PRE - September 4, 2003 Musings.

All of the entries from April 2003 to early September 2003 are listed here.  Earlier reports are also available for those who wish to search the archive.

September 3, 2003.  Ballots are in the mail for Measure 29, a legislative referral of the proposal to refinance the State's PERS obligation at substantially lower interest rates, and save the treasury about $1 billion over the life of the bonds and assuming the debt is not refinanced in other ways [NOTE:  this wording does not seem to satisfy some people.  Measure 29 allows the treasurer to sell general obligation bonds to finance the state's PERS obligation.  If Measure 29 is defeated, the Treasurer will still be able to sell certificates of participation at a higher interest rate.  The estimated savings between general obligation bonds and COPs is estimated at about $44 million.  So, a vote for Measure 29 is to save about $44 million over other ways of financing the state's PERS debt, assuming the state chooses to go that route.  The Treasurer is not obliged to sell COP's; the debt can be retired by taking from other general fund programs.  However, if Measure 29 passes, the treasurer will have to issue general obligation bonds to refinance the state's PERS obligations.]  As usual, the misinformation, disinformation, and dissembling campaign is out in force.  This will NOT result in higher benefits to PERS members; this does not cover an imaginary and non-existent waiver of Oregon income-tax for PERS recipients (PERS recipients living in Oregon DO pay Oregon State Income Tax!!!); this does not give the Oregon Treasury carte blanche to sell bonds for any purpose it wants; this does not increase our property taxes, yada, yada, yada.  As has been repeated many times, the principle involved in Measure 29 is exactly the same as that applied when you refinance a mortgage at a lower interest rate - the loan balance is exactly the same, but the interest rate charged is lower, which results in lower monthly payments and a lower lifetime interest expense.  The only people who would vote no on this measure are dumb and dumber, are willfully choosing to misrepresent the facts, or are so anti-government that they refuse to believe that government might actually try to save taxpayers some money, however small.  Anyone with more than two firing neurons should vote YES on Measure 29. [NOTE:  September 6, 2003.  My remarks above seem to have offended members of the Oregon Libertarian Party, the only group to mount an organized opposition to Measure 29.  If you are a member of the list, you are free to challenge what I say in the form of an email sent to the list, which I may or may not approve for wider distribution - I get to decide.  If you write something that is well-reasoned and beyond the usual Libertarian distrusting anti-government prattle, I might let it go through.  Emailing me privately on this matter is an exercise in futility.] 

August 28, 2003.  Several readers have reported that the new PERS Retirement Calculator (at PERS' website) produces "anomalous" results for retirements before 4/1/04 and after 4/1/04.  The common report is that a retirement date of 3/1/04 produces a HIGHER benefit than a retirement date of, say, 4/1/04.  This is NOT an erroneous result.  It is a direct consequence of the language of HB 2003, which states that PERS may not credit earnings to the regular account for any year in which there is a deficit.  The language of the new statute produces an odd situation for retirements between now and 3/1/04 and those beginning 4/1/04 and after.  The earlier retirements (before 4/1/04) will be credited with a pro-rate of 8% through 12/31/03 and 0% for the period 1/1/04 to 3/31/04.  These retirees will be subject to the COLA freeze until their 1999 "overcredit" is recovered.  Folks retiring on 4/1/04 or later will be credited with 0% for 2003 but are not subject to the COLA freeze.  So, if you're considering retiring within the next 12 months, look carefully at the period just before and just after 4/1/04. 

August 27, 2003.  The House and Senate have now approved HB 2020-B (the successor plan) for new hires.  It heads to the Governor's desk for his signature.  HB 2020-B guarantees a 30-year employee (who begins in PERS on or after 1/1/04) a 45% defined benefit, and offers a separate 401-K style defined contribution.  The 401-K will be employee-paid, but it could be negotiated as an employer payment under collective bargaining.  This completes the overhaul of PERS for this legislative session.  The only lingering issues are the multiple legal challenges that will tie up the reform for 18-24 months in the Oregon Supreme Court, and the resolution of how HB 2152 and ORS 238.380 (HB 3349) will play together if the various Legislative Republicans and the Oregon Libertarian Party (among others) succeed in referring the surcharge to the voters and the surcharge is ultimately upheld in a special election in ?February.  (Of course, if the referendum movement fails to get the required number of valid signatures, then the surcharge will remain in effect).

August 26, 2003.  As a followup to my earlier email exchange with Steve Rodeman (PERS Policy, Planning & Legislative Analysis Group Manager) concerning the HB 2152 income tax surcharge and HB 3349 benefit adjustments, Steve writes:  "The agency hasn't had an opportunity to evaluate the impact of the higher tax rates on HB 3349 benefit increases, so I can't confirm what the impact will be.  In general, the relevant statutes (ORS 238.380) do appear to contemplate an increase in the HB 3349 payment if the maximum Oregon income tax rate increases.  But we have not reviewed the nature and scope of the tax increase, so it's effect, if any, on HB 3349 benefit payments has not been evaluated at this time."

August 25, 2003.  I just heard back from PERS' Steve Rodeman concerning my August 22nd entry (re:  HB 2152 - the income tax surcharge - and the HB 3349 benefit increment adjustments some retirees receive).  According to Steve, "The legislature did not request a fiscal impact statement from the agency on this measure, so none was provided.  We have not conducted such an analysis at this time."  Currently unanswered is the question of whether the surcharge would be eligible for an additional benefit increment.  If it isn't, then PERS recipients would be liable (legally?) for an additional income tax on the portion of their pensions which were the subject of the "Young" case (Oregon tax liability on PERS pensions) litigated back in 1992 and eventually resulted in HB 3349.

