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March 11, 2005.  According to an email I just received from PSU's IT Department, the majordomo list client is going to be phased out soon and replaced with a new client - Mailman.  The new mailing list software supposedly gives me more control over the list (egads! just what I need is more control), and is easier for users.  The new software will be implemented slowly and Majordomo will remain in parallel until early August.  I'm not going to rush to make the change, but change will be forced on me eventually.  Sometime between now and late June, I'm going to migrate the current PERSLIST to Mailman.  This will undoubtedly create some unexpected and unanticipated consequences - probably not good at first - but I will wait as long as I can to make the switch and pilot it with a small group of users.  So, while I don't anticipate sending out all that many emails, there may be a flurry of them around the time I make the forced switch.  This is just advanced warning. 

Associated with this page is a Majordomo mailing list (see note above).  If you are reading this page but not receiving emails from the PERSLIST, you may also want to subscribe to get the mailings.   This list has searchable archives and serves as a vehicle to communicate news of the "moment".  I've removed the capacity for anyone but me to post to the list.  This is a mechanism to thwart spammers.  If you want to engage in a more open PERS Discussion, check the link on the bottom of the left column of this page.  It will take you to a PERS Discussion Board on Yahoo organized and run by Dana Jackson.  Dana's list generates a large volume of exchanges and there are about a dozen very active participants (including me) on the Board.   There are currently over 550 subscribers, but the Board is configurable so that you can read all messages online and NOT receive email.   The exchanges are lively, more casual, and often heated.  There are lots of points of view represented and  is a great place for PERS members and retirees to come to "chat" about current PERS-related events, get "guardhouse" legal advice, and to get advice on how to cope with the information overload and underload.  It isn't intended to replace this board, but is an excellent supplement.   My Majordomo list no longer generates much email traffic  - one message per month at most - and shouldn't be a burden to anyone's email server.  Also the list membership is not public so your email address will not be accessible to spammers.   To subscribe, send an email message to majordomo@lists.pdx.edu.  In the BODY of the email put the expression:  SUBSCRIBE perslist your_email_address (e.g. SUBSCRIBE perslist joe@blow.edu).  I will manually approve all subscriptions (this prevents spammers from getting on the list).   You can find the list archives (such as they are) at my list archives.  All the entries prior to September 1, 2004 have been moved off to four separate pages.  Links to these pages can be found on the left, or at the bottom of the current entries. 

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April 8, 2005.  Today is the very last direct entry to this website.  The response to my new blog format has been extraordinarily positive, and the format is just so much easier for me to maintain.  I haven't figured out a way to automatically take you to the new site, but if you have bookmarks please update them to:

http://persinfo.blogspot.com

I will continue to use this site to host all pdf files that I refer to on the new blog.  All the content here will remain indefinitely as a reference.  Eventually I'll rename THIS page and create an entirely new page in its place that will automatically refer you to the new site, while continuing to make this site and its linked contents available for those who want the historical archives.  The PERSlist will still function.

April 6, 2005.  The Supreme Court's website indicates that no court decisions will be issued tomorrow (April 7).  I'm sticking with my original estimate of "by mid-May".

The response to my new BLOG has been overwhelmingly positive so far.  I will try to keep the sites synchronized to the extent possible, but given all the encouragement from readers and the freedom I have with a blog, I'm virtually certain that it will become the new PERS Information site.  You won't need to worry about the change.  This site will continue to exist indefinitely and there will eventually be a permanent referral to the BLOG.  This site will continue to host all documents and the PERSList.   If you haven't been to the blog site, please check it out (click the "BLOG") link above.  It is definitely more colorful, more modern, and edgier.  It is also a heck of a lot easier to manage, both at home and while travelling.  In the end, it will provide more continuity for regular readers and for occasional readers and permit me to update it from wherever in the world I might be -- I *think* that's what retirement is supposed to be about.

April 5, 2005.  PERS has posted an announcement that Tier 1 and Tier 2 2004 Member's Annual Statements will be delayed indefinitely until a ruling is issued in the City of Eugene (Lipscomb) appeal.  OPSRP (and IAP) statements are scheduled to be mailed out during the first week of May.

A few have already inquired about the RSS icon above.  If you don't know what RSS is, you don't need to worry about it.  If you do, the clicking on the button above (not in this paragraph) will link you to some XML code that will allow you to get an RSS ("Really Simple Syndication") feed from this site.  In theory, the RSS feed should tell you whenever there is a content change on this site.  I know that for some of you a once or more daily check of this site is just a part of your day.  For those with less time and an always-on connection, the RSS mechanism may permit you to save a few seconds of your daily surf.  Let me know if it does (or doesn't) work and whether you like it or not.  I'm new to the world of XML coding and I have to confess that I used an RSS-feed generator to do the work for me.  But if it works, I'll start updating by hand so it will be much more precise.

I am also experimenting with moving future updates to "blog" format.  I'm travelling more than I have in several years and it may be easier to update this site from the road using blogging software.  You can get a preview of what this might look like by going to my experimental PERS blog.  If successful, there will also be an easy-to-update ATOM/RSS feed for those into RSS (see above) for more detail.  For now, the blog site is ONLY experimental.  I'll update it periodically just to see how it works.  In the meantime, please let me know what you think of the format (the layout is trivially easy to change) via email (feldesmanm@pdx.edu).

April 1, 2005.  Just in.  The City of Eugene plaintiffs and PERB have tossed in the towel.  They've decided not to implement the settlement and will give PERS members back everything owed them from the Strunk case.  The Governor has agreed to this too, remarking that "A deal is a deal".   As a result, Judge Lipscomb has decided to retire and start drawing his PERS benefits before the Legislature has a chance to implement any more of his ideas. (April Fools Day!!!!! ).  (Ok, sorry to toy with you, but I couldn't resist)    

March 31, 2005.  The Supreme Court did NOT release a ruling in the City of Eugene case (Lipscomb) today.  I keep getting emails from people asking me if I know when the Court will rule in Lipscomb.  In matters like this, I have no special connections, no way of knowing, and no way of finding out.  I've heard it said that a ruling is expected in 60 days.  That was about 2 weeks ago.  By my calculations, all my sources would be right if the Court ruled by mid-May.  To the best of my knowledge, the Court pre-announces its decisions only 24 hours before releasing them.  I don't think any of the parties get more advance notice than the public gets.  If someone knows different, please let me know.  In the meantime, I'm unable and unwilling to speculate on the "when" of the Lipscomb decision other than to say that in geologic time it will be soon.  (For some strange reason, the "hit counter" on this page keeps coming and going.  It vanished briefly yesterday, reappeared again this morning, and is gone again at the time of this writing.  I suspect the problem is downstream to me at the site where the counter is hosted.  I can still get statistics directly, but I don't see them on the page right now.  Perhaps this will be fixed again by the time you read my missive for today.)

March 30, 2005.  One small followup from yesterday's meeting and report below.  I've gotten and seen a fair number of emails about the notion that the PERS Board is somehow in "contempt of court" for failing to follow a court order (i.e. the Strunk decision) and immediately implement fixes to unroll the 0% crediting for 2003 and the COLA freezes for recent retirees.  I'm not a lawyer, and don't pretend to be, but two things bear noting here.  First and probably foremost is the fact that the PERS Board DID NOT MAKE THIS DECISION without consulting all the lawyers for all sides of this dispute.  All the lawyers agreed that the PERS Staff recommendation -- to delay taking any action until after the Lipscomb decision -- was the wisest course of action.  Mr. Hartman was interviewed after the meeting and publicly commented that he thought the Board's decision was wise.  Second, and here's where my legal naivete may show, is that the Supreme Court didn't issue any "order".  They merely voided relevant sections of the Oregon Revised Statutes pertaining to the crediting at less than the assumed interest rate, and to the use of the COLA freeze as a mechanism for recovering funds from certain retirees.  There are a whole series of administrative rules that flow from the provisions that were voided.  But those rules have to be modified or repealed (following a precise timetable) before the PERS Board can implement any remedy.  Those rule changes and repeals were on yesterday's agenda, and while no decision on them was made as I recall, the changes have to be made sooner or later regardless of Lipscomb.  But since the Lipscomb decision is imminent -- certainly before summer -- there may be other rule changes required as well.  While it is frustrating to everyone, it just doesn't make any sense to me for PERS to do much of anything except get the ducks in a row for relatively rapid action once the Lipscomb matter is decided.

