in the Oregon Constitution and too difficult to remove). I will vote for Governor Kulongoski (with my nose pinched); I will proudly vote for Virginia Linder for the Supreme Court vacancy; and I will also vote for my two representatives - Richard Devlin (happily) and Greg MacPherson (grumblingly). I can't wait for election season to be over. Am I the only one who simply can't stand the sleazeballs any longer? If I see one more smarmy and distorted Ron Saxton ad I'm gonna puke.

Universal soldier

For users reporting problems running the Mac version of the Lipscomb Calculator, I am happy to report that I've identified the problem, and fixed it for some people. The version I uploaded today (as in 10 minutes ago) is a "Universal" binary. This means that it will run happily on an older Mac or a new Intel Mac. The only limitation is that you MUST (no exceptions) be running OS X 10.3 or OS X 10.4 (Tiger). Earlier versions of OS X and OS 9 will not run the program. If you have problems please let me know. If you have success, please let me know.

Party At The End Of The World

Time to find out what the end of the world might look like. In case you missed the notice yesterday (buried in the bottom of a lengthy post), I have released OSX and Windows versions of my Strunk Eugene calculator. It has been tested extensively by people who have independently validated the results. I'm confident that I've captured PERS' methodology correctly (at least as it has been publicly explained) and the results should give you a picture of what your situation could look like next July 1. In later versions I am going to try to give the user the choice of implementation date, although there will be constraints as I cannot forecast COLAs out too far. You can download the program by clicking on the link to the left of the blog screen, below the "About Me" section. PLEASE, PLEASE, PLEASE (did I say it often and loud enough) read the posted "Read Me" before downloading and, especially, before coming to me about problems. Thanks to Martha and Peg for their unflagging help in getting out some gnarly bugs and for data entry, and to Dick for some OS X suggestions and help.

Seen it All Before

My sources at PERS remind me that I've "seen it all before". I posed this question to them earlier this year, as they remind me, and they claim to have settled the matter of my question in the last post. They report that the method that will be use to adjust benefits after year 1 of the Strunk Eugene plan, follows the description I give in method number 2. This means that your year 1 "net gross" benefit (adjusted minus actuarial recovery amount) becomes the new base for the COLA in the next year. This is the entire assumption of the actuarial recovery tables used to construct my program. See "Gimme Some Truth" for more details about the differences in methodology.

The more I think about this and discuss it with mathematicians, business people, and engineers, the more I'm thinking there may be a difference of interpretation between the approached intended by the actuaries in using these actuarial recovery factors, and PERS' implementation of the recovery mechanism for producing the monthly benefit check. In the main, my question lies with Option 2 -- the mechanism that PERS has multiply told me is the way they plan to apply the reductions. What still isn't clear in PERS' answer, and what makes a really big difference is how the benefit is figured beyond the first year. We all agree that the first year benefit is computed as: take the revised benefit with all COLAS and subtract some amount representing the proper actuarial recovery factor for your retirement option and your single (Option 1) life expectancy. From this, we come up with the net gross benefit - an amount that has de facto been subjected to the actuarial recovery factors. From this point further, there is no actuarial reduction remaining as the benefit has been reduced by the flat amount in perpetuity. It should be this simple. Future COLAS should be applied to the "net gross benefit" starting after year 1 and should continue to grow without further reduction thereafter. If this is what PERS is planning to do, they should acknowledge it. Perhaps I haven't been clear enough in formulating my question, but I understand the ramifications much more clearly now than I did when I first asked the questions. Watch this space for a more definitive answer.

Speaking of programs, I released version 1.0PR (release candidate 1) for Windows and OS X early this afternoon. You can visit the link over on the left, which will take you to the web page where the program links can be found. Please do read the instructions. They will save you (and me) a lot of time later.

Gimme Some Truth

A number of readers have inquired about the same issue I've been trying to clarify since late 2005. It concerns what happens after the actuarial recovery plan starts and the member is eligible for the next COLA and thereafter. It is easier to explain with an illustration than simple words. I combine both to show you the areas of where a fair number of us have been devoting some free "worry" time.

Suppose Adams (a made-up name) owes PERS $10000 as of July 1, 2007 after all COLAs have been applied to the "revised" benefit and used to offset any "overpayments". On that date, PERS implements the "recovery plan" and begins collecting from Adams' monthly check. Further suppose that Adams' revised benefit is, for simplicity, $4000 per month (Option 1, but it doesn't matter) with an actuarial reduction of $40 per month. So, effective July 1, 2007 (with the August 1, 2007 payment), Adams receives a monthly benefit check for a gross amount of $4000 minus the repayment amount of $40 and the net gross (I like that term) is a monthly benefit gross $3960 (less any normal taxes) [This is another interesting area. Does the actuarial reduction come out pre-tax or post-tax?]. Adams continues to receive this benefit until until July 1, 2008, at which time he will be due another 2% cost of living increase. It's right here where questions start to arise and where PERS members could be in for a rude surprise. I have heard two completely different (and utterly contradictory) explanations of what happens next. One makes a certain degree of sense, but is inconsistent with an assumption outlined in the recovery tables, while the other is consistent with the tables, but against the statutes as I understand them.