August 24, 2003.  For those interested in the progress of the legal proceedings against HB 2003 and HB 2004, Oregon AFSCME has a page devoted to the filings.  You can read about the lawsuits here and from the links on that page.  If you are a legal junkie, there is a complete copy of the actual lawsuit pleadings linked from the page above.  You can also get your updates directly from the Bennett, Hartman, Morris, and Kaplan webpage.

Many of you still ask about my wife's progress.  Your concern touches us deeply.  I am happy to report that she is making steady progress.  She is able to walk for short distances (5 - 10 feet) unassisted and for much longer distances (500 - 750 feet)  if I'm there to provide a bit of support and stabilization.  Each day she gets stronger and is able to go farther.  Once she is able to get herself out of bed and back into bed unassisted - perhaps in as little as a week to ten days - things will improve dramatically.  Right now she is totally dependent on me to help her, which limits both of us.  But we know this is short-lived and we do have friends, family, and neighbors to help out occasionally, which gives both of us a change of scenery periodically.  We're optimistic that she is on the path towards a full recovery in the expected 6 month time frame.

August 23, 2003.  There is considerable interest in how PERS will implement the revised variable match calculation for active and retired members pursuant to Judge Lipscomb's order in Eugene v. PERS.  You can read brief answers to questions I posed to PERS - in particular to Steve Rodeman - here.

August 22, 2003.  I've been trying to chase down some information on how HB 2152 - the 3-year income tax surcharge just approved by House and Senate - will affect PERS retirees currently receiving a "benefit increment adjustment" under ORS 238.380 (HB 3349).  My understanding of ORS 238.380 is that increases in the Oregon Income Tax rates are to be accompanied by an adjustment in the "benefit increment" credited to retirees for the portion of their pension attributable to service prior to 10/91.  If this is correct, then the HB 2152 income tax increase OUGHT TO BE offset to some degree by an increase in the benefit increment adjustment.  I DO NOT KNOW THIS TO BE TRUE!  I'm trying to get clarification from people who would know; however the "Sobig" virus/worm has had such an adverse impact on email systems that I'm currently RECEIVING more than 1000 copies of the virus/worm per day.  I've heard of instances where some local businesses and public agencies have had to block all email coming from or going to the "outside".  Consequently, my communications links are mostly shut down right now.  As soon as I have information, I will post it here and also send an email out to list subscribers.

August 20, 2003.  In the past 24 hours, I've received more than 200 emails with the W32/Sobig.f@MM worm/virus attached.  [late 8/21/03 - update.  The Sobig count now exceeds 2000 since my posting yesterday.  According to news reports, this is the fastest spreading virus ever.  PLEASE, PLEASE, PLEASE CHECK YOUR OWN COMPUTERS TO BE SURE YOU'RE NOT INFECTED.]  Many of these emails APPEAR to come from list subscribers, although most probably do not ACTUALLY come from subscribers.  You can read more about this noxious pest at http://us.mcafee.com/virusInfo/default.asp?id=description&virus_k=100561.  If you don't have current antivirus protection on your computer, you are in for a heap of difficulty.  You can check to see if you have this virus on your computer WITHOUT current antivirus protection by searching for two files: WINPPR32.EXE and WINSTT32.DAT.  If you have these two files, you have the "SoBig" worm and your computer is sending the virus on to random names taken from your email outbox (the "sent" folder) and making them appear to be from another random name from your email outbox. 

Please note that all emails from the PERSLIST (i.e. from ME) are scanned before they're sent and so are virus/worm free.  If you get any emails with subjects such as "movie", "wicked", "document", "your document", "details", "thank you" (note case), DO NOT OPEN THEM.  If you do, your machine will be transformed into a virus-propagating machine.  Your best defense is up-to-date virus protection (e.g. Symantec AV, or McAfee AV) and a software firewall such as Zone Alarm (free) or Norton Internet Security (not free).

August 19, 2003.  I now have a copy of the "variable match calculation" example distributed to the PERS Board on July 29th.  Here it is.  The worksheet is relatively straightforward, but as you can see both from the internal questions raised by PERS Staff and by extending the logic, there are a number of questions still to be resolved prior to implementing this aspect of Judge Lipscomb's decision.

August 18, 2003.  Not much to report.  If you tried to reach this site over the weekend, it appears that either the "msblast" worm took down PSU's server, or more likely it was taken down as a precaution against a "denial of service" attack.  Several people have asked me about the PERS Board July 29th item in the minutes designated as:  '"implement Lipscomb decision" for "variable match calculation"
following "option 1 example" as presented to Board by staff'.  I don't have the "Option 1 example" but have requested a copy if it is publicly available.  I'll post it here as soon as (and if) I get it.

Life is returning more to "normal" right now.  At the moment my wife is unable to do much for herself without considerable assistance, but she is making incredible progress with her rehabilitation.  Thanks to family and friends I've been able to get out almost daily for an hour or so to run errands and such.  In a few weeks I'll be able to leave for longer periods of time. 

August 14, 2003.  We've returned from San Francisco, only slightly worse for the wear and tear of getting back.  My wife is progressing well right now and we are optimistic for a full and complete recovery over the next 6 months.  I will begin again to update this site on a regular basis starting on August 18, 2003.  There isn't much to report now.  All the significant news was contained in a single email I sent to the list in early August. 