One clarification from yesterday's post.  I wrote:  "For members retiring during 2005, this means that accounts won't be credited at 8% for 2003, the 2004 crediting will (I think) be tentatively at 8% and PERS will continue to use the pre-Strunk mechanism for estimating benefits to be paid."  I did NOT mean to imply that members WON'T be credited at 8% for 2003.  They just won't be credited immediately for the 8% for 2003.  To reiterate, PERS wants to touch each member's account only once, not multiple times.  As it is, the number of transactions involved to reconcile all accounts affected by Strunk (all Tier 1 and corridor retirees), will be increased significantly by the number of transactions required from a decision in Lipscomb.  If PERS can do all these transactions in a single pass through a member's account, it saves both time and money for everyone.  While this tries members' patience, it still is the most sensible way to go.

This is a test to see if you're reading <g>.  Look up at the "hit" counter and notice its value.  Then email me privately (feldesmanm@pdx.edu) with your guess as to when you think the hit counter will cross the 150,000 mark.  Closest guess on either side wins a Border's or BN gift card.  Ties awarded to the earliest time stamp.  A few clues to help those more mathematically inclined.  We hit 100,000 in October and 125,000 in late February.   The single day record was 4457 hits on the day after the Supreme Court released its decision on Strunk.  Good luck Tim.

March 29, 2005.  I spent two hours this afternoon at the PERS Board meeting.  The meeting was eventful largely because the PERS Board actually did nothing of substance.  Some will dispute that characterization, but the Board mostly delayed taking up the issues most important to members and retirees until AFTER the Oregon Supreme Court rules in the City of Eugene (Lipscomb) appeal.  After a detailed examination by the hired legal guns for PERB, and following a PERS Staff analysis of the effects of Strunk alone and then Strunk in combination with the Court upholding Lipscomb in the City of Eugene case, the Board decided to defer any decision-making until after the Court rules.  Member and retirees WILL be interested to see the thinking going on both privately and publicly.  The Board and its attorneys believe that for active members, the effects of the Strunk decision coupled with upholding Lipscomb will be largely a "wash".  Strunk gives what Lipscomb will take away and active and inactive members will be no better off than they are right now if no part of the Legislation was overturned (maybe slightly worse off, but not much).  For retirees, the situation from PERS' perspective is that they only come out ahead in Strunk and IF Lipscomb is overturned.  PERS and its attorneys believe that the "heads we win, tails you lose" strategy will prevail if Lipscomb is upheld.  Under that scenario, PERS will adjust benefits  of retirees in the 4/2000 to 4/2004 corridor to the benefit they SHOULD HAVE RECEIVED IF 1999 EARNINGS WERE CREDITED AT 11.33% instead of 20%.  To that benefit will be added the appropriate cost-of-living increases.  That will become their "new" benefit as of the date PERS chooses to implement the rulings.  At the same time all this happens, PERS will generate an invoice to retirees dunning them for any benefit amount that exceeded the revised benefit level.  This amount will be smaller for recent retirees and it increases the further back the retiree is in the corridor.   The only way retirees will prevail is if the Supreme Court rules that there was no error in computing benefits for members who retired during the corridor.  But to do that would also require some consistency by the court in treating active and inactive members.  It can't be an error for one group and not another.  The court could (I suppose) argue that the Board abused its discretion, but that the members shouldn't be penalized.  What the Board did may have been stupid, but not illegal.  One hopes the Supreme Court will see things this way. 

The Board also decided NOT to do any crediting for 2004 either.  Instead, pending the outcome of the Lipscomb case, the Board intends to move at its April 15 meeting to transfer all earnings to something called the "pending reserve", until a decision is reached.  PERS does not want to do any transaction more than once.  For members retiring during 2005, this means that accounts won't be credited at 8% for 2003, the 2004 crediting will (I think) be tentatively at 8% and PERS will continue to use the pre-Strunk mechanism for estimating benefits to be paid.  They also plan to delay sending out the 2004 Member Account Statements until after Lipscomb is decided.

    PERS estimates that it needs 70 additional FTE for a 2 year period to implement both Strunk and an upheld Lipscomb (including the settlement).  They estimate it will take about 71,000 hours to deal with the impact of Strunk alone, and 198,000 hours to deal with both Strunk and Lipscomb.   PERS also estimates that the computer system reprogramming that would be required to implement Strunk (with or without Lipscomb) will not be finished until August 2006 and therefore nothing would occur by way of adjustments much sooner than September 2006.

I'll save my confused and confusing comments about the Capital Preservation Reserve for another time.  In the meantime, those of you who want to read about the PERS Staff and Legal view of the worst case scenarios for members and retirees, cruise on over to PERS' website and download a copy of today's meeting agenda packet.  All the items associated with agenda D.1, D.2, and D.3 are germane.  In addition, the memo distributed directly to attendees and Board Members at today's meeting can be read on the PERS website here.

March 28, 2005.  Tomorrow's PERS Board meeting should be quite interesting, as the Board will take up various issues related to implementing the Supreme Court ruling in the Strunk case.   I am planning to attend at least part of the meeting and I hope to be able to report back on some of the more important decisions made.  As always, I have various competing demands on my time and if the Board meeting stretches on too long, I may have to leave before anything important gets decided.  The "meat" of the meeting is near the end of the agenda.  That follows a common administrative practice designed to force people to stay until the bitter end, and is the frequent cause of people arriving to meetings late.   Check back here later tomorrow evening to see whether I managed to stay at the meeting long enough to get to the meaty items.

As expected, the PERS Coalition has filed a petition to the Oregon Supreme Court asking that it reconsider and omit  certain language in its recent decision in the Strunk case.  The offending language pertains to the Court's discussion of "excess earnings" credited to Tier 1 regular accounts.  The court concluded that Tier 1 members were entitled to receive at least the assumed interest rate on their regular account balances.  However, the Court went somewhat further than any of the Legislation or previous litigation to conclude that Tier 1 members had no necessary right to earnings beyond the assumed interest rate in the future.  Since this topic was not part of the Legislation, not part of any previous litigation, the PERS Coalition has alleged that the Supreme Court went beyond its authority in creating a legal finding for an issue not previously in dispute.  Deleting this discussion would NOT change any of the Court's findings.  You can read the PERS Coalition's petition here. 

March 26, 2005.  Back from a glorious week of vacation.  Not too much new to report.  The most significant event will be Tuesday's (March 29, 2005) PERS Board meeting.  During this meeting, the Board will take up some rule changes necessitated by the Supreme Court's ruling in Strunk.  These include rules pertaining to the COLA freeze and to the earnings crediting for 2003 (and for 2004).  Also under discussion will be issues related to the City of Eugene settlement and the Lipscomb Appeal.   The Board agenda and discussion items are online at the PERS website. 

March 16, 2005.  Postings will be sporadic at this web site until March 25.  I'm going on vacation - heaven knows, I need one - and won't be back until a week from Friday.  I'll continue to have internet access, but unless something of material significance breaks, I don't plan to update the site until at least March 25.  I may have one more post before leaving on Friday, but that depends on the news.  The only news I have now is that the Supreme Court WILL NOT rule on the Lipscomb appeal tomorrow.  Maybe next week, but more likely next month.   Perhaps relevant or comforting is that March 7th was the last day for members of the Oregon House to introduce any new legislation for this session.  This means, in effect, that no new PERS bills can be introduced at this late date in the session. (Is it accidental or deliberate that the Supreme Court's ruling in the Strunk case came down the NEXT day?)  The House starts taking up agency budgets next week.  Sometime in mid-April the House will shut down all committees.  Bills that haven't been heard or gotten out of committee will "die" if they haven't cleared committee by that date.  I don't know the Senate's schedule, but I suspect it follows reasonably close to the House schedule.  Along those lines, SB 497 (relates to the HB 3349 tax-adjustment for PERS retirees), has not gotten a hearing before the Senate Rules Committee.  While there is still time, it is considered unlikely that the bill will survive much longer.  I regard this as good news. 

March 15, 2005.  A very well-placed source told me today that the Supreme Court, in its Strunk decision, did NOT address or resolve the issue of the 1999 earnings crediting decision.  That decision will be made in the City of Eugene appeal, still pending before the Supreme Court, expected in the next 60 days.  All sorts of people are speculating on whether or not the latest case decided gives an inkling of how the Court might rule in the City of Eugene (Lipscomb) case.  Again, there appears to be no definitive statement from the Court.  Finally, I'm told that even if the Court finds that the 1999 earnings crediting decision (20%) was an abuse of discretion or overly generous, there is already considerable disagree*ment on what that actually means for active (and inactive) Tier 1 members, and for retirees.  It appears that there will be no rest until after the City of Eugene case is decided by the Oregon Supreme Court.

