When The Ball Drops

My last entry motivated a fair number of readers to email me about PERS' schedule for invoicing. "When will I be next?" is the common question. Folks, PERS doesn't keep me posted on their invoicing cycle. The people who've written to me have come from all over the retirement map, from 1999 to 2003, and from all different types of circumstances. As best I can tell -- and I may well be wrong -- PERS still seems to be "testing" their invoicing by sending out invoices to nearly randomly selected individuals to make sure they've gotten all the billing issues straight and all the calculations and explanations correct. There is nothing I've seen or heard that indicates that PERS has begun a regular and systematic billing of retirees. I suspect that will begin in March and continue for several years. It has also been suggested elsewhere that PERS' stringing this out over such a long period of time is deliberate, but not for the reasons they give. The usual reasons cite manpower shortages, desire to restrict the "damage" to any one retiree by waiting for the "crossover" of benefits to occur, etc. That is all plausible, but one wonders if something more deliberate isn't going on. Why is it that so few retirees - compared to the total number affected - are so vocal about the PERS "takeback"? Do you think that maybe PERS wants to bill slowly so that they never bill enough people to gain a critical mass of outrage? Imagine what would happen if 37,000 bills went out all at one time? Now imagine if only 1,000 bills go out each month? Big difference in reaction. Hard to organize opposition when only a few people at a time get notified. And believe me, relatively few people know enough to be worried about the impact. Most are completely clueless and will continue to be until they get that bill. I know because some of the folks being billed are just now becoming aware there is a problem. Favorite comment: "Why is this happening to me?" "What caused this to happen?". My only response is: "What planet have you been living on for the past 5 years?" Slow billing - PERS manpower shortage and PERS desire to "be nice" or PERS strategy for keeping groups of unhappy people small at any given time? Enough to make you wonder.

Pay The Devil

I don't know whether this is good news or bad news, but I've now heard from about half a dozen people who've gotten their invoices from PERS. First, for the good news. It appears that my Lipscomb calculator is providing people with nearly dead accurate estimates of their adjusted benefits from PERS. The bad news is that I figured it out and programmed it correctly. It is always nice for a programmer to know that his work turns out to be good and reasonably accurate. But this was one instance where I had secretly hoped that my calculator would provide worst case scenarios rather than dead accurate predictions. Any inaccuracies found in the calculator versus PERS' actual invoiced amounts are, in all likelihood, the result of the fixed date for implementation built into the calculator, which is different from the actual date of implementation by PERS. But as we get closer and closer to July 1, 2007, the size of the estimates between my calculator and PERS' invoices should decrease. Other possible sources of inaccurancies result from accounts with a variable component remaining at retirement, buy backs of waiting time, and other nuances that just aren't possible for me to program as the rules are too complex for me to distill into a single-purpose calculator. But, for 85% of the "window retirees", my calculator should give results good enough for people to depend on as a fairly reasonable portrayal of their actual tariff to the devil. For whatever that's worth.

Everybody's On the Phone

Now that everyone should have received their PERS benefit for the month of January (on February 1st) my email box and voicemail runneth over. The question: why did my benefit go down (up) on February 1? Did PERS just implement the recovery without bothering to notify me? The unequivocal answer to this question is NO. The only things that changed were the Oregon and Federal Withholding Tables. These tables are adjusted annually for inflation and employers are required to implement withholding changes effective with the first payroll for time worked in January. Since PERS checks are issued "in arrears", the deposit/check received on February 1 was for the period January 1 - January 31. Thus, this is the first payment of the new year and the first payment to which the new withholding tables were applied. So if your benefit went up or down by a few dollars (mine increased by $15.47) it isn't anything sinister up with PERS. It is just your governments changing the amount they accept as prepayment for your obligation to democracy.

P.S. This whole situation has inspired one of my regular readers to question whether or not we can trust PERS anymore or PERS has squandered members' trust along with their money. Please go to my other blog and discuss Peg's thesis there.