So: Year 2, 7/1/2008 we have a 2% cola. The methodology PERS has published clearly states that the actuarial recovery amount assumes a 2% COLA (to the repayment amount) but the methodology outlined in the Powerpoint Craig Stroud showed to the Board implies a level payback amount over a member (beneficiary) lifetime.

Interpretation 1: 2008 benefit = 2007 gross benefit ($4000 * 1.02) = $4080
minus actuarial recovery factor $40, leaving a net gross benefit of $4040

Version 2: 2008 benefit = 2007 net gross benefit ($3960 *1.02) = $4039.20 - actuarial recovery factor $40, leaving a net gross benefit of $3999.20

or

Version 3: 2008 = 2007 gross benefit ($4000 * 1.02) = $4080 minus the actuarial recovery factor ($40 * 1.02) = $40.80, resulting in a net gross benefit of $4039.20.

Version 1 is implied by the explanations I've heard; version 2 relates to a discussion I heard at a PERS Board meeting, and explanation 3 derives from reading the footnotes to the actuarial recovery factors but flatly contradicts the assurances I and others have received that the repayment amount would remain flat. As you can see, version 2 is significantly different than version 1 and is, I believe, illegal (it is not supported by statute or by the Strunk ruling). Version 3 is what a literal interpretation of the recovery table footnotes would mean, but is inconsistent with the argument that the recovery amount is "flat" over an individual's lifetime. One might argue that Version 1 and Version 3 give close results, which is true in this case. But, imagine living 25 or 30 years and each year having the repayment amount grow by 2%. While the relative difference between the net gross benefit and the repayment amount remain the same, the repayment amount does not remain flat, for more than a year. We've all be led, I believe, to think that PERS plans to implement version 1. It is the expectation we've had from everything PERS has said. While none of us is rooting for PERS to win the various legal battles ongoing, if PERS begins recovery, we expect to see Version 1 be the way this happens. But, I don't know for sure anymore and I'm hoping that PERS will settle this matter for me once and for all. We've had enough surprises that I have no patience or tolerance for any more.

P.S. The calculator tests are going well. Some minor bugs have been located and fixed and I'm about to embark on correcting a thinking error on my part (fortunately this isn't computational and should have affected none of the testers' results). The program works well on Windows, but needs some clearer instructions to run on the Mac. I'm hoping that I can get all the fixes and cosmetic changes done this coming week and get a version for everyone to play with by the end of this week or early the following week. I'll announce it in a blog entry and the link to the left will be replaced with an updated link to the new program. Watch carefully.

Supply and Demand

Are currently saturated. I've had many responses to my plea for testers and probably have enough copies out there to determine whether/if there are computational bugs. I have only a few Mac testers, so if you still want to test the program (same conditions as in my earlier request), but run a reasonably new Mac under either Panther (OSX 10.3) or Tiger (OSX 10.4), please drop me a note. Please indicate that you want the OSX version as I'm so used to sending the Windows version that I might do so in error.

Thanks again to all those who volunteered to test the Windows version. I'll post updates when I've heard back from some of the testers.

P.S. added 10/12/06. Early reports are quite positive. Those who've done the calculations by hand report program results to within a few dollars of hand calculations. Since there is no way to guarantee accuracy greater than that, I regard these results as confirming my hope that the program captures the methodology correctly. There are more reports coming and another version will be available very soon. If you are testing the program, please get your reports to me soon: feldesmanm at pdx dot edu (do the conversion for yourself please). If reports continue to be positive and my time proves to be as profitable as it's been so far, I am anticipating a public release of the program by Hallowe'en.

Long Line of Pain

I've just finished and tested an early version of the revised Lipscomb/Strunk calculator. Many of you have downloaded and used the earlier version (see link at left), and the comments have been favorable. PERS has given me the actuarial recovery factors they plan to use in "invoicing" retirees for the benefits they allege you have received in error. We know the COLA increases that members have NOT received. With generous help of Peg - a fellow PERS retiree who did the tedious entry of all the actuarial recovery factors - I have been able to program in the new factors, reconstruct the PERS methodology for using them, and can now reasonably confidently compute how a typical PERS retiree will fare under PERS' proposed implementation plan at the implementation date (7/1/07). As a result, I am looking for people to test the program before it starts to circulate widely. If you meet most of the following criteria and you wish to be an early guinea pig, please contact me via email at the link on this site:

(1) "window" retiree (retired between 4/1/00 and before 4/1/04).
(2) are receiving a monthly benefit check from PERS.
(3) retired under "Money Match"
(4) have 100% of retirement money now in "fixed" account (i.e. did not retain a variable account into retirement)
(5) selected Option 1, 2, 2A, 3, or 3A as the payment option
(6) are between 50 and 80 years old with a beneficiary no younger than 50 nor older than 80.
(7) agree to NOT share the program (yet)

I'm anxious to get this program tested, debugged, and circulating so that people will not be surprised by anything PERS does next year. Contact me if you're interested.

P.S. Some have criticized me for jumping the gun here and assuming that PERS will win the litigation ongoing currently. That is untrue. However, in the event that happens, I want all to be prepared and to understand what is about to occur. It might even affect how you vote in November.

Tangled Up in Blue

The wedding is over. The bride and groom looked spectacular (dad and mom didn't look so bad either); the wedding was a roaring success and the bride and groom are busy making final preparations for their honeymoon. Thanks to all who offered words of congratulations and encouragement.