March 14, 2005.  Not too much news to report today.  Yesterday's Salem Statesman Journal had an "In my opinion" piece by Governor Kulongoski.  This op-ed talked about the PERS ruling and its impact on Oregon.  The Governor repeated his claims that the Legislation was fair and that the Court, while striking down some provisions, left intact the core principles of the reform, which include the ability to change the system prospectively.  The Governor also remarked that the assumed interest rate guarantee (8% currently) was determined by the Board and could be changed prospectively to something less than the current rate.  On this topic, there is considerable information flying around that the Board will make such a recommendation in the future.  Keep in mind, however, that a change in the actuarially assumed interest rate will affect more than just Tier 1 members.  The assumed interest rate is used to determine the "floor" on earnings paid to active and inactive Tier 1 member regular accounts.  It is also used as a factor in determining employER contribution rates to the system.   Reducing the assumed interest rate will RAISE employer contribution rates.  Finally, be aware that a change in assumed interest rates also has an impact on the mortality factors.  The current (2003/2005) mortality tables are built with the assumption of an annual 8% rate of return.  To change the actuarially assumed interest rate would:  lower Tier 1 member regular account earnings IN THE FUTURE; increase employer contribution rates; and require changing mortality table factors and would affect members retiring after those tables changed.  (The terms of the "lookback" mechanism do not lock in mortality tables that are adopted subsequent to those in effect on 6/30/03.  Thus, once the effect of the "lookback" wears off -- soon for many people -- the new tables have no similar protection against future changes in mortality factors). 

  Consider that the PERS Board has new actuaries beginning on 1/1/2006, the current actuarial tables "expire" on 12/30/2006; the first system valuation under the new actuaries will be for 2006; new employer rates will be derived from *this* system valuation; and the general election will be held in November 2006, with the legislature scheduled to convene in January 2007.   All these create a perfect storm opportunity for this change to take place in January 2007.  If it were to happen, that's when I'd expect it to occur.  I'm NOT PREDICTING THIS.  In fact, I have not a shred of information that it *will* happen at all, much less when it might happen.  But, if I were in a position to have to consider when to do it, that would be my timetable.

March 10, 2005.  I've had more time to reflect on the Court's decision.  I've also had an opportunity to read much more about the decision, talk to more people, discuss some issues with people connected to PERS and have come away feeling a bit more encouraged about the Court's findings.  I'm pretty sure now that the Court has made the 1999 earnings credit a non-issue in two ways:  1)  they wrote that the PERS Board decisions on earnings crediting were "final" and can't be changed retroactively by legislation, 2) that retirees' "fixed benefit" on July 1, 2003 is just that, a "fixed benefit".   They seem to be suggesting that the Legislature erred in trying to come up with a "revised benefit" that would be subject to COLAs while leaving a "fixed benefit" that wouldn't be subject to COLAs.  According to the Court, once the benefit is "fixed", the statutes create a contract that REQUIRES COLAs to be added when the CPI meets the relevant statutory criteria.   These two findings, coupled with the conclusion that PERB must pay "no less than the assumed interest rate" to regular Tier 1 member accounts, pretty much undercuts PERS' ability to collect for alleged 1999 "overcredits".  The court's footnote 58 merely says that the COLA freeze mechanism is NOT an acceptable method for correcting errors, but that nothing the Court has decided interferes with statutory mechanisms already in place for correcting errors when they occur (see ORS 238.715).  For additional reading, the Oregon Supreme Court now has an executive summary (8 pages) of the Court's ruling in the Strunk case.  You can find it here.  In addition, PERS Coalition attorney has forwarded a more detailed analysis of the decision to PERS Coalition members.  The Association of Oregon Faculties has that also posted now on its website.  Between the two of these, you should begin to get a better feel for the outcome and why I'm more reassured today than I was yesterday.

One more recurring question people are asking, but not getting answers to is the issue of the "lookback".   The court is silent on the question of the "lookback"; however the Court upheld all the legislation pertaining to the way the Legislature and PERS implemented the mortality table (AEF) updates.  Since the "lookback" mechanism is built into HB 2004 and amendments contained in HB 3020 (all of which were subject to the litigation), one can only conclude that not only is the use of new mortality tables legal, but that the mechanism of the "lookback" is a sufficient safeguard to ensure that accumulated benefits are preserved.  There isn't any obvious reason why it shouldn't be continued.

I'm not going to spend the COLA I haven't received yet, but I may kick back for awhile and drink a glass of wine (or two).   You should do so too.   There probably won't be too much news to report for the next few days.  I've got student papers to grade and my lawn needs mowing.  While you're free to check here for your daily news fix, I probably won't post anything again until next week.  Of course, if something really interesting happens, I will get it out widely and quickly.  I just don't expect anything too exciting or interesting in the next few days.

March 9, 2005.  24 hours have now passed since the Supreme Court issued its decision in the Strunk case.  After reading, re-reading, reviewing, studying, and deconstructing the opinion, I've come to the conclusion that the Court decisively ruled on pretty much everything *except* the issue of the COLA freeze for retirees.  While they clearly struck down the COLA freeze methodology and clearly said that the COLA freeze is a breach or impairment of a retiree's contract, they did not really say that the issue was dead.  Pretty much everyone has now tumbled to the troubling language "at least for the time being" and the issue of the City of Eugene settlement, which contains some "poison pill language" concerning the mechanism of recovering "errors" from overpayments in the face of the Court overturning the COLA freeze.  Since the Court has not yet issued its ruling on the "City of Eugene Appeal", retirees might find themselves worse off than before.  While the court requires PERS to restore the lost COLAs and not withhold any further COLAs, it was silent about the issue of whether PERS is permitted to recover overpayments through the statutory mechanisms outlined in ORS 238.715, which has been on the books for a very long time.  According to the City of Eugene "settlement", PERS is supposed to recover those "erroneously paid" benefits almost immediately if the Court finds the COLA freeze mechanism unconstitutional.  Unless the Court rules on Lipscomb soon - like within the next two weeks - those of us who retired during the COLA freeze window *may* find ourselves no better off than we were before the Court ruled -- and very possibly worse off.  There is no way to tell right now.  Perhaps PERS will wisely wait until the Court makes its decision on the still-pending appeal before embarking on a very expensive and very complicated process that might have to be unwound weeks later.  NOTE:  For now, retirees and current PERS members can take some comfort in this message posted earlier today on the AFSCME website (Afscme Update).

On a different subject, yesterday's "hit count" for this web site went "off the charts".  By the end of the day, 4457 hits had been recorded.  This is 4x the previous high.   I expected a fair number of hits, but nowhere near this many.  I guess this means you all expect me to keep writing and reporting <g>.

March 8, 2005.  THE VERDICT IS IN!!!!!  The Oregon Supreme Court issued its long awaited decision in the Strunk Case.  As I've been predicting for some time, the Court "divided the baby".  The Court struck down (voided) the COLA freeze for retirees (yey!) and the Court also ruled that the annual "assumed interest rate" guarantee for Tier 1 employees is contractual.  Therefore, any annual crediting to Tier 1 regular accounts less than the "assumed interest rate" is not permissible (think 2003).   Aside from that, the Court upheld the rest of the legislation - IAP, ending of variable contributions, potentially ending the "6% pickup".  I haven't read the decision completely (it is 61 pages long), but I'm sure I'll find some interesting tidbits to clarify further.  Two sentences jumped out at me.  One sentence referred to PERB decisions on earnings crediting were "final" (see 1999 and the two pieces of the legislation that were voided).  The other sentence, referring to the COLA provision, basically orders PERS to return retirees to the state they were in before the legislation, which in turn implies that "lost" COLAs have to be restored.  But within that sentence is an interesting offset.  It uses the phrase "for the time being".   I'm not entirely comfortable with that wording in the particular context I find it, even though it refers to a benefit I'm supposed to have restored.  I can't help wondering exactly what that phrase really means.

Interestingly, Justices Durham, Riggs, and Kistler (Kulongoski appointee), filed a dissent to the majority decision to uphold the IAP/6% diversion and cancel the variable.  They argued that the logic used to overturn the COLA freeze and the redefined "guarantee", apply equally to the changes that were upheld by the majority.  So, the PERS Coalition didn't suffer a humiliating loss, but they didn't enjoy total victory.  I'm still unclear about how the PERS "settlement" (of Lipscomb/City of Eugene) will figure into the final analysis.  The court did NOT rule on that issue, although both were mentioned in the Court's decision on the Legislation.  There were a couple of very carefully worded paragraphs surrounding the areas where the Court ruled in favor of PERS members/retirees that leave open some uncomfortable room for the "settlement" to possibly kick in.  In one instance, the Court seemed to be specifically arguing that one element of the legislation wasn't "ripe for adjudication" (i.e. no one has yet been harmed by it).  Without going back and reading the Legislation or scouring the footnotes, I'm not sure what this means.  I'm personally happy with the outcome, but I'm not planning on spending any those withheld COLAs yet.