Broken Promises

The Boregonian carried a story today about how the Oregon Investment Council is looking for support to begin investing PERS resources into Hedge Funds. Predictibly, this has a lot of people quite rattled as Hedge Funds are considered high risk investments and seem, to me anyway, somewhat inappropriate for individual and employer contributions to a Pension fund that has prided itself on stability and on the incredible ability of the Oregon Investment Council's acumen in placing funds with investment firms that can meet the expectation of an 8% annual return. As unnerving as this is, I'm of the opinion that this is really a game of sleight of hand. I don't, for a moment, think the OIC's real objective is to get Hedge Funds into the mix of the PERS portfolio. Instead, I think this is a strategy designed to get members and employers all weirded out by the prospect of a portfolio partly invested in high risk hedge funds. In the meantime, the real objective is to scare stakeholders into accepting a lowering of the actuarially assumed rate of return - currently 8% - to something in the 5 - 6% range. A number of years ago, I was permitted to read a private report commissioned by Governor Kulongoski that explored the impact of the 8% assumed rate of return on employer rates, member earnings, and the overall health of the PERS fund. The gist of this report - written by a former member of the OIC - was that in order for the OIC to generate a consistent 8% return on investment, the fund was having to take on increasingly greater risk than is prudent for a pension fund. The conclusion was that the PERS Board should lower the rate guarantee from the current 8% to something closer to 5 or 6%. The upside of this recommendation was that PERS members in Tier 1, who are guaranteed no less than the assumed rate of return, would earn less money on their funds, the actuarial tables would require lower payouts to members at retirement, and the fund would be financially healthier and subject to far less volatility than they are now. The down side of this proposal was the fact that the employer contribution rate is tied to the assumed rate of return in an inverse way. The less money the fund is assumed to earn, the more money the employers have to contribute to ensure that sufficient funds are available to pay out benefits in the future. The author concluded that while this might not be attractive to employers in the short run, that once the Tier 1/Tier 2 member ratios reversed, in approximately 5 - 7 years, and the number of Tier 3 members increased, the long term benefits would be to lower employer contributions and that the short term pain would be offset by long term gains. This report did not see the light of day - or so I thought. But now that I see the proposal from the OIC to invest in Hedge Funds, I'm beginning to think that this "secret report" is beginning to take on a life of its own and will form the foundation for the incredible compromise that will be offered to the unions and the employers. Both will be given the option of either agreeing to let Hedge Funds into the investment mix, with their great potential for earnings coupled with the possibilities of disastrous losses, OR, both can agree to take some heat off the OIC by permitting PERS and the PERB to lower the actuarially assumed rate of return. I'd be willing to bet that if the unions and the members were actually faced with this choice, the lowered rate of return would look a lot more attractive than it does right now. This is a cynical game with the title of "Broken Promises", but looks to be the wave of the future. Since the OIC has had exactly zero difficulties earning returns far in excess of 8% without Hedge Funds in their portfolio, it is hard to see why this is suddenly so urgent now. Consider me cynical, but I think Hedge Funds are being used as a stalking horse for an entirely different agenda.

When My Love Crosses Over

PERS has finally gotten around to sending out 1099-R forms to retirees. Most have received them in the past couple of days. Already there are questions as some retirees are receiving two 1099-R forms where before they had only received one. There is a simple explanation for this. Prior to age 59 1/2, retirees are receiving benefits reported to the IRS as an "early distribution exception" signified by a number "2" in box 7 of the 1099-R. Turn the form over for an explanation of the meaning of the code "2" in box 7. The first 1099-R that you receive is for those months during 2006 that you were UNDER the age of 59 1/2. The second 1099-R will be for the months AFTER you turned 59 1/2 and will be signified by having nothing in box 7. Once you've turned 59 1/2, all subsequent 1099-R's will be issued without the early distribution exception. Congratulations. You've crossed over and now all your retirement funds (IRA, Roth, 401-K, 403-B, 457) are accessible to you without penalty for early withdrawal. That calls for a celebration of some sort.

The Sad Cafe

It has been rumored for some time that PERS staff had gotten their act together and had started invoicing COLA freeze members for the overcredits and had started to revise their benefits. I've been hearing stories for about two months now. I was, at first, puzzled since the official PERS timetable showed COLA freezers not being hit until April 2007. However, the stories I've been hearing have finally been confirmed when PERS posted a revised timetable last week showing that COLA freezer billings began in December 2006. So for those of you hoping that PERS might await the outcome of Arken and/or Robinson, the answer is now in. They aren't waiting, and we can now all join one another at the sad cafe, as more and more of us see what PERS has in store for us.

