Long Hard Road

The Oregon Court of Appeals has decided to reschedule the Arken case hearings to an unknown date in the future. At the same time, the court wisely decided to include the Robinson case for hearing simultaneously. As we know, the legal system moves at the speed of a glacier and these two cases seem to be in an interstadial whereupon they aren't moving at all. Eventually, these cases will be heard and decided by the Appellate branch, but we all know that this is just a brief hiatus before the big act before the Oregon Supreme Court. I'm still holding on my prediction of 2012 (or 2013) for final resolution of these cases. That would make the matter about 10 years to get through the entire legal system. Not bad for cases that were supposed to be "fast-tracked". It's a long hard road to get from here to there. Hopefully we will ALL still be alive to realize any benefits from these cases (note the optimism).

Stalemate

The pissing match between feckless Governor Ted and the Legislature over SB 897 is finally OVER. Today, following Friday's unanimous vote to override Governor K's veto of SB 897 in the Senate, the Oregon House voted 44-15 to override. As of around noon today, SB 897 is now LAW - the Governor be damned.

SB 897 forces PERS to establish mechanisms to ensure Quality Control on all retirement estimates beginning two years before the earliest retirement date. It requires verification of service time at all PERS employers, verification of age, beneficiary, account balances (and requires PERS to collect from employers derilect in paying employee and employer contributions, and effectively insures that when an individual puts in a retirement application, ALL the information used has been audited. Done properly and with care, there should be NO MISTAKES when someone starts receiving his/her first benefit check. The bill puts PERS on the same playing field as the Oregon Department of Revenue. Once a return (application) has been audited and closed, whatever mistakes (if any) are owned by the agency, not the individual.

This is, by no means, a land-grab by PERS members as some have claimed. PERS has until July 1, 2011 to put mechanisms in place to accomplish the audit, and with their new super-duper jClarety software package, they ought to be able to insure the accuracy of benefits to the point where people can finally stop worrying about a PERS "dropping shoe" about two or three years after retiring. This was the essence of the Kay Bell case in which PERS denied errors during Kay's working life and then suddenly found them after she retired.

I am proud of Kay for standing up through all this publicity, the trials, and the excursions through just about every aspect of her life. I'm proud that our jury system works and that Kay won punitive damages (yet to be collected) from PERS. And I'm proud of our Legislature, which had the collective wisdom to pass SB 897 in the first place, and the tenacity to stick it into the Governor's dark places when he vetoed a unaminously passed bill. I am also proud of OPRI for actively working on passing SB 897.

And to all the PERS critics out there who will see this as the beginning of a further falling of the sky, read the damn bill before bothering to criticize. It hands out nothing to anyone and grants public employees rights that you all already have. Take a chill pill and relax. The sea is not roiling, the sky is not falling, and armaggedon is not close.

Ring Them Chimes

Hallelujah! According to an email I received today from Senator Richard Devlin's office, both the House and the Senate voted unanimously to override the Governor's veto of SB 897, which passed unanimously in the 2009 legislative session. This is a major slap in Governor Kulongoski's face and an equally hard bolt upside the heads of the PERS, both of which actively opposed this measure. Now, PERS will have to take ownership of the auditing process and members will (starting on July 1, 2011) get benefit estimates and Notices of Entitlement that will actually be accurate. If PERS screws up after all the auditing, they will have to eat the costs.

This is a victory for OPRI, for PERS retirees in general, for upcoming retirees, and for Kay Bell, in particular. I stand in awe of Kay Bell for having the tenacity to keep fighting for her rights against the wall of ignorance that can sometimes be found inside PERS and in the Governor's office. I toast you Kay. I will buy you dinner sometime soon. Thanks again.

CORRECTION (9 p.m.): only the Senate voted today to override SB 897. The Oregon House will vote on Monday. If you haven't written your House Representative, now would be a good time. I think the confusion arose because the Senate voted to override TWO of the Governor's vetoes. The syntax of the response I received made no mention of the second veto. Nevertheless, I strongly believe that the House will also override this veto as well.

The Chain

It is that time of year again. PERS just sent out the 1099R forms for you to begin the task of preparing your State and Federal Income taxes. Just for you, I've gathered together a couple of good deals from Amazon. You can find them here. Personally, I use Turbo Tax, but I've used Tax Cut and a few of the others as well. I just find TurboTax to be easier to use than most, plus it imports information about as easily as it comes. Amazon's prices are pretty good, typically matching Costco's fairly closely. And you'll get free shipping. For me, this is a painful time of year because I get to find out how good (or usually bad) my tax planning has been.

There'll Be Some Changes Made

After receiving 58 yes votes and 0 no votes and then being vetoed by Oregon's pimp daddy, Ted Kulongoski, SB 897 is back for a veto override on February 1 in the Legislative Special Session. If you recall from my harangues last summer, SB 897 is a bill that would require PERS to clean up its estimates and take ownership of them. This would prevent the kinds of fiascoes that Kay Bell was subjected to when PERS kept reassuring her there were no errors in her estimates and then found the same error she had been reporting for years, after she retired. The veto override is being led by Senator Ted Ferrioli (R, John Day).

Bullet With Butterfly Wings

On Wednesday the Oregon PERS Board held a joint meeting with the Oregon Investment Council and interested stakeholders. I didn't attend, but a reliable scribe was in attendance. If I didn't know better, I would have thought that the PERS Board might as well have declared the following: "Dear Current PERS Retiree: Please drop dead as soon as possible." At issue were the growing employer rates for the PERS Retirement System. The Board seemed to think that the real problem is that employers had to continue to pay for existing retirees and that retirees were making it hard because they weren't dying. Of course other ideas were also floated, including the possibility of a Tier 4, for new hires which would be no retirement system at all.

The fact that any of this was discussed in a public meeting is utterly repugnant and contemptible. The current PERS Board acts like PERS members and retirees are an inconvenient group of people for them to deal with (please see note below for a correction). They'd prefer dealing only with employers. Of course, without PERS Members and Retirees, there isn't a retirement system. Unless my understanding of state statute has been gravely flawed, it is stated in law that the PERS Board acts as the fiduciary for the system. They are responsible TO and FOR members. WE ARE NOT INCONVENIENT STATISTICS THAT MUST BE TRIFLED WITH. I find this behavior by the Board, even if tongue in cheek to be reprehensible and I hope the Board finds a copy of this post in its collective mailbox. Otherwise, the bullet will have butterfly wings and, if you recall, chaos theory starts with the flapping of butterfly wings. Expect a tsunami of complaint about this stupidity. I'm offended deeply and even sorrier I wasn't able to make the meeting. Had I been there, I would have objected out loud and in person face-to-face.

Note added at 8:00 p.m. My source for this information attended today's meeting as well. I was corrected that the remark about pesky retirees didn't come from a PERB member but a member of the Oregon Investment Council. I'm not any more mollified to know this as the OIC is also charged with the responsibility to invest OUR money. If they find us annoying and pesky and inconvenient, every member has the option of resigning. I'm sure there are many other folks out there who would be perfectly happy investing our money and would do just as well.

Need You Now

The Oregon Legislature's special session convenes on February 1, 2010 and will run to February 26, 2010. One of the first agenda items will be to consider a motion to override Governor Kulongoski's ill-informed decision to veto SB 897, which passed in the House and Senate by a combined 58-0 vote. SB 897 is intended to require PERS to develop a mechanism that insures potential retirees of getting accurate and audited and certified benefit estimates BEFORE retiring and that such benefits would be fixed (as in not subject to change) after retirement. This bill was inspired by the Kay Bell litigation. It is vitally important that you write to your legislators (Representative and Senator) and urge them to support the veto override. Only by overriding this veto can prospective retirees get a grip on their benefits and the important assurance that PERS won't be coming back long after you retire and say, "oops. We made a small mistake. You owe us $100,000 payable in non-sequential $20 bills". A form of a letter was sent to me today, which will serve as a useful template. I reprint here a slightly modified version:

Dear Representative XXXXXX:

Dear Senator XXXXXX:


As a member of [fill in your union, your organization, whatever], I’m extremely appreciative that both the House and Senate voted unanimously to pass Senate Bill 897 in the 2009 Legislature. This broad support reflected the fact that the legislation will provide fairness and accountability for Oregon’s public employees by requiring that PERS’ benefit calculations be accurate and, once fully verified, become my fixed base benefit. I want to urge you to vote to override Govenor Kulongoski’s ill-considered veto of Senate Bill 897 when the legislature meets for its February 2010 special session.

Thank you for your consideration.


Sincerely,


your name
address
phone number


You can find email addresses for all legislators by searching for "Oregon Legislature" using the search engine of your choosing. If you don't know who your legislators are, the same search will take you to the Oregon Legislature's web site where you can enter your address and find out who your legislators are.

Since this veto override will be taken up at the beginning of the Special Session, we need you now to send these emails, phone calls, or letters. If you wait until after the session starts, it may be too late. If you are interested in equity for PERS retirees, this issue is vitally important and your support is needed to urge any reluctant legislator to really consider voting FOR the veto override.

Thanks.