One relevant piece of news appears this morning, however.  Governor Kulongoski named the new PERS Board members who will begin on September 1, 2003.  They include James Dalton, Tektronix vice president; Eva Kripalani, senior vice president and general counsel for KinderCare Learning Centers; Michael Pittman, senior vice president for PacifiCorp/ScottishPower; Thomas Grimsley, an educator in the Bethel School District; and Brenda Rocklin, Oregon State Lottery director.

July 20, 2003.  We leave for San Francisco very early tomorrow morning.  This is my last update to this site until about August 12, 2003.  My sincere thanks to all of you have emailed me to convey best wishes and to offer various forms of prayer for my wife's successful surgeries and speedy recovery.  I've jokingly remarked to close friends that there are so many prayer chains, prayer trees, irie vibes, good karma, and shaman rituals going for my wife that all forms of energy could collide above San Francisco and knock out all wireless Internet access in the whole Bay Area.  In any event, I am genuinely blessed to have so many people who care about my wife's recovery.  I will post any updates that are of interest via the Majordomo list serve when I have the opportunity.  Regular updates to this website will resume approximately August 12.

July 18, 2003.  The earnings rates effective August 1, 2003 are:  Tier 1 regular account for retirements effective August 1, 2003, is 1.0464 or 4.64%. This is based on 8.00% prorated for 212 days. The Tier 1 regular account crediting rate for refunds (folks not working for a PERS agency and not eligible to retire but merely cashing out their PERS accounts) effective August 1, 2003, and later is 0.00%. Actual Tier 1 earnings available for crediting through June 30, 2003, are 1.0942 or 9.42% (this is the rate that is used internally to figure things like valuation of the PERS asset base and, by inference, the unfunded actuarial liability).  The Tier 2 regular account rate effective August 1, 2003, is 1.0942, or 9.42%.  The Variable crediting rate effective August 1, 2003, is 1.1340 or 13.40%.

The PERS Coalition has set July 22, 2003 as the date for filing the various legal actions against HB 2003 and HB 2004.  You can read more at the AFSCME website (here).

The House and Senate have agreed to let the Oregon Treasury sell general obligation bonds to refinance $2 billion of the State's unfunded liability to PERS.  The bill, approved yesterday in conference, will now go to the Governor who is expected to sign it today.  Once signed, the matter will be placed before the voters in a special election on September 16, 2003.  If approved, the State is expected to sell bonds at 5% interest, as opposed to the 8% they're paying now.  The Salem Statesman Journal (today) and other papers (regularly) continue to report this as if this is PERS' debt that's being refinanced.  To the best of my knowledge, this bill isn't for PERS to refinance its debt; it is for the State of Oregon to refinance its obligations to PERS.  Thus, it is my belief that some of the reporting is somewhat misleading.

July 17, 2003.  The Oregon Senate Rules committee approved a revised House bill yesterday that will allow a vote on September 16, 2003 to let the Oregon Treasury sell general obligation bonds to refinance approximately $2 billion in PERS debt.  These bonds, if approved by voters, would let the State refinance debt, currently at 8% interest, at a much more attractive 5% rate.  This would save the state about $90 million per biennium for a total savings of about $1 billion over the 24 year cycle of the bonds.  The Senate committee did not permit a broader version of the bill to proceed.  The broader version would have permitted the State to issue General Obligation bonds to refinance existing debt anytime the interest rates dropped significantly.  The bill now heads to the Senate floor and, if approved, on the Governor by tomorrow.  Tomorrow is the deadline for getting any referred measure on the ballot for a September 16 vote. 

Please note.  The bill above refinances State of Oregon (as employer) obligations to PERS.  It doesn't benefit PERS in any way that I can see except that it will generate $2 billion in cash that presently exists on PERS' books as a $2 billion receivable earning 8%.  Instead of paying PERS 8% on this money, the State will pay bondholders 5% while liquidating its current debt to PERS.

July 11, 2003.  State Treasurer Randall Edwards' proposal to issue General Obligation bonds to refinance $2 billion of State of Oregon debt to PERS was accepted yesterday by a House committee.  If this proposal is accepted by the Legislature before July 18th, Oregonians will vote on the proposal in September.  Edwards estimates that refinancing the debt at 5% (vs 8%) would generate savings of $90 million in the current biennium and would save several billion dollars in interest over the 24 years life span of the bonds.  

July 10, 2003.  Not surprisingly, the full House rejected the heavily amended HB 2020-B, the successor plan for new hires.  The bill now goes to a House-Senate conference committee to try to work out a compromise - a task that will be difficult given the Governor's opposition to the House-passed version and his support of the Senate variant. 

July 9, 2003.  I've heard from several well-placed sources that section 27 of HB 2020-B, which limits PERS retirees to no more than 600 hours of calendar year re-employment, DOES NOT APPLY to current retirees or to active Tier 1 or Tier 2 members.  The intent of section 27 is to limit re-employment of retirees from the successor plan ("PERS Lite") who join PERS on or after 1/1/04, from working more than 600 hours per calendar year. 

I've also gotten some clarification on the installment payment interest crediting for lump-sum recipients.  If you retired on or before 6/1/03, you will continue to get the assumed interest rate on installments until they are all paid out.  If you retire between 7/1/03 and 4/1/04, you will get the market return rate on installment balances (essentially the Tier 2 rate).  If you retire after 4/1/04, you will get 0% on installment balances until the deficit is liquidated - at least 3 years.