Prior to the weekend's festivities, I had the opportunity to attend the first of two hearings on PERS retiree cases. These cases were heard before Judge Henry Kantor of the Multnomah County Circuit. I was able to attend the Arken case but had to miss the arguments in the Robinson case. My comments apply primarily to Arken.

From the moment the Arken hearing started, it was clear we were in a different courtroom at a different time. The reporters were gone but 30+ intretrepid PERS retirees plus assorted PERS staff attended to watch Greg Hartman and Aruna Masih square off against Joseph Malkin and Bill Gary representing the PERS Board and the non-state employers, respectively.

The Arken case appears to be deceptively simple. It relies on the language of ORS 238.715 (the collection statute), ORS 238.360 (the COLA statute) and the wording of the Supreme Court in the Strunk decision. All parties agree that its outcome will be based on a straightforward legal principle and nothing else. Basically, Hartman is arguing that the Legislature, by drawing a distinction between a "fixed" benefit to which no COLA was attached and a "revised" benefit that received a COLA, left itself no way out when the Supreme Court struck down the COLA freeze language of section 10 of HB 2003. By doing so, the court left the "fixed" account and the "revised" account intact, associated the "fixed" account with a class of retirees called "window retirees" and left PERS with no alternative but to pay COLA on the benefit the member was receiving on July 1, 2003 or the actual date of retirement - the "fixed" benefit.

Neither the state nor the non-State employers agree with Mr. Hartman's representation of the case. They've called his position preposterous, outrageous and a host of other things.

From the beginning of the hearing, the Judge focused on "big picture" issues, leaving the smaller issues to the briefs themselves. The Judge was concerned how the "class" of retirees in Arken differed from the "class" of retirees covered by Robinson. Both "classes" cover the "window" retirees, but Robinson includes a group of retirees outside the "window". The Judge posed hypotheticals to all the principal attorneys asking what their clients might do in the event that he (the judge) ruled for plaintiffs in one case and for defendants in the other. The importance of this cannot be overstated. A plaintiff victory in either case would have the effect -- at least for the time being -- of stopping PERS from implementing its current recovery plan. What is different about the cases is who would pay for the costs of implementing the Court's decision. It is clear that if the court decides for the Plaintiffs in Robinson -- using the language of Section 14b of HB 2003 -- the employers could *not* be held liable for the restoration of the COLA; section 14b expressly forbids PERS from collecting these costs from employers. On the other hand, if the plaintiffs win in Arken but not Robinson, it is anyone's guess who will pay since the PERS Coalition expressly sued the employers as a class.

I was heartened to hear Judge Kantor announce that he regarded the cases as legally separable, that he will issue separate decisions in Arken and Robinson, but he plans to issue them relatively quickly and simultaneously. The hope is that these decisions will come down before the end of the year. It is clear that the Judge is mindful of the upcoming legislative session and asked all the attorneys several times whether problems arising from these cases could be "fixed" by a subsequent legislature. All the attorneys felt that the legislature could propose a fix, although Mr. Gary claimed that Hartman would be back in court the next day if the Legislature ever did anything to "fix" the system. It was good theatre, but not much else.

My informants who stayed for the Robinson hearings said the theme didn't change, although the defendant in Robinson is PERB, not the other employers. Again, Judge Kantor's efforts focused on defining how the Robinson class differs from the Arken class and on how each party might respond to a split decision on the two cases.

I'm not prone to be a legal optimist, especially knowing that these cases won't be decided until the Supreme Court finally acts in a couple of years. That said, I was more comfortable with Judge Kantor's line of questioning than I was with Lipscomb, Judge Brewer, or any of the SC justices. Only time will tell whether my comfort with Judge Kantor was merited.

Wait for Me

Tomorrow's the big day for the hearings in the Arken and Robinson cases. Both hearings will be held in Room 528 of the Multnomah County Courthouse. The Arken case hearings begin at 1:30; the Robinson case begins at 4:00 p.m. Security is tight in the Courthouse; allow ample time to clear security before getting to the courtroom.

I plan to be in attendance for Arken, and *possibly* for the Robinson hearings. I probably won't be able to put up my summary and first impressions until early next week unless a miracle intervenes. My daughter's wedding takes priority this weekend and the relatives start appearing about the time the Robinson case begins. I *will* get the summary/impressions up but they won't be as timely as usual. Wait for me.

Gnawin' on It

I've been getting quite a bit of email lately from readers concerned that I'm giving up the ghost on PERS issues. Au contraire my friends. There have been no posts because nothing terribly significant has occurred in quite some time. That's about to change next Thursday (September 28th), when Judge Henry Kantor of the Multnomah County Circuit Court hears oral arguments in two very significant lawsuits filed against PERS. (Lest you doubt the significance of these cases, PERS has delayed its implementation of the collection efforts until October - coincidence or concern?). The Court will hear arguments in the Arken case at 1:30 and the Robinson case at 4:00. These cases are defining for "window" retirees as each challenges PERS' attempt to implement recovery of alleged 1999 overcrediting. The cases take different positions and cover the most compelling grounds for preventing PERS from going forward. Of the two cases, my opinion is that the Arken case is stronger, but the Robinson case takes up an issue that has nagged most of us since 2003. Arken involves breach of contract issues and is based on the Supreme Court's own finding in the Strunk case. It also makes the "promissory estoppel" claim (PERS notice of entitlement and all documents and counselling never told any retiree in the window that the 1999 earnings crediting were under legal challenge and that their benefit might change depending on the outcome of the City of Eugene case). Robinson alleges that PERS has deliberately ignored a mandatory element of HB 2003 that, in effect, prevents PERS from using any of the collection techniques proposed. There is considerable ambiguity in the statute under litigation and the outcome of that case will, in all likelihood, depend on a detailed determination of "legislative intent". I've been pessimistic about both cases until quite recently when I had an opportunity to review the written briefs filed in each case. The briefs clearly lay out the basis for the argument and appear to make a much stronger case than I had initially expected.