Bad Romance

I hope that OPRI officials get the message that its romance with lobbyist Mark Nelson is not popular with the rank and file. The poll below, at the time of this writing, shows that 156 people of 179 voting, think that OPRI should find a new lobbying firm. While OPRI seems to have taken no "official" stand on Measures 66 and 67, its affiliation with Nelson's group leaves it in the curious position of being "associated" with the NO on 66 and 67 group. If OPRI wants a reason to sever a bad romance, there are quite a few we could list. Just pursue a list of all the lobbying efforts Nelson's PAC Counsel has been associated with - no on tobacco taxes, no on beer/wine taxes, no on any other taxes, against health care reform, and the list goes on and on and on. If I were involved with the administration of OPRI, I would run as fast as I can AWAY from Nelson and his confederates. He's bad news and he's bad company. I'd take out a restraining order to keep him away. OPRI is still seen as an advocate for PERS members and retirees, but this lobbying relationship is straining bonds of credulity.

If you are reading this Kathleen, et al, take a page from AOF's book. Find a new firm and contract out with an unrelated firm to run your office.

Stay or Go?

Should OPRI continue with Mark Nelson's group - Public Affairs Counsel, or should they part company like AOF and several other groups recently.  Follow the link below for the poll.

A Lifeless Ordinary

Not surprisingly, Mark Nelson, OPRI Lobbyist, is about as popular as the plague for all his work for anti-tax clients. Nelson was recently ranked as one of the most "awful" lobbyists by a recent article in the Portland Mercury. Today, it was announced that the Association of Oregon Faculties, which represents faculty members in the Oregon University System, parted ways with Nelson (see article in Blue Oregon by Carla Axtman). They gave him his walking papers because they had become fed up with his work with clients taking stands inimical to what AOF represented, and they were getting a lot of flak from their members about this association. One wonders what it will take to get OPRI to part ways with Nelson. He is a cancer and a pox and I will not encourage anyone to donate to OPRI's lobbying fund - indeed I will encourage people to sit on their wallets - if OPRI does not tear up their contract with Public Affairs Counsel (Nelson's firm). In addition to Mark Nelson, they also employ, David Reinhardt, the former conservative columnist from the Oregonian whose hatred of public employees was palpable in his columns. Nelson and his group may be effective in its lobbying efforts - something the Mercury acknowledges - but they are regarded as utter scumbags by those interviewed for the Mercury's piece. So, AOF has gotten religion and dissassociated itself with Nelson and his band of merry pranksters, while OPRI does nothing. Sooner or later, this association with Public Affairs Counsel will come back to bite OPRI really hard, in the pocketbook where it will hurt most. Since there are alternative lobbying firms that have both good reputations as progressive, and equal effectiveness as Nelson, it makes no sense for OPRI to continue in this unhealthy relationship. OPRI needs a divorce soon. Otherwise their effectiveness, whatever it is, will be diminished by its affiliation with a lobbying firm that is consistently on the wrong side of issues that affect PERS members and retirees. AOF got the message. Will OPRI? I'd suggest you contact OPRI to register your displeasure, but all OPRI email and phone calls go directly to Mark Nelson's group. OPRI contracts out all business operations of the organization to Mark Nelson's Public Affairs Counsel. This makes it hard to criticize OPRI's affiliation since we have the fox guarding the henhouse. So, I think that would not be the obvious way to go. Perhaps by tomorrow I can get together a poll posted on this blog that will give OPRI some feedback on how we, as members, feel about continuing this unhealthy relationship. Look for a poll in tomorrow's blog followup. Feel free to add your comments as well to this post. The more the merrier.

Bagpipes from Baghdad

In a surprising move, Elizabeth Hovde, the new resident conservative at the local Portland paper has published a followup to her partial hit piece linking PERS and Measures 66 and 67. Surprised by the more than 100 comments she received at Oregonlive.com she tries to set the record straight on the blog. Basically, she admits that she didn't expect the flack from PERS members and retirees and she didn't mean to 'dis public employees. She essentially apologized and then cited her sources for much of the information she provided in the original piece. Not surprisingly, she doesn't back down on much but relies on slippery semantics to try to qualify her answers. It is true that she didn't say "all" public employees get fully-paid medical care, but then cites the numbers who do. She acknowledges my point about the diminishing numbers of Tier 1 members subject to the rate guarantee, but then says she hasn't verified my numbers. At least she admits they "might" be right.

In the end she accepts that Tier 1 members and retirees are probably safe from any further changes to the system, citing the court decisions that have made this abundantly clear. But she argues that the unions and the members are going to have to sit down with management and negotiate out of the current mess (which is?) so that the system will be sustainable for all.

More entertaining are the responses to Hovde. One PERS retiree is having a field day tweaking all the conservatives and others by raving about his benefits and how much he is enjoying retirement life. While I understand the principle, deliberately flaunting this in peoples' faces is probably not a strategy I would use. It is sufficient to make the point that the benefits were earned fairly and squarely by hard work and under a unilateral contract. Beyond that, lavishing attention on the benefits in retirement is like poking sticks in people's eyes. I think it is counterproductive to our cause. The more attention we draw to ourselves by writing these kinds of inflammatory responses, the worse off we'll be. Some may think I'm being hypocritical as I am the most prominent defender of PERS benefits in the state. Nevertheless, if you go back and read my posts you'll see that I've been careful not to expose my benefits to people on a public blog. I'm very happy with my benefits, but that's as much as I'm going to say about them.

On an unrelated topic, the PERS Board and the Oregon Investment Council will be having a joint meeting in late January (the 29th) beginning at noon. This will be preceded by a conference meeting on January 27th. The topic of discussion will be employer rates for the next biennium in light of PERS' returns for 2009. The semi-official returns through November 30, 2009 were 15.5% and with December's runup, the final year's earnings ought to be pretty good. California's PERS ended up with an 11+% gain for CY 2009, which helps their bottom line tremendously. I think the 2009 returns may help mitigate the size of the employers' rates for 2011-2013, although there will be no way for the employers to completely avoid the 2008 hit. You can run, but you can't hide.

I close with my personal thanks to PERS for helping a friend in need. I can't tell you how much it means for people to know that PERS is actually going out of their way to help a family whose situation is, to say the least, quite dire. I do this for friends; I do this for total strangers. If you are frustrated with your dealings with PERS and can't seem to get anyone to listen, please let me know. I do have contacts and I'm not afraid to use them.

It Happens

Please make a note that if you were planning on attending the Court of Appeals arguments in the Arken et al case, the Court of Appeals has rescheduled the hearings for Friday morning, March 5, 2010 at 9:00 a.m. I will post updated information as soon as I get the location firmed up. I presume the hearing will be in Salem, but I don't know where exactly yet. Just remember that this is change in both day and time.

No reason to get annoyed or upset about the time and date change. This kind of stuff happens a lot in court cases.

Roll On

I hope you notice the new Amazon links to the side of this blog. I've added them to help defray the costs of running this blog (time, ISP, computer equipment, etc). If you link through this site to Amazon and purchase (at the identical price you'd pay anyway), this blog will receive a small percentage of your purchase price for the referral. It isn't much, but every bit counts. While I do this as a labor of love, there are expenses even though the platform (Blogger) is free. So I'd appreciate it if you use Amazon that you consider linking through the boxes on the left side of this blog. You're here anyway. Why not save a few keystrokes and a few seconds of your time to make the link directly and contribute a few cents to the ongoing operation of this site.

Let It Go (already)

The Whoregonian's new resident conservative, Elizabeth Hovde, still doesn't seem to grasp anything about the PERS system. The fact that she works for the local rag may have something to do with it. The editors of that paper must wear a pair of shades over their eyes that prevents them from seeing the constant error their staff makes about PERS. In today's screed against PERS, Hovde repeats the same tired crap that has cluttered the news for at least the last 15 years. It is time for them to both let is go and to get a clue.

Earth to Elizabeth: only a small fraction of PERS members have a "guaranteed" rate of return. The Oregon Supreme Court ruled in 1996 in OSPOA v Oregon that the earnings rate guarantee for Tier 1 members was part of the members' contract and therefore could not be changed, period, end of story. Furthermore, the court in 2005 in Strunk et al v Oregon ruled that PERS could not temporarily reduce the guarantee to zero. The guarantee is the guarantee. How many more court decisions do you need to spell out that the guarantee is not going away, now or ever until the last Tier 1 member and beneficiary dies.

I realize that this galls people, but there is absolutely nothing, zero, nada, and zilch the state, the legislature, or the courts can do about it. Get over it already. Move on to another topic. This fish won't fly.

It does no good to tell the Oregonian any of this. They KNOW it; they just don't want to acknowledge it. It is an unpleasant fact that they want to go away. If you repeat something often enough, it still doesn't make it true.

I will give Elizabeth Hovde one clap. She did her smarmy best to NOT trash PERS members. Her angst is with the unions and the employers. One cheer for the Oregonian today.

Concrete and Barbed Wire

A trip to Salem across the concrete and near the barbed wire seems to be in order. The Oregon Court of Appeals has set the date for oral arguments in the Arken et al litigation for 1:30 on Wednesday March 3, 2010. I don't know the location of the hearing (note to self: probably the Oregon Court of Appeals in Salem). According to what I've heard, this will be a very short hearing and will focus almost exclusively on legal issues. I'm not sure I'll drive all the way to Salem for a half hour hearing, but those of you living in the area might want to attend. It will be interesting to see who presides over this appeal.

