Good Intent

I just got through reviewing the Board packet that accompanies the meeting agenda for the PERS Board (PERB). The monthly meeting for this month is Friday July 20 at 1 p.m. The agenda doesn't appear to be terribly interesting, but there is one item that should please almost all "window retirees". Apparently, as a result of the Arken/Robinson ruling, PERS will consider restarting the COLA process for all "window retirees" who haven't been invoiced under Strunk/Eugene (these people have COLA restoration already but under different circumstances). The PERS staff is recommending that the July 1 2007 COLA be restarted for all the uninvoiced retirees effective immediately. This would mean that if the PERB approves the staff recommendation, we should see a 2% increase in our next (August 1) payment. This will have a small impact on the Strunk/Eugene balance if that process resumes, but that question remains quite open right now. I will be attending the meeting on Friday and will know for certain whether there is any opposition to this proposal. I doubt there will be as there is more than sufficient money to do this and PERS staff appears to be somewhat "sensitive" to the fact that some of us have gone almost 5 years without any benefit increase. This is the first ray of sunshine for many of us in a very long time. The Arken/Robinson outcome was really good news, but actually resuming the COLA process is even better news. Hopefully, we can count on this to take place. I'm very positive about it. I'll be even more positive if we start seeing reimbursement for the previous 4 years of lost colas. Please don't mistake my optimism as a sudden reprieve for PERS. Run the SartainLipscomb calculator and find out what you're really missing. This barely takes the sting away, but they have to start somewhere and now is as good a time as any.

There are some who are very suspicious of PERS' actions and motives for doing this. I would be derilect if I were not to acknowledge the downside of the PERS decision. It could be that PERS is doing this to look like a good citizen before going before Judge Kantor on August 16. If they had just let another COLA go unpaid, they could be subject to all kinds of repercussions from Judge Kantor. This may be nothing more than another attempt by PERS to distract attention from what they are really doing. At this point in the game, I wouldn't put this past them. On the other hand, PERS has admitted in its staff memo that COLAs are automatic UNLESS there is an exclusion list, which has been what all window retirees have been on since 7/1/2003. If COLAs are automatic and all it takes is a "no exclusion" switch in their RIMS system, it will make it much harder for PERS to claim hardship if the court orders restoration of all past COLAs. So, even if PERS is just playing legal games, this could come back to bite them. Too bad, so sad. (And BTW Curtis, I agree with you. Arken/Robinson is the catalyst that makes everything else happen. It deserves more credit than I gave it above. The COLA resumption is driven by Arken/Robinson, not the reverse.)

The Strange Becomes Acceptable

Apathy, disinterest, diffidence all seem to characterize many "window" retirees' attitudes towards PERS. PERS has been screwing over retirees for some years now, yet a large percentage of those affected (or to be affected) seem completely unaware of the size and magnitude of the hole PERS is putting in us. The strange has become acceptable. It is time to change. It is time to get off the dime and stop permitting this to go on. If you haven't already, take a few minutes to read my post from yesterday "Heading For the Light". Download the calculator that works best with your system. When you're all done running it (it is easy, trust me) calculate your "spread" - the difference between what you are reputed to owe PERS and what the Sartain verdict says PERS owes you. If you find out that your spread is less than $10,000 I'll be very surprised. Nevertheless, when you find out just what this "spread" is, try to be more than just plain sanguine or indifferent about it. This is real money - your hard-earned money - that we're talking about. Time for some activism. Join the PERS discussion group (OPDG, link on left near bottom) and find out what others' spreads are. Post yours. Get involved. The next court hearing at which PERS retirees' fates will be discussed is a Status Conference to be held at 9 am on August 16, 2006 in Judge Henry Kantor's courthouse (Multnomah County Courthouse - 4th Avenue entrance). Be there to watch the PERS lawyers try to spin and dissemble and delay. Be there to watch PERS retiree lawyers Greg Hartman and Jim Coon try to get Judge Kantor to clarify his ruling and to urge PERS to just comply and quit stalling. What should aggravate you no end is that PERS is using member and retiree money to fund the legal fees needed to prevent retirees from getting what is due this. What gall! What chutzpah! The strange is UNacceptable. Let people know this. Don't let them continue to stomp on your bones, because that's all that will be left if we let PERS continue its delaying tactics. Time for a movement, some attitude, and to restore our benefits. Delay, indifference, and apathy are our worst enemies. The PERB is "doing its job"; unfortunately that "job" is on us. Time for it to stop.

Bring It Back

It never left. For those of you using the new "SartainLipscomb" calculator, the output is automatically saved as a text file that you can print, edit, do with what you want. To distinguish it from the old calculator, I've named it "sartain.txt". It should be saved in the same directory from which you ran the software. If not, use Spotlight (Mac) or Windows Explorer (PC) to find it. It is there. It even says this in the "PLEASE READ THIS" screen of the software. If you can't find it, I need to know. But please don't ask until you've looked first. It is part of the code and an essential piece of output. It is there so you don't have to "print" the screen.

Heading for the Light

Prior to her death (and before I knew she was sick) Martha Sartain helped persuade me to rewrite my "Lipscomb" calculator to compute the outcome if PERS were to be forced to implement the Sartain decision from the Supreme Court's ruling in Strunk. Under the Sartain decision, PERS is obligated to restore the COLA on the fixed benefit retroactive to July 1, 2003. PERS has not implemented this ruling and has tried to avoid it by throwing up a fog based on the "Settlement Agreement". Until the recent Arken and Robinson rulings in Multnomah County Circuit Court, there seemed no likelihood of the Sartain ruling ever being implemented and there was no incentive for me to offer people a false hope. But the calculus has changed and I now believe there is *some* hope that we might finally get justice (not quickly mind you, but justice nonetheless). In anticipation, I thought it would be fruitful for retirees to examine their situation under the "Settlement" (or Lipscomb) outcome, and also under the "Sartain" decision. For those who have fallen under PERS' BS about the benefit cuts being small, the outcome under the newest calculator will be truly eye-popping. PERS' baloney only smells good if you never believed you were entitled to something else - what your retirement contract actually calls for. Now you will be able to see the light and hopefully shed your indifference and apathy regarding what you truly are entitled to.

Windows users can go here for the program. Mac users will find their version at this location. The Mac version is a "universal" binary that will run under OS X 10.4.5 and higher and should run on older Macs with the PPC chip, while also running on the newer Intel-based Macs. Good luck with your calculations and let the light shine in corners it has never shone in before.

Knocking on Heaven's Door

St. Peter welcomed our sister, Martha Sartain, today with open arms. She was sent off in a wonderfully special and simple service. I haven't been to a memorial service that showed as much love and affection as Martha's today. There were probably 75 people in attendance, including a few of us from here. Martha selected two people to speak after first having to be urged to even permit a memorial service. It became clear from the two selected that Martha was an incredible person, both as a talented and path-setting engineer with ODOT, a terrific and inspiring mentor for many, and a wonderful, funny, and loyal friend. Leave it to Martha to remark just before her passing that her biggest regret in life was that she wouldn't live long enough to collect social security. That brought a smile to everyone's face. Martha chose a beautiful piece of "real estate" (her term, not mine) for her final resting place. It will give me great pleasure to remember her each Memorial Day with flowers that she loved. I learned many things today about Martha that I didn't know. We all knew how smart, how worldly, and how articulate she was. I didn't know that she was a wonderful mentor, an amazing (and mischievious) friend, and I surely didn't know how talented a poet she was. The poem she wrote (but didn't expect to be read aloud) was specifically for attendees at the memorial and others who would mourn her passing. It was beautifully written and, while it brought a tear to my eyes, it comforted me in many ways as well. I hope that someone in her family or her circle of friends will urge its publication - it was that good. Martha is now at peace; may we all rededicate ourselves to the mission she set out to accomplish on *all* our behalves. It would be a wonderful memorial to her to actually get the justice she won.