I guess that if there is any synchronicity in this, it is that I won't have to stare down the barrel at a PERS invoice about the same time the IRS extracts its annual 10,000 pounds of flesh.

I Just Wanna See His Face

Or know his or her name, or the name of the firm. There are so many different PERS-related lawsuits going on right now that it takes a program to figure out which case is which and who is representing whom in each. One high profile case, captioned Robinson, lost its attorney and law firm at the end of December. Gene Mechanic, who represented the PERS Coalition in the Robinson case, left the firm, which also dissolved, at the end of 2006. Mechanic now works as a labor attorney for the Florida branch of SEIU, while each of the other partners in Goldberg, Mechanic et al have moved on to either their own practices or to other firms in the area. When announcing the dissolution of the firm and his departure from Oregon, Gene Mechanic reported that there would be "continuity" on the extant cases, including Robinson. However, I have been unable to determine who will continue to represent the Coalition in this case. I know to a near-certainty that it won't be Greg Hartman and his firm. Hartman and the PERS Coalition filed a claim against the Legislature in Strunk that was diametrically opposed to the position staked out in the Robinson case and so, to avoid a conflict of interest, Hartman recommended that the PERS Coalition (including OPRI) find a different legal firm to represent the plaintiffs in Robinson. That's how Mechanic got involved in the first place. It would be awkward, to say the very least, for Hartman to become involved in this litigation and make the legal argument that is in exact opposition to the one he made in the Strunk case. I've emailed Gene Mechanic to see what information he can provide. He should know, but I haven't heard back from him yet, and I don't know if he will respond. In the meantime, if anyone else out there knows who the new legal eagle is on this case, I and the readers of this blog would appreciate the information.

Update 3:30 pm. Gene Mechanic just emailed me back with the relevant information. Gene continues as lead counsel in the case. He will be assisted by Jim Coon of Swanson, Thomas, and Coon. Jim will be co-counsel and will be involved with much of the appellate work (should it be necessary). My thanks to Gene for his remarkably quick reply to my message.

Title and Registration

I'm now the proud owner of the domain http://www.orpersinfo.com. Since I have a regular readership here, I plan to use my new domain to start another blog about PERS, but let it emerge more organically. The new blog uses an entirely different format and an entirely new and powerful set of tools. My plan is to use that blog to introduce a topic and let people jump in with comments and further the discussion with differing opinions and additional information. It is not intended to replace this blog or to compete with the Oregon PERS Discussion Group. I see it as complementary to all the existing vehicles for us to share PERS information. Unlike OPDG, you don't have to register to post and the engine used does nothing to check the validity of the email address you provide or the alias you use. However, to ensure that spammers don't hijack the new site, there are powerful administrative tools that will allow me to completely block offensive posts, to prevent spambots from posting at all, and to maintain order. Moreover, the way the comments are structured, you have to work very hard to top or bottom post. Every comment is independent and readers can skim the comments without having to put up with rereading the same post a dozen times as posters fail to trim out excessive text. There are still simple ways for posters to ensure that the comments are specifically directed. I've already posted two entries, unrelated to anything here, and both already have a few comments. I have another entry planned for tomorrow after I've had a chance to read the full text of Bush's State of the Union Address. It won't be about PERS specifically, but it is related enough that it will make for a useful and interesting discussion. Please stop by the new blog site and leave a comment about the site, its look, its organization, or the topics posted. All are welcome to join in the fun. I look forward to your continued readership here and at my second blog.