Mystery In The Makings

I've gotten notes from several 2009 retirees that they are still waiting after 6 or so months of retirement without an official Notice of Entitlement. They are receiving estimated benefits that are deliberately low so that there is no possibility that the retiree will owe PERS money for overpayments. While this is very thoughtful of PERS, I'm having trouble understanding why it is taking PERS so long to get out a Notice of Entitlement. The cases I've heard about are all pretty straightforward and PERS is not *that* overworked right now. Why would retirees in June and July still be waiting for their Notices? Anyone else having this trouble with PERS? If so, it might be time for a group exorcism.

Heartbreak Warfare (long)

It is a rare occurrence when I find myself agreeing with The Oregonian in an editorial. Last Sunday they came out *against* Ballot Measures 66 and 67. As someone who has supported nearly every tax increase ballot measure and opposed every tax limitation measure, my view of M66 and M67 will surprise many.

I am categorically opposed to the measures introduced by the Legislature and which we will vote on anytime between now and January 26, 2010. My opposition is not to the principle of tax increases, but as an objection to the methods and ways the Legislature sneaked in all sorts of nasty things into these "reforms" and increases. They did not even consider alternatives and any legislator who tries to convince me otherwise is dissembling.

I don't doubt that the schools need more money, that higher education, and human services need more money. But, the Legislature chose two groups to single out for PERMANENT tax increases and did so in the most perverse of ways.

First, let's discuss M66. This is advertised as a simple increase of 1.8% in the marginal tax rate of personal income taxes on singles who earn more than $125,000 per year and joint filers who earn more than $250,000 per year. What isn't made clear is that this is only part of the story. Not stated is the fact that (1) the tax increase is permanent; (2) the tax increase is retroactive to January 1, 2009; (3) the marginal rate rises to 11% on incomes over $500,000; (4) M66 phases out the deduction of federal income taxes paid from $5600 to $4000 on incomes up to $290,000, and then to $0 on incomes above that. All tolled, instead of raising the marginal rate from 9% to 10.8% or 11%, the effective marginal rate rises to close to 12.5% or 13% in most cases. This is an outrage. This is enough to drive many individuals who contribute large sums of money to the Oregon Treasury to consider moving out of Oregon. Who will pay the 54% of taxes individuals or couples in those income brackets currently pay when many decide to pick up and move across the river to Washington and base their employment out of WA. Most people in those income brackets are pretty mobile. We certainly are.

To me, it is outrageous to expect that those 1% of taxpayers pick up an additional 5% of the state's revenue, while the rest of the taxpayers get by scott free (or so they think).

Measure 67 is a slightly different story. I am not opposed to raising the minimum tax for business from $10 to $150. While it is significant in percentage terms, it is not significant in dollar terms. But the Legislature wasn't content to leave the tax alone. Instead, they changed the basis of the tax as well. It used to be that the $10 was the minimum tax a business paid regardless of its profits or losses. However, the new minimum tax is now based on gross receipts before expenses are deducted. So a small business whose sales are, say, $60,000 will pay taxes on that amount rather than paying taxes on the NET sales after expenses. A business with $60,000 gross receipts and a net profit of $2000 will be paying about 30x as much in taxes as before. I can't think of a more regressive form of taxation. Instead of encouraging small business to work harder to up their gross receipts, this measure punishes them for succeeding regardless of the expenses needed to up gross receipts.

Since I have made it a practice to try, whenever possible, to patronize small business (my dry cleaners, my local independent service station, my local hardware store, my barber, etc), this will result in them having to pass on the tax increase in the form of raising prices. This, in turn, may drive me back to the big box stores I try to avoid. And the big box stores won't even be fazed by this change in the tax structure.

So, while the Legislature had dozens of different opportunities to come to grips with Oregon's terrible tax structure, its moronic "kicker" law, and the prospect of a "temporary" tax increase, they managed to choose the most offensive forms of tax increases imaginable. Instead of providing measures to increase tax fairness, to spread the burden equally (or semi-equally) across the various tax brackets, they chose a path designed to antagonize the two groups of people who contribute more in raw dollars to Oregon's treasury than anyone else, and to do it in a blatantly dishonest and disingenuous way. Read the ballot titles and then read the tax measures themselves. Ask yourself just how much information isn't being shared in the ballot title.

Don't let the cries of "woe is me" and "the sky will fall" fool you. The Oregon Legislature's special session will not convene until AFTER the results of this election are in. They will have time to come up with a set of alternatives to these tax measures in ample time to prevent the sky from falling. They're telling you that this will leave a $700 million hole in the budget, but they fail to tell you how big the 2010 "kicker" will be. It isn't that there isn't enough money; it's that the Legislature doesn't want to try to spend it. I call BS and urge people to think very carefully before voting on these measures.

The "rich" and "business" are two convenient "whipping people" for those who like to engage in "class warfare". However, the "rich" won't all be paying these taxes. The ordinary citizen of Oregon will end up paying these taxes in the form of higher prices and diminished services. In addition, both businesses and individuals/couples that are mobile will simply pick up and cross the river as soon as possible. I know that we will.

Oregon no longer owns the patent on "psychic income". I don't feel richer because I live in Oregon. It used to be that Oregon sold itself as the land of milk and honey. Now, I'm afraid, Oregon's reputation is simply the land of a cowardly government that uses emotional blackmail to try to get citizens to do the dirty work that the Legislature and Governor refuse to do. It is always easy to vote for taxes that affect someone else. But believe me, these taxes will come back to haunt everyone if they pass.

I know this entry will piss off many of my friends and colleagues still working in the public sector. I'm sorry that you feel that way. But just remember that there is no such thing as a free lunch.

Note: added 1/12/10. For those of you who may want to take advantage of the special deal to convert traditional IRAs to a Roth IRA, expect the conversion to come under the M66 effects. Just another bite from retirement savings. Major bummer.

Same Song and Dance

Welcome to 2010, two years ahead of the apocalyse according to the Mayan calendar. But not to worry. We have our own version of apocalyptic worry to deal with.

Another story of PERS' worrisome behavior is worth repeating. I've received several emails from people who retired on December 1, 2009. Recall that this was the last retirement date before PERS rolled out the new mortality tables on January 1, 2010. The new tables change the methodology used to compute the mortality factors and these methods reduce benefits slightly across the board. In any case, these readers planned their retirements around the implementation of the new tables. In at least two cases that I'm aware of, potential retirees submitted their paperwork in plenty of time to meet the December 1 deadline. In both cases, the members received notification after December 1 that there were issues with their lengths of service. In both cases there had been brief breaks-in-service in the past that had just been discovered at the time of the retirement audit. In both cases, members were under 55 and were going out under the 30 year provision. In both cases, their lengths of service were reduced by several months, putting one right on the cusp of not being able to retire.

There is a moral to this story. About two years before planning to retire, YOU should do an audit of your years of service. If you've worked for only one PERS employer, this is easy to do. You need only check with the personnel office to find out whether there are any breaks recorded in your personnel file. If you've worked for multiple PERS employers, then you need to do this for all of them. It is a pain, but is absolutely necessary if you are planning to take a 30 year-and-out retirement and are under 55 years of age. Even if you are a Money Match retiree, you MUST be 55 if you don't have 30 years. This is especially a woman's issue if you've taken time out for child birth etc. Prior to FMLA, these leaves may have been recorded as breaks-in-service and you may not even be aware. A good time to perform this audit would be following receipt of your annual benefit statement in May about two years before retirement.

If you depend on PERS to notify you in a timely manner about deficiencies or discrepancies in your service time, you could find yourself in a situation where you've already given up your job on the expectation that you have sufficient time to meet retirement requirements. That would be a terrible, if not catastrophic, error about which you can do little.

So, make this your New Year's resolution to audit that service time to make sure there are no surprises waiting for you at the end. Otherwise, it will be the same old song and dance at PERS, with you sitting on the sidelines without a partner.

Happy New Year.

Heartaches By the Number(s)

I've been keeping score over the past year of the number of inquiries I've received, or of questions I've seen posted at various newsgroups concerning the accuracy of PERS' retirement estimates. The typical story goes like this: "I've been getting estimates for some time so I'm familiar with what they used to look like. The current version is almost impossible to interpret, much less replicate. I don't understand how PERS arrives at current account balance and why by my own calculations PERS' numbers are almost always lower than expected. Now they assume that the 6 month buyback is part of the account balance with the employee always purchasing waiting time. They used to make everything easy to understand; now the estimates are completely opaque."

Alas this story is so familiar that I've tried to replicate PERS' numbers on numerous occasions. I can come close, but never reach the elusive amount that PERS gets. The errors are beyond rounding and suggest a systematic bias of some sort. What is frustrating about this is that PERS speaks with a forked-tongue about such estimates. On the one hand, they are the only solid evidence one gets upon which to make a retirement decision (that and the semi-useless online calculator). Yet PERS absolutely, positively declaims the accuracy of these estimates, leaving potential retirees helplessly frustrated. On the other hand, PERS offers no other way to help a member get a fixed amount that can lead to a confident decision to retire. This led to the calumny known as the Kay Bell case, in which a member sued PERS (and won) because she tried repeatedly to point out errors in the estimates and PERS kept telling her not to worry about them. So she didn't, untill PERS billed her for the very errors after she retired.