I'll post more later today or tomorrow after I've read the entire decision, had a chance to digest the press conferences, read media accounts, and chatted with various contacts in places higher than I sit.  For now, savor the partial victory.  And in the meantime, here's the PERS Coalition's first public comments on the court's decision here.  (If you want to view the Court's decision, go to the link about 4 sentences below this for March 7, 2005).

March 7, 2005.   The Supreme Court will issue its decision in the Strunk et al vs PERS cases TOMORROW March 8.  This information is now posted on the Supreme Court's website.  The decision will be made available at 8:00 a.m. and will be posted on the Justice Department's "publication" website here at 9:00 am.  You should probably expect a variety of press conferences following the release of the decision.  I don't know of any official announcements of press conferences, nor does anyone get an advance preview of the decision.  We'll all just have to wait one more day.  In the meantime, you can read more details at AFSCME's website

I plan to read a copy of the decision as soon as I can.  Since I'm not a lawyer and don't presume to be, I may not be able to completely understand the decision, but I do understand the meaning of simple terms like "uphold" and "overturn".  For those who don't want to wait for other, more informed, analyses, feel free to check back here tomorrow afternoon.  It might be possible to present a "scorecard" quickly, but any more detailed explanation will definitely wait until I've had an opportunity to read the decisions carefully and listen to the various press conferences.

To clarify one issue, the Strunk consolidated cases do not relate to the appeal of the City of Eugene case, which the court also has under review.  It would not be correct to say that a decision to overturn major parts of the Legislation necessarily moots any of the City of Eugene/Lipscomb appeal.  While the two cases cover similar territory, the "settlement" of the City of Eugene case invokes another set of procedures to satisfy any of the so-called "overcrediting" issues from 1999.  Those will go into effect within 30 days if the Court overturns those parts of the Legislation.  In addition, the City of Eugene settlement covers areas that are not the subject of the current Strunk case.  In particular, it is the City of Eugene "settlement" that sets out the new method for calculating the variable match.  That topic is NOT a part of the Strunk litigation.

It *is* true that if the Court upholds certain parts of the Legislation, it will moot parts of the settlement.  But it would be entirely wrong-headed to think that if the Court overturns those same pieces, it automatically moots them in the settlement.  One merely has to read the settlement to understand that it builds in a mechanism to recover 1999 "overpayments" that already exist in statute.  The court will have to explicitly enjoin enforcement of the settlement to prevent that from happening.  That might require the Court to act quickly on the "appeal" itself, but it is NOT part of tomorrow's ruling so far as I know.

March 2, 2005.  No PERS decision tomorrow.  The court has announced the opinion to be released tomorrow and it isn't anything related to PERS.  Maybe next week.

P & F people should take note.  According to reliable sources, PERS will be issuing a notice of a rule change on March 15 concerning age-eligibility for P & F members.  The rule, if approved, goes into effect on 1/1/06.  The rule change apparently clarifies some ambiguous language in PERS retirement eligibility rules for P & F.  Police and Fire members will only be able to retire at age 50 IF they are still working in a P&F position on or after their 50th birthday.  If P&F members are vested but not P&F-employed at the time they turn 50, the rule clarification would not make them eligible; they would have to wait until normal age 55 to retire.  While there is plenty of time for advance planning, this rule change is significant for those vested P&F members who are NOT employed as a P&F member on their 50th birthday.

March 1, 2005.  No word from the Supreme Court yet.  Reliable sources tell me that the decision(s) is/are expected "soon", but it's a little unclear what "soon" really means.  For those who want to check the Supreme Court's website and look for pre-announcements of decisions, go to the Supreme Court Decision website where you will find "slip" opinion schedules.  The court posts announcements of decisions to be released on Thursdays on Wednesday (day before) afternoon.  I don't have any direct pipeline to announcements in advance of the Supreme Court's own website.  I do check it pretty much daily now, but Wednesday's are usually definitive days.  I've been told that it is not unusual for the Court to have a week with no decisions.  Decisions are posted when they are ready, not according to some preconceived schedule.  That said, we're certainly into the season now where a decision could come at almost any time.

February 24, 2005.  No PERS decision from the Oregon Supreme Court this week.  Much of the speculation of a decision in late February was based on one of those not-very-credible rumors floating around Salem a few weeks ago.  My personal bet is that a Supreme Court decision is still a ways off - perhaps a month or more.  This is MY opinion and is NOT based on anything I've heard from anyone.  I just don't see the court hurrying for much of anything right now.  Better to have a carefully written and argued decision than to release one that might be regretted later.  Besides, the more careful the Court is, the more likely their decision *might* be unanimous one way or the other.  Part of the problem now is because the 1996 "OSPOA" decision (Measure 8) was NOT unanimous (4-3 in favor of "OSPOA" and against the State) that this whole mess sits before the Court in the first place.  The 1991 "Hughes" decision is being used by both sides to argue for/against the Legislature's actions, but the State/Employers/Legislature want "OSPOA" overturned to uphold the Legislation.  Part of their reasoning is that "OSPOA" was not a clear decision and therefore shouldn't be used as a precedent for overturning the Legislative Reforms of 2003.  The arguments are much more sophisticated than this, but believe me, I think both sides would be happier to win with a unanimous decision than to win or lose by a 4-3 decision.  (Of course, both sides will accept victory in whatever form it comes, but a clear and unanimous decision makes the precedent much less contentious in the future).  And do keep in mind that 2 of the dissenters in OSPOA remain on the Court now, the Governor himself was the third dissenter and he (the Governor) has appointed a justice,  since re-elected, who was in the AG's office during the time it was defending (and losing) Measure 8.  My worthless 2 cents for today.

February 22, 2005.  A number have asked what section of the IRS code covers the new IAP.  My sources at PERS tell me that the IAP qualifies under IRC 414(k).  This will allow IAP money to be transferred at retirement to the OSGP or other tax-qualified investment; it does not permit OSGP money to flow into the IAP.

You can see the preliminary 2004 earnings crediting at this link here.  Note that these are *preliminary*; the final decision will not be made until March 29, 2005.

February 21, 2005.  Here is the $1.9 billion question for today.  Since 2003, the PERB has stuffed away $1.9 billion into reserves that have no clearly defined purpose - the contingency reserve and the capital preservation reserve.  True enough, the PERB also liquidated the deficit in the Gain/Loss Reserve, which stood at about $1.7 billion before any of the legislative reforms kicked in.  The gain/loss reserve is the one the PERB is supposed to fund to ensure that there is enough money to "guarantee" the "assumed interest rate" to Tier 1 members in "down" years.  And so, they used fund earnings to eliminate the deficit, but they didn't put funds in so that there might be a surplus to draw on in future years.  In the meantime, $1.9 billion in earnings that would have been distributed to employEE and employER accounts is stuffed away in two funds whose purpose is, um, unclear.  A cynic might think that the PERB has those funds sequestered so they themselves can underwrite the cost of losing in the Supreme Court.  Or, that if the reforms are upheld, the Legislature has another "trust fund" to raid (kind of like the SAIF fund some years back) to balance the budget.  Or, perhaps to use in a way that mollifies employers.  There doesn't seem to be much chance that employees, whose assets were used in part to produce those gains, will see these funds except at the point of the Supreme Court's gun.  Kinda makes ya wonder, doesn't it?

Apropos of virtually nothing, the traffic on this website has increased dramatically.  Friday (2/18) represented the single largest "hit" day since the site began more than 2 years ago.  We had 1094 unique visitors recorded.  The previous daily high was 655, sometime during the 2003 legislative session.  Suddenly we're averaging over 350 hits per day.  It took nearly 20 months to record 100,000 hits to the site.  It has taken less slightly more than 3 months to record 25,000 hits; we could reach 250,000 hits by the end of 2005.  Amazing.