July 8, 2003.  Yesterday the Oregon Senate passed an amended version of HB 2020-B - the "successor" for new hires - in a very close (16 - 14) vote.  The Senate bill closely resembles HB 2008, which was defeated in the House PERS Committee in favor of HB 2020-A (the "Fair Retirement Plan", introduced by Representative Dennis Richardson).  The Governor would not accept HB 2020-A in the form passed by the House, but seems to favor the Senate version, whose structure was developed by Representative Greg Macpherson in consultation with the Governor's office.  HB 2020-B has a defined benefit component that guarantees a career (30 year) worker at least 45% of FAS.  In addition, there would be an employee contribution - currently 6% - that would go into a separate defined contribution account and would supplement guaranteed pension benefits.  The actual amount of the contribution and who pays it will be subject to collective bargaining beginning in 2005.  HB 2020-B also changes the rules for re-hiring retired employees, halving the number of hours a retiree can work after retirement.  This change does not apply to current PERS members; instead, according to Sen Tony Corcoran it only applies to members who retire under the "successor" plan (sometimes called "PERS light" or "Tier 3").

Also passing the Senate in a 28 - 2 vote yesterday was the amended HB 3020-B, which is a "housekeeping" bill intended to clean up some of the unintended consequences of passing HB 2001, HB 2003, and HB 2004.  HB 3020-B goes back to the House now for reconciliation with the version it passed.  This bill clarifies the "lookback" to what we understood it to be originally (see Mr. Voytko's FAQ, which you can access via the July 6, 2003 link).  At the same time, it also includes language that changes the way earnings would be credited to those retirees who elect to take either a lump sum or double-lump sum settlement (again, see Mr. Voytko's FAQ for further information).  HB 3020-B is a very long, very detailed, and labyrinthine bill covering much ground (but then again, so is HB 2003).  There is no "peanut" summary possible.  You'll need to read it carefully to ferret out all the relevant details.  The "good" news is clarification of the "lookback" and the "earnings" crediting for people electing to retire between now and April 1, 2004.  The "bad" news relates to the folks planning to take a lump sum settlement in installments and who were expecting to receive 8% earnings annually on the residual balance - it isn't going to work that way.  (To be perfectly honest, I can't actually figure out whether this has any impact on folks who retired before July 1, 2003 or not, but stay tuned).

July 7, 2003.  The PERS link below (July 6) has been fixed and the spreadsheets should now be accurate for Members A and B at a retirement age of 65. 

July 6, 2003.  Hope all had a pleasant and safe 4th of July.  We certainly did.  On Thursday (7/3/03), I sent out an email to list subscribers describing a new posting from Jim Voytko, Executive Director of PERS, on "Thinking over the retirement decision".  This is posted on PERS' website here.  Mr. Voytko's post has a very nice FAQ dealing with some member questions arising from implementing HB 2003 and HB 2004.  His answers are very helpful.  It also contains a series of spreadsheets that show two hypothetical members and how different scenarios might affect their retirement decisions.  I have numerous questions about these spreadsheets, particularly as they pertain to Members A and B retiring at age 65.  I believe the spreadsheets are in error or have been misprinted with respect to the Age 65 worksheets.  I have emailed Mr. Voytko for clarification and hope to have this resolved soon.  In the meantime, I would take the "N/A" or 0.0 values for the Age 65 worksheet with a very large chunk of salt. 

July 2, 2003.  To prevent list headaches, I changed the email addresses of all subscribers with attbi.com email addresses to the new comcast.net address.  If your subscription address was myname@attbi.com before, it is now subscribed under myname@comcast.net.  You may have received two emails from MajorDomo - one "unsubscribing" the attbi address and a second "subscribing" under the comcast address.   If you don't get a Digest TODAY (and were subscribed before under an attbi email address, please let me know).   

Oregon PERS Retirees Inc (OPRI, www.opri.org) has announced its intent to take legal action against the parts of HB 2003 that apply to recent retirees (i.e. the COLA suspension).  OPRI will be reactivating its legal defense fund and will hire a lawyer independent of the PERS Coalition, to which they belong.  Because the interests of recent retirees are different from the interests of active PERS members, this will allow OPRI and the PERS Coalition to pursue separate legal paths if their legal interests collide.  More information can be found on the OPRI website - address above. 

July 1, 2003.  Apropos of almost nothing in particular, HB 2003 and HB 2004 take effect today, changing the retirement landscape for those retiring in the not-too-distant future. 

Steve Rodeman of PERS sent me a copy of the memo he distributed to the PERS Board at yesterday's meeting.  This memo outlines general recommendations to the Board for PERS staff's implementation of the Lipscomb decision pending the outcome of current and future litigation.  You can read Steve's memo here.

June 30, 2003.  I tried to get to the PERS Board meeting this morning.  I managed to make it for the final 15 minutes after all of the meaty stuff was discussed, so I don't have anything substantive to report.  Despite the length of the agenda, the meeting lasted only 75 minutes and so whatever happened didn't involve a great deal of discussion.  I don't have anything significant to summarize, but PERS has already published its summary of today's meeting here.  Steve Rodeman did prepare a handout with some recommendations to the Board on implementing the Lipscomb decision.  I have it in hard copy and should be able to get an electronic copy to post by tomorrow.

June 28, 2003.  PERS has issued a revised agenda for its Board meeting tomorrow and Monday, with several (10 or 11) attachments that the Board will consider at Monday's meeting.  Some of these documents pertain to issues related to HB 2003, HB 2004, and the proposed reconciliation bill, HB 3020.  If you are interested, here are the documents (6-30 AGENDA, A.1, A.2, A.3, A.4, A.4 EXCEL attach, A.5, A.8. HB 2004 Draft 2, A.8. HB 3020, A.8.0055, A.9. 0180, A.10, A.11,12,13.)  The numbers on these (e.g. A.x) refer to item numbers on the June 30th agenda.