Apropos of that justice, after the service I had a chance to talk "shop" with Scott Jonnson, the attorney who represented Martha and retirees in the Sartain v State of Oregon case that was part of the Strunk consolidated matter ruled on by the Oregon Supreme Court two years ago. Scott filled me in on the tardiness of the Oregon Supreme Court in issuing their final ruling in the "fee award" portion of Strunk. In her final days, Martha was concerned about the disposition of "her" case should she die before PERS was forced to implement. Scott assured her (and then me) that he would continue pursuit of PERS until they complied so that Martha's estate could get what she was denied in her lifetime, not to mention all the retirees she represented. There is no legal uncertainty created by her death. He also noted that Martha would live on forever through the case, as legal precedents are always referred to by the cases in which they were decided. Thus, "Sartain v State of Oregon" will become an historically important case and will continue to be cited in both Oregon and other state pension cases. One interested factoid emerged that I was unaware of. The attorney fee award in the Sartain case was tripled by the Special Master because he wanted the award to be sufficient to cover expenses and the donations made by OPRI members to subsidize the litigation. This is to prevent double jeopardy to OPRI contributors - the original donation plus the cost levied against retirees to pay OPRI for the legal fees incurred in its litigation against PERS. Thus, OPRI will have a difficult time NOT offering to refund the donations once PERS pays them what the Court is expected to order. The Court (in particular Judge Breithaupt, Special Master) made this an important part of its recommendation.

Finally, I now know the date, time, and place of the Arken/Robinson status conference. It is scheduled for August 16, 2007 at 9:00 a.m. in Judge Kantor's courtroom in the Multnomah County Circuit Court. A nice turnout would both honor Martha and provide us with important clues about how PERS is going to treat the ruling. Scott thought that with a summary judgement, PERS may have about 90 days (probably not any more) to decide whether to appeal. Nearly 30 days have already elapsed and we'll be up to almost 60 by the time of the status conference. PERS is going to have to fish or cut bait fairly soon and no one seems to be certain what they'll do.

Rough Justice

I've received quite a number of requests from retirees for me to resurrect my calculator that computes the COLA on the fixed benefit.  Although I never had such a calculator (wishful thinking on my readers' parts), I've decided that I will include a "good news" section to my Lipscomb calculator.  In honor of both the court decision that called for it, and in memory of a good friend whose name is associated with the decision, the revised calculator will be called the Lipscomb/Sartain Calculator.  As before, the Lipscomb piece will compute the scenario for window retirees under the now enjoined method PERS intended to use to recover money from retirees.  The Sartain portion calculator will unwind the process, extract the original "fixed benefit" and calculate the COLAs due retirees on that benefit.  It will provide an estimate of the current benefit as of 7/1/08 (note date carefully; I'm not expecting PERS to hurry), in addition to the amount PERS owes each retiree to for lost COLA.  I am unaware of any provision that will require PERS to pay interest on the "held" money.  

I don't want anyone to get the wrong idea about what this calculator is for.  Its existence in no way suggests that PERS has rolled over and will suddenly pay us what they've refused to do for 4 years.  But, if the contrast between the Lipscomb outcome and the Sartain result motivates apathetic window retirees, many of whom have seemed to accept their fate without a fight, to rethink the importance of the battle, then I will consider the outcome a success.  I don't know how much work this will involve - I've only briefly examined the Lipscomb source code.  I'm guessing it will take me a few weeks to get a clean run and so watch for the revised calculator in early August -- before the status conference on the Arken case.

Magical Mystery Tour

On August 8, at a time and place to be announced, all attorneys involved with the Arken and Robinson cases are scheduled for a status conference with Judge Kantor. The agenda is not set, but will surely include the PERS Coalitions' request to clarify the order and to address claims not answered by Judge Kantor in his opinion and order. PERS will also be required to show how they are complying with Judge Kantor's order. That ought to be an interesting tap dance. No doubt they'll employ Steely Dan's "pretzel logic" to come up with their latest justification for doing nothing. I can't wait.

Note at 6 p.m. PERS have changed the date on their web site to August 16th. It is unclear whether there has been a genuine scheduling change, or the date was wrong initially. I will try to clarify and repost soon with a correct date (and maybe time).

Feet In the Clouds

Yesterday morning, one of the main plaintiffs in the Strunk et al case, and my friend, Martha Sartain, passed away from complications related to lung cancer. Martha was the "face and soul" of "window retirees" as she agreed to have her name and her life explored in relentless detail during the proceedings leading up to the Sartain v PERB case in 2004. This case, sponsored by OPRI, involved the COLA freeze issue for window retirees and it still stands front and center as the Arken case wends its way through the courts, and the fee reimbursement issue remains before the Oregon Supreme Court.

I will remember Martha as a smart, savvy, and keen observer of the goings on at PERS, and an impossible person to put something over on. I'll remember Martha's companionship through endless hearings in Strunk, in Arken, and in the final days of the hearings related to fee reimbursements of lawyers in the Strunk cases. I'll also remember her generosity in sharing copies of court transcripts and her persistence in getting audio documents of important hearings for me to use in writing my blog. Without her assistance, many of my posts would have been impossible to write.

Martha was a tireless advocate for "window retirees". She served on the OPRI Board with distinction and should be credited with getting the Board to recognize "window retiree" issues and for pursuing an agenda of openness and use of modern technology.

Martha's memorial service will be held on Thursday July 12th [NOTE: corrected date] at Belcrest Memorial Park Cemetary in South Salem at 2:00. Martha's family asked that in lieu of flowers or charitable gifts, please "instead treat your family or a close friend to meal out .... and remember friends".

Godspeed Martha. We will all miss you.

Lowdown

There is considerable debate, speculation, and prediction afloat about what, exactly, Judge Kantor meant in his recent ruling in the Arken and Robinson cases. In an effort to get the lowdown from one of the attorneys involved in the Arken case - Greg Hartman - I dropped him an email this morning. Greg was kind enough to respond and give me some general answers about what is coming down the line. Obviously we are not alone in being unclear about some elements of the ruling. Hartman (and Coon?) are trying to schedule a hearing with Judge Kantor in order to clarify some of the issues under discussion. From the looks of things, this hearing will be scheduled sometime in the early part of August. The plan is to submit a proposed order that would clarify a number of issues relating to the "scope of the ruling." In addition, Hartman shared with me that he believed Judge Kantor had ruled that 14(b) (the "exclusive remedy") precludes the application of 238.715. He observed "...even if it turns out that the alternatives provided in 14(b) don't work that does not mean that the legislature's decision to limit the application of 238.715 can be attacked." He also remarked that there were a number of issues in Arken that were independent of Robinson and 14b and that he hopes to "encourage" Judge Kantor to address them. In short, it is probably the case that the debate, speculation, and prediction will remain ongoing (or not) until the outcome of August's hearing is known. Once the date of the hearing is known, I will let people know. It would be encouraging to have retirees once again pack Judge Kantor's courtroom.

Whoa Bessy

Or was that Betsy? You might want to take a look at Greg Hartman's memo to PERS Coalition members concerning the accuracy of the Oregonian and Statesman Journal reporting on the Arken decision. In case you don't know how to use Google, you can find it here. Bottom line is that administrative chargeoffs were not an issue in the Arken case. Until and unless PERS tries to charge the Arken victory to active and inactive PERS members, there is no fight. If they do - a point they argued was illegal on its face - they can expect a knock on the door from Greg Hartman and the PERS Coalition. So, Betsy, take your bias and that of your newspaper and shove it.

Get Miles

Questions are starting to arise about contributing to legal defense funds to force PERS to start distributing COLAs on the fixed benefit. Personally, I think it is too early to send money. Moreover, I don't know where I'd send it. OPRI is not my favorite organization these days. Their attitude toward window retirees has been less than stellar although their new Board now has 3 window retirees on it. They participated in Arken by joining the PERS Coalition. The PERS Coalition is mostly about unions representing active employees. They've made it clear that if PERS moves to compensate retirees at the expense of actives, they will fight it (and retirees). There is no evidence that PERS is planning to do much of anything yet. I think waiting until PERS decides whether it will appeal or not would be the most prudent course of action right now. If you do contribute to a legal defense fund, make sure you get miles for doing so.

To keep you up to date, the Oregon Supreme Court has yet to rule in the fee award dispute in the Strunk case. Both OPRI and the PERS Coalition have argued that they should be awarded attorney fees. If OPRI is awarded attorney fees, they will receive back much of what we, as individuals, contributed to their legal defense fund. Should we find ourselves in a position of having to pursue additional litigation, I'd want OPRI to use recovered funds first before asking me for more - especially since they promised to return my donations if they won fees in the Sartain/Strunk case. So, first I want to see if they win. Second, I want them to offer to return my donations and only if they do that would I consider letting them keep those funds and receive more to pursue the final phase of this shaggy dog legal case. I just wouldn't rush to send money to anyone quite yet.

How Much Did You Get For Your Soul?