Soul Suckers

I've been hearing from a lot of people who've been invoiced by PERS for alleged overpayments resulting from the 1999 earnings recrediting. A number of readers have shared their invoices with me and it is fairly clear to me that PERS has to do a better job of explaining how they arrived at the numbers. If it is bewildering to me from their explanation, I can't imagine how challenging these invoices must be for people who aren't numerically inclined. Some invoices have been fairly straightforward, but for people who had a complex scenario that involved a portion of the account in variable, who left money with PERS to withdraw a lump sum settlement on the installment plan, had account balances tied up with divorce decrees, the documentation PERS provides just suck the soul out of you. To even replicate the calculations requires that you dig back through a lot of paperwork, which you hope you've saved. Then you have to tediously re-enter data into a spreadsheet and perform some magical transformations and incantations in the hopes you come up with a matching amount to PERS' calculations. These are some seriously complicated calculations when these factors are involved. I don't envy PERS having to do them, but they are absolutely paralyzing for many receiving them. They don't have a clue what to do. My mailbox is overrun with cries for help. PERS' answers to questions about these invoices is, in many cases, less than helpful or instructive. Since PERS promised that ALL numbers needed to replicate the calculations would be provided, PERS should be held to its promise with easy to follow flowcharts that take the individual through EVERY step of the calculation, filling in all the intermediate amounts along the way. Failing that, PERS should hold weekly meetings around the state where people can go and get specific questions answered about their circumstances in real time. If this is going to suck the soul out of unwitting recipients, the least it can do is suck some life out of the people who brought this disaster to you. Perhaps we can ask a few legislators, the Governor, and some attorneys to join in these Saturday sessions. Maybe then would they understand why so many people are complaining that whatever "soul" PERS once had, it left the building about 2003 and it ain't coming back.

Caring is Creepy

During last week's PERS Board meeting, PERS staff reported that the average adjustment to retiree benefits was approximately 1% after the invoicing. This figure was left unexplained and so as a public service, I will attempt to explain this for you. PERS' report is technically correct, but is distracting. The benefit adjustment (plus or minus 1%) uses the CURRENT benefit the member is receiving as the basis for the 1% figure. Once you factor in the recalculated member balance for 1999 at 11.33% earnings and compound it forward to the date of retirement, take the "correct" benefit for the option chosen, and they apply relevant cost of living adjustments (COLA) to the adjusted benefit, figure out the amount PERS believes you've been overpaid, applies the actuarial adjustment, and nets out the benefit, the final benefit is within 1% of the amount you're currently receiving. PERS conveniently ignores the actual words of the Strunk ruling in 2005 and then makes you feel good by telling you it is only a 1% change (for the better or for the worse). I figure that my current benefit has already been reduced by frozen COLA to the tune of about 7% (compounded), so I'm guessing that after the adjustment I'll either be down 8% or 6% depending on where I am in the adjusted benefit-plus-COLA cycle. This is a pretty good snow job - at least as good as the WMD-in-Saddam's-basement scare a few years ago. With friends like these ....

Good Day In Hell

No school, no classes, no work. It's a good day in hell. Since I had extensive plans for today, all bollixed up by the weather, I thought I'd spend my morning learning how to use one of the cool new tools Apple has just made available in Beta for developers. I "wrote" a trivial DashBoard Widget to pull RSS feeds down from this site. You can now get your occasional news from my blog without having to visit my blog. If you own a Mac, run OS X 10.4.3 or higher, and can't live without my site, you're just the candidate to play with my new widget. Contact me back channel if you are interested.

On the PERS front, I keep hearing from more and more retirees that they have gotten their invoices for the 1999 payback and actuarial reductions. From what I've discerned from the invoices, PERS seems to be running a bit ahead of schedule as many "ordinary" window retirees are getting invoiced. The last few people I've heard from retired in the latter part of 2002, so that must mean that I'm on the list to get my invitation to repay soon. When I do, I'll share with all. To reiterate a point I made awhile back, unless you can prove that PERS miscalculated on the repayment amount, there is no current venue that I can think of to contest either the method of repayment or the fact of repayment. Both of those are current subjects of ongoing litigation and I'd hate to see any single member waste financial resources beating heads against stone walls. I'm not caving into PERS unless I can demonstrate they have miscalculated my repayment amount. While I don't expect to be treated appreciably differently, I expect that they'll double check my invoice more than twice before placing it in the mail. I don't expect to see any calculation errors and I'd be stunned if there were. I can imagine a few others whose numbers will be run carefully as PERS knows full well that these people can and do run the numbers very carefully and are rarely wrong. If you have any questions about your invoice, there might be a group of us willing to help you check the calculations, but no guarantees at this point. Our group hasn't formed yet. It is just an idea gestating as we get closer to the big mail dump.