February 19, 2005.  The PERB voted yesterday to recommend crediting 8% to Tier 1 Regular Accounts, 13% to variable accounts, and left open the precise amount to be recommended for Tier 2 accounts.  The minimum will be 12% and the maximum could be 13.2%.  The Board also decided to place an additional $375 million in the contingency reserve and is debating about placing another $250+ million into the capital preservation reserve.  That is why the decision on Tier 2 workers remains open.  The logic, from the Board's point of view, for crediting the lower amount is that the additional money placed in the reserves would be needed if the Supreme Court overturns any significant part of the 2003 Legislation.  Curiously, employer costs would rise if the additional money got put into reserves rather than into employee acounts.  The reason this happens is that everytime PERB puts money into reserves rather than into employee accounts, the employers' funds are also NOT credited with the amounts put into reserves either.  This, in turn, makes their rates higher.

February 18, 2005.  Still awaiting news of the Board's recommendation to the Legislature on earnings crediting for 2004.  I hope to have that information soon.

I've heard from several reliable sources that Kate Brown, Chair of the Senate Rules Committee, has assured retiree groups that SB 497 won't make it out of committee.  I've also heard that Senator Brown asked Senator Charlie Ringo (D) to withdraw the bill and that Senator Ringo declined to withdraw it.  If true, I find this more disturbing than I find Senator Brown's comments as reassuring.   I want to know whose water Senator Ringo is carrying with this bill.  Could the "who" behind this bill actually be our Governor?  I don't know and I'm not interested in conspiracy theories.  I'm just trying to figure out what Senator Ringo's purpose is in bringing a bill before the Senate that tries to amend a statute that was passed in response to a Supreme Court ruling and which has been on the books for some time now.  The problem that the bill seeks to remedy is nothing new; the Legislature that approved HB 3349 (which SB 497 seeks to change) was fully aware of the "problems" that SB 497 seeks to fix.  The earlier Legislature chose NOT to fix the problem in the way that SB 497 tries to fix it and all cognizant parties signed off on the "fix".   It ain't broke.  Why fix it except to be punitive?

February 17, 2005.  The PERS Board meets tomorrow and will consider, among other things, the 2004 earnings crediting that they will recommend to the Legislature.  I'm hearing unconfirmed rumors that the Board wants to credit 8% to Tier 1 regular, 13% to variable, and 13.2% to Tier 2.  IAP crediting for 2004 is expected to be nearer the Tier 2 amount than to the Tier 1 credit; however there are some administrative costs applicable to the IAP that don't seem to be chargeable to Tier 1 or Tier 2 members.

I've gotten further information on the IAP distribution for members who retired after January 1, 2004.  According to PERS sources, 49 IAP retirement packets were sent out to early 2004 retirees earlier this week.  If papers are returned promptly, PERS is expected to start making IAP distributions to those retirees in April.  A second batch of 200-250 IAP retirement packets will go out to 2004 retirees in early March with distributions expected in May.  Those two are "pilots" to be able to work out any "kinks" in this new system.  If all goes well in those two test mailings, PERS will then begin to process the remaining 2004 retiree IAP packets.  I have no word yet on the "form" of the distribution (lump sum, direct rollover to IRA, some installments, or other).  Until I see an actual IAP retirement packet, I won't know what options are available.  I do know that HB 2020 and HB 3020 do set a lower bound on balances that require a lump sum distribution.  I'm shooting from memory here, but I think the threshhold is $1000.

I hope to have some information on what the Board recommends for distribution as soon as I can get it.  You may know sooner than I do.  If so, feel free to drop me an email.

February 16, 2005.  The Supreme Court's list of opinions to be released tomorrow do NOT include any of the PERS-related cases.  We'll know relatively soon whether the court plans to issue any opinion in the month of February.  They only issue decisions on Thursdays and the schedule is usually posted by the Monday before.  Thus, if any PERS decision is to be announced in February, we'll know by next Monday.

There continues to be a great deal of speculation, conspiracy theory, and solid ideas about why recent retirees have been given no information about their IAP account balances or how they can begin to withdraw them.  It is well-known that implementing the IAP has been far more problematic than the Legislature expected, despite PERS staff warnings to the contrary.  It isn't expected that IAP statements for 2004 will go out until May.  However, PERS has not really explained yet why members who retired in the period since the IAP took effect (1/1/04 to the present) cannot even get a clue about what's in those accounts, how much earnings they have, or when/how they can access the money for investing purposes (in retirement), for purchasing annuities, for financing a trip to Fiji, or to roll over into an IRA.  Some of the speculation makes sense; some of the conspiracy theories seem to be, well, conspiracy theories on the order of the "grassy knoll" or "Area 51".  I've asked of some of my PERS inside sources for clarification; hopefully I'll have some useful information to report soon.

NOTE:  In my 2/14/05 entry, I inadvertantly reported SB 407 as the bill to watch.  The number was wrong.  It should have been SB 497.  I've corrected the entry below.  I encourage retirees and soon-to-be retired members to look closely at the text of the Legislation here.  Note carefully that this version of the bill is quite different from the related bill (HB 2407) that was introduced and then quickly disappeared during the 2003 Legislative session.  The current version is especially onerous.  I have conflicting information from two typically reliable legislative sources:  one says the bill is DOA, while another says that the form of this bill is different enough that it will probably get a hearing, which HB 2407 never got in last session.  The bill is assigned to the Senate Rules Committee.  I will be researching the composition of that committee and will post relevant information here as soon as I can put it all together.  As of now, SB 497 has not been scheduled for hearing in the Senate Rules Committee.  COMPOSITION:  Jason Atkinson (R), Kate Brown (Chair, D), Ted Ferriolli (Vice-Chair, R), Charlie Ringo (D), and Frank Shields (D).  Email addresses for each can be found on the Legislature's web site.

February 14, 2005.  Happy Valentine's Day all.  Couple of interesting pieces of news to report.  First off, word on the street (and apparently being given to *some* near-term retirees by PERS CS Reps) is that the Board *wants* to credit 8% to Tier 1 Regular Accounts for 2004.  We'll know what their plans are for sure at the February 18, 2005 Board meeting.  The preliminary report to the Legislature is due and the PERB will make its recommendations at that time.  The second piece of news is that the minutes from the January 25, 2005 Board meeting were posted today.  Buried in the early part of the minutes is a Board-approved recommendation to PERS staff to use "earned interest to date" (subject to the 0% - 8% limits imposed by HB 2001) as the basis for pro-rating 2005 earnings to members who retire during 2005.  What this means, in effect, is that the board will credit between 0% and 1/12 of 8% for each month past January that a member works.  If the fund does well, the member will get a prorate of 8%; if the fund does poorly, the member will get no less than 0%.  I'm not sure whether this means they'll use the same mechanism they used before the legislation, or something else.

For retirees, watch out for SB 497 in the 2005 Senate.  As predicted, the Legislature will again try to amend the HB 3349 rules for out-of-state retirees.  Basically, what they want to do is to take away the adjustment that resulted from the Hughes and Chess cases, that offsets retirees for the taxation of pensions.  It isn't clear exactly who the bill is intended for. 

February 8, 2005.  To speed up the page loading time, I have moved all of the entries between January 1, 2004 and August 31, 2004 to another page.  You can link to it from the link at the left ("Musings Jan 1, 2004 - August 31, 2004"), or from the same link at the bottom of this page.  In one of those "duh" moments, I realized that my web authoring program had gotten balky not from any computer deficiency but from the fact that the PERS Information webpage had simply grown too big.  PERS sure gives me a lot to write about.  I figure that before the month is over there will be lots more to crab or crow about.  This way we start with a semi-clean slate.

February 5, 2005.  I have finally ironed out all the peculiar problems on this website.  Everything started about Wednesday when I updated my web authoring program to its latest version.  The new version is fully W3C compliant and automatically changed some things that had been put into the page by Microsoft FrontPage - my original web authoring program.  In order to get things back to "normal" I had to use a fairly large hammer to persuade the program to accept non-compliant code (I'm not skilled enough in html to "see" where the non-compliant code could be made compliant without breaking it altogether, and I'm too lazy to completely re-do the site from the ground up.)  In any case, everything should be back to normal and I apologize for those whose daily news fix includes a visit to this site. 

Speaking of non-news, the rumor mill was hot and heavy all around Salem yesterday that the Supreme Court would be releasing its ruling today (Saturday) before noon.  The rumor had it that the Court had upheld everything the Legislature had done.  In an effort to control this rumor, AFSCME issued an e-lert carrying a message from Greg Hartman to the effect that NO decision was announced or would be announced this week.  The court only issues its decisions on Thursdays, so the earliest possible date for a "customary" release of their decision would be February 10.  No one is speculating that the decision will come that soon, but many now feel that a decision will be forthcoming before the end of February.  Stay tuned...