The Oregonian's Betsy Hammond swallowed the kool aid again with her latest editorial (oops, was that supposed to be a news article?) on the outcome of two related PERS court cases in the Multnomah County Circuit Court.   In her article "New Retirees will pay for old mistakes" (Oregonian, 6/21/07), Ms Hammond again fails to read either (a) the court's opinion or (b) the legislation to which the court's opinion refers.  Nowhere in Judge Kantor's decision does it say that "new retirees" (or active members) will pay for Judge Kantor's decision.  Judge Kantor merely ruled that the Legislature established two methods for dealing with the actions of the 1999 PERS Board - either to freeze the cost-of-living increases for those retiring between 4/2000 and 4/2004 or to charge the expenses to administrative costs.  Since the Oregon Supreme Court ruled that withholding cost-of-living increases was illegal, Judge Kantor ruled that the Legislature left the PERS Board with only one viable option - the administrative charge off.  It is true that administrative expenses are taken out before earnings are distributed and so the potential exists for active members to subsidize benefits for this small group of retirees; HOWEVER, PERS has been reserving funds like crazy since 2003 and now has nearly $2 BILLION in reserves from which these expenses could come.  These reserves are not available to any members and charging expenses to them will not reduce the benefit of ANY member now or in the future.  Instead of pointing this important fact out, Ms. Hammond draws the financial implications out of the air and creates a potential conflict where there is none.  In so doing, Ms. Hammond again wears her bias on her sleeve and continues the Oregonian's long history of bashing public employees.   

Best of All Possible Worlds

By now it should be pretty common knowledge that the PERS Coalition was the big winner in the Arken and Robinson cases. Judge Kantor's combined ruling in both cases earlier today - after a 9 month wait - pretty much puts the kibosh on PERS' plans to recover anything from retirees. In Arken he invalidated PERS' January 27, 2006 collection order (the subject of the March 2006 "letter" we all received), and enjoined PERS from recovering anything from affected retirees. Moreover, he ordered PERS to return payments that retirees have made in response to now illegal invoices. To put the icing on the cake, Judge Kantor did a careful review of the legislative history of section 14 of HB 2003. In so doing, he hoist non-state defendants' attorney Bill Gary on his own petard. He quoted Gary's remarks to the legislative committees that took testimony on HB 2003. In that testimony, Gary explained that the intent of section 14 was to insure that retirees would not have to pay anything "out of pocket" and would simply be subject to a COLA-freeze. On the basis of such testimony, and the Governor's declared statement that retirees would not have money taken away from them, Judge Kantor concluded that the legislature's clear intent was to make section 14 the EXCLUSIVE remedy for the City of Eugene case, thus removing PERS' right to collect under ORS 238.715. As a result, Judge Kantor ruled that the Robinson plaintiffs were correct in arguing that PERS has no choice but to recover the overpayments from administrative expenses, not by invoicing retirees.

As in any legal proceeding, this battle is far from over. There is the Court of Appeals and the Supreme Court that still await. But for now, we can savor the victory that we have waited several years to have. It feels good right now. It would feel a lot better if Judge Kantor had explicitly told PERS to start paying COLAs on the fixed benefit immediately. The next COLA is payable next month and it probably wouldn't be too much of an effort for PERS to start that process now while taking a bit more time to restore the previous 4 COLAs that have been frozen. That's probably too much to expect right now. It will probably require PERS to be told at the point of a legal gun that it has to do that. Apparently the Supreme Court doesn't haul enough big steel to make PERS quake in its boots. Perhaps now the thought might cross their minds. THAT would be the best of all possible worlds. In the meantime, I'll savor this moment of complete vindication. Frankly, I didn't think I'd live to see this day.

I Got the News

This just in from Joe DeNicola, SEIU president:

Sisters & Brothers,

Judge Kantor, Multnomah County Circuit Court, has issued opinions in both the Arken and Robinson cases. He has ruled in our favor in both cases and has enjoined PERS from additional collection efforts
with regard to PERS retirees. Additional analysis from our attorney. Greg Hartman, will be forthcoming soon.

I am seeking independent verification, but it appears that stage one in the long waiting game may be over.

P.S. 11:50 a.m. Judge Kantor's office confirms that the decisions were filed this morning. I will have copies of both rulings by FAX later this afternoon and will try to have them posted by tomorrow.

Here is a copy of the decision.

Girl They Won't Believe

Really a woman, but it doesn't really matter.  I spent more than an hour on the phone yesterday afternoon with a woman whose husband - an active Tier 1 PERS member and PSU colleague - had died unexpectedly in his early 60's.   Her story is most perplexing and qualifies as one of the more difficult issues I've heard about in quite some time.  She's been dealing with PERS' death unit for several months and has, thusfar, been unsuccessful in prying any money from them.  The issue hinges on PERS' belief that her husband died without officially naming her as a beneficiary.  Leaving aside the question of whether he did or didn't officially name his wife as a beneficiary, it has always been my understanding that one's spouse is always the beneficiary unless an individual is (1) unmarried at the time of death or retirement or (2) explicitly declaims the spouse *and the spouse agrees in writing to the declamation*.  Otherwise, the spouse is the default beneficiary.  According to PERS, in the absence of an official beneficiary form, the only way the spouse can recover benefits from the account of a deceased non-retiree is via probate of the will.  Since the husband was very careful to put all property in both of their names, had explicitly named his wife as the beneficiary of the IAP account, had a current will naming his wife as personal representative and recipient of his entire estate, how likely is it that he *forgot* to name his wife as the beneficiary of his Tier 1 account?  I find this nearly impossible to believe.  So, she's left arguing with PERS that they've misplaced the relevant information, while PERS claims that they don't have it.  She's left to pursue probating a will that otherwise doesn't require probate (and the legal fees involved), or she can enlist the aid of a lawyer to sue PERS.  The challenge is that few people ever get a copy of the information PERS receives when it enters a new member into the system and so many people may be unaware of the beneficiary status of their PERS account.  I'm hopeful that this can be resolved favorably and quickly.  I've certainly pointed her in a direction that will, if at all possible, lead to a quick resolution.  (Answer to obvious question:  wife and husband married a very long time.  Husband began work at PSU long after he and his wife married).

The moral of this story is that if you are an active PERS member, make sure you have a named beneficiary attached to your PERS account.  Don't make any assumptions.  If you are in doubt, fill out another form to make double-dog sure you're covered.  

Handle With Care

As a result of many complaints to me and suggestions to PERS from me, the online PERS Retirement Benefit Estimate Calculator will have some updated verbiage to clarify what it does and doesn't do. Rather than paraphrase, I'm going to use David Crosley's response to me for the rest of this entry. David is PERS' official spokesman and is coordinating the PERS Retiree Focus Group, of which I am member. Here is David's description of the changes to be made to the Calculator verbiage:

"I reviewed the verbiage in the disclaimers and will have some changes made. Also, we corrected the "2005 ending balance" to 2006 for the variable portion.

The disclaimer at the beginning of the calculator will be changed to read: "The PERS Benefit Estimate Calculator calculates an estimated retirement benefit based on the data you provide. The calculator is not connected to your earnings record, PERS information file, or your employer's information file. As a result, near-term retirement dates tend to produce more accurate results. The accuracy of your estimate
will depend on how closely the information you provide matches the information used to calculate your benefit at the time you retire."

I will also have the updated disclaimer highlighted in bold. A member must agree to the statement before he/she can produce an online estimate.

I will also have information bolded regarding the calculator's limitations (what the calculator does not do):
· Estimates for judges, legislative members, and TIAA-CREF members.
· Costs and impacts associated with optional purchases. For information on purchases, please contact PERS Customer Service.
· Estimates if any part of an account balance has been or will be distributed to an alternate payee, or if a benefit will be adjusted as a result of a divorce decree.
· Disability retirement benefits.
· Estimates where any of your total service time includes time accrued under the Oregon Public Service Retirement Plan (OPSRP).

Our Benefits Calc section tells me that the calculator provides an estimate that is within pennies of a written estimate for Money Match.

If Money Match provides the highest benefit estimate for a member, the verbiage at the top of the estimate page states: "The information you have provided indicates you MAY BE affected by the City of Eugene vs. PERS settlement. The impact of the settlement is not included in the figures below. If you would like to estimate the impact of the settlement on your benefit, please click here."

The member is then directed to a page with a disclaimer that will be updated to read: "This calculator is not connected to your earnings record, PERS information file, or your employer's information file. As a result, near-term retirement dates tend to produce more accurate results. The accuracy of this estimate will depend on how closely the information you provide matches the information at your retirement."
This will be in bold text as well.

Our Benefits Calc section tells me that the calculator provides a "var at reg/var at var" estimate that is very close to a written estimate."