Enjoy your snow day, unless you're reading this from Phoenix, or Hawaii, in which case we already hate you so don't read :-)

Purple Stain

I hope you've all recovered (or are recovering) from the festivities of NYE and from whatever holiday you celebrated immediately previously. We had a very nice week celebrating Christmas at our vacation home in central Oregon with family and our daughter's new in-laws. Lots of snowshoeing, cross-country skiing, and, for the younger folks, downhill skiing. We spent a relatively quiet New Year's eve dining with a few friends. Between my wife's contacts and mine, we have a diverse group of friends who cross paths with most of the "connected" folks around the state, particularly in the Portland area. This means that we are treated to some occasionally delicious gossip that sometimes shows up here. Last night the gossip included something I found rather disturbing, as it gets to the passionate-over-the-top vindictiveness of this whole PERS fiasco. I learned - and I consider my sources to be pretty darned reliable - that during the peak of testimony at the Legislature during 2003, Jim Voytko, then Executive Director of PERS, started receiving a series of death threats being sent to him at his HOME, as well as to his office at PERS. I find this so utterly reprehensible and morally repugnant that I nearly spilled a glass of wine. Fortunately, I only created a small purple stain. I cannot understand how potential retirees, actual retirees, or active members ever expect to "win over" public opinion by threatening the life of a public official charged with doing a job. We may not have liked what Mr. Voytko had to say, but in my opinion, there is NO excuse that justifies death threats against him and his family. Mr. Voytko is no longer at PERS and is rumored to be very successfully consulting for public employee retirement plans in 20 states from his base in Portland. But, this leads me to wonder whether the current PERS Board and PERS Staff is just as exposed. Folks, I know that everything that has gone on is very distressing, but it isn't worth the risk of being charged with and convicted of a felony. I can guarantee you that making a death threat against a public official is taken very seriously, and that you stand to lose far more than just a pension if you're caught. I realize that probably no one who reads this blog is guilty, but I'd hazard a guess that more than one person has had such thoughts. Do us all a favor. If you have such thoughts, keep them to yourself. You do yourself and the "cause" no good by articulating them.

It's Alright Ma (I'm Only Bleeding)

David Crosley, PERS Director of Communications, kindly gave me permission to publish his entire email to me yesterday concerning my post of December 14 ("Money Made You Mean"). As I indicated yesterday, PERS pointed out some factual and potentially interpretive errors in my post and wanted to clarify for me. Since David's response is concise and clear, it seemed better to publish it unedited rather than try to summarize an already short email. I'll have comments on this post later (possibly today, possibly not), as we are leaving for our vacation later today, weather permitting. So for your (in)digestion, here is David's complete email:

"We want to let you know that your December 14, 2006 blog posting has inaccurate information. Benefit recipients who retired under the Full Formula method may be affected by the Strunk/Eugene recalculation and your direction to send a letter to certain PERS staff in and of itself may not preserve a member's right to appeal.

The amount of a Full Formula benefit payment may change with a change in account balance depending on whether the member chose to convert the normal Full Formula benefit (as you stated, Final Average Salary x Service Credit x Statutory Factor) to an optional form of benefit. ORS 238.300 directs that the member's retirement be comprised of an annuity funded by his/her account balance and a pension that "tops up" to the highest benefit form (Money Match, Full Formula, or Formula + Annuity, if eligible).

The normal Full Formula calculation initially yields a benefit payable on a Refund Annuity basis (the Refund Annuity Option). If the member instead elects Option 1, 2, 2A, 3, or 3A, the annuity component of the Full Formula benefit is then revised using the actuarial adjustment factors. The resulting difference from the Refund Annuity Option calculation is then applied to the member's payable benefit (higher if Option 1; lower if Options 2, 2A, 3, or 3A). So, changes in a member's account balance under the Strunk/Eugene recalculation would affect the amount of that annuity adjustment if the member had chosen to convert his/her Refund Annuity Full Formula to an optional form of benefit payment (as the majority of members do).

Also, you appear to assume that these benefit recipients can contest their benefit using the Notice of Contest procedure. In fact, depending on several factors (whether the member previously received a Notice of Entitlement, e.g.), their appeal rights may lay in a different direction. The appeal process is specified in each member's letter, particular to that member's status and issues that are subject to review. So, while the Notice of Contest may be appropriate for some members, it is not for others. Members who want to appeal their adjustment need to follow the appeal process specified in the information provided to them in their individual Strunk/Eugene recalculation letter. They can supplement that process with a letter to some or all of the people you mentioned, but those supplemental letters, in and of themselves, may not preserve their appeal rights.