February 2, 2005.  Silly rumors continue to flood my mail box.  All involve timing of the Supreme Court's decisions in the Strunk (consolidated PERS) case and, possibly, Lipscomb.  There are two competing, but not contradictory, rumors floating around.  The first rumor is that the Supreme Court will announce its decision in this (these) case (s) before the end of February.  The reason given is that PERS Coalition attorney Greg Hartman will be attending a legal conference with one of the sitting justices on the Supreme Court, and (heaven forbid) has a golf date scheduled.  Word is that the court doesn't want any accusation of "interference" with the decision and so wants to have it out of the way before the two leave for their golf "date".  The second rumor is that the Supremes will delay their decision in these cases until after the Legislature adjourns ONLY if their decision is adverse to the Legislature (i.e. favors the PERS members).  While I could envision either of these scenarios playing out, I do find the hint of some sort of legal impropriety in scheduling a golf match to be among the more absurd theories propounded.  In this crazy, mixed-up world right now, it could be the truth, but I wouldn't bet the farm on the theory.  As for delaying a decision, this, too, seems preposterous.  The reasoning for this is that the Court would want to protect its own budget against potential retaliation by the Legislature from a decision that would be adverse to the state's budget.

I report these rumors not because I take any great stock in them, but because they recur now with such frequency that they're hard to ignore.  They've achieved the status of "urban myths" right now (you know, kinda like the Neiman-Marcus cookie recipe), and it would be unfair of me to deny you the opportunity to engage in further myth-making.

January 31, 2005.  Just to clarify a point that has come up recently, the excellent performance of the PERS fund since 2003 has no significant bearing on the speed with which a retiree can expect a resumption of COLAs frozen as a result of HB 2003.  A quick read of HB 2003 can confirm this.  The freeze is based on the putative "overcredit" to active member Tier 1 regular accounts for 1999.  Those accounts were credited with 20% earnings when, according to hindsighted Legislative fiat (HB 2003), the should only have been credited with 11.33%.  HB 2003 proposes to "recapture" that arguable "overcredit" by withholding the annual COLA until the "actual benefit"  (not the one you're receiving) "catches up" with the "real benefit" (the one you ARE receiving).  The actual benefit "catches up" by receiving COLAs annually.  The COLAs bear no relationship to fund performance; they relate only to the increase in the CPI for the Portland area.  Since the COLA freeze length was predicated on a now (in retrospect) faulty assumption, the actual length of the freeze will probably be longer than anticipated.  The faulty assumption was that the COLA would be 2% annually.  In fact, the last two COLA increases for recent retirees have been 0.77% and 1.17% respectively.  This is more than a 2% discrepancy between actual and assumed.  So, while active members will benefit from improved market conditions, the retired members will continue to be cursed with increases in cost of living without concommitant increases in their annual benefits. 

January 28, 2005.  Not a lot going on these days.  The "big" news, if you can call it that, is that the Oregon Treasury reported to the PERS Board on Tuesday that the PERS Fund earned about 14.5% for 2004.  This is considerably higher than might have been predicted two years ago and means that there is a better than even chance Tier 1 members will see *some* earnings credited to their regular accounts for 2004 - a welcome relief for those stuck in the toilet created by the Oregon Legislature in 2003.  The earnings are sufficient to retire the remaining $246 million deficit in the gain/loss reserve - the critical benchmark for determining whether earnings will be credited to Tier 1 regular accounts.  What remains open right now is how much the Board will decide to credit to Tier 1 accounts.  Under the terms of HB 2001 (not under litigation), the Board cannot credit more than 8% no matter what, but there are circumstances that allow the Board to credit less than 8%.  At the same time PERS has had significant earnings for 2003 and 2004, the employers were enjoying relatively stable contribution rates because of Legislative reforms in 2003 *and* because of how the PERS Board "smooths" earnings and losses.  The employer contribution rates still recognize some of the staggering losses from 2000 - 2002, which have not been fully liquidated.  As a result, employers are faced with hefty rate increases scheduled to go into effect on July 1, 2005.  Predictibly, they're all whining and act like they couldn't have seen this coming.  Hard to believe since it was they who demanded that losses (and gains) be spread over several years to decrease the ups and downs of rates.  To their abject surprise, the rates for 2005 continue to rise because even with good earnings for 2003 and 2004, the losses from 2001 and 2002 have never been fully absorbed in the rates.  As Mark Johnson put it:  "you either pay now or pay later".  The employers chose the "deferred payment" option and are now faced with the "later".  With budgets extremely short, there is considerable outcry from the Legislature, the Governor, the press, and the employers to do "something" (anything) to mitigate these increases.  So, the PERS Board is considering extending the smoothing period even longer and allowing the rate increase to take place in two phases - the first in 2005 and the second in 2007.  If they do, money to pay for this delay has to come from somewhere if the Board is to comply with its fiduciary and statutory responsibility to maintain the fund's solvency and prevent deficit spending.  Sooooooooo.  I wouldn't plan on spending those 2004 employEE earnings too quickly.  I expect the Board will confiscate some of them to help the employers reduce their obligations to members.  Not nice - mean even - but probably perfectly legal.  So think of that possible 8% as a pipe dream.  Expect earnings crediting for Tier 1 regular accounts to be greater than 0% but IMO significantly less than 8%.  It will give new meaning to the expression "I gave at the office".   I DO hope I'm wrong, but given history, I suspect the legislature and the governor are desperate enough to appease the employers at the expense, again, of the PERS members. 

January 11, 2005.  Several recent retirees have emailed me about problems they're having getting their final "Notice of Entitlement", which details the exact amount of their benefit.   These correspondents note that their effective dates of retirement were, particularly, April 1, 2004.   This was the first day the 0% crediting for 2003 was effective; before that 2003 was credited with 8% and there was an 8% pro-rate for January and February 2004.  On April 1, the 0% crediting began and it was at this point that the "lookback" became particularly important.  Because the volume of retirements in this period was extensive, PERS wasn't able to process all retirements in a timely fashion and so resorted to "estimating" benefits to comply with the statutory guidelines.  People who retired on April 1, 2004 got "estimated" benefit letters in June 2004 and first "estimated" payments on July 1, 2004.  From what I've been told, few, if any, of these people have ever received the mandatory "Notice of Entitlement" detailing the exact amount of the benefit and the calculation method.  As of November 1, 2004, several had written PERS to inquire why these had not been sent out.  PERS' response, according to informants, was that letters would be in the mail "soon" and should be received by early to mid-December.  We're approaching mid-January right now and so far, none of my correspondents has reported receiving a "correct" benefit check or "Notice of Entitlement".   Since I only report this information - I don't fix problems - I suggest that readers in this situation write their letters and emails to the Administrator of the Benefits Processing Division, PERS.  A copy of this letter should also go to Mr. Paul Cleary, Executive Director of PERS. 

January 7, 2005.  Some major administrative changes announced at PERS.  Steve Delaney will now become Deputy Director, up from PPLAG.  He will continue to be the legislative liason.  Steve Rodeman will become administrator of PPLAG.  Rodeman will become responsible for managing the Business Enterprise Team and the RIMS coversion.  Brendalee Wilson will replace Steve Rodeman as day-to-day manager of PPLAG.  Jackie Reep, formerly administrator of Benefits Payment Division, will move to PPLAG.  Craig Stroud will become Administrator of Benefits Payment Division.  Jenny Kumm will replace Craig Stroud as Director of Audits.  All these changes are subject to Board approval, but it is hard to imagine the Board objecting.  Most of these changes are unsurprising and, will, in the long run make PERS run much more efficiently.  For members and retirees, in particular, moving Jackie Reep from BPD to PPLAG comes as a belated, but welcome, Christmas present.  I don't know Craig Stroud, but those who do tell me that he is very competent, responsive, well-liked, and easy to work with - in short, a really good fit for a job like administrator of the Benefits Processing Division. 

January 5, 2005.  The PERS Board meeting agenda for January 7, 2005 is available here.  You will probably find the attachments to the agenda interesting reading.

January 3, 2005.  Welcome to 2005, the beginning of the third year this web site has been online.  This year ought to be challenging and bracing for PERS members and retirees.  While I don't have a clue when the Court will issue its rulings, I do expect a decision in the Strunk et al cases, and the City of Eugene appeal, before the Legislature gets too deeply into its session, which begins later this month.   I have no inside track on when these decisions will be announced.  We'll all know when we know.  If you have a hot tip to share, feel free to drop me an email line at my usual address (feldesmanm@pdx.edu).  I'll try to verify the information and post it in a timely fashion.  If it is pure rumor, I may publish it as such, and see if that smokes out any more informed response.