Hopefully, these clarifications and disclosures will make the benefit calculator more useful for members and will make transparent the areas where the calculator is apt to produce either too optimistic or too pessimistic estimates.

Everybody's On the Phone

Only been gone a week, but the old voicemail box has runneth over. The PERS news is pretty mundane, although if you are a lump sum retiree already faced with or soon to face a large lump bill to pay, HB 2397 may be your remedy. In little-noticed action during the week, HB 2397 passed both the Senate and the House and is on its way to the governor for either his signature, or him sitting on it and allowing it to go into law without his signature. There seems to be some disagreement whether he will sign it or not. Basically, HB 2397 allows those who owe PERS a lump sum from a lump sum retirement settlement to make the payment using a custodial transfer to PERS from an IRA, 401K, or other tax-sheltered account without incurring any tax or early withdrawal penalties. It does not change the obligation to repay in a lump sum, but it will allow the repayment to take place from a tax-advantaged account without triggering adverse tax consequences. The effective date is unclear, as is whether those who have already paid with non-tax advantaged money will be given a retroactive opportunity to pay this way. Actually, for those who have already paid, it isn't clear whether this bill has any benefits, but at least it makes the option available in the future. You can read the text of HB 2397 on the Oregon Legislature's web site (sorry for not having the link immediately at the tip of my fingers; I'm still adjusting to time changes).

In another development, PERS released its latest "PERS By The Numbers" with a June 2007 date. It continues to prove the point made by the PERS Coalition that had the Legislature done nothing in 2003, the structural problems with PERS would have resolved themselves and the PERS Board could have made incremental fixes along the way that would have been relatively benign for all members and retirees. I doubt we'll see the media touting this document as proving *this* particular point; if it gets mentioned at all, it will be cited as further proof that the reforms were both necessary and are working. It completely belies the Ron Saxton claim that the reforms were too little, too late. You can read the whole document here

As expected, Judge Crater is still missing. He didn't release any decisions in the Arken or Robinson cases, and the White case continues to spin slowly. The Legislature will adjourn for this year on June 29th; perhaps we'll see decisions after they go sine die for 2007.

100 Miles and Runnin'

Nothing to post. I'm out of town and have brief access to a computer in one of those fancy-schmancy airport clubs for frequent flyers. Nothing again until at least June 17t. According to weather reports, the Rose Parade will have rain. It wouldn't be Oregon if it didn't rain on the parade. Everyone be safe and on your best behavior. As Ahnold vould say in da Terminator: I'll be back.

Jet Lag

News from the PERS front is pitiful right now. There are three lawsuits awaiting action from Judge Henry Kantor of the Multnomah County Circuit Court. Despite promising a "quick" ruling, both the Arken and Robinson cases have been awaiting Judge Kantor's decision since September 28, 2006 - 8 full months now. Both of these are high stakes cases that could affect the way PERS is currently handling the invoicing and collection from "window" retirees (Arken) as well as a broader segment of PERS retirees (Robinson). Judge Kantor has had several high profile cases on his calendar since he made the prediction of a relatively quick decision, but those cases have come, gone, and are in various stages of appeal. Resolution of the Arken and Robinson cases would hardly be definitive at this legal level. Parties on both sides of both cases have promised to appeal any adverse ruling, so both cases are ultimately heading for the Oregon Supreme Court. However, to get to the OSC, both cases would have to go through the Oregon Court of Appeals first, leaving final resolution in limbo until at least 2011 by current estimates. Justice moves very slowly.

There is considerable debate among window retirees and others targeted for collection efforts as to whether the PERS Coalition should push for an injunction to stop PERS from its collection efforts if it wins either or both cases at Judge Kantor's level. PERSonally (sorry, couldn't resist), I'd prefer PERS continue its collection efforts rather than stop part way through. There is no way I can imagine that PERS would suddenly decide to grant COLA raises on the original benefit. Consequently, I could see an injunction having the effect of freezing our original benefit indefinitely. I'd rather be getting COLA adjustments on my revised benefit than to have my current benefit frozen for another few years. Most window retirees are at or near the point where the revised benefit with COLAS exceeds the current benefit. Not seeking an injunction at this point would probably mean that we'd all get something more than we're getting now (MOST would; a few continue to be screwed by some bizarre unintended consequences that make their benefits significantly smaller). And we'd continue to get COLA each August 1. I hope the PERS Coalition sees the disadvantage of trying to force an injunction unless they pursue one that restores the COLA to the original fixed benefit.

This will probably be my last post until after June 16th. I will be on the East Coast visiting friends and family (and catching a few plays) for the next several weeks. As always, I will monitor email and try to respond to urgent issues. I will also keep watching for any significant events that are "of the moment" and will attempt to update this blog from a distance via Internet Cafes. I can get email on my phone, but I can't do blogging from it and I'm not taking a notebook computer with me this time. Enjoy the great weather while it lasts. Since the Rose Festival has started, it is a given that crappy weather will soon be upon us. Just remember the Oregon summer law - "in Oregon, summer begins on July 5th".

Note added at 5:30 p.m. In my haste to write this, I omitted a couple of other significant issues that remain to be resolved. The "White" case challenges the settlement agreement itself. Should this case finally get a hearing and a ruling, it has the potential of overshadowing any of the other extant cases as it would invalidate the settlement and make both Arken and Robinson unnecessary. Similarly, the Supreme Court appointed a Special Master to take up the matter of attorney fees in the Strunk case. To apportion attorney fees, the court has to decide who are the "winners" and who are the "losers". In a perverse twist of fate, the Special Master concluded that the "window retirees" won their case, while the opposition argued that the "window retirees" won nothing and are worse off now than they would have been if the Sartain case had never been filed. The special master recommended that PERS pay attorney fees and PERS has decided that "window retirees" should be dunned for "winning". PERS has no independent money to foot these bills and all such judgements eventually come out of administrative expenses. The Supreme Court has not accepted the Special Master's conclusions and has not issued a ruling. Those of us who think deeply about such things think that the SC may be trying to dodge a ruling here as a declaration of "window retirees" as "winners" and their attorneys as deserving of attorney fees might require the SC to clarify what it meant in its ruling. Nothing would please me more than to see the SC forced to explain its ruling in the Sartain (COLA freeze) case. If they explain it the way they wrote it, PERS has a very difficult time justifying what it is doing now and it would trump all existing legal cases. Some part of me is enjoying imagining the SC squirm. The other part of me is wondering how the "current" SC can interpret what a "previous" SC might have meant. Needless to say, the SC will eventually have to issue a decision and no matter how they choose to parse it, it *will* clarify (or further obfuscate) the Strunk decision. This is one of those few legal decisions I await with some glee. I like watching the SC twist slowly in the wind.

Calling Elvis

Anybody home? Despite widespread efforts to spread the word, the PERS Coalition and its attorney Greg Hartman have not been successful in finding suitable plaintiffs to file suit against PERS for the travesty known as the "Lipscomb Match" for variable account holders at retirement. To refresh your memory, this change in matching methodology was prescribed by Judge Lipscomb in his remand of the 1999 earnings crediting decision to the PERS Board. In response, the PERB entered into a settlement agreement with the suit plaintiffs that, among other things, required PERS to compute the employer match in an entirely different way. This affects retirees with a variable account who retired ON OR AFTER JULY 1, 2004. Aside from the going-nowhere-fast White case, which contests the settlement itself, there are no specific legal challenges to the variable match change. So, the PERS Coalition is looking for suitable plaintiffs. If you retired on or after July 1, 2004, had a variable account, and have substantial evidence that you were financially harmed by this revised approach to the variable match, you should contact the PERS Coalition through its attorney, Greg Hartman.

The Lipscomb methodology deprives retirees of the employer match to actual earnings in the variable account. Instead, the revised method considers employer match only as if the money had been in the regular account for the total length of time the retiree was in variable. There are two calculations done: var@var (the old method which provides a dollar for dollar match to variable account balances) and the var@regular (which matches only what the variable dollars would have earned if the money had been in the regular account). There have been claims of massive harm, but to date the claim has not been backed up with a sufficient number of documentable cases to file suit. If you are in the category of having experienced harm (i.e. lost money that you thought you should have been entitled but for the change in methodology), get in touch quickly. Both the time and motivation for filing suit is getting shorter each day.