Of note to those who track these things, the Senate's General Government Committee has amended HB 2020, which was the proposed successor plan for new hires.  The House-approved HB 2020 would have put new hires into a pure DC plan; the amendments to HB 2020 appear to gut and stuff the contents of HB 2020 with the (former) HB 2008, proposed by Representative Greg Macpherson.  This would result in a hybrid DC/DB plan that would guarantee a career worker at least 45% of FAS, plus whatever element results from the DC portion of the plan.  Minimum employer rates would be 8.67%, with an additional 6% available if the employer decides to continue to "pick up" the employee contribution.

June 25, 2003.  Back from a relaxing vacation in Hawaii.  It appears that little went on for the past two weeks.  I do have copies of the PERS Board's agenda for its meetings on June 29 and June 30.  You can see these agendas here (6-29 AGENDA, 6-30 AGENDA).  Note in particular that the Board will discuss the denial of the stay of the Lipscomb decision in executive session on 6/29 and will give direction to PERS Staff in public session on 6/30 for implementing the decision.  The 6/30/03 meeting is open to the public; unfortunately it is a Monday, not a Tuesday, and I won't be able to attend.  I'll try to get a quick summary out as soon as one of my sources lets me know what happened. 

June 12, 2003.  Just when you thought it was safe to go back in the water, an Oregon Court of Appeals Judge denied a petition for a stay of the Lipscomb order.  In doing so, the appellate court judge is effectively forcing the PERS Board to implement Judge Lipscomb's decision immediately rather than waiting for the case to wend its way through the appeals process.  The effect of this is not entirely clear, although an Oregonian report today suggests that the Board will meet on June 30, 2003 to plan for the immediate implementation.  Several likely effects will be a refiguring of 1999 earnings for active employees, immediate implementation of new mortality tables (presumably without a "lookback"), and refiguring of employer rates.  While the appeals process will continue, it isn't exactly clear what the "real" effect of this ruling will be in light of HB 2003 and HB 2004, both of which address the issues raised in Lipscomb and which take effect on July 1, 2003 anyway. 

Today is the last update to this site until June 25th or June 26th.  I'll be out of town and won't have any way in updating.  If I get any relevant information via other channels, I will send out at most one email to the subscriber list during the next two weeks. 

June 10, 2003.  As promised here is the Oregon Attorney General's opinion on HB 2003 and HB 2004.  This is a document that was scanned in and so its quality is not as good as the documents that come to me in electronic (original) format.  My thanks to Cara Filsinger, Committee Administrator for the House PERS Committee, for emailing it to me so quickly.

The AG's Opinion is a very lengthy and complicated document.  The synopsis is already out there - the AG believes that the legal status of large sections of HB 2003 and HB 2004 is questionable.  However, for retirees soon-to-be subject to the COLA freeze, the AG's opinion is most worrisome.  In short, the AG is not impressed with this mechanism for recovering the 1999 "overcrediting" should it be found unlawful, but reaches a troubling conclusion - namely that other mechanisms exist for recovering the "overcrediting" and that continuing to "overpay" retirees and beneficiaries in the interim would be against IRS regulations and ORS 238.660 itself.  The relevant section begins on page 36 of the opinion and runs for approximately 7 pages.  You should read it!

June 7, 2003.  The Oregon Attorney General's Office released its 57 page opinion on various aspects of the the Legislature's attempts to reform PERS, in particular, HB 2003 and HB 2004.  I still have not seen the opinion, but the Oregonian mentioned the opinion in an article today (I've rarely seen an article so devoid of information), while the Associated Press release (written by Peter Prengeman) offers some insight into key areas where the AG's Office thinks HB 2003 and HB 2004 are on legal quicksand.  The areas singled out for mention in Prengeman's article are - the "lookback" itself, the ending of the 6% contribution to employee accounts, and the 8% assumed interest rate over the employee's career as opposed to annually.  I have several people trying to get copies of the opinion to me.  If I get it before I leave on vacation, I will post it here and send out an email telling subscribers that it is here.  Watch this space.

June 6, 2003.  OPEU/SEIU has done my work for me.  They've posted the PERS Memo on their web site along with relevant testimony from the Legislative Counsel.  Go to their web site and click on the two highlighted links (note that they are backwards - the second link (Dave's testimony) is actually the PERS Memo, while the first link (PERS' memo) is actually Dave's testimony).  You should read the PERS memorandum very carefully.  If you combine it with the summary of my meeting with PERS officials last Friday, you'll get about as much certainty as you're likely to have at this time.  The points PERS raises in its memo are quite challenging and ought to keep the courts busy for some time to come.  In the meantime, I've heard that the Oregon Attorney General's Office has released its analysis of the various PERS-related bills today.  I have NOT seen the opinion nor do I know exactly what it contains.  I've merely heard rumors that the AG's Office is not overwhelmed with optimism about the fate of some of these changes.  Hopefully I'll have a copy soon to post.  If not, I'm sure the PERS Coalition will have the opinion posted and, if so, I'll provide a link to it through one of its member sites.

June 5, 2003.  I've started to get pieces of the PERS memo that Greg Hartman refers to in the OPEU/SEIU link below (June 4, 2003).  [Actually - see above June 6.  OPEU/SEIU has actually posted the entire memo and you can read it for yourself by going to the link above.]