December 23, 2004.   There isn't anything new to report, but I wanted to take this opportunity to wish you all the happiest of holiday seasons.  This will probably be my last post for 2004.  I'm leaving in the morning to spend the holidays with family away from home.  I'll be back on New Year's Day.  Merry Christmas, Happy Hannukah, Bountiful Kwaanza to all.  More next year.   (I have to confess that I'm waiting for the Oregon Supreme Court to deliver us a belated holiday gift in the early part of next year.  I may be waiting for Godot, but hope always springs eternal in my house.)

December 17, 2004.  The Web address of the PERS website has changed, as has the total design.  The old link to the site works (it redirects to the new site), but none of your bookmarked links to the old site will take you where you want to go.  You'll have to go to the new PERS website to begin to find anything.  Probably the most important change is the link to the page with the financial information - Tier 1 earnings rate, Tier 2 earnings rate, Variable earnings rate, etc.  That can be found here.  In fact, almost everything of interest can be found from the main page, left side menu under PERS Related. 

Of additional note.  The PERS Board did *not* renew the actuarial contract with Milliman and Associates (and with Mark Johnson specifically).  At their November board meeting, the PERB selected Mercer to deliver actuarial services beginning in 2005.  Milliman has been the actuarial firm for nearly 25 years.  This pretty well completes the clean sweep the Governor and Legislature had hoped for - old board gone, reduced in size, replaced with non-PERS people, Executive Director gone and replaced with a gubenatorial crony, many senior (and junior) staff gone and replaced, and now the long-time actuarial firm is gone and replaced. 

December 14, 2004.  My oldest daughter's birthday.  Happy Birthday Hillary (in Minnesota).  Well, we've finally gotten some answers that make sense.  1)  The "revised benefit calculation" letters only went to people who retired between 4/1/00 and 12/1/00.  PERS is only sending them to retirees who they believe to be close to the end of their COLA freeze.  The rest will receive letters later, probably not sooner than a year from now.  2)  there *were* errors in calculating the revised benefit.  For some members PERS mistakenly used 1.24% for the July 1, 2003 COLA when they should have used 2%.  PERS knows this and will be sending out corrected letters "soon".  3) PERS also confirmed that retirees are supposed to get quarterly withholding confirmations of EFT deposits.  Those who receive them more often usually have something unusual (e.g. extra withholding or deductions) taken out.  Hope this clarifies.

December 11, 2004.  Questions, questions.  Confusion, confusion.  Some PERS retirees report getting a letter from PERS providing them with an update on their "revised benefit" resulting from the COLA freeze in HB 2003.  Recall that when HB 2003 passed, PERS was required to go back and refigure the 1999 Tier 1 Regular Earnings "as if" the Board had credited 11.33% rather than the 20% they actually credited.  PERS was then required to produce a revised benefit based on the balance adjusted for the lower return rate.  To this revised benefit would be added the annual COLA increases to which PERS members are entitled.  At the point where the revised benefit equaled or exceeded the actual benefit received by the member, COLA increases would resume for retirees.  Well, some members have a received a letter stating where their "revised benefit" currently sits after the July 1, 2004 COLA increase.  EVERY member who has gotten this letter and who has contacted me reports that the "revised benefit" is lower than their own calculations suggest it should be. 

It is completely unclear to any of us exactly who is getting these letters.  Far more retirees that I know have NOT gotten one of these than who have.  We can find no common denominator amongst those who have received them and those who haven't.  We can't figure out how PERS is calculating the "revised benefit" reported in these letters, and we can't for the life of us figure out why PERS would even bother to send such letters out with the Supreme Court's decision on the legislative reforms due out within months.

We also exposed another curiosity about PERS.  Most retirees get withholding statements on EFT-deposited checks quarterly and whenever there is any change in withholding rates.  However, some retirees get statements monthly.  We also cannot find out the reason why some get statements monthly and why some get statements quarterly.  It also appears that people who have normally gotten monthly statements within a day or two of their EFT deposit, didn't get them for December.

I've emailed contacts inside PERS but have gotten no answers to any of these questions.  Something is clearly amiss and no answers seem to be forthcoming.

Be aware that PERS' website undergoes more changes yet again on or about December 15.  Check the PERS website (if you can find it) for more details.

November 30, 2004.   I just finished reading the minutes from the October PERS Board meeting.  Buried in the minutes is a curious (and would be funny if it weren't for the PERS Board spending our money for "quality" legal representation) item about the Board and the PERS Coalition law firm, Bennett, Hartman, Morris & Kaplan (BHMK).  The PERS Board decided in Executive Session to pursue legal sanctions (Rule 11) against BHMK if the appeal of Judge Mosman's ruling on the Henderson Case (called Henderson II) isn't dropped.  BHMK and the PERS Coalition are pursuing an appeal of this (federal) case to the full US 9th Circuit Court of Appeals.  Apparently the PERB and its legal eagles have decided that further litigation of this case constitutes "harassment" and is "frivolous"  (both elements of Rule 11).  It is nice to see the PERS Board spending members' money to prevent members from exercising their full legal rights in a case that has some significant implications.  

Hope you all had an enjoyable Thanksgiving.  We boycotted the Thursday holiday, went out to dinner instead and cooked the traditional family Thanksgiving dinner on a more convenient day - Sunday.  That way our usual group of Thanksgiving denizens could attend. 

November 20, 2004.  One of the most bizarre rumors I've heard to date has the legislative and executive branches of government wishing/hoping/(encouraging?) that the judicial branch will delay its rulings on Strunk and Lipscomb until after the 2005 Legislature adjourns.  Apparently, this is the "be careful of what you wish for" fantasy.  After passing legislation in 2003 that would "fast-track" the PERS legislation and litigation to the Supreme Court for a decision before the 2005 Legislature convenes, there now seems to be the attitude in Salem that win or lose, we don't want the distraction of PERS on the table during the 2005 Legislative session.  If the legislative reforms prevail, there is the fear that this will embolden PERS critics to embark on more "reform", which will distract attention from pressing fiscal issues, while if they lose, they will have to address the issue of "remedy".  Since the Governor's fingerprints are on every aspect of the reform legislation and the litigation, it kinda makes you wonder how the Supreme Court rulings might be delayed.  It seems to me that the Court doesn't have to delay its rulings until after the Legislature adjourns; it only has to delay its rulings until no more bills can be introduced into the Legislature (of course there is that old "gut and stuff" option).   Since no one expects the Lipscomb ruling until late Spring anyway, it just might be that the Court will hold that Strunk can't be decided until Lipscomb is resolved.  Sigh.  It just gets stranger by the day.

November 18, 2004.  Things are still very quiet on the PERS front.  The most exciting thing I hear these days are rumors.  Like most other "tidbits" of information I hear, most turn out unfounded, but two persistent rumors keep floating around.  The first has the 2005 Legislature tinkering with the HB 3349 benefit increment adjustment for retirees to make it available ONLY to retirees who live in Oregon and pay Oregon Income taxes.  I'm still trying to figure out the mechanism by which they'd enforce this and establish Oregon residency prospectively.  The second is the recurrent Republican desire to eliminate public employee collective bargaining.  I wouldn't be surprised to see one or more bills introduced in the Legislature to accomplish this.  The HB 3349 change would only affect Tier 1 members who worked prior to 1991; a change to collective bargaining would sweep across a larger landscape and would affect all public employees.  I've seen no proposed bills and I haven't heard these rumors from any legislator, but I have heard them from sources who might know a thing or two about such matters.

November 3, 2004.  At long last, the election is over.  No further political comments from me.  I wasn't able to attend the Oregon Supreme Court hearing this morning on the City of Eugene v PERS (Lipscomb) appeal.  From the limited reports I've read, the hearings were more time-constrained and the arguments less lively and combative than during the Strunk case in July.  From questions & answers I've read, there seems to be a question of whether the court should even hear this case before deciding the Strunk case (Hartman, absolutely; PERS, the case shouldn't be heard at all; it's settled and moot).  Court was interested in why PERS Coalition thinks that just because PERS calculated something (variable match) one way for 25 years that this is necessarily the correct way or the statutory way it should have been done?  The Court was also interested from hearing arguments for and against the proposition that the 30-month gain/loss reserve funding was a "requirement" to be implemented immediately (in March 2000), or a "recommendation" to be implemented incrementally (Hartman suggested it was the latter, while the Circuit Court insisted it was the former).  The court was also interested in the matter of the unfunded Contingency reserve.  Did PERB actually consider the question and decide simply not to fund it, or did  PERB simply fail to even consider the question at all?.  The PERB's "hired gun", James Baker, was asked a number of questions, one of which he simply didn't understand and couldn't answer, and gave a second answer to a different question and was admonished by Justice Gillette that he (Baker) was simply wrong.  As in the past, the questions justices ask often reveal little about how they will rule in the case.