The Legislature tried to "right" some of this uncertainty with SB 897 in the past legislative session. This bill would have made PERS take "ownership" of the estimate process and require it to place its money behind its estimates. The bill passed 58-0 in the Legislature, and was then vetoed by Governor Ted (the coward) Kulongoski. Perhaps we can work towards a reversal of the veto in next month's special session. In the meantime, members close to retirement seeking to get an estimate for their final retirement benefit probably get better odds of accuracy at one of Oregon's casinos. There is absolutely no way that pre-retirees should have to live with the kind of uncertainty that PERS produces. You can't get a reliable retirement benefit estimate, you can't depend on the estimate or hold PERS accountable for errors, and if there are errors, it becomes your fault and your bill. It is like the old coin flip joke: Heads PERS wins; Tails you lose.

Gypsies In The Palace

I guess my rhetorical concern yesterday about OPRI's lobbyist helped prompt one reader to remind about this. OPRI's use of lobbyists with few or no ethical constraints on who they represent has been going on for awhile. I'm not a purist by any means, but I have little use for lobbyists like these. C'mon OPRI. Do you not have an ounce of self-respect that you throw yourselves under the bus with slime like these.

Radio Nowhere

I have been in lengthy back channel discussions with a very bright and analytical future PERS retiree about the Option 0 benefit. I confess to having been taken aback by the fact that the algorithm for Option 0 is poorly described and documented. I am unable to duplicate PERS' calculations of it and my correspondent has spent much time with PERS people and they too have been unable to replicate their own calculations. This is very scary for if PERS cannot replicate its own calculations in its own estimates, how then is a member expected to have any confidence in choosing Option 0. It is true that few members select Option 0 as a retirement option, but it is there, in statute, as an option and there is absolutely no excuse for PERS' inability to replicate the calculations they provide in their estimates. Whether Mercer - the PERS actuaries - is immaterial. If the agency can't duplicate its own results, then how can any of us be confident that in selecting Option 0, we are safe from the potential of an "error" along with a "bill" coming down the road when PERS finally sorts all this out. Advice to PERS - you better get this figured out real soon now or you'll be expecting a phone call from your friendly neighborhood PERS advocate or coalition member.

On an unrelated topic, is anyone else besides me a bit concerned about having Mark Nelson and his PAC Counsel office representing OPRI as their lobbyist, while also representing the folks opposed to Ballot Measures 66 and 67? Since the failure of 66 and 67 will affect PERS members and, perhaps, retirees, the conflict of interest is obvious to me. I find that all the groups Nelson represents - the tobacco groups, the business groups, and a host of others - to be among the more repugnant aspects of our society. I can't for the life of me figure out why OPRI has to team up with this ugly lobbying group, which would sell its own mother to make a buck. They don't seem to think there is anything wrong with a conflict of interest so long as the dollars keep rolling in. The answer, no doubt, will be that Nelson's group "gets the job done", but surely there are lobbyists who aren't quite as two-faced as Nelson. I make no secret of my opposition to Measure 66, but I am strongly in favor of Measure 67. In opposing Measure 66, I am not throwing my hat into the ring with Nelson's group. Their opposition is the typical opposition to liberal "tax and spend", whereas my personal opposition in on the principle of how the Legislature chose to implement the Measure. But I am deeply concerned that OPRI and Nelson are joined at the hip, while Nelson's firm has the job of defeating tax measures that would benefit PERS active members and future retirees. This simply makes no sense. If you are concerned about this, you should express your displeasure to OPRI. I've certainly rethought my donation to OPRI's lobbying efforts. I don't want a dime of my money to end up in Nelson's pocket.

Strange Days

One of the more surprising and unusual proposals to show up at yesterday's Board meeting emerged out of a meeting of Stakeholders with the Legislative Advisory Committee (LAC). Astonishingly, one idea is to end the IAP for Tier 1 and Tier 2 members and repatriate the money into the respective Tiers. This has no bearing whatsoever on ideas floating to eliminate the 6% pickup or end the 6% mandate. The issue created by the IAP - an unanticipated consequence one might say - is that employee money is no longer going into the PERS Fund and does not contribute to the financial health (or illness) of the system. Somehow the employers seem to feel (it was suggested by an employer) that if the IAP money from Tier 1 and Tier 2 members were to be drawn back in to the PERB fund, the system's health might improve. Of course, the actuaries haven't weighed in on this and the PERS Board isn't likely to request such a study from their operating budget. But to have this floated scarcely 5 years after the IAP began shows just how many bad ideas emerged out of the 2003 Legislature. We live in strange times.

Battle Studies

To my surprise, the PERB meeting today was pretty low key. That isn't to say that there weren't moments where it looked like howitzers would be drawn. But on the whole there were far fewer fireworks than expected.

Not surprisingly, the new actuarial equivalency factors were adopted without any discussion. The actual tables are not public to the best of my knowledge, but they will be shortly. All we have are the adjustment factors from the previous study and the impression that the factors will again be slightly less generous than before both because of better survival rates and because Mercer changed the calculation methodology. The expected impact is about 2% lower benefits at retirement, which can be offset by delaying retirement by a few months. Of course, your mileage may vary once the factors are public.

On the topic expected to cause the most fireworks, few actually occurred. The actuary went over various options and their impact. No matter how you slice it, employer rates will be going up for 2011-13, but the steepness of their increase remains an unanswered question, subject to a variety of factors. After the actuary finished his presentation, stakeholders were permitted to comment. The only stakeholder there who surprised me a bit was the public employee's best friend, Bob Tiernan, the chair of the Oregon Republican Party. Tiernan was not there to speak for or against the employer rate hike, but to remind everyone that PERS was back on his radar and said that his party would be looking at this as part of the next campaign (Legislative and Gubernatorial no doubt). For those of you unfamiliar with Bob Tiernan, recall that he was in the Legislature the early 1990's and was the sponsor of Ballot Measure 8 (1994) which would have removed both the rate guarantee and the mandatory employee contribution and the pick-up. When those were tossed by the Oregon Supreme Court, Tiernan was responsible for the Tier 2 program, which stripped the guarantee from new members.

For the employees, Pat West of OPRI and the Firefighters, and Greg Hartman spoke to the dual need of the Board's responsibility to members and to employers. Neither was willing to take any stand on what the PERB ought to do before any proposals were on the table - maybe at the January 2010 meeting.

Steve Manton from the City of Portland gave his employer's view of the potential rate increases, neither appealing for mercy, but asking that the Board take into consideration everything.

Finally, Phil Keisling gave an impassioned plea for the Board to engage in a longer-term discussion of the of the future of PERS in the current environment. He remonstrated the Board for looking at 2008 in isolation as though it were a "black swan" event, rather than considering the 5 year run of 15%+ returns as "golden geese". He surmised that the probability of the 5 year 15% run was about the same as the single year 2008 and that the Board (and the actuaries) ought to be considering both when they start all their modeling. Keisling was arguing that the Board should not make this decision in a compressed time frame in a reactionary sense, but should take as much time as is reasonable to plan. There is no direction for the employer rates to go except up and the Board, while certainly being the fiscal stewards they were, had the responsibility to deliver the bad news to the employers even if the employers did want to hear it.

The Board responded in turn to each of these comments and basically challenged that their job was to administer the system, not to make law. They had no authority to do some of the things being floated about, and felt that they should not be held hostage to the entire fiscal situation in Oregon. They had no authority to call on the Legislature for some sort of forum on the fiscal scenarios being played out. The general consensus among the Board was that they had not intended for the double-rate collar to be so black and white as to place once employer whose funding was at 79.8% with a 3% higher increase than an employer with an 80.3% funded rate. They seemed to be telegraphing that the rate collar would be maintained, but with some more graduated rates between the two cliffs.

At this point I had to leave the meeting and I didn't hear the final 15 minutes, although I doubt anything of significance was mentioned.

It is clear that the Board is suddenly growing troubled by the responsibility it faces and the consequences of their actions on public finance in Oregon. No final decision will be made until July 2010 when the 2009 returns become finalized. In the meantime, there will be 3 more meetings fraught with hand-wringing and despair as the Board and the employers wrestle with the problem of how they can push the problem on down the road while making it clear that they aren't. It will be an interesting 7 months and the knives and guns will be hoarded and the battle studies will take place in semi-slow motion.

For me, the answer is simple. The Board should hit the employers hard now. Make it clear that this is the system the Legislature baked and there are simply no other ways the employers can weasel their way out of future promised obligations.

Apologia

My primary source for Phil Kiesling's "meditation" on the PERS system failed to include Kiesling's cover letter. Since Kiesling explicitly asks that the cover letter be included, I am reprinting here since the source linked below does not include it. Kiesling tries to answer some of the questions about his motivations in the letter and set the record straight about errors and omissions and updates between the current version and previous versions. So here it is, extracted from the original source:

Begin letter:

"Friends and fellow Oregonians:

About 4 months ago, I started making a few inquiries about the status of Oregon’s Public Employee Retirement System (PERS), which was much in the news a half-decade ago. I thought I might do an 800 word op-ed piece about the effects of the 2008 market downturn on the system. But one question led to about 3 more, and as summer turned to fall and then early winter, the end result (after multiple drafts) is the attached White Paper, which is roughly 15 times the length.