I plan to attend the oral arguments on Arken, but I'm not yet certain I can stay around for Robinson (my daughter is getting married on the 30th and lots of relatives will start arriving on Thursday afternoon). I urge people to attend these hearings - pack the courtroom - so that Judge Kantor can SEE that PERS' unwillingness to follow the law as it was written has a significant impact on real people. I hope to see lots of people at the Multnomah County Courthouse on September 28, 2006. Please leave early and get to the courthouse early. Security is quite tight (leave all firearms and knives at home :-).

Watch for further information, including directions, in a post early next week.

None of Us Are Free

It's been a long summer. We've fully moved and have completed a long, fun-filled, and exhausting vacation. We're now steeling ourselves for our daughter's wedding at the end of September and the onslaught of relatives and friends that will bring. Thankfully my daughter is organizing the entire wedding and all we've been called on to do is be the human ATM - but we love her and think her future husband is terrific.

Since my last post lots of little details about PERS-related subjects have surfaced. None of this is "new" information and many of you probably know most of it. Nevertheless, for those of you who spent the last month actually taking a vacation from PERS-related news, here is the brief 4-1-1. First, PERS has delayed for at least a month invoicing the first batch of double-lump summers until October. The speculation is that this is because hearings in two significant lawsuits are scheduled for September 28th and a negative outcome for PERS in either of those cases might delay implementation of collection efforts even further. In that regard, both the Robinson case (concerning section 14b of the PERS Reform Bill HB 2003), and the Arken case (concerning the breach of contract and promissory estoppel claims of "window retirees") will be heard in Judge Henry Kantor's Multnomah County Circuit Court on the morning and afternoon of September 28th, respectively. In the meantime, the hearings on the legal fee reimbursements have taken a rather bizarre (and unfortunate) turn. A closer reading of the Supreme Court's decision to award legal fees to the "winners" in the Strunk case has pundits suggesting that the "winning" attorneys will get to recover their fees from PERS, which will, in turn, pass these recovery charges on to the people who "won" - retirees and actives. Whether this is true or not depends on how the next conference goes on October 19th, but it is clear that the reports from the previous conference (August 15th) did not seem to provide any hope that the losers would pay much "out of pocket" for attorney fees. The costs will just be passed on to members and retirees.

That's the peanut summary so far. Just remember the title of today's post - none of us are free.

P.S. It is no longer simple to full justify these entries. So today's post is simply printed in its native format, not prettified. I know how to do it in html but I'm too lazy to edit the html code.

Money

Today, in Salem, the Special Master Henry Breithaupt, will hear fee motions filed in the Strunk/Sartain case. For those wondering what this is about, the Supreme Court did not award legal expenses to the "winners" in the Strunk Case - the PERS Coalition on the "rate guarantee" matter for Tier 1 members, and the OPRI Plaintiff Sartain in the COLA freeze matter. Now, 18 months after the court issued its ruling, the Supreme Court has directed Judge Breithaupt to collect motions and evidence and hear the appeals of the attorneys for the PERS Coalition and for OPRI present their arguments in support of recovering legal expenses in the cases. I'm not sure what amount the PERS Coalition will claim, but I know that OPRI's legal defense fund is claiming expenses in excess of $300,000. The Supreme Court finally ruled (a few months ago) that these plaintiffs are entitled to recovery of some (all?) legal fees BUT has referred the determination of the appropriate amount to a Special Master's recommendation. (THIS Supreme Court really seems to like punting to Special Masters instead of "just doing it").

This strikes me as another example of this court's lockstep politicization. Instead of providing clear and unambiguous guidance, it provides ambiguous rulings that the losers are free to ignore and the winners are forced to take additional legal action to get enforced. Even the unambiguous rulings are ignored at will or trumped by sleasy backroom deals that seem only marginally, if that, legal. To add insult to injury, even when the Court issues a clear ruling - the plaintiffs are entitled to legal fees - it makes the parties go through yet another special master and incur more legal expenses just to get some determination of *what* fees are to be awarded. I *suppose* that if the Special Master decided to award $1 to both the PERS Coalition and to OPRI, it would meet the Supreme Court's mandate. Some justice, eh?