Please let me know if you would like further information or clarification on these issues."

There you have it. My guess is that some Full Formula retirees "in the window" (not many actually), may see invoices they never expected to get.

P.S. I've just heard another rumor (not verified yet) that PERS is also dunning some members who retired in late 1999, BEFORE the *window* defined by the Legislature. It is unclear what statutory authority is involved here, as members who retired prior to January 1, 2000 wouldn't have been credited with 20% for 1999. One can only surmise that PERS may be taking its mandate further than that granted by the Legislature or by Judge Lipscomb in recalculating the benefit for *anyone* who was credited with more than 11.33% in 1999, regardless of when they retired. Perhaps they've decided that 11.33% is the base and retirements during 1999 must somehow be prorated to the final crediting. This would be a significant change in recent policy, as PERS has previously credited retirements during a calendar year with the greater of the 8% pro-rate or the actual earnings at the end of the month preceding the retirement month (e.g. October 31 for December 1 retirements). I understand that the ceiling is currently set at 8%, regardless of actual earnings, but it wasn't set in 1999, nor was 1999 revised to do anything other than credit 11.33% to Tier 1 regular accounts, not somehow change the way the monthly pro-rates work. So, while this is in rumor form, I regard the source as quite reliable and I will be looking into this further when I return from vacation. In the meantime, the fun never stops. Someday I hope to wake up from this nightmare and discover it was all just a bad dream. Unfortunately, sleeping is challenging these days as more of these cockroaches keep climbing out from under the rocks and interrupting sound sleep.

Way Down in the Hole

I've gotten a note from PERS stating that some points I made in my December 14 "Money Made Me Mean" entry are misleading or wrong. Rather than try to summarize a complex response, I'm seeking permission from PERS to publish the email so that it can clarify; not me. I can tell you the general areas of correction: 1) the "Notice of Contest" may NOT be the appropriate form to contest an invoice (it depends on the status of the recipient and whether or not the recipient has already gotten a formal Notice of Entitlement); 2) that copying in all the various PERS people won't preserve a member's right; that can only be done with the official contest (or appropriate equivalent); and 3) there are certain circumstances where a Full Formula recipient COULD owe PERS money. As I said, the email I received is short and very succinct. It would be a disservice to my readers if *I* tried to summarize something already pretty concise. I will post it in its entirety as soon as I receive permission. If I don't receive permission, I will publish a damn close paraphrase. Stay tuned ...

Just a Song Before I Go

I will be out of town for the holidays and probably won't post much while I'm gone. I want to wish all my readers a very Merry Christmas and a Happy Hanukkah or any other holiday celebrated during this time of year. Reader generosity has resulted in about $2200 in charity donations from you, plus another $1000 from us in honor of your contributions. We still have the 400,000 hit challenge going. It ends at noon on December 31, 2006, so there is still time to generate more donations to charity.

Several readers have inquired about the "Bell" case. This is a new lawsuit filed by the PERS Coalition on behalf of a single member as a test case. I know only what AFSCME has published in its weekly e-Lert. It appears to me to be a case testing the proposition that PERS, by failing to inform members considering retirement, of possible changes to retirement benefits resulting from active litigation, misled people into retiring on knowingly faulty information. I don't know the details, but it seems to me that those members who sought to and retired PRIOR TO the Lipscomb decision on October 8, 2002 would be candidates for this, but there is some view that anyone who retired prior to the enactment of HB 2003 (May 8, 2003) would also be candidates. PERS was anything but candid about any of this litigation and legislation prior to mid-2003 and so many members relied on PERS' representations and figures to MAKE retirement decisions. So it appears that the PERS Coalition is going to test this theory out in a separate case, captioned "Bell v PERS". I'm certainly interested in this case, as I retired prior to Lipscomb's decision and I can tell you that PERS never once advertised or informed me of the possible impact of this case on my decision to retire. Indeed, I have frequently remarked that I *might* have chosen to work a year or two longer had I known that the 1999 earnings crediting decision was in jeopardy for an entire class of PERS members.

It is time to start readying the family for our trip. Again, best wishes for a Merry Christmas, Happy Hannukah and a joyous New Year. I had hoped that my final post for 2006 might include the outcome of the Arken and Robinson cases, but it appears that Judge Kantor will wait until 2007 to release his decisions in those cases. I will interrupt my regular vacation to post should Judge Kantor issue decisions before the end of the year.