My apologies for that. I know everyone is super busy, and this hardly the stuff of compelling literature for most people. But I thought this might be of potential interest to you, given how long and thoughtfully each of you has contributed to thinking and acting constructively about important public policy issues in this state. So in case this topic is of interest, I thought I’d send it along. (And my apologies to those who received this more than once; I’ve lost track of who got some earlier versions).

Indeed, if any of you have seen an earlier draft, please consider this one to supersede that. As I explain below, I have made more than a few changes, and old versions (and their flaws) of things do tend to linger longer than they should in cyber space.

I also fully recognize that while this November 9, 2009 draft reflects an extensive effort to respond to the myriad of comments and corrections I received, I’m sure that I failed to correct everything. But having started this inquiry in July – and much has indeed changed since then – it felt like it was time to call it “baked” at least for the time being, and send it out, remaining warts and all (and I fully confess some do indeed remain.).

For those who were able to read the previous piece, there’s nothing earth-shatteringly new in here. The main explanations – and conclusions – pretty much remain the same, though there are some important corrections in both tone and substance throughout. In addition to working diligently -- though I’m sure, not completely successfully -- to wring all factual errors from the large to relatively small from this piece, I want to highlight and emphasize several major points:

• An Executive Summary has been added, to try to encapsulate the more salient, big picture points

• Updated PERS numbers have been inserted where appropriate – especially multiple references to the fact that the PERS fund has rebounded significantly during CY 2009, and may finish the year with 15-18% investment gains. That said, I also repeatedly emphasize that even with a year that may restore most of 2008’s massive losses, the outlook for PERS’ funding situation, while certainly better than it was in earlier reports, is still very challenging. Readers should take various predictions and charts – especially those based on the May 2009 -- with that caveat, but also recognize that the general trajectory of rates remains in a relatively steep, upward direction for the next few biennia, under most foreseeable scenario save for a return to very high and multi-year (e.g, 12-15% annual) rates of return.

• This draft reflects a more sophisticated – and admittedly more favorable -- discussion of the role the PERS Governing board has played, post 2003 reforms, to further reduce PERS’ vulnerabilities. However, it’s also evident that much of the “non debate/non-awareness” of PERS’ situation during 2003-2007 was due to investment returns over 5 years of close to 15% -- almost double PERS’ Assumed Earnings Rate of 8% . The 2008 market downturn definitely did not “cause” PERS’ current predicament. Rather, it simply revealed -- sooner, and more uncomfortably than virtually anyone would have liked -- the longer term problems that PERS faces under more “normal” (not to mention, any “sub-normal”) investment environments.

• The “possible options” section has also been expanded somewhat. However, I want to once again re-iterate that the main purpose of this paper was to 1) Try to slash through the dense jungle of assumptions, actuarial terms, and acronyms so that readers could more easily grasp the basic and most important aspects of the system; and 2) Describe the broad outlines of the structural challenges PERS faces in coming years, given past decisions and existing policies (e.g. everything from benefit levels to rate-setting policies, assumptions, and processes).

This paper’s purpose was not to advocate a specific PERS reform agenda. Indeed, in both tone and substance I deliberately worked to steer clear, for now, of exactly that. (I do, however, strongly advocate for a robust, open debate that involves sufficient time and opportunities to involve not just public employers and their employees, but the general public. )

Indeed, it’s been my experience over the years that fierce partisans in this debate – and there are many, on both sides – often want to quickly steer PERS-related discussions into territory that’s almost “theological” in nature. Do you -- or do you not -- think that public employees do good, valuable work, and therefore are entitled to everything (and perhaps more) than what they’re currently scheduled (or believe they’re entitled) to receive?

For many, this is the general outline of the debate they want to have – and I have few illusions that even this white paper can avoid being sucked into exactly this kind of rhetorical vortex, too. So if you hold the more positive view, the discussion can quickly become a matter of, “We were promised this in exchange for lower wages, so what’s the problem? And since private employers don’t give (or sometimes cheat) their employees when it comes to decent pensions, maybe, private workers deserve a PERS system, too!” And if you hold the more negative view, it can quickly devolve to, “What a bunch of overpaid, overprotected complainers! Let’s just cut these excessively generous benefits!”

What a dreary – and ultimately off-point -- discussion, however much energy and heartfelt passion folks bring to the table.

While some – including current retirees, whose retirement benefits, ironically, are virtually untouchable when it comes to any proposed changes that are legally permissible – might want PERS discussions to focus on this (and related questions), the larger, important point is this: Oregon has and needs a public pension system. PERS is that system, and it’s one that Oregon taxpayers are ultimately responsible for, since it’s part of a compensation package that they (and their elected and appointed representatives) have decided on, through both laws and negotiated contracts.

But what are the prices of sustaining that system, as currently configured – including the potential costs on everyone, not just taxpayers, but on public employees themselves? And what possible changes might make such a system better, stronger, and more sustainable over time, under current and future scenarios that everyone needs to plan for as best we can?

Finally, I want to call people’s attention to the possibility of important decisions relating to PERS, perhaps happening very quickly. On November 19, 2009, the PERS Governing Board will discuss – and could even decide on -- some significant policy changes that bear directly on PERS future. (For example, whether rates should increase by 6% or 3% for 2011-13 under the current “double rate collar” policy).

Given the virtual absence of meaningful discussion of PERS during the last 6 years in journalistic, political, and other circles – I’m concerned that such a fast decision-making pace could prove unwise –not mention, quite unnecessary. (Existing net Employer Contribution rates will remain in effect through June 30, 2011). If any of you have concerns – either about the speed at which changes could be made, or the proposed changes themselves -- I encourage you to communicate them directly to members of the PERS Board and staff, and sooner rather than later.

I plan to attend the next PERS Governing Board meeting – Friday, November 20th, at 1 pm at PERS headquarters in Tigard – and have been warned by many to wear a flak jacket. Indeed, the PERS “blogosphere” is already filled with many dark speculations about my own personal motives, and the origins of the white paper – Am I running for Governor (No!); is this a product of the dark cabal known as the “Junto, (??!); and am I trying to take away the hard-earned benefits of existing PERS retirees? ( a) No; b) I’m a Tier I future beneficiary myself; and c) even if I wanted to, that would be a non starter given the court rulings!)

But I am trying to do something I think is very much needed in Oregon at this time: raising some important, legitimate questions as to whether such a large and basic pillar of current public policy rests on the kind of firm foundation most would -- or should --agree is needed (regardless of their political philosophies and views about government generally). This is ultimately a question of how well we collectively manage this function – not just to ensure we get it right for today’s workers and citizens, but also for those citizens of future years and decades who deserve something better than inheriting a mess that we could have/should have fixed on our watch -- but chose not to because we didn’t want to be inconvenienced by difficult discussions, much less actual decisions.

You may also feel free to forward this white paper to others. I only ask that if you do so, you also forward the above discussion that includes my various caveats (“Mistakes were made”) and the larger context I’m trying to put this into.

Thanks for any interest you might have in this – and for those brave enough to wade in, happy reading!

Phil Keisling

=========================

Let The Walls Come Down

In the past few days our favorite non-politician (Phil Kiesling) has released an updated version of his "meditations" on the PERS system. You can read Phil's latest draft here. I have to give Kiesling credit for picking up and correcting many of the mistakes that littered his previous versions of this document. Nevertheless, Phil's objective seems to be to provoke a serious discussion about PERS' future with legislators, the executive branch, the unions, all the various public employers. I strongly suggest that you read this updated version for it lays out some of the areas where PERS members might be facing some changes. Phil treats everything in the PERS contract that isn't legally nailed down by court decisions as subject to potential negotiation and/or legislation. Even if you don't want to wade through the lengthy text (this draft is nearly 20 pages longer than the first draft), please do not miss the APPENDIX. It is here where Phil lays out ideas for discussion. I do not want to discuss the document here, but I would suggest that readers who wish to discuss this come to our PERS Discussion Group (POD), which you can get to by clicking on the first link at the left. Please pose your questions there, although you are free to comment here, as always.

You Can't Beat The House

My head is spinning from the garbage being distributed lately. It seems that the announcement that PERS employer rates are going to rise has triggered a series of non-sequiturs from all directions. Everybody, it seems, has an idea to fix PERS. One thing unites all these ideas - they all involve taking things away from members. No matter what happens, PERS members are always the whipping boys and girls for advocates of smaller (or larger) government. Somehow it always seems as if we are greedy, ungrateful, spoiled brats who just want our PERS benefits and the public be damned. Everyone seems to forget that PERS benefits are not negotiable. They represent the ONLY retirement system available for most members (OUS members aside). The only element of the retirement system that was ever negotiated was the 6% pickup, but few today recall that it was presented to the unions in the form of an ultimatum - it is this or nothing. The unions wanted pay raises at a time when inflation was running at 12-14%. The state, predictibly, couldn't afford raises of that magnitude so Vic Atiyeh and Bob Straub came up with the idea that by paying for the employees' required PERS contribution, that would work out cheaper for the state and better for the employers. So, if you have a choice between the 6% pickup or nothing, you take the 6% pickup. I recall many, many PERS members griping to high heaven about not getting a pay raise. Now the 6% is historically part of the general PERS contract. It isn't going to be given up in negotiations.