Mamas don't let your babies grow up to be cowboys

Or Tier 1 PERS retirees either (too late, I guess). It's been pretty boring out in PERS-land lately. The only real news has come in the past week or so. PERS announced the 2006 COLA increase today (2% for everyone EXCEPT the window retirees) - so what else is new? The Supreme Court issued its way too long awaited decision in the petition for an award of attorneys' fees to the plaintiffs in the Strunk Case. The Court agreed that the plaintiffs were entitled to something, but then punted to a special master to duke it out with the plaintiffs and the defendants on how much the award should be. The Sartain (COLA freeze) piece of the Strunk case cost more than $350,000 to litigate. Wonder how much the special master will see fit to award. The legal systems continues to grind along at a snail's pace. A hearing is set for September 28th in the Arken case (Window retiree) to consider the motion of summary judgement. The Robinson case is also buzzing along at about the same speed (slowly). For those of you holding out hope for a quick resolution of any of this, I'm laying my personal odds that the current cases won't run out their legal string until about 2008, with some final resolution around 2010. More optimistic predictions focus on 2009. What's one year at this point? AFSCME is holding a Q&A session on PERS this coming Monday night (July 24th at their Portland headquarters). Call AFSCME if you're interested in attending.

Here We Go Again

A repeat title to clarify. Yesterday's post ended up as a mass of corrections and additions. My original first paragraph was the only thing that should have been published. The second paragraph is dead wrong and results from a transposition of numbers. The third paragraph tries to correct the errors of the second paragraph. It is probably easier to just repeat, in different words, the key point.

In 2005, the variable simple earned less than the regular Tier 1 or Tier 2 accounts. This is because the variable is invested in a different pool than the other accounts. The variable pool is a more aggressive mix of equities. In a good year - as last year was - the variable *usually* does better than the regular, which is why there is so much confusion. Unfortunately, while last year was a good year, it was also an unusual year. It parallels a few earlier years in the mid-1980's when the regular outperformed the variable on a pure earnings basis. PERS is not holding back any earnings from the variable. It distributes what is earned. Read PERS' financial pages carefully. You won't find a shred of evidence that the variable earned any amount other than 8.29%. But if you read the summary page, you can be misled into thinking it SHOULD have earned more. You're reading more into the page than is there. Read it carefully.

The Other Side of the Coin

Last week PERS started sending out 2005 statements to active and inactive members. Since those have gone out, I've seen a real increase in my email from Tier 1 members with variable accounts. The question is exactly the same each time. How come the regular Tier 1 earnings were 13+% (only 8% actually paid on Tier 1 Regular accounts), while the variable earnings were only 8.39%? I'm a bit perplexed why PERS has been unable to answer this question for members inquiring. The answer is simple. It is the other side of the coin of aggressive investing. The Tier 1 regular account is invested more conservatively than the Variable account, which is more aggressively managed. In really good times, the variable *should* earn more than the regular and historically this has been true. But, last year was not a "typical" year and the more conservative investment style did better than the more aggressive style. Consequently, the variable actually earned less than the regular. There isn't anything sinister happening here; PERS isn't creaming off variable earnings to stick into reserves. The variable earns what it earns and in 2005 it earned less than the regular. End of story.

Note added at 7 p.m. Not so fast is this the end of the story. Apparently the problem is a bit more complex and requires a clear statement from PERS about what is going on. According to PERS' website, the 2005 financials include the December earnings rate for the variable at 13+%. Since the December earnings are typically within a fraction of a percent of the earnings paid out after end of year accounting, it is somewhat disconcerting to see a 5% difference between the stated December penultimate earnings figure and the actual figure of 8.39%. While I'm certain there is an explanation for this huge divergence, PERS has some big explaining to do. My note above still stands - the variable earnings are supposed to be actual earnings on funds more aggressively invested than the regular Tier 1 fixed account. This year something doesn't add up. Hopefully my contacts at PERS can provide some guidance on this disparity.

Note added even later: My bad. The original statement stands. PERS shows at its variable listing that the 2005 December earnings are indeed 8.29%, not the 13+ I reported earning. I apologize for the confusion. The variable really *did* earn less in 2005 than the regular for the reasons noted above.

Don't Give Up on Me

Every once in awhile some small piece of good news comes along. It's the "don't give up on me" news. Today's good news comes in the form of a Supreme Court ruling that vacates the judgement of January 16, 2003 in the City of Eugene case ("Lipscomb"). While this doesn't undo the effect of the case, it removes the case as legal precedent and may not be cited in future PERS litigation. This is a result of the Supreme Court's ruling last August that mooted the City of Eugene appeal itself by the PERS Coalition. For those interested in reading the Court's ruling, a copy will be posted on my web site later today and an addendum made to this post providing the link.

To be a bit more precise on the effect, normally when the Supreme Court "moots" a legal case, it vacates the underlying case rendering it of no further legal significance. When the Oregon Supreme Court mooted the PERS Coalition's appeal of the City of Eugene judgement, the SC failed to vacate the underlying judgement. This was seen as a glaring omission and legally problematic as it left in force a judgement that itself had been superceded by Legislative action and a settlement agreement. However, as long as the judgement itself wasn't vacated, the case remained as a legal precedent that precluded any further litigation. As I understand it, the City of Eugene ruling simply no longer exists.