June 4, 2003.  The summary of Friday's meeting is now available (here) [NOTE:  an earlier version posted was misnumbered.  The current version has the numbering of the Q&A's corrected.  There WAS no Q4 & A4 in the original].  Do keep in mind that the PERS officials with whom I met have not vetted this document and questions still remain.  I am fully aware that there may be "technical" amendments offered in another bill to clarify, offer precision, and direct interpretation of some of the more complex issues that arise in HB 2003 and HB 2004, of which only a small fraction are represented here.  However, the answers offered last Friday are, to my understanding, the way PERS will implement various pieces of the legislation in the absence of any technical or clarifying changes.  I do not know when or if technical changes will be introduced, but note the third paragraph of the June 3, 2003 entry (below).  I also know that there are quite a few other issues that we didn't discuss that seem to need additional clarification and that remain under discussion.

Apropos of the above summary, information reported here earlier concerning the lookback, and other issues pertinent to the implementation of HB 2003/2004, you may want to take a quick peek at the SEIU website link http://www.opeuseiu.org/lockeddown/PERS/interpretation.html for some insight.  (I do *not* have a copy of the memo that Greg Hartman refers to in his communication to the PERS Coalition.  I'm aware of its existence and have an idea of its contents, but I don't know the full scope of the issues PERS raised in it.  I have requested a copy, but I don't know whether it is a privileged communication or a public record.  

Subscribers may find PERS' own website useful as it has updated the explanation of the key features of HB 2001, HB 2003 & HB 2004 (here).

I'm happy to report that the DIGEST seems to be working as planned.  There will be no more individual messages emailed from the list.  All messages (or a single message) will come bundled at around 4 p.m. on any day messages are in the queue.  The DIGEST and PERSLIST are completely transparent.  You can subscribe/unsubscribe to/from PERSLIST and the effect will ramify to both lists. 

I will be out of town from June 12 to June 25th and there will be no updates to this website during that period.  I also expect that the list itself will go pretty silent for the same duration, although I have the capacity to email during my travels (Hawaii isn't that remote after all <g>).

June 3, 2003.  Nothing new yet to report, but an opinion piece in today's Salem Statesman Journal is timely, particularly in view of the customer service issues we discussed on Friday.  You can read this piece here (PERS 'panic sale' unfair to Oregonians).

I've decided that I will post a summary of Friday's meeting tomorrow morning whether I've heard back from PERS or not.  Just keep in mind that IF I post such a summary, it is subject to revision if the PERS people are able to get back to me and clarify any the issues I asked them to look over in this document.  I do not interpret their silence as either confirmation or disagreement.  I merely acknowledge that they're really busy.  The information I post isn't likely to be too far astray since pieces of it have been corroborated via emails among list subscribers and PERS Counselors and Customer Service Representatives.

The House PERS Committee has more or less closed up shop and has no further meetings scheduled.  According to an email I received from Representative Macpherson's office, the Committee will probably schedule one more meeting near the end of the Legislative session to wrap up some last minute details.

June 2, 2003.  I hope to have a summary of Friday's meeting posted later today or this evening.  I'm still trying to get clarification in two areas, but I've had to wait until today to email the principals for it.  Hopefully I'll have my questions answered before the day's end and I can post a summary here.   (6:45 p.m.  Not yet.  Check back tomorrow.  I really want to make sure my summary accurately reflects what was said and I haven't received the clarification I need on two points. Rather than mislead or misdirect, I'll err on the side of caution.)

May 30, 2003.  I had a very cordial morning meeting with Jim Voytko, Dale Orr, Steve Rodeman, Marsha Bacon, and Christina Shearer of PERS.  We spent a lot of time talking about "customer service" issues, the various ways PERS tries to provide members with a good customer service experience, and the uncertainties and obstacles that make this difficult.  Thanks to a number of members who shared their "stories" with me, I was able to provide PERS with some concrete examples of places where members appear to be having difficulty.  I came away from the meeting with a sense that PERS would try harder to rectify those problems over which it had some control.  We talked about the questions you all had posed, but there are, unfortunately, few unambiguous answers to most of them.  This is because the changes are sweeping, complex, and enacted only recently.  PERS must adhere to the statutory language, and many issues in the new statutes are still not clarified to the point where PERS feels it can give clear or definitive answers.  PERS has decided that their approach must be to provide as much firm information as possible, but this does not include "guessing" about the ultimate resolution of various uncertainties thereby risking giving members information that proves unreliable.  To this extent, there are a number of implementation details that arise under careful examination of the statutory language of HB 2003 and HB 2004 such that PERS is still seeking input from the Legislature on how it should proceed.  In short, with only a couple of exceptions, none of the responses I got from PERS were definitive (nor did I expect them to be), nor were any of the responses novel or unexpected.  As a result,  I'm going to delay sending out a detailed email until I've had a chance to mull them over, seek clarification if necessary, and let my inflamed wrist cool down a bit. 

May 29, 2003.  I've now received more than 200 responses from list subscribers and readers of this website concerning questions and areas for discussion at my meeting tomorrow with officials of PERS.  At this point, I simply can't take any more questions.  Rest assured, however, that the vast majority of the questions covered more or less the same ground and I've distilled all your responses and my own questions down into 7 complex and multi-part areas.  When written down, these questions are nearly 4 pages of single-spaced typing.  I've forwarded a very rough copy of them to the group of PERS officials with whom I'll be meeting in the hopes that this will give them an opportunity to see what the concerns are in advance.  I also couched all the questions in the following assumptions:  1) that HB 2003 and HB 2004 will be judged "legal"  and 2) that regardless of the ongoing legal dispute, that PERS will have to implement both these bills on July 1, 2003.  I don't plan to post the questions here - at least not now - but I can tell you that the following areas are covered in what I sent to PERS:

Each of these areas has multiple parts and I don't really expect that we will get to all of them in a 90-minute meeting.  What I hope will happen is that PERS will ultimately (and soon) release its own FAQ to address these (and many other) questions that members have.  I also expect to share with the PERS Officials some of the horror stories that subscribers have shared with me about trying to get accurate (or even consistent) information from PERS in the past few weeks. 