Can't Get No (Satisfaction)

This morning's FAX brought me a copy of PERS' response to a retiree's petition of the Strunk/Eugene remediation. The case was pretty straightforward. The retiree retired under the "lookback" not too long after the 2003 legislation took effect and right around the time of the PERB "settlement" of the City of Eugene litigation. PERS' remediation of said litigation resulted in their recalculating benefits. This retiree was not in the "window" and was expecting a check and/or a small benefit increase as he had retired when 2003 and 2004 were tracking at 0% rather than 8%. When he got his invoice, he was chagrined, shocked, and staggered by PERS' calculations. Indeed, his account balance was adjusted positively, he owed PERS no money - all expected and good outcomes. His benefit would go up - he thought. But no. It didn't go up. Instead it decreased significantly - a fact that just wouldn't compute for him. We've been longtime correspondents and so he sent me his invoice - the first of many I would see. When I looked at it, it became obvious quickly what had happened, although PERS did not make this even slightly clear. After all the adjustments to his account balance resulting from 2003 and 2004 add backs and 1999 take backs, his lookback balance was lower while his at-retirement balance was substantially higher. As a result, the "lookback" no longer produced the highest benefit. The highest benefit resulted from his at-retirement account balance using the NEW mortality tables. Unfortunately, the highest recalculated benefit was several hundred dollars lower than his previous "lookback" benefit. Consequently, his monthly benefit was lowered. Nowhere in any of the discussions surrounding the remediation plan had this unintended consequence been discussed. Even the PERS Coalition had not seen it before.

At my recommendation, he forwarded his concerns and my interpretation to the PERS Coalition attorney, Greg Hartman. Mr. Hartman reviewed the situation and concluded that it was unfortunate but fell within the parameters of the remediation. Only the outcome of existing litigation could possibly change the result. My correspondent then petitioned PERS following the procedure contained in the recalculation letter. Yesterday they responded. After a lot of yada, yada, yada, it concluded: "The appeal is denied because it does not raise a bona fide dispute of material fact, the pertinent statutes and rules are clear in their application to the facts, and there was not an administrative error". Not surprising, but disappointing. He's left now only to appeal to an administrative Judge petitioning for a contested case hearing. In the meantime, PERS has offered to provide him with the material facts of his calculation for a simple toll-free phone call.

I suspect that anyone else who tries to appeal the Strunk/Eugene calculations will find the same result. I don't discourage members who genuinely believe that PERS has MISCALCULATED something to challenge them. But appealing on the grounds that you don't believe you owe the money isn't going to get you anything but a response much like Mr. T.

Turn, Turn, Turn

Here's our latest poll, motivated by a lot of discussion on the Oregon PERS Discussion Group and my lack of sympathy for the lump summers who profess to be surprised or stunned by their invoice. I'm sympathetic to the financial burder, just not the surprise of getting an invoice.

Since there is no injunction against PERS to prevent them from collecting overpayments, should members who took lump sum settlements?
	Pay the lump sum and wait for the courts to decide on the legality
	Consult an attorney and appeal to PERS?
	Ignore the invoice and see what happens?
	Plead with the PERS Board for mercy?
	Sue for installment payment options although no statute currently permits them?
pollcode.com free polls

Looking at the World from the Bottom of a Well

The blog entries for these last two months have been dominated by various tales of woe from retirees caught in the snare of PERS Strunk/Eugene remediation team. One group that I've singled out for special care has been the not-so-small group of retirees who had the misfortune to retire after 3/1/04 - not window retirees - whose benefit was calculated on the basis of the "lookback". To refresh memories, the Legislature implemented the "lookback" as part of HB 2004, which mandated that PERS implement new mortality tables every two years as part of an ongoing effort to keep the tables current with actual experience. To "protect" a small group of individuals whose service occurred virtually entirely under one set of mortality tables, the Legislature offered a small sop. PERS was to calculate the benefit as if the individual had retired on 6/30/03, use the account balance at that time, use current service, and compute the benefit using mortality tables last updated in 1996 (sometimes called the 1978 tables for reasons that elude me). If the "lookback" benefit was higher than the benefit calculated using the current (at retirement) account balance and the newly implemented mortality tables, the retiree got the "lookback" benefit; otherwise the benefit from the new mortality tables.

When PERS set out to do the Strunk/Eugene remediation, it decided that it would completely recalculate the benefit by reviewing the entire employment history to make certain that as the new computer system was phased in, it began with entirely accurate information. As a side effect of this, the Strunk/Eugene remediation also adjusted the 1999 account balance to reflect the revised earnings crediting for 1999 (from 20% to 11.33%), and to recalulate 2003 and 2004 balances using 8% earnings rather than the 0% mandated by the legislature and struck down by the Oregon Supreme Court. Unbeknownst to most, the one group for which this recalculation was about to produce a most curious and deleterious effect was the "lookback" group. The "lookback" recipients had benefitted from the 20% in 1999 and received a pro-rate of 8% for 2003 at the time of retirement. No further additions occurred to their accounts. When the recalculations occurred, a curious thing happened. The "lookback" was no longer the winning benefit method. As PERS is obligated by statute to give the highest benefit to an individual, this should a moment for happy celebration. Unfortunately, "winners" in this situation found themselves with a significantly higher at retirement account balance, a lower balance for the "lookback", and a higher benefit from the non-"lookback". Paradoxically, the higher benefit is lower than the current benefit. Thus, "lookback" winners have been turned into big losers with a lower adjusted benefit and a higher repayment amount than they ever imagined. They expected a check; instead they got an invoice for a lot of money and a monthly benefit sizeably lower than their former benefit. Moreover, because these people were outside the "window", they had no COLA freeze dollars to rely on to offset some of the debt.

At my encouragement, several of my correspondents did two things: (a) appealed to PERS following the procedures described in the invoice and (b) communicated directly with Greg Hartman. To date, there has been no response from PERS, and very discouraging responses from Greg Hartman. In a nutshell, unless the White case wins and holds through appeals, there is no litigation potential for these folks. Talk about your caught between a rock and a hard place. Hence the title for my entry today.

I wonder how many other surprises still lurk out there? Back to celebrating Mother's Day. A reason to take pictures, look at a slide show, and not think about PERS for half a day.

Soul Suckers

Things continue to be quiet in PERS-land. PERS is quietly invoicing anyone with a pulse who had an account in 1999 including quite a few lump summers who have been cruising in another galaxy while this whole debacle has been unfolding over the past 5 years. I guess I find it amazing that anyone residing in Oregon could be unaware of PERS issues at this time. You'd literally have had to have had your head buried deeply in the sand these last five years to be caught out unaware right now. Yet, each day my mailbox brings new surprises and I have to write the same pathetic reply to let them know that "no, there isn't an error. You have won the negative lottery and you don't have much choice but to pay PERS back or start finding yourself facing some rather severe efforts to recover that money.

For a brief moment last week, an unsubstantiated (and incorrect) rumor was floating that Judge Kantor was going to release one or more of his PERS-related rulings. For those of you who've forgotten, Judge Kantor is the Multnomah County Circuit Court Judge who heard the Arken and Robinson cases last September 28, 2006. He promised all in attendance - lawyers, reporters, PERS members and others - of a relatively quick resolution. We're starting to measure quick in geological time, not clock time. I don't have any sense that Judge Kantor is any closer to releasing a verdict in either case anytime soon. Maybe I'm wrong, but he's managed to redefine "relatively soon" so many times that I no longer know what it means.

Our Quebec foreign exchange student left this morning and we're all feeling a bit sad. It is wonderful to have the opportunity to spend time with young people from another culture. They try so hard to speak English and we try so hard to speak French. Regardless of language barriers, we and our daughter had a wonderful time. And, by way of symmetry, our daughter had a great time staying with our student in Quebec.

I hope I have some interesting, relevant, and useful PERS news before we leave on our next trip to New York City in June. At the current rate, that seems unlikely.

Cutting Board Blues

PERS began mailing some invoices to retirees who had taken lump sum distributions (either single or double) upon retiring. These invoices demand full payment of amounts reputed to have been overpaid as a result of the 1999 earnings crediting decision. For many people, the demand for full payment constitutes a severe, if not crippling, financial imposition. The PERS Coalition, through its attorney Greg Hartman, has published some general observations and discusses the various options available to individuals receiving these invoices. You can read this memo here. The memo isn't entirely helpful and advises members faced with these invoices to seek advice from their own attorneys. Nevertheless, regardless of what the attorney advises, the options listed in the Coalition memo seem to be exhaustive. I can't think of any other option that isn't listed.