I'm Back

It was touch and go there for awhile. I didn't think we'd ever get everything moved. After nearly 17 years of living in the same house, we picked up everything we could and transported humans, cats, frogs, and multitudes of stuff and landed safely in our new digs - in a new county, a new school district, a new zip code, new phone numbers, and one hell of a lot of junk mail that seems to follow us no matter where we go. How do they find us even *before* we filed a change of address? In any case, after of week of being offline I have some of the computers running and connected to the net. My hope is that regular reporting of PERS-related happenings will resume by next week when the dust settles - literally. There isn't a whole lot going on right now. Current members and inactives have started to receive their 2005 account statements. There are many reports that the statements contain "no surprises", and the occasional "WTF is going on with my account". In short, it looks like PERS may have finally ironed out many of its IT problems. The legal front continues to baffle and confuse. By next week I hope to have a summary of the status of the major cases - Arken et al, Robinson et al, and Robertson. If you hear any good gossip or rumors, my email address remains the same.

When I'm Sixty-Four

Is about when the Arken case will be heard. The latest word is that the case has been assigned to Judge Kantor of the Multnomah County Circuit. On May 16, 2006 he scheduled the hearing for Arken et al for May 9, 2008. While one could argue that the basis of the Arken case will not finally affect all the window retirees until sometime after 2007, this insures that *all* "window retirees" will have their benefits adjusted by PERS before Arken is heard. In the meantime, we can wait for the Robinson case to be decided. Lots of speculation about that one. I'd like to be optimistic, but justice delayed is justice denied.

On The Road Again

For the next several months I will be involved in a massive move from our old house to a new house. After living in the same abode for 17 years, the amount of accumulated stuff is just staggering. The move will take place in stages over the month of June and for many periods during the move I will be without internet access until I'm able to set things up at the new house. In addition, once the move is finished, the combination of "moving in" as well as prepping our old house for sale will consume much of July. Finally, we're pretty much taking August off to recover from this ordeal and will spend much of the time at our vacation home in the Bend area. (BTW, we're only moving from Portland to a close-by suburb, not more than about 5 miles from our current location.)

The takehome message is that if you're expecting a regular monologue here, you'd be wrong. I'll try to post as often as needed, but I can't say I'm likely to be as prompt about responding to email. Don't take it personally if I don't answer you immediately.

P.S. (added 5/30). Posting will continue to this blog - I'm not taking the whole summer off from posting as some have misinterpreted. It is just that my posting will probably be limited to significant events rather than the interspersed interesting observations that have no practical bearing on the immediate PERS issues. I hope this clarifies any confusion.

Message in a Bottle

PERS has kindly sent me the "actuarial reduction factors" that will be used in the Strunk/Eugene recovery process. These apply to "window retirees" and serve to represent the repayment factors to be applied to amounts PERS deems to have "overpaid" such retirees. These are *not* mortality factors; instead they combine existing mortality expectations with an assumed 2% COLA on the money being repaid. This has the effect of spreading out the repayment over a longer period of time than mortality tables would suggest but insure that at the expected age of demise (joint or individual), the owed money would be repaid by including the lost interest. It is more complicated, but this method insures that retirees will have less money taken out monthly than they would if PERS simply took the amount owed and divided it by the number of months of single or joint life expectancy remaining. PERS still does not have "actuarial reduction factors" for members who elected "refund" options. Hopefully soon. In the meantime, check back to this post later for a link to the "actuarial recovery factors" I have. I will post them soon.

On an unrelated topic, I have, apparently, overstayed my welcome on Robert Gourley's SEIU retiree's mailing list. Although I never belonged to SEIU or any union (I was unclassified), Robert let me have "guest" status on his list. I had the temerity to suggest that Dawn Morgan did not testify before the Strunk Special Master hearings in a way that favored PERS members (either she wasn't permitted to do so, wasn't asked, or chose not to do so. The reason remains unclear.), Mr. Gourley decided that I no longer deserved "guest" status and he "unsubscribed" me from his list. Strangely, Mr. Gourley continues to cc me on emails related to things I've posted here and elsewhere and so I'm still privy to his various rants about me and other members who post on the Oregon PERS Discussion Group. I want to thank Mr. Gourley for allowing me a window into the inner workings of SEIU politics while I had the opportunity to do so. For me, however, the loss of my occasional email from Mr. Gourley's list spares me from email whose noise to signal ratio was rapidly approaching 100:1.

6:00 pm. Here are the Option 2 & 2A Actuarial Reduction Factors and the Option 3 & 3A Actuarial Reduction Factors. Finally, here are the Option 1 Actuarial Reduction Factors. To use these "factors", you need to determine what you "owe" PERS (my calculator will give you a ballpark figure, but the collection date has changed and the amount you owe will be different. It's a good start though). To use the factors, find the appropriate "factor" in the tables. Then divide what you owe to PERS by this factor and the result is your monthly reduction in benefits or your monthly payback amount. Be sure to use your age and your beneficiary's exact age (in years only) as of 8/31/07. Hope this helps.