May 23, 2003.  My meeting with Mr. Voytko and senior staff has been scheduled for Friday May 30, 2003.  A fair number of people have sent me questions to consider asking during this meeting.  Some are quite specific (or individual) and probably won't get asked, but others touch on broader issues of policy that may well get asked.  Keep the cards and letters coming.  Please do remember that clearly formulated questions are easier to ask than are questions with no obvious handle or focus.

Have a safe Memorial Day weekend!

May 22, 2003.  The visibility of this web site and the associated email list has resulted in my receiving an invitation to meet with Mr. James Voytko, Executive Director of PERS, and some of his senior staff to explore some of the issues raised here and on the list.  Mr. Voytko emailed me yesterday to ask me if I would like to meet with him and some senior staff next week (we haven't set a time or day yet) to share information, to find out a bit more about some of the concerns that members share with me, and to explore some of the questions I've raised here, in my public emails, and in my private emails to him and his staff.  I fully understand that almost everything is in flux, that PERS (the agency) takes direction from the Oregon Legislature, the Oregon Courts, and the PERS Board, and that PERS (the agency) is just beginning to work on the details of implementing pieces of the legislation only recently approved and signed into law.  As a result, I don't expect that I will get a lot of "answers", but I view this as an opportunity for information sharing and to relay some of the more common concerns that are expressed to me (and possibly not with PERS). 

If you have questions/concerns that you'd like me to consider bringing up in this meeting, please email me privately (feldesmanm@pdx.edu).  I won't promise that I'll ask the question, and I guarantee that you won't get a personal response from me.  However, I do plan to post a summary of the more salient information I glean from this meeting shortly thereafter, so you may well find something pertinent to your question in the summary. 

As of 4 p.m. today, the list moved to DIGEST-ONLY format.  You *should* only get one aggregated email per day.  This email will *only* be sent if there is something to send.  The DIGEST is set to go out at 4 p.m. on days when there is accumulated email.  I'm deliberately NOT posting this to the list serve because I don't want to generate list traffic just for the sake of seeing whether the DIGEST works.  So, with my fingers crossed, the next message you get will be in DIGEST format and won't go out until I actually have something useful to report. 

May 21, 2003.  Still no "official" confirmation or denial of the rumor posted below (May 20), but other sources suggest that it is (unfortunately) a correct reading of the situation.  What is clear right now is that the Legislature really complicated the administration of HB 2003 and HB 2004 with one bill amending the other, and creating a real planning nightmare for people retiring after April 1, 2004.  The "lookback" appears to offer considerably less than it first appeared, not necessarily because of anything in HB 2004 directly, but because of amendments to HB 2004 contained in HB 2003 (adding service time and FAS as components in the lookback), and because of HB 2003's prohibition on paying any earnings on regular account balances until the deficit reserve is liquidated.  What becomes very tricky is that individuals don't get to "choose" the "winner" in the "best of 3" comparisons; statute requires that PERS make that determination.  Thus, even if an individual knew that the benefit would be better under Money Match using the the 6/30/03 "frozen" balance, they won't get to make that choice if Full Formula is the "winner" at retirement.  While this probably has little effect on individuals retiring in the next 12 months or so, who's really to say what will happen.  Unfortunately, the uncertainty in calculation methodology, the complexity of the information needed to make the calculations, and the logic involved virtually assures that I won't redo the calculators.   

Several people have asked about HB 3314, a bill introduced by Rep Richardson to reduce PERS income dollar-for-dollar (up to 50%) for returning to a PERS-covered employer to work under the 1039 hour rule.  This bill was last "heard" on 4/10/03, and it appeared on the PERS Committee's agenda last week but was not actually discussed.  It does not appear on the agenda this week, and I have no idea what its fate is. 

Added late afternoon May 21.  Although I haven't gotten any direct confirmation that the information above/below is correct, I have gotten some indication that (in all likelihood) the House PERS Committee will be addressing (?fixing?) up some "unintended consequences" of HB 2003 and HB 2004 as amendments to another bill - possibly HB 3020A.  The implementation of the "lookback" calculation is reputed to be one of several of these (supposedly) unintended consequences, but I have no idea what the technical fixes will be (if any) or when the House PERS Committee (or Senate General Government) will take them up.  There certainly isn't anything of this nature on their agenda for the next (May 27th) meeting.

May 20, 2003.  SB 258 heads to the Governor's desk for his signature.  The House approved the bill yesterday in a vote of 52-1.  SB 258 allows PERS members who were inactive on 1/1/2000 (and remain inactive) to "cash out" 150% of their member account balance between 7/1/04 and 6/30/06. 