October 26, 2004.  I've heard rumors now that the Supreme Court has already decided the Strunk cases.   Rather than clutter the airwaves with bogus information, let me simply say that NONE of my sources has any information on any possible Court decision.   Since these people ought to know if a decision has been made, I'm assuming that the rumors are just that, rumors.  There are, in fact, so many different versions of the rumors floating around that I could start my own "Drudge Report".  If history is any guide whatsoever, the Court's announcement of its decisions will come when the Court is ready to issue them, not before.   While I don't discount completely the possibility of a "leaked" decision, the court has always played its hand close to the vest.  I doubt that any of the current rumors have any basis in fact, although the content of the rumors is not entirely implausible.   Since this is a case with far-reaching impacts, you can be assured that the decision will be announced with the appropriate media fanfare and press-conferences (not from the Court, but from all the interested parties - winners and losers alike). 

October 25, 2004.  A week from Wednesday (November 3, 2004), the last really major Supreme Court hearing on PERS reform will be heard.  While this hearing isn't about the changes the Legislature made, in many ways it is even more important than those.  The City of Eugene v PERS case ('the Lipscomb decision') is under appeal that day.  Since virtually every part of Judge Lipscomb's ruling in that case found its way into the Legislative reforms, the City of Eugene case is the gordian knot that has to be cut in order to unravel most of the Legislative reforms.  Although the Supreme Court will decide independently on the Legislative reforms, it is hard to imagine how they could do so without taking a definitive legal position on the City of Eugene case.  The hearings will be held in the Oregon Supreme Court in Salem on Wednesday afternoon, November 3, 2004.  The starting time is 1:15 and will last 1 hour.  The Supreme Court doesn't allow overtime.  I am unable to attend these hearings, but  I encourage EVERYONE who can to attend.  It is really important for those of us who care about the outcome to show our faces so that the court understands that the impact of these rulings is not an abstract set of legal principles, but the retirement benefits of real people who've been adversely affected by these changes. 

I was at the July hearings in the Strunk case; the courtroom (12th & State, 3rd Floor, Salem) only holds about 12 spectators, but the overflow crowds will be directed to the Capital Building, across the Mall, to hearing room E, which will have closed circuit broadcast of the hearings.  This is an opportunity to see and be seen.  Watch justice in action.  Parking is relatively convenient, with meters in front of the capitol.  Take about $2 in quarters with you to feed the meters. 

October 18, 2004.  On October 15th, the PERS website posted a notice about the 'new' 2005 - 2007 Actuarial Equivalency Factors.  The Board decided that on the basis of the most recent actuarial study that the mortality factors put into effect on July 1, 2003 were still current and would remain the same on January 1, 2005, as directed by HB 2004.  Recall that HB 2004 directed the PERS Board to adopt new mortality factors every two years beginning on 1/1/05 and thereafter.  These mortality factors will apply to retirements occurring within that two-year period (i.e. 1/1/05 - 12/31/06), subject to the "lookback", which only preserves account balances and mortality factors that were in effect on 6/30/03.  (Had the 2005 - 2007 mortality factors changed from those adopted on July 1, 2003, the "lookback" would still only apply to the factors in effect on June 30, 2003.  The "lookback" is not ongoing in the sense that every time mortality factors change, a member would get the benefit of some combination of balance and mortality factors in effect just before the change.  The Legislature was quite explicit in making the current "lookback" limited only to the period prior to the effective date of HB 2004, July 1, 2003.)

October 13, 2004.  Congratulations to Rick Groff for winning the $25 Border's Gift Card.  Rick came the closest to the actual date when the 100,000th visitor would pass through our neighborhood.  We crossed that mark at about 9:55 a.m. today.  I'm truly amazed and gratified at the interest shown in this site.  I hope that there will be some important and interesting news to post in the near future. 
October 11, 2004.  I've been out of town for a few days.  It appears that nothing truly reportable has happened.  The PERS Board meets tomorrow to consider a number of administrative rule changes, some relating to the IAP/OPSRP (HB 2020) plan.  If you're interested in reviewing the rule changes, they are available on the PERS web site (here) as part of the agenda for tomorrow's meeting (warning:  this is a big pdf file). 

In other news, members who've tried out PERS' new retirement benefit estimator for Tier 1 and Tier 2 employees have been pleasantly surprised by how comprehensive it is.  You still need to make some assumptions, but those assumptions aren't any different than the assumptions PERS would make in producing a benefit estimate for you.   Members also report that the estimates are helpful and do actually enable a member to try and make an informed decision about when to retire.  My hat is off to the PERS staff and programmers that made this possible.

We're inching closer and closer to the magic 100K visitor mark.  I have identified one person who should win the Border's Gift Certificate for coming the closest to guessing the date at which the board would cross this mark.  I don't know precisely when this will happen, but have no doubt that it will be in the next day or two.  Amazing.

October 6, 2004.  Now that PERS has posted its new and improved benefit estimator (for Tier 1 & Tier 2) that does the "Lookback", HB 3349 adjustment, and all 13 payout options (new PERS Benefit estimator), I've decided to discontinue any further work on my own estimator.  They say that "imitation is the sincerest form of flattery", and while the format of the PERS Benefit estimator doesn't look at all like the one I developed, I know that my calculator influenced the information that PERS has decided to offer to members in its calculator.  I'm just pleased that PERS has decided to take up the challenge and make this available.  It should never have been the case that someone outside PERS would have to completely decode all the rules and program them into a calculator.  Do keep me posted on results you get that don't look right.  Although I won't do any more work on my calculator, I do know how these calculations are done and have the capacity to double check the calculations.  I'm not volunteering to do this, but I do have a pipeline into PERS that can let the people in charge of developing the calculator of possible errors.  I also know how programming is done and appreciate the ways in which subtle (and completely unanticipated) errors can creep into programs.

September 22, 2004.  I've had a couple of inquiries from people who retired on July 1, 2004 and who are just now starting to see benefit checks.  Several have asked why the "Notice of Entitlement" shows one benefit amount and then the first check (s) is/are nominally higher.  While I'm not 100% certain, I'm pretty confident that the discrepancy is due to the July 1, 2004 COLA, which new retirees (April 1, 2004 to July 1, 2004) are eligible to receive.  The 2004 COLA for new retirees was 1.17%.  This amount is not, to the best of my knowledge, added to the "notice of entitlement".  Instead, the new retiree will probably receive a separate notice indicating the change in benefit amount due to the COLA.  If I'm wrong, it won't take long for me to know about it.

September 18, 2004.  Nothing really new to report.  There is a lively discussion going on over at the PERS Discussion Group (see link at left, bottom) about post-retirement health insurance costs, health savings accounts, and high deductible insurance plans.  If these topics interest you, a trip through the discussion might give you some useful information and suggestions. 

So far, none of the guesses on the timing of the 100,000th visitor have been correct or close.  Most have been way too optimistic.  I'm willing to re-open the contest (see July 28th entry) with entries due by email to me by no later than September 23rd.  Border's Gift Certificate is still the prize.

September 7, 2004.   My wife and I made it back from San Francisco on Sunday.  Her surgery went smoothly and the hospital stay ended up being the minimum length.  She is doing well and we're hopeful that we've seen the inside of UC San Francisco Medical Center for the last time.  (I love San Francisco, but I've seen both way too much and way too little of it in the past year).  Thanks to all who sent emails and who phoned to offer prayers, irie vibes, mojo, and other forms of good karma.   

On the PERS front, there hasn't been any interesting news while I've been away.  At least one of the plaintiff's lawyers (Hoag) is mildly optimistic about the Supreme Court overturning at least part of the Legislative reforms.  He even expects the court to issue its decision well before the end of the year, an optimistic estimate by all accounts.  There is some speculation afoot that the court wants to decide the Strunk case before it even hears the Lipscomb appeal (November 3rd). 

January to August 2004 Musings

September to December 2003 Musings

Pre-September 3, 2003 Musings

Pre April 2003 Information

copyright 2000 - 2005, Marc Feldesman

 

Last Updated: March 16, 2005