New Train

Or at least a greatly revised web site. The first in a series of changes to the PERS web site went live today. Many of the changes are the result of input from a focus group PERS selected (yours truly is included). If you haven't been to the PERS website in awhile, you should find the new site much easier to navigate and important information more prominently displayed. I'm not much of a style maven, but the color scheme seems a bit garish to me. But that's my opinion and I have no room to quibble, especially after the color choices I've made in putting together blogs and websites.

In other news, a PERS-sponsored bill to eliminate the "Break In Service" statute enacted in 2003 has gotten its first hearing. This statute has created more havoc, more unintended consequences, and more headaches for PERS and for many employers and employees than anyone imagined when HB 3020 (formerly 2020) passed in 2003. The City of Portland has blessed PERS' efforts to eliminate the rule, as has the PERS Coalition. Our friendly Oregon School Boards Association is opposed to eliminating the rule, in part no doubt because they were instrumental in drafting it during 2003. Hopefully this statute is headed for the dustbin of history.

Home at Last

We arrived home safe and sound yesterday. We managed to keep the jet lag to a minimum by an old trick of forcing ourselves to stay away through two long flights. By the time we were on the west coast, we were sufficiently exhausted to sleep all the way through the night and wake up totally on West Coast time. It doesn't work perfectly, but minimizes the amount of jet lag we experience. By Thursday or Friday we'll be a bit strung out, but it should last only a couple of days. Until then, I can fake coherence.

Obviously nothing of substance took place while I was gone. The Oregonian seems to have had an article extolling the management of PERS and lavishing praise on the Board, which has taken a large deficit and converted it to a $1.75 billion surplus. No mention is made of the fact that the unions predicted this would happen by a market change without any reform. Surprise, surprise, the stock market has been on a roll since 2003 with new records being broken daily. Little wonder the PERS fund is as healthy as it is. Now, if the public could only understand that it was market forces that put PERS in the hole in the first place, not outsized public employee pensions. But I'll be dead before the Oregonian or the public makes that admission.

While I was gone, I decided to change my image a la London style. You can see the results of this change here. It just seem appropriate for me so that I can continue to remain low profile. Sorry for the image quality. No flash permitted and I didn't have a tripod handy. Even Photoshop couldn't clean up the blur, but you'll get the point anyway.

Who are You

At the suggestion of others, I'm interested in polling all the non-PERS individuals who read my blog. So here's your chance to respond. If you've already voted, don't vote again.

Now that we know about PERS members and retirees, let's find out about the others who read this blog
	Attorney
	Judge
	MSM Journalist
	Blogger
	Related to a PERS member
	Have no PERS affiliation
	none of these
pollcode.com free polls

So Quiet In Here

You can almost hear a pin drop. The only news of substance I have to report prior to my departure is that the PERS Retiree Focus Group has had one online query. It concentrated on the current layout of the PERS website and how and whether PERS should make information more readily available. The group offered some suggestions of what other information would be helpful and some navigation hints. These were taken seriously and some reorganization of the website will be forthcoming. The group was also asked about the desireability of making our names public or at least available to each other. Obviously you know my feeling about that subject, but my opinion was not shared by a majority of the (unknown) group. So, we will continue to operate ignorant of each other's identity. (We don't communicate in a forum; we don't even see what each other writes. It's not really a focus group in the strict sense as it is 9 independent voices providing input to PERS. I wish it were a real focus group where we are all involved simultaneously. I also wish I were a billionaire :-)

On The Road Again

I'm getting ready to take another road trip this week. I'll be out of blogging range until April 30th. I'll probably have internet access, but at the rates charged, I probably won't be posting mundane items. If a major development occurs, I'll try to find time to blog about it, but this isn't my highest priority. It hasn't been very often that I've had travel time without children and with a housesitter. So, my wife and I will be trundling off for a quick jump across the pond to visit friends in the UK. Retirement *is* good.

This is Us

Here's a new poll to gauge the readership of this blog. Please take the poll below. To make it accurate, please answer the question only once. Thanks.

What is your PERS retirement status
	Active Tier 1
	Inactive Tier 1
	Window Retiree, old actuarial tables
	Window Retiree, new actuarial tables
	Window Retiree, "Lookback"
	Post-Window Retiree, new actuarial tables
	Post-Window Retiree, "lookback"
	Tier 2 or Tier 3 active
	OUS ORP active
pollcode.com free polls

Another Round of Blues

Over the past few posts (except my April Fool's post), we've been exploring the plight of a narrow group of retirees whose benefit was calculated on the basis of the "lookback" - a legislatively designed method to ensure IRS compliance when the new actuarial tables went into effect on July 1, 2003 (HB 2004, 2003 Legislature). You can review previous entries to see how this particular calculation has led to some perverse outcomes for retirees subject to the Strunk/Eugene remediation efforts. The short version is that when the Strunk/Eugene adjustments are made, the "lookback" no longer gives the best retirement estimate. Instead, retirees are finding that they have significantly higher at-retirement account balances and are re-retiring under a straight Money Match calculation using the higher balance. While at first blush this might seem to be very good news (and most people in that situation thought that would be the case), the fact is that the higher account balances don't translate into higher retirement benefits. Instead, the higher balances become subject to the new mortality tables, which are considerably less generous than the tables they replaced. Consequently, retirees who find themselves in this situation are faced with benefits lower than they were receiving under the original "lookback". In some cases, the benefit cut is significant - several hundred dollars per month. When a spate of these started showing up in my mailbox, I walked through the calculations in the instances where I had all the relevant data. Alas, there is nothing wrong with PERS' calculations. I suggested that affected individuals contact the PERS Coalition through its attorney, Greg Hartman. Several did and this resulted in the PERS Coalition publishing a brief response on the AFSCME web site. The short answer is that while these cases are unfortunate, they do not appear to be litigable, or at least the PERS Coalition isn't going to litigate them. I don't know how many retirees are in this boat. I heard from 16 individuals. In the time period where this effect could possibly occur, there were a total of about 5000 retirements. Based on my own experience and communications, I would say about half those retirements were "lookback." Of those, I'd guess that approximately half will experience what my correspondents have experienced. The key factors will be age at retirement, retirement option, and percentage of account in variable. Younger individuals are less likely to experience this than retirees 60 and over. This is because the mortality factor changes are more evident for older retirees than the younger ones.

On an unrelated topic, I want to alert everyone to another "quiet" period for this blog. I'm leaving on April 21st for London and returning April 30. I will have my laptop with me, but I don't know how easy it will be for me to have wireless access. Our friends don't have it, so I may have to depend on finding a handy Starbucks or equivalent. Given the current exchange rate, I'll probably ration my time online. So, don't expect too much news from this source during that time period.

Party At The End of the World

I've returned from my Spring Break party at the end of the world (or at least at the tip of it) and found a piece of spectacular news awaiting. It seems that the PERB has decided to withdraw its complaints in the Arken and Robinson cases and has joined forces with the PERS Coalition. From the looks of what they're doing, they finally understand what the Supreme Court ruled in Strunk and plan to give "window retirees" everything they're entitled to receive - adjusted current benefits, restored COLA and the like. A spokesman from one of the PERB's law firms Dewey, Cheatham, and Howe said: "It took us quite awhile to parse the wording of the majority opinion in the Strunk et al case, but just last week it dawned on us that the Supreme Court wrote the words "fixed benefit" and said that because it was legislatively determined, it cannot be in error. Therefore, we plan to re-remediate the collection efforts and turn it into a method by which PERS repays all the retirees for lost COLAS and any associated expenses. Because the mechanism is already in place, we will first adjust those members who've already been invoiced and then we will address those members whose accounts have not been touched. It is a complex task, but we should be able to complete all account adjustments by 2009." This seems like such an anticlimactic end to such a long and exhausting process, and I'm a little disappointed at how easy this has been to resolve. I wonder if the Governor was involved in bringing the PERB to its senses. In any case, be sure to mark this day on your calendar as the day this exclusive news appeared, just in case PERS changes its mind tomorrow. [And in case you haven't noticed, do check today's date for important clues about the veracity of the information contained in this post.]