So right now we have the Boregonian carping about high employer rates, The Statesman Journal writing about the ripoff of employer side accounts, and The Eugene Register-Guard complaining about the high cost of health care for public employees. Phil Kiesling wants to put everything in the union contracts up for renegotiation with tougher public employer negotiations. Steve Buckstein of the Cascade Policy Institute wants us to believe that if we raise taxes (via Measures 66 and 67) this will (a) all go to pay for the PERS "boondoggle" and (b) will cost the state much-needed jobs.

I can predict right now that politics will make very strange bedfellows during this coming January special election. We will have some peculiar groups of people supporting or opposing Measures 66 and 67. I'm not exited about Measure 66, but think Measure 67 is long overdue (or do I have them backwards?).

Regardless of what I think about these two tax measures, I can assure you that the lever that will be used to defeat them is going to be PERS costs. So, once again, we will be demonized no matter what happens. If the measures pass, people will bitch and moan that all the money is doing is to pay the costs for greedy PERS members. If the measures fail, it will be because of the greedy PERS members. In short, the house will win no matter what. Heads they win, tails they win. We lose no matter what. I don't like those odds.

Conjunto

Interesting musical form, emanating out of Mexico and on the border. Don't know its origin, but its suffix -junto is from the same root as junta. What does this have to do with anything? Nothing and everything. It is likely that the "position paper" on PERS may have originated in some discussion of PERS at a relatively new "club" called Junto that has 42 members, all prominent Portland/Oregon Democrats. Membership includes some of our favorite people including Greg Macpherson and, surprise, surprise, Phil Kiesling. The group was organized by someone I've known for a long time. If you are interested in this group, you might want to Google the word "junto" and find an October issue of Willamette Weekly with an article by Nigel Jacquiss on this not-so-public group. I suspect we'll be hearing more policy proposals emerging from this group. The membership includes an awful lot of familiar and not-so-familiar names. Beware.

Throw a Stone

For those of you who listened to OPB's "Think Out Loud", which aired this morning from 9-10, you would have found one of the guests to be a bit of surprise. Phil Keisling, former Oregon Secretary of State, was there to discuss his latest "PERS Position Paper". While I had heard rumors of such a document, I was neither certain of its authenticity or its authorship, much less its contents. Well, now we know the document exists and its author is Phil Keisling. The latest version is 36 pages long and is dated October 12, 2009. I have located a copy and have posted it here. Read it and understand that Kiesling has thrown the first stone into the pond called PERS in advance of the 2011 Legislature. Perhaps Kiesling is running for something, or just wants to stir up trouble. One thing is for sure is that active PERS members will certainly need to be on their guard before the next set of bad shoes drop.

Closer To The Bone

Tomorrow morning at 9 a.m., Oregon Public Broadcasting's radio program "Think Out Loud" will feature a discussion and call in about "PERS" in the current economy. The show airs on all public broadcasting stations that are part of the OPB network. It is 91.5 FM in Portland and at other frequencies around the state. It also streams live (and delayed) here. I don't know for certain who is on the show (I am not, that much is certain), but I know that invitations have been extended to Paul Cleary, Executive Director of PERS, Greg Hartman who represents the PERS Coalition, someone from OPRI (not sure who), possibly Ted Sickinger of the Oregonian (author of the latest hit piece on PERS), and probably one or two other luminaries - perhaps Bill Gary or someone who represents the employers. The show has a blog organized by topic (the show tomorrow already has about 10 posts), which is supervised in real time, as well as an opportunity to call in and make points and ask questions. I encourage all to listen to this show. Emily Harris, the show's host, is an exceptionally good interviewer and host, and this is an opportunity to learn what some of the public policy issues might be when the 2011 legislature convenes. Just remember that both the Oregonian and the Statesman Journal have published recent hit pieces on PERS and they've catapulted PERS into the public eye, yet again. Each time they strike, the outcome cuts closer to the bone. Be aware, be alert, listen, and call.

Wrecking Ball

On Wednesday November 4, 2009, the Oregon Public Broadcasting show "Think Out Loud", hosted by Emily Harris will focus on the PERS system in Oregon. The show will air at 9:00 a.m. Wednesday and again at 7:00 p.m. The show can also be streamed from the OPB website. At this point, I'm not sure who all the guests will be. I *may* be one, although I have not been extended an invitation yet (I've been contacted, but I haven't spoken to anyone about it yet). Greg Hartman, someone from OPRI, and Paul Cleary are known to be involved. This could be a seminal show as it may be possible to divine what PERS opponents have in store for actives and current retirees during the next election or Legislative cycle. With the Whoregonian and the Statesman Journal both publishing major articles on the PERS system in the past two weeks, and the Whoregonian editorializing on the sad state of affairs there, it seems quite likely that we have not yet eluded the snare of the fowler. There are many out there who would like to apply the wrecking ball to PERS and this next Legislative session (2011) may be the year of our discontent. In the meantime, plan to listen, plan to call in, plan to participate on the "Think Out Loud" blog. Register early so you don't waste any time while the show is airing.

You Might Die Trying

The Whoregonian's piece on Sunday about PERS managed to antagonize quite a few people - some good, some bad. My personal internets are buzzing with various shards of information about how we might see a variety of groups try to take on the local rag with a concerted information campaign to show how wrong-headed the Oregonian is. While they just "report" the news, they do far more than report. Every article is an editorial, whether they agree or not with that assertion. The headlines are editorials and much of the article's structure may be put together in such a way to lead a reader to the ineluctable conclusion that PERS is a failed enterprise that must go, or be significantly changed. Needless to say, everytime the Oregonian takes a strong stand on PERS, the Legislature inevitably gets into the action. This is why I predict -- this doesn't take a seer or genius to do -- that PERS reform will, yet again, be part of the 2011 Legislature.

In any case, the word I'm hearing is that the unions, the various other organizations that represent PERS members and retirees, PERS itself, might be moving towards a more concerted effort to counter the Oregonian's campaign of dis- and mis-information. I have no idea how, when, or if this will all come together, but if it does, expect it soon because the Oregon's effect is NOW. Unfortunately, the damage is already done, and I hope that efforts to change public opinion don't cause people to die trying. The general populace isn't very smart when it comes to PERS, and the Oregonian dumbs it down so that it is understandable. Unfortunately, that understanding comes at the price of substantial accuracy and versimilitude.

It does my heart good to read that the Oregonian's subscriber base has fallen to its lowest level since before it merged with the Oregon Journal. May this bastion of SI Newhouse finally bite the dust, or be turned over to some people who know not to bite the hands that feed them.

In the meantime, good luck to all those who may be trying to set the record straight. I give you props for trying, but I have low expectations of your chances to succeed in the court of public opinion.

I Hate Yer Ugly Face

Strong words, but that's how I feel about the Sunday Whoregonian setting out on its agenda to derail PERS again. I can only hope that PERS offers some sort of rebuttal to this slash and burn job by our local bird shit cage liner. The paper has the local loonies enraged and they are frothing at the mouth over at Oregonlive.com, where you can get angrier and angrier as these Lars, Rush, Bill O', and Sarah Palin wannabes ply the bit bucket with small are large piles of bit shit to be dumped on all the lazy, overpaid public employees. I wish I could encourage you to engage these morons, but I have found that doing so only enrages them more. It is all heat, fire, but neither warmth nor light.

Make sure your fight is done with facts; just remember that facts are boring to people who don't want to bother with them. The anti-PERS rhetoric is brought to you largely by people for whom numbers are alien concepts brought to us by illegal immigrants.

The article I'm referring to lies on the front page (above the fold) in Sunday October 25, 2009 Oregonian. Read it, but for heavens sake do not buy this paper. The fewer people who buy the paper, the sooner its extinction will come. The only favor we can do ourselves is to hasten its demise, before they hasten ours.

I Got The News

This is only the second or third post that doesn't really involve PERS, except tangentially. It really doesn't involve anything except to let people know I'm still alive and writing. I receive a daily investment update and today's update seems to be related almost entirely to public employment retirement systems. I'll just share the headlines: "MacFarlane quits as CalPERS real estate manager"; "New York State delays $1 billion pension contribution"; "North Carolina puts placement agent rules in place"; "Oregon treasurer undergoes treatment for cancer".

I find all this news on the same day a bit creepy. Ben Westlund's recurrence of lung cancer is worrisome. He heads the Treasury and the OIC. I don't know the internal structure of Treasury well and I don't know how things could play out if Westlund is unable to return to work. I'd hate to give our lamebrain Governor the right to choose Westlund's replacement; god knows what we'd get. Just the though scares me.

Fortunately it is neither Friday the 13th nor Hallowe'en, so perhaps these aren't omens of the future. They seem too close together for comfort.

Back to my cave.

Farewell My Lovelies

PERS, like other state agencies, is planning furlough days for its employees over the next two years. Just to keep everyone up to date, please be advised that the PERS offices in Salem and Tigard will be closed on Friday October 16, 2009, Monday Feb 15, 2010, Marcn 19, 2010, April 16, 2009, June 18, 2010, August 20, 2010, September 17, 2010, February 17,2011, March 18, 2011, and May 20, 2011. All of those dates are Fridays and were selected to minimize the impact on as many stakeholders as possible. According to sources, these closures will save the state about $2 million per closure day.