Don't Cry Sister

Every once in awhile I receive a spam email that is so funny that I spend days trying to figure out the motivation behind it and the people who treat them as real. Since I've been trying to encourage more private (albeit small) philanthropy at this time of year, I thought I'd share with you the text of this hysterically funny "Nigerian scam" (a class of spam) letter. Sister Felicia makes Mrs. Mohommed of Nigeria look like a piker in comparison. So here, complete in the exact format I received it is a view of modern email philanthropology (laugh, it's funny):

"I decided to donate the sum of $5,000,000( five million dollars) to you for the good work of the lord, and also to help motherless privilege
also for the assistance of the widows according to (JAMES 1:27). e motherless

My name is MRS Filicia Bryant .I am a dying woman who have decided to
donate what I have to you in order to use it for the benificial of our nation
and the rest of our citizenry.
i am a native of Russian Federation,but my husband is
from London .I was diagnosed for cancer about 2 years ago, immediately after the
death of my husband, Who had left me everything he worked

I have been touched By God to donate from what I have inherited from my late
Husband to you for the good work of God,. Please pray that the good Lord forgive me my sins. I have asked God To forgive me and i believe he has because He is a merciful God.I will be going in for an operation tomorrow morning.

At the moment I cannot take any telephone calls right now due to the Fact that my relatives are around me and my health status. I have adjusted my WILL and my Executor is aware I have changed my will; you and he will arrange for the change of ownership of the funds as it is presently deposited in barclays bank, and lodged. the box in a coded Security company whose name is Ron basically on security and confidential purposes and would only be released to (you).

I wish you all the best and may the good Lord bless you abundantly, and Please use the funds well and always extend the good work to others. Contact my Executor sirbrown with this specified email; sirbrown@myway with your full names contact telephone/fax number and your full address and tell him that I have WILLED ($5,000,000.00) to you and I have also notified him that I am WILLING that amount to you for a specific and good work. I know I don't know you but I have been directed to do this. Thanks and God bless.

NB: I will appreciate your utmost confidentiality in this matter until the task is accomplished as I don't want anything that will Jeopardize my last wish. Pls keep the faith My Prayer for you.Father, I ask You to bless my friends, relatives and
those I care deeply for, You Who are reading this right now. Show him/her a new
revelation of Your love and power. Holy Spirit, I ask You to minister to their spirit at this very moment. Where there is pain, give them Your peace and mercy. Where there is self-doubt, release a renewed confidence through Your grace. Where there is need,I ask you to fulfill their needs. Bless their homes, families, finances, their goings and their comings. In Jesus' precious name.
Amen.

Regards,

YOUR EMAIL RESPONSE SHOULD BE DIRECTED TO Executor sirbrown PROCESSING OFFICER Email: sirbrown@myway.com

FILICA

"

Breathe In, Breathe Out, Move On

One of my regular readers treated me to a "great" (alas, way too familiar) PERS story. My commentator retired in January 2004 and received an estimated benefits statement in March '04. He's been asking PERS since then when he'll be getting his final Notice of Entitlement. They keep shining him on with new dates. First it was late 2004, then November 2006, now it is January 2007. At this rate - although we wouldn't wish this on anyone - this person, his beneficiary, and their children could all be deceased before PERS gets off its incompetent ass to get these legal documents out to retirees. It infuriates me that "simple" things like this get dragged on interminably, while PERS continues to waste member money on high-priced legal help that will only result in PERS having to redo whatever they've done already. Perhaps they're deliberately dragging their feet to avoid having to do anything at all until the Court finally speaks with finality (can the court ever do that?). I know, breathe in, breathe out, move on.

3/5ths of a Mile in 10 seconds

Time to crank up the hit-o-meter. We're close to the 400,000 mark. To help us reach that mark, I'm offering up an incentive. Our goal is to reach 400,000 before New Year's Day. At the current rate, we won't make it. So, to encourage readers to visit my site more often, I'm offering to contribute $1 to the Oregon Food Bank for every visit over 400,000 and before January 1, 2007. I'm a big believer in the Oregon Food Bank and hope you can help me help them.

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.