Soon As I Get Paid

I now have permission to share with you the Special Master's Report to the Supreme Court in the matter of Attorneys' fees in the Strunk case. The report is here. I also have a copy of Stipulation 1, which pertains to OPRI's attorneys' fees. It is here. It appears from reading these reports that retirees have won their battle for attorney fees, but it unclear how they might benefit from this ruling. If OPRI keeps its promise, those of us who donated to their Legal Defense fund might expect a refund of our donations -- that was the promise Jack Sollis made to members who donated. It seems only reasonable since PERS is going to "ding" retirees for their "win". Of course, all of this is predicated on the assumption that the Supreme Court accepts Judge Breithaupt's recommendations without modification. The unfortunate news is that there is nothing in the Special Master's report that would compel the Supreme Court to clarify its Strunk ruling as it pertains to the "fixed benefit" and its computation "without error". We had hoped that in the attorney fee hearings that this issue would be forced in order for the Supreme Court to declare how retiree's had "won". Alas, nothing in the report seems to force that clarification. On the other hand, having this out of the way removes any further obstacles to getting rulings in Arken and Robinson. Many believe Judge Kantor was waiting for the Special Master to issue his report and for the Supreme Court to clarify its Strunk ruling. Since that isn't likely to happen, Judge Kantor will be forced to rule on the merits of the cases before him without any "help" from the Supreme Court. Enjoy your reading.

On a totally unrelated subject, I will be out of the country from March 23rd to March 31st on a family vacation. I will have no access to email, the internet, or phone service. Do not expect anything posted here, on my other web site, or on the PERS Discussion Group at Yahoo. I will be truly out of contact (the sound you hear is my family cheering).

Call Me

I have been selected as one of 9 retirees to participate in a PERS focus group. Its purpose is to deal with communication issues and other problems relating to PERS' interactions with PERS retirees. If you have any specific concerns you'd like to share with me to share with the group when we get organized, please feel free to drop me an email at a special email address I've set up for these communications. Send your note to me here: enochroot1947-persissues@yahoo.com Try to keep your "issue" focused and clear. I want to represent retiree issues fairly and competently. You can help me by a concise statement of the problem/issue you have. A word of caution: I doubt the group will deal with matters currently the subject of ongoing litigation. They may get into issues related to communication about these matters, but the nitty-gritty details may not be up for discussion.

Everybody Have Fun Tonight

Over on Jack Bog's site there is a lively and fun discussion of names you would give to the Portland City Council if they were a rock group. The proposed names are fun. It seems that we could have a similar good time if we poked fun at (a) the PERS Board (b) the PERS and Employers Attorneys (c) the various Media and (d) the various Judges involved, including the Supreme Court. What IF each of these were rock groups. What would you call them. To start, I'd be inclined to propose a name for the PERB, including Paul Cleary, and call them "Paul Cleary and the Raiders", or "Mike Pittman and the Mechanics". For the PERB lawyers - Joe Malkin and Bill Gary - "Stoned Temple Pilots". Use your imagination. Go to my interactive website and leave your suggestions over there. The winners will be honored by having their names used in place of the real names in some of my posts. This is good, clean fun and is a nice way to divert attention from the real problems we all are dealing with. Let your creative juices run wild. PERS can't take those away.

Hungry Heart

You'll notice a new element on the upper left of this site. I've joined Kevin Bacon's "Six Degrees" web network. The goal of "Six Degrees" is to raise money for charity. At a certain level, Kevin Bacon himself will match the donations made to Oregon Food Bank through this site on a dollar for dollar basis. Since the sight of hungry people in our affluent country really angers, bewilders, and frustrates me, I have decided that it is my "pet" cause. My wife and I give substantial amounts of money annually to the Oregon Food Bank. My daughter does volunteer work there through her school's community service program. I know that I can't single-handedly stamp out hunger in our community, but I want to do whatever I can to raise people's awareness of this significant problem in our society. I provide the news and commentary here with no expectation of financial remuneration. Many people have indicated how valuable they find the site. If you really find the site valuable, please consider making a small (or large) donation to the Oregon Food Bank through this site. Not only will you be helping people in genuine need in our own communities, you will also be indirectly showing support for the work I'm doing on your behalf. My only regret with the "Six Degrees" organization has been their inability to get the credit card companies to donate their fees and charges so that 100% of the money donated can go directly to the Oregon Food Bank. You can offset this yourself, or let "Six Degrees" deduct it from your donation. It is up to you. Regardless of how you feel about this feature, please do consider making a donation. It is the least you can do to make me feel that my efforts here are worthwhile. Thank you.

Blowin' in the Wind

The answer my friends, is blowin in the wind. My email box runneth over. The dogs have been unleashed and all those people who retired around mid-2004 are now discovering just how much of a "do over" PERS got. I've heard from about a dozen post April 1, 2004 retirees of the following scenario. You've gotten your recalculation letter. Your "at retirement" balance is higher AFTER the Strunk/Eugene adjustment than before (in one case, more than $20,000) higher. First, for the good news. The reason your balance is higher is because PERS was forced to pay you 8% for 2003 on both contributions and balance, and a pro-rate of 8% for 2004 on your beginning 2004 account balance. They also reduced your 1999 balance, but the 2003 & 2004 earnings were larger than the 1999 reduction; hence an increased account balance at retirement. Now for the really bad news. If you go back to your original Notice of Entitlement - the one you got when you originally retired, you should see that your benefit was calculated on the basis of the "Lookback" (surely you've forgotten that by now). The "lookback" was created by the Legislature to give you a "floor" under your benefits so that you could still get the benefit of the "old" actuarial factors, but at a price. The price was that your account was frozen at its balance as of June 30, 2003 - nothing else was added. If, when you retired, your frozen benefit on June 30, 2003 was higher than your benefit accounting for all additional earnings and contributions after that date using the NEW (less generous) actuarial tables, you got the higher benefit. So now, four years later, they go back and they are forced to give you additional money. The consequence is that although you left money on the table to get the higher benefit, it no longer works out that way when they add in even more money. They recalculate your benefit and lo and behold, the "lookback" doesn't "win" anymore. Now, your benefit is higher using the new (higher) account balance than it is using the "lookback" in the same comparison. Voila. You get the higher benefit. Unfortunately, the higher benefit is lower than your benefit when you had the lookback because you're under the NEW actuarial tables. Still more unfortunately, PERS is obliged to "give" you the highest benefit. And sadly, the higher benefit is still lower than your previous benefit because you're now using different actuarial tables. Remember that the lookback preserved the "old" tables (the ones usually called the 1978 tables). After the Strunk/Eugene adjustments, you end up, by pure computation, under a set of tables that went into effect on 7/1/03 and are less generous than the 1978 tables.

PERS should have explained this in the letter. It would have saved them a ton of grief. Now, the only thing I can offer is that people appeal their benefit. I'm afraid the appeal won't show much except you'll get the details of the calculation so you can see how this all worked out.

I remember this topic coming up in a PERS Board meeting and the PERS staff cautioning that a complete review of calculations could end up in situations like this. Unfortunately, they underplayed their hand. It looks like it is happening in every single case I've heard about. So far, every single example I have where the "lookback" was the winning procedure originally, it now loses and produces a smaller gross benefit. This is a sick and cruel joke. Appeal the invoice. Make PERS do the extra work to provide you with the explanation. Make sure you thank your legislator. After you've done that, consider a contribution to one of the legal defense funds to help the litigation to stop this dead in its tracks.

P.S. In an answer to an obvious followup question. Why doesn't the "lookback" still work? Because the original lookback was formed on an assumption that is no longer legally correct. PERS calculated your "at retirement" actual account balance assuming 0% earnings for 2003 and 2004. Since the "lookback" used a pro-rate of 8% to simulate the June 30, 2003 balance, the "lookback" balance upon recalculation is actually lower than it was when originally calculated. The original "lookback" continued to "freeze" the 20% for 1999 without the 0% freeze. If you reduce 1999 but not the 2003 earnings rate, the revised "lookback" balance cannot possibly be higher. However, the total account balance is likely to be significantly higher because it was originally formulated with 20% for 1999, 0% for 2003, and 0% for whatever period you worked in 2004. The 1999 adjustment is common to both balances, 2003 had already been adjusted for the "lookback" but not the final account balance, and so there is virtually no way that the actual account balance adjusted for the Strunk/Eugene matter could be anything but significantly higher. And so, the "lookback" has little chance of "winning" against a significantly higher account balance after the recalculation.