This notice brought to you by the lovelies at PERS.

Way Down In The Hole

Greg Hartman, attorney for the PERS Coalition, posted an update on the status of five PERS cases on the AFSCME website yesterday.

Hartman notes that after 6 years, there are still 5 cases before the Oregon Court of Appeals in varying states of hearing. First is Arken, which is a case on behalf of "window retirees", arguing that the adjusted benefit they received following the "settlement agreement" in the City of Eugene case is not legal. That case was heard in Multnomah County Circuit Court over an extended period of time and has moved to the Court of Appeals. Briefs have been filed, but there is no date set for oral argument.

The second case is the Robinson case, which asserts that section 14(b) of the 2003 reform legislation prevents PERS from recovering for "overpayments" resulting from the 1999 earnings distribution of 20%. The coalition won this case in Circuit Court, but both parties have appealed to the Oregon Court of Appeals and briefs have not been completed. The hope was that both Arken and Robinson would hit the Court of Appeals at the same time, but they are staged differently and now have a low likelhood of being appealed simultaneously.

The White case challenged the settlement agreement itself. Judge Kantor ruled against the PERS Coalition and a notice of appeal has been filed. Briefing has just begun.

Kay Bell's case is an individual piece of litigation handled by Hartman's associate Aruna Masih. The trial jury ruled in Kay's favor that she was given incorrect information at the time she retired. The case formed the nucleus of the SB 897, which passed in both chambers of the Legislature and was then vetoed by the Governor. Both plaintiff and the defense have appealed the verdict (for different reasons) and parties are in the briefing stage for the Oregon Court of Appeals. The Coalition is also studying whether to pursue a Legislative override of the Governor's veto during the Legislative special session early in 2010.

Finally, there is the Murray case. This is one that has received very little publicity but has already been argued before the Appeals Court. It relates to how PERS is supposed to charge administrative expenses in a year where there are no earnings. PERS apparently thinks that administrative expenses should come from variable accounts, which the PERS Coalition says it is not appropriate to charge the variable account. This case is simply waiting a verdict from the Oregon Court of Appeals.

Five cases, six years, interminable waiting. That's how Oregon thanks its dedicated public employees. Hartman believes that most of these cases will have results from the Court of Appeals by next year sometime. The bad news, still, is that the hole gets deeper and deeper. Even with verdicts from the Court of Appeals, every case is eligible for review by the Oregon Supreme Court, which is virtually assured. We are still facing another 2-4 years before a final outcome in any case. My original estimate of 2012 may be hopelessly optimistic as 2013 or 2014 seems more likely. I hope I'm still around when these verdicts finally come down.

Dope Ball

PERS latest waste of members' money was in the case of English v PERB, just ruled on by the Oregon Court of Appeals. This case involves a matter of policy in domestic partnerships. The plaintiff was in a domestic partnership that got terminated. Under Oregon Statute, a domestic partner *can* be named as a beneficiary on a PERS account. Following the dissolution of the partnership, the plaintiff sought to change beneficiaries. This privilege accords to married persons who divorce, depending on how the divorce decree is structured. PERS ruled that the plaintiff had no legal basis for changing beneficiaries because Oregon statute is silent on the question of domestic partnership dissolution and does not consider domestic partners as having *all* the same rights as married persons. PERS asserted that to allow this would "jeopardize the tax status of the plan". The Plaintiff appealed the case to an Administrative Law Judge, who ruled that PERS did not provide evidence that the plan might be impaired as a result of letting this plaintiff change benefiaries. PERS appealed that verdict and the case went to the Oregon Court of Appeals, wherein PERS lost again for the same reason. The OCA remanded the case back to PERS for resolution.

PERS has made a mockery of the entire judicial process asserting in almost every piece of litigation filed in the past 9 years that either (a) whatever they were being asked to do would "jeopardize the tax-exempt status of the plan", or (b) that it would be too costly to implement the changes. Never once have they every provided an ounce of actual evidence that either was true, but they continue to use our money to assert this as fact without support. Instead of this continuing battle of wills over PERS' assertions, it seems to me that PERS could save a lot of our money to seek a private IRS ruling about exactly what the plan can and can't do in these kinds of cases. Bravo to the judges who had the courage to call PERS' bluff and send them back to their hidey-holes to work out new lame excuses on which to impale members. Litigation against PERS is like a game of rope-a-dope with a dope ball. It is tiresome and time to stop.

Have a safe and sane holiday weekend. Drive carefully and don't become a statistic out on the mean streets of Oregon.

Light A Candle

And hope. In checking around I've learned that the first thing that happens in a Special Session of the Legislature is a review of all bills vetoed by the Governor in the previous regular session. This means that SB 897 - the PERS "clean up your act" bill - will get reviewed again in the special session in January/February. This makes it imperative that we contact each of our own legislators (first in the Senate, then in House) and urge them to hold firm in their original votes to pass this bill. If we can retain all the votes SB 897 got during the regular session (100% of those voting in both bodies), the Governor's veto can be overturned. As soon as Labor Day passes and the silly season begins (always the day after Labor Day), you can consider writing a letter urging continued support for SB 897. This bill is common sense. It calls for PERS to take some responsibility for its estimates and actually work to assure members and retirees that they have ACCURATE information upon which to make a life-altering decision. This bill's statutes would not take effect until 2011, which gives PERS plenty of time to develop the QA mechanisms required for accuracy. We cannot tolerate the "eets not my job mon" attitude of PERS any longer. Customer service and honest representation of your trustees should not be that big a headache.

After The Thrill is Gone

I've been writing about PERS issues since mid-2001. This started out as a private email list to my colleagues at PSU, in which the messages would be forwarded to others at UO, OSU etc. Eventually, my work evolved into a pre-blog, web-based diary. That led to the current blog, which has been running pretty continuously since late 2003. Along the way I've made thousands of friends inside of PERS, in the Legislature, in the legal community, in all aspects of public employment, and even some of journalists with whom I compete for news reporting. All of this has been richly rewarding. I've even had people offer to pay me for looking at their personal PERS situations. I've always refused to take money for my observations or advice because I've always believe that money compromises objectivity. I still believe that.

Along the way, I've actively participated in one newsgroup (OPDG), started another one as a competitor (POD), and helped to organize the incredibly valuable PERS Document Library, which contains virtually all relevant documents pertaining to PERS, the litigation, the legislation, the policy papers.

If I have one fault (I'm sure I have many) it is my abject refusal to engage with people who continually try to hijack the primary raison d'etre for all my endeavors - PERS and closely related retirement issues. I loathe political arguments. I am unapologetically left of center and have no use for the politics of the political right wing. This doesn't mean I don't have friends who come from both sides of the political aisle. We've managed to co-exist as friends so long as we agree not to discuss the one topic (along with religion) that is guaranteed to explode friendships and destroy any semblance of order - politics.

This leads me to the primary point of this entry, which isn't what some are worried about. No, my participation in this blog and my participation in POD and PERS Document Library will continue UNABATED. These are things I value and feel I continue to have information to share, sources to access, and opinions. But politics is not my metier. For the past several years, as PERS news appears to have diminished (an illusion, really), one of the groups (OPDG) where I participated actively has been hijacked by its owner and one or two other members and given over almost totally to noisome, tiresome, hostile, and irrelevant political chatter. In some ways the newsgroup reads like an online version of certain radio and television shows, which I won't dignify by naming here. I've tried to maintain my membership in the group to help out the occasional brave soul who dares post a PERS-related question. Moreover, I've periodically popped in over there to tweak the owner, in particular, to try to get off the political bandwagon and return the group to its roots. Unfortunately, my style can be abrasive, especially when the owner and two or three of his henchmen are guaranteed to jump all over anyone who disagrees with him/them for any reason. Political opponents have either shut up and merely lurk in the background, or they have been banned from the group. Apparently, the owner can dish it out, but he can't take any form of disagreement, whether it be respectful or hostile. In the end, it became a fool's errand to bother to post anything there. Finally, and to no one's surprise, least of all mine, the owner finally banned me from his group. As of today, I am no longer a member of OPDG. I have been banned.

One of the reasons POD was formed was to offset all the deficiencies of OPDG. POD has no membership requirement to read our posts. If you like to have RSS or Atom syndication, our group can be accessed by any newsreader, such as Google Reader. Membership is required to post, but unlike OPDG, you don't have to join just to read our information. A second major difference between POD is that the content is limited to PERS information, questions and answers, and closely related topics (e.g. Social Security, post-retirement health care). Any politically motivated post will be deleted by any of our three moderators. We rarely have to enforce this policy because most members quickly understand that we really mean it when we say we don't want politics to interfere with the group. So far, while we don't get the volume of posts that our ?competitor? gets, we get triple or quadruple the volume of relevant posts. We really are a PERS-related group.

So, if you are looking for up-to-date PERS discussion with interested public employees who share the desire for a NO POLITICS ZONE, please give us a visit. Take a look at the last month's worth of topics. If you belong to the ?other? group, compare the content. Do you see a difference? If so, and you like what you see at POD, please consider joining and participating.