Hands Clean

Robert Gourley, of the SEIU retirees chapter, reported that he and others met with Dawn Morgan this morning in Albany (see "Tell Me Why?"). Robert specifically asked Dawn my question about the 1999 Board and the 1999 earnings crediting decision. According to Robert, Dawn said: "I don't remember getting any specific advice about how to distribute the earnings. What we did get advice about was about putting anything into the contingency reserve account. We spent a lot of time trying to figure out whether to put money into this account, and if so, how much. In the end the attorneys advised against funding the account. The PERS statute, which had been in place since near the beginning of the fund, states that the contingency reserve could only be used if the fund was unable to pay benefits. Because the fund is now so large that it is inconceivable that it would be unable to pay benefits, the lawyers said that any money put into the reserve could not be taken out. Interestingly enough, this information was never allowed into the court record. Had it been allowed, I'm confident that Judge Lipscomb would not have found that the Board had breached its fiduciary duty. That would have meant that they couldn't ask for the 1999 earnings back from retirees. Because the new PERS Board was prevented from having any contact with the old Board, they didn't have any way of knowing that this was the case. The settlement that was struck prohibited the information entering the record at the appeal level, too. This should be of interest to anyone trying to understand the Board's actions, or anyway that's what I think. Dawn"

This is very helpful piece of the historical record that has been missing from the discussions up-to-now. Many of us suspected that the Board's actions in crediting the 20% for 1999 was completely within the Board's discretion and that they acted in accordance with legal advice given at the time. Dawn's information indicates that there was virtually no discussion of the earnings crediting rate, but instead a discussion of the need to, or not, fund the contingency reserve. This puts the Board's actions in a slightly different perspective, but also reinforce the claim that there was nothing inappropriate about their actions in 2000. It's nice to see this information out in some form. The state, the employers, and PERS have been working double-overtime to prevent this information from reaching the courts. In so doing, they've permitted a legal travesty. Hopefully, we'll eventually get what we were promised. I'm not holding my breath. Blue is not a good color for me.

Magical Mystery Tour

For PERS members, the Fall elections present some interesting conundrums. As local pundit Jack Bog noted on his blog this morning, "welcome to Neil Goldschmidt's third term as Governor." Jack was referring to the fact that either the Democrat Kulongoski or the Republican Saxton are pretty much creatures of Neil Goldschmidt, and no matter who wins it will simply be another Goldschmidt term. Whatever. What concerns me is that voting this fall will be, for me, a choice between Tweedledum and Dr. Evil. Kulongoski's position on PERS is well-known and hard-felt by any of us in the "favored" group. Saxton's animus toward PERS and PERS members has been just about as in-your-face and public as any politician's position - he is, indeed, the Lars Larson of realpolitik. People will confuse you with Saxton's "moderate" views, but I've heard nothing from Saxton that separates him from Rush Limbaugh. Of course, few PERS retirees can stomach voting for Ted. This leaves, who? Ben Westlund? Pundits are already trying to figure out who Ben Westlund really benefits and hurts. Some say that newly independent Ben is still a Republican in sheep's clothing; hence, a vote for him hurts Saxton. Others point out that union members and PERS retirees - a sizeable group of people - will be hard-pressed to support Kulongoski and so a vote for Westlund helps Saxton. For me, the gubernatorial choice comes down to which weapon I'd like to use to kill myself - a 9 mm Glock or an Uzi. No matter who I end up voting for, I'm gonna hate myself in the morning. Not a comfortable position to be to be sure. More mushrooms please. Time for that magical mystery tour.

Tell Me Why?

Dawn Morgan, former PERS Board Chair, is scheduled to speak about PERS on Thursday May 18, 2006 at 9:30 a.m. at Novak's Restaurant (across from Heritage Mall) in Albany, OR. As I've noted elsewhere, I wouldn't give Ms. Morgan the time of day, but since this is the first time I'm aware of her talking publicly about PERS since she ransacked the PERS membership during her testimony in the Strunk case, I'd be interested in hearing her side of the story. I'd go to Albany myself and ask her in person, but I have other things to do Thursday morning. If any of you go, feel free to ask her MY question: what advice did the AG's office give you in early 2000 before you credited the 20% to Tier 1 PERS member regular accounts? This has been the flash point for a number of legal motions, and the AG's office has always declined to provide this evidence on attorney-client privilege grounds. Since Ms. Morgan seems to be neither attorney nor client, she has no special obligation to keep that information private. I'd be fascinated by her answer, especially if it is what I think it is. So Dawn, tell me why????

Crossroads

I had to miss last Friday's OPRI meeting in Salem. I was partying in California with relatives as my nephew Matt got married. I was especially delighted to see my nephew Adam (Matt's brother) and his new bride. Adam just returned from an 18 month tour of duty in Iraq and a 6 month post combat deployment in Germany. He's now busy training new recruits in Kentucky. (While we're not big fans of the Iraq circus, we're damn proud of Adam's service to his country, and extremely thankful that he returned with both mind and body in tact).

On the PERS front, I'm still trying to get a summary of the OPRI meeting from one of the organizers. I do know that 150 people attended to hear Paul Cleary from PERS speak. In addition attendees heard from Greg Hartman who provided some legal updates on the Arken case (Multnomah County) and the Robertson case (federal case awaiting an en banc hearing in the US 9th Circuit), and from Gene Mechanic, who represents the PERS Coalition in the newly filed Robinson case. Currently, I have no specifics on what either Hartman or Mechanic told the crowd, but Paul Cleary generously provided the complete Powerpoint he gave to the group. It is available for viewing and download at the OPRI website. Worth noting is the very revised timeline for invoicing "window" retirees. It appears that the earliest anyone with a "normal" retirement can expect to see an invoice accompanied by a change in benefits is September 2007, at which point a large number of retirees will experience a benefit increase. The reason for this is that the "revised" benefit will have accumulated enough withheld cost-of-living increases that it will actually exceed the current benefit. Whether net benefits increase at this time depends largely on the amount PERS believes you owe and how long they expect you to live.