Math Sucks

Even though Jimmy Buffett sings of his despair with math (tough sell for one shrewd moneymaker), the PERS math turns out not to be as hard as people are making, although PERS certainly makes life more difficult for itself by putting in extra filips on its forms that confuse rather than help. If you want the "411" explanation of what is happening, consider the forms published yesterday- particularly the first form - as our example. We have a "Before Recalculation" benefit and an "After Recalculation Benefit". One represents what you are currently getting as a result of the 1999 overcredit. The other represents what you *should be getting* after the recalculation of the 1999 interest at 11.33%. Down at the bottom of the page is a list of the COLAS that need to be applied to the revised benefit. The final number represents what your new revised benefit will be, before actuarial reduction. For the amount labeled "Your initial actuarial reduction", subtract that to get "Your recalculated benefit starting [date, 2007] under the ARM". Consider this your NEW REVISED BENEFIT and forget everything else. Nothing more will be done to you. From that benefit forward - assuming it is computed correctly - you will get COLA adjustments on the NEW REVISED BENEFIT. You should never see another ARM reduction as they've just taken it away from you forever in "one touch". Presto, your account is in PERS harmony and PERS doesn't have to fiddle with anything related to your account again except for those annual COLAS. The ARM amount is a one-time reduction to your permanent benefit. The issue of increased ARM payments is a "red herring" as this is invisible to you. PERS is simply banking your ARM monthly and has to apply the COLA to it in the same way it applies a COLA to your benefit. Unless PERS is looking to needlessly complicate its life, there is no reason for it to do anything else. You'll be repaying for the rest of your life in the form of a permanently reduced benefit. I sincerely hope this helps people understand what is going on.

Everyone Is Going Mad

The PERS machine just rolls on, running over people with gay abandon. Yesterday I finally laid hands and eyes on a copy of the form PERS is sending out to retirees when they are "invoiced" for the 1999 "overpayment" and the implementation of the Strunk/Eugene remediation. The form looks pretty straightforward and, for the most part, doesn't seem to lack any essential information needed for a mathematically competent record keeper to verify. Here is an example of a straightforward form submitted by a recipient with ALL original numbers from PERS. (Other identifiers have been photographically removed). There is nothing unusual about this form, although some were surprised to see the way PERS phrased the matter of the actuarial recovery amount (note the asterisk and what it attaches to). As a result of this form, I concluded that the PERS forms were probably adequate and that they weren't as awful as had been alleged by a deluge of emails I had received from recent recipients. But that was before I got the next one. This is from a retiree who left the PERS system 3 months outside the "window" and therefore came under a different set of rules. His situation is bizarre, to say the least, as he had been led to expect, not unreasonably, that his benefit would rise because of the decision involving the 8% earnings to be paid on 2003 contributions and on the 2004 balance. Alas, look at this form and its second page. You get bonus points if you can explain how this person has a HIGHER total account balance AFTER the Strunk/Eugene adjustments but a LOWER monthly benefit. Needless to say, this is one extremely unhappy retiree who feels he has been led like a lamb to slaughter in the PERS "play by whatever rules we happen to think of at the moment" game. Comments welcome on my other blog here. For the record, I advised this retiree to contest his invoice as it makes no sense.

Wasted Time

An intrepid "window retiree" finally faxed me a copy of her invoice from PERS. Let me say that after looking the letter over carefully, there is very little missing. PERS has supplied what it said it would supply and a reader armed with a 1999 Member Statement and a Notice of Entitlement could easily check the numbers. The form is pretty transparent. I take back the evil things I wrote yesterday. If you can't calculate whether PERS is correct or not from what they've sent, dig out the two forms, an Excel spreadsheet and calculate. Everything you need in present on those sheets of paper. And BTW, those are the same sheets of paper you need to use my calculator.

Comfortably Numb

I've been stunned by the number of people who have emailed me with questions about how to challenge PERS on the recalculation letters. Back in September 2005, PERS presented its plan to the Board, the stakeholder attorneys, and a fairly large audience of union representatives and plain old affected citizens like me. The "Strunk/Eugene" remediation plan included a phase in which retirees would receive two letters, the first informing them of PERS' intent to adjust their benefits in accordance with the rulings in Strunk/Eugene cases and the "settlement agreement". The second of these letters would *detail* the calculations and lead the retiree to the recalculated amounts. PERS promised that the letter would contain enough information for the retiree to determine how PERS arrived at the recalculated benefit. Although I've not actually laid eyes on a single letter, I have nearly 150 emails telling me that the numbers just aren't there and there is no way for a retiree to reconstruct much of anything from the information provided with the letter. PERS assured us that this wouldn't happen. In fact it is. This borders on criminal contempt. I wrote my Lipscomb calculator to allow retirees to estimate the effect the Strunk/Eugene remediation would have on their benefits, assuming a July 1, 2007 implementation date. From reports I get, my calculator turns out to be pretty good - estimates are frequently within a few pennies of PERS' own calculation. But this is absolutely and positively no excuse for PERS to not supply members with the ability to check the calculations on their own. PERS should be supplying members with a template that walks through the calculations following the same algorithm PERS is using to compute the benefit adjustments. It is the least we can expect. Otherwise, EVERY RETIREE receiving one of these letters, should challenge the adjustment for no other reason than to force PERS to supply ALL the numbers making up the calculation. We cannot afford to be comfortably numb. If we accept PERS' numbers without independently verifying them, we might as well give PERS the gun to shoot ourselves with. They've already got a reputation as a rogue agency, interpreting Supreme Court rulings willy-nilly and making up rules as they go along. We cannot sit back idly and let them continue to shove things down our throats (and other parts of our anatomy). Don't be comfortably numb. Challenge the letter.

The Long Line of Pain

Gertrude Himmelfarb once titled a book "On Looking Into the Abyss". In it she ruminated about the culture wars and how they would play out in the future. Although I don't share any of Himmelfarb's views, nor those of her husband Irving Kristol and son William, I thought she represented the future as presciently as just about anyone else of her generation. Lately, I've been reading and partipating in discussions elsewhere and via email with PERS retirees who've begun to get very tired, irritated, and frustrated by the lack of any movement on any of the Court cases litigating all things related to the PERS Board's "do over" of the 1999 earnings crediting decision. Some people are antsy about the slowness with which PERS is moving; others are angry that the PERS Coalition doesn't show more aggressiveness in pursuing options that they believe will force PERS' hand. Others ruminate and argue over what exactly the Supreme Court meant by its reference to "fixed benefits" and "without errors" in its Strunk Decision. Others are indignant that PERS is acting like the Supreme Court never ruled and seems to be writing its own rulebook. Others (including me) point out the inherent conflict of interest that arises in some of the legal proceedings between the interests of active (or non-retired) PERS members and those who retired during the "window" or thereafter. Some adamantly cling to the quaint notion that "justice delayed is justice denied". I suppose this is all natural, especially when this melodrama has been played out in so many different courtrooms, in the legislature, and in the newspapers since early 2000. And I don't have an answer or advice to give. I can stare into the same abyss everyone else is viewing and all I see is another 2 or 3 years before all legal avenues are exhausted. The current process being used by PERS to implement what they're calling "Strunk/Eugene" remediation, was agreed to by lawyers (and presumably the client groups they represent) for ALL parties in September 2005 [note added 2/22 - it is significant to note that OPRI and plaintiff Sartain did NOT agree to the one touch, but OPRI's attorney was not present at the 9/2005 meeting, and his letter did not make it into the Board packet because of OPRI's indecisiveness about whether to seek legal input on this matter. I definitely stand corrected on this point.] PERS is moving at the pace it said it would move, perhaps a bit more quickly but not a lot faster. The calculations are turning out to be pretty much in accord with what I programmed into my calculator, unfortunately. The "one touch" approach seemed like a good idea back in 2005 when several of the current cases got launched. It still seemed like a good idea when Judge Kantor announced in both Arken and Kantor that he would make decisions relatively quickly. But that was nearly 6 months ago and most people have difficulty understanding that legal time and geological time are close cousins. In geological time, 2 million years is really fast, but humans can't grasp its speed. To lawyers, a year seems like an instant, but clients can't grasp that it is fast. I don't have any magic wand I can wave and make the judicial system move faster. I have no pull with the lawyers that would suddenly make them "see the light" and move for some sort of action that would (a) stop PERS from continuing what it is doing and (b) sequester funds currently being withheld from retirees into a safe account that will be paid out with interest if the retirees ultimately win. All I can say is that if PERS loses, "one touch", will become "two or more touch" and that is PERS' problem, not mine. Obviously PERS is confident that it will win; otherwise it wouldn't be moving the way it is. So my advice is to sit back, grouse all you want, but expect the grousing to fall on deaf ears from the legal and judicial community. They will decide when they decide, and then someone will appeal and the wait will begin anew. And from there, its possible for a final appeal to the Supreme Court, which is where we all expect this to go for "final" (good god I hope so) resolution and clarification. We have no choice but to endure this long line of pain.

Note added 9:14 pm. If you want to discuss this post openly, please go to my other blog site www.orpersinfo.com and post your comments to the entry "Waiting On the World To Change". It is the most current addition to that site.

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.