I'm pretty sure that the thrill has gone out of the other group. Its large membership is a result of inertia. Most people don't even bother to read the posts, but don't bother to unjoin either. If you are interested in participating in a group with more than 1100 members and two active posters whose posts only marginally (at the outer 0.0001% of the margin) relate to anything relevant to PERS (I may be exaggerating; maybe it is only 0.000001%) then OPDG is the place to be. If you also want a case-study of what happens if you let politics hijack a group, OPDG is textbook. If you are truly interested in PERS-related news brought to you by members, many of whom actually attend PERS Board meetings, and can actually answer questions without going to the PERS website to look up PERS' sketchy information, please stop by and give us your eyes for a few minutes. I think you'll be quite pleasantly surprised by what you see.

We're No Here

No, there isn't a typo in the title. My mailbox runneth over with people getting estimates from PERS that contain one or more inconsistency or plain error. I've gotten emails this week (and today's only Weds) from five different readers, each of whom had requested estimates for a December 1, 2009 date (significant because that is the last retirement date before the revised method of mortality factors goes into effect on January 1, 2010). The errors I'm seeing are in erroneous entries for the 2008 ending balance, mismatches between Option 1 estimates in multiple places on the same page, variable costs for purchasing waiting time, and a new "error" of having the online calculator refuse to estimate benefits beyond two years away from retirement, even for inactive members. This kind of sclerosis is the sort of thing that drives members stark, raving, bonkers. And it is especially aggravating because PERS accepts no responsibility for these errors. What is to assure us that these kind of inept errors won't occur in one's notice of entitlement. We've already learned that from a legal point of view, the NOE isn't worth the paper it is printed on. If PERS makes a mistake and later catches it, you (the retiree) get to pay for it regardless of whether you could have identified it when you retired or not. Some people just aren't "numbers" people, and PERS doesn't do much beyond the online calculator to provide an individual with guidance. Have you ever tried to find out the method used to calculate buyback costs? Obviously it is individual, but the method of calculation should be the same for each member, especially for the 6 month waiting time. But how do you check that?

I hate to keep harping on this point, but SB 897 was supposed to force PERS to "clean up its act." Now that our feckless Governor has vetoed a unanimously passed bill, PERS' accuracy has declined dramatically in my opinion. I haven't received this many incorrect estimates (plus those from previous weeks) in all of the 6+ years I've been writing this blog. So, it leads me to wonder whether PERS even cares whether its estimates are accurate. Do they have ANY QA supervising the drones doing the estimates?

Please, please, please. If you find an error or anything that doesn't make sense to you please do the following: 1) bring it to PERS' attention and ask for a replacement estimate that isn't charged against your yearly limit; 2) send a copy of the complaint to Paul Cleary (paul.cleary@state.or.us); 3) send a copy to the Legislative leaders (I'll post email addresses in a comment to this post); 4) send a copy to your local Representative and State Senator; 5) send a copy to Governor Kulongoski. Finally, in each of the latter 4 copies, remind all of them that SB 897 was designed to make PERS accountable for these kinds of errors and that the error rate is increasing rather than decreasing since the Governor's veto. It can't hurt to remind all the Legislators as the Legislature will be in Special Session in early 2010 and we can possibly assert the need for an override of the Governor's veto. The excuse that there is pending litigation is true, but entirely irrelevant since this is the subject of a civil suit brought by a single individual with a jury trial. There is no way the outcome of that case can possibly force PERS to change its ways. Only Legislative action or an Administrative law case can do that.

TubThumping

I've been out of town for a few weeks and my posts have been sparse. Needless to say, so is PERS news these days. After our cowardly Governor vetoed SB897, the only talk I'm hearing is the "possibility" that a group of Legislators from both parties may try to mount an effort to overturn the Governor's veto of SB897. It is rare to ever have any bill passed unanimously by both House and Senate and unheard of for a Governor to veto that bill. That's just dumb, even for a lame duck. Ostensibly, the reason for the Governor's reluctance to sign SB 897 was that there is still outstanding litigation about the subject of SB 897 and the Governor felt that the litigation should be allowed to run its course before the Legislature gets involved. Besides being hypocritical (the City of Eugene case was still in litigation when the Governor proposed a complete overhaul of the PERS system to "solve" some of the problems identified by the PERS reform bills), it is also plain incorrect. The *only* litigation still ongoing is PERS' appeal of the ruling in the Kay Bell civil trial. Regardless of what happens in that case, only one person will benefit from its resolution - Kay Bell. It isn't a class action case. It isn't an administrative rule hearing. It has no application outside Kay Bell and has no possibility of inducing or requiring PERS to change its ways. In fact, SB 897 was designed to solve the problem that Kay Bell and many others found themselves in well after retirement.

I don't know how likely it is that the Legislature will take up the SB 897 veto during its winter Special Session. Typically, these sessions are scheduled in advance when pressing financial problems make it necessary for some mid-term adjustments to the State's budget or agency budgets. It may take a lot of tubthumping to get SB 897 back on the front burner. But you can write your legislators (House and Senate) and urge each to support a plan to overturn the Governor's veto. Otherwise, PERS pre-retirees will continue to go blindly into retirement without any legal assurance that the estimates as well as the final Notice of Entitlement might fall prey to another of PERS' FUBARS. No one is asking PERS to pay anyone more than they are owed. It would just be nice to know with certainty that you are not retiring on a promise compromised by fingers crossed behind PERS' back.

If I Had A Rocket Launcher

I'd use it on our Governor. In an unbelievable show of stabbing all his supporters in the back with multiple knives, Governor Kulongoski VETOED SB 897. This was one of the few significant PERS bills passed virtually unanimously in the Oregon Legislature. Among its most important elements was a section, due to take effect in 2011, that would have required PERS to "own" the final estimates and Notices of Entitlement given to PERS members just before and just after they retired. This bill was sponsored by OPRI and motivated by the Kay Bell case in which PERS denied repeatedly that there were errors in Kay's estimate and then long after she retired decided there were significant errors and reduced her benefit by a very large amount. It is very hard for me to reconcile a Democratic Governor who self-servingly solicits and gets money from the various public employee unions, gets support from those unions and then deliberately and provocatively points a loaded gun at them and vetoes a bill they strongly support. I have no idea what the Governor's reasoning was and I really don't give a damn. This was a needed bill designed to curb the reign of errors of PERS. It was supported strongly by both parties in the Legislature (passing virtually unanimously in both the House and Senate), and then vetoed by the Governor on the VERY LAST DAY he was permitted to have any impact on this bill.

This was a cowardly act by a cowardly Governor. Ted, you have earned your place in history as the most ineffective and chicken-shit Governor in Oregon history. May you rot in obscurity.

Throw A Stone

At PERB, just for fun. As reported several weeks ago, the PERS Board (PERB) agreed with Mercer to adopt a new methodology for calculating the mortality factors that make up the biennial actuarial table revisions. The Board also adjusted the timing of the various studies that make up the basis of the AEF (mortality factors) and the employer contribution rates. Not surprisingly, the Board decided to hold the assumed rate ("the guarantee") at its current 8% rate.

As is normal for this Board, whenever they issue good news (keeping the 8%) rate, they always seem to dilute the excitement by providing offsetting bad news. Today's adventure has to do with the calculation of the mortality factors. PERS has posted a general explanation of how the new method ("generational mortality") will affect members who retire on or after January 1, 2010. Basically, you can expect that your monthly benefit under Money Match will decrease by about 2%, while the Formula+Annuity retirees will see their benefit decrease by 1%. PERS suggests that if members want to retain the benefit under the current mortality tables, they can either retire before 1/1/2010 (i.e. 12/1/2009) or plan to work an additional 3 or 4 months. You can read PERS' own explanation on their web site, which you can reach via a link on the left side of this blog.

If you were planning to retire anyway I would advise you to do everything possible to make your retirement effective on 12/1/2009 (i.e. get your papers in before 12/1 and separate from your employer no later than 11/30/2009). This will have a minimal effect on your benefit and preserves your mortality factors under those currently in force. The challenge for those who want to wait to see what the actual impact will be under the new mortality tables, be aware that the new factors won't be voted on until the November 2009 meeting. You would have to act fast if you don't like what you see. Keep in mind that the older you are, the greater the effect the change in methodology will have. You can see this clearly in the illustration provided at PERS' website.

My advice is to be very careful in making your decision. If it is a no brainer to retire at the end of November; it requires some careful thought to wait longer unless you have no choice. Leave it to PERS to keep members constantly on their toes watching out for their own interests. So much for the concept of a trustee looking out for your own good.

Non Entity

That's what I think of our Governor. I had expected some action on SB 897 while I was away. I must have been on some hallucinogenic drug to think that. It has long been rumored that the Governor was unhappy with SB 897 and more rumors that he might veto it. In true cowardly form, the Governor seems to be choosing the "easy" way out. With near unanimous votes for this bill in both the House and the Senate, truly bipartisan support, the Governor would have to be crazy to veto it. It isn't that I haven't thought of him that way, but it appears more likely that the Governor will let SB 897 become law without his signature. Ted has until Thursday to sign or veto the bill. If we get through Thursday and the Gov has done nothing with SB 897, it automatically becomes law on Friday as it contains an emergency clause that makes it effective as soon as it is law.

It is truly a good thing that he is lame-ducked (dead-ducked). I could not ever imagine voting for that dolt again, regardless of who were to oppose him. The man has no backbone whatsoever, and he truly knows how to bite the hands that feed him. Can you say m-o-r-o-n.