Funny How Time Slips Away

Ole Willie was right. Here it is May 8, 2006. At 5 p.m. tonight, the clock runs out on all those "window" retirees who wish to appeal that notice PERS sent them in early March. It only seems like yesterday that I got my "Notice of Board Action" and here I'm out of time to appeal it. Fortunately, the PERS Coalition (including OPRI and AOF - groups to which I belong and contribute) has my back with two different lawsuits filed. These cases are the Arken case (lead attorney, Greg Hartman) and the Robinson case (lead attorney, Gene Mechanic). Both cases have been filed as class actions in Multnomah County. To date, there has been no ruling on class action status. Nevertheless, if you want to help the cause, OPRI represents *all* retirees, regardless of former employer. They have a legal defense fund to which you can contribute. They are also having a general meeting of members and other interested parties on Friday May 12, 2006 in Salem. Wander over to the OPRI web site for more information about the legal defense fund and about Friday's meeting. Alas, I'll be in California attending my nephew's wedding and won't be at the OPRI meeting. But invited speakers include Greg Hartman from the PERS Coalition and Paul Cleary, Executive Director of PERS. It ought to be both informative and enlivening. I highly recommend that those who can get to Salem for this meeting attend.

Several have emailed me about my judge comments in a previous post. There are two interesting statewide judicial races and one interesting local race. The most important statewide race is for the Supreme Court. It pits Jack Roberts, Virginia Lindner, and Gene Hallman against one another for the position vacated by former Chief Justice Wallace Carson. The Oregonian has endorsed Virginia Lindner and she's rumored to be Gov Ted's favorite. Gene Hallman has been widely endorsed by the labor unions involved with the PERS Coalition. To my knowledge, Jack Roberts hasn't any significant endorsements. The second statewide races pits Court of Appeals Justice David Brewer (author of the PERS Special Master's Report used in the Strunk case) in a brutal battle against himself. The only choice there would be a write-in to send a message. Final, the local race drawing the most interest is in Marion County where Judge Paul Lipscomb (yep, that one!) is running against Ross Day. This is a tough race because, in my opinion, the opponent could be worse than the incumbent. The major issue in that race seems to be Measure 37, while PERS has received relatively little notice. Nevertheless...... Finally, keep in mind that all of the current PERS litigation has been filed in Multnomah County, so watching the Multnomah County Circuit court elections might be more than a spectator sport this year. My limited experience in/with the Multnomah County Circuit Court system hasn't given me to strong opinions about any of the judges running for re-election. If others have more information, pass it along.

Here We Go Again

In my haste to post new information on the Robinson case (see yesterday's missive), I forgot one detail of the Robinson complaint. In addition to alleging that PERS effectively has ignored the statutory "exclusive remedy" (section 14b) of HB 2003, the suit also alleges that the "Notification" sent out to "window retirees" on March 8, 2006 does not constitute proper notice under the statute ORS 238.715. I'm no lawyer - and don't pretend to be - but I'm guessing that the court won't be too persuaded by this claim. At worst, the court might find that the notice was incomplete, but PERS would be the first to acknowledge that the recovery provisions of ORS 238.715 aren't complete until the member actually is invoiced. Anyway, to me the strongest argument is the section 14b claim, especially since the Legislature passed HB 2003 with this "exclusive remedy" for the City of Eugene case. That language seems pretty clear and unambiguous to me. Guess we'll let the courts sort that out. [In that regard, let me encourage each of you reading this to think very carefully about the judicial elections on the May primary ballot. In the ongoing battle over PERS, the courts are the arbiters of our fate. Judges do make a huge difference, as we've all learned in the past three years.]

Everything Must Go

Not unexpectedly, PERS was hit with another lawsuit filed today in Multnomah County Circuit Court. This is the class action mentioned in an earlier post and is filed by the PERS Coalition. It alleges that the PERB, in adopting the Board Order of January 27, 2006 and then notifying "window retirees" of their intent to recover "overpayments" in a letter dated May 8, 2006, breached the statutes governing such issues. The suit asks the Court to order PERS to collect the overcredits via the mechanism statutorily adopted by the Oregon Legislature in HB 2003, while enjoining them from any other method. This method, known around among friends as the "14b" rule, is named after the section of House Bill 2003 enacted during the 2003 legislature to provide an "exclusive remedy" in the City of Eugene case (this was before the case was 'settled' and before the Supreme Court mooted the appeal). The attorney of record in this case is Gene Mechanic, another Portland labor lawyer with PERS litigation history. The case will be referred to as the "Robinson" case. It joins the "Arken" case as legal tests of the current PERS Board's authority to go forward with plans to recover from retirees.

This lawsuit could still be followed by several more before May 9th, the official end to the 60-day period surrounding the "official" notification "window retirees" received.

P.S. A copy of the petition is posted on the OPRI website for those interested in reading it. The OPRI site also has exerpted section 14b of the statute enacted by the legislature in 2003 to highlight the area of law addressed by this suit. The Robinson case basically asks the Court to order PERS to charge the expenses of the retirees off to administrative expenses as the court already ruled that the COLA freeze was an improper way to recover the money.