WHAT FOLLOWS IS RUMOR FROM SEVERAL SOURCES.  IT HAS NOT BEEN CONFIRMED!!!!! There are some disturbing rumors floating around right now concerning the way the "lookback" will actually be implemented.  I've now heard from several independent sources that PERS will calculate the "lookback" somewhat differently than most of us understood to be the case.  (I'm also told that PERS didn't make this decision; it is coming from "Salem").  As I understand now, PERS will compute the "best of 3" at the time of retirement (for example July 1, 2006).  If "Money Match" is the "winner" in 2006, then it will be compared with the "Money Match" benefit based on the "frozen" balance at 6/30/03 and the member gets the "best of 2".  Similarly, if "Full Formula" wins in 2006, it will only be compared with the "Full Formula" at 6/30/03 (using components frozen on that date).  This leaves open the distinct possibility that a member might not get the maximum benefit he/she would get if PERS were actually calculating the "best of 6" (best of 3 at retirement; best of 3 at lookback.  Winner is the best of the best).  If this turns out to be true, it will become decidedly harder for a member to figure out how to optimize the time of retirement.  It is also the case that with no account growth due to contributions or earnings that Full Formula would take effect sooner than it would otherwise.  Nevertheless, I'm sure that few of the folks who supported HB 2003's modifications of HB 2004 fully grasped how this might be implemented. 

I've tried to get confirmation of the above from at least 5 different sources, any one of whom should be in a position to know whether it is true or poppycock.  So far, I haven't gotten any confirmation or denial from anyone.  I have heard from one (a sixth) well-placed person whose answer *seemed* to contradict the rumor, but I'm not satisfied yet.  Normally I don't publish information like this until I'm reasonably certain it is correct.  Nevertheless, I'm making an exception here because it is getting precipitously close to the deadline for retiring before July 1.  If you want to know the answer to this question, you may have to ask PERS yourself. 

Also, it is the case that the HB 3349 adjustment (the "grossing up" of the retirement benefit to compensate for the Oregon taxability of PERS benefits) will be based on the service time at retirement whether the "lookback" wins or not.  Given the way the HB 3349 adjustment is calculated, this is not to the member's advantage.  (HB 3349 adjustments are computed as the fraction of service time prior to 10/1/1991 relative to the entire service time at retirement.  The further away from 10/1/91 an employee is at retirement, the lower the HB 3349 adjustment.  However, for the purpose of the "lookback", the employee's service credit is frozen at 6/30/03, but this "freeze" apparently doesn't apply to the HB 3349 adjustment, which would be higher in percentage terms on 6/30/03 than, say, two years later).

The Listserv is back operating.  To prevent the flood of emails subscribers have gotten from people who've incorrectly set their "Out of Office" notices, I've made the list "moderated".  This means that if you want to post something to the entire list, it will come to me first for my approval.  It will only get to the list if I authorize it with the correct password.  In the meantime, I continue to work with the Unix team to change the list to "Digest" only.  My whole goal is to reduce the amount of email people get from the list - and to reduce the number of email "bounces" I get whenever people go out of town and their mail boxes fill up.  With as many subscribers as I have - cresting 1500 right now - each email to the list generates as many as 100 "bounces", which I then have to do something with. 

May 15, 2003.  Oregon AFSCME has released an "E-lert" outlining the legal strategy to be taken against HB 2003 and HB 2004.  If you are interested, you can read the E-lert (here).  Briefly, Greg Hartman plans to file 6 separate lawsuits, 4 with the Oregon Supreme Court and 2 in Federal Court.  The 4 state cases will (1) challenge the Oregon Constitutionality of HB 2003; (2) challenge the Oregon Constitutionality of HB 2004; (3) HB 2003 "breach of contract"; and(4) HB 2004 "breach of contract".  In addition, federal court petitions will be filed challenging the (1) US Constitutionality of HB 2003 and (2) the US Constitutionality of HB 2004.  In addition, he
plans to file "class action" lawsuits in Multnomah County for HB 2003 and HB 2004's "breach of contract".  Hartman claims that these are merely "placeholders in the legal system that may or may not be needed".  There will be no race to the courthouse to file the papers.
Mr. Hartman plans to file the various petitions by around July 1, 2003 but well-within the time window afforded by the bills.  At the present time, Mr. Hartman does not anticipate seeking an injunction to prevent either bill from taking effect since the harm from both bills can be
repaired by money; "irreparable harm" is the usual reason for seeking an injunction and there is nothing at the present time that can't be undone by money.

May 14, 2003.  Not too much new to report.  The House PERS Committee met yesterday to take testimony on two very technical bills, both of which would have consequences for active PERS members.  HB 2408 is an "accrual termination" bill, which would effectively terminate PERS for active members on 12/31/03.  Members would be credited with their "non forfeitable" accrued benefit to date (a non-trivial calculation with important IRS and legal consequences).  The form of the credit remains a legislative decision.  There are more details in my email to list subscribers which should appear in mailboxes on May 15, 2003.  No action was taken on this bill.  The Committee also took testimony on HB 2406, which would permit municipalities to reorganize and restructure debt (or have debts discharged) under bankruptcy.  In my opinion, HB 2406 is being offered up as a potential "poison pill" against adverse outcomes of litigation on HB 2003, HB 2004 and Eugene v PERS.  Again, no action was taken, but I expect that both bills will reappear on the Committee's docket real soon now.  If you are seriously interested in these bills, the best thing you could do would be to listen to Jim Voytko's testimony to the House PERS Committee for Tuesday May 13, 2003.  It takes the entire 48 minutes of the hearing.

May 10, 2003.  Governor Kulongoski signed HB 2003, HB 2004, and HB 2005 into law late yesterday.  The next stop will be the Oregon Supreme Court.  Both HB 2003 and HB 2004 carry provisions that direct an expedited appeal to the Oregon Supreme Court, by-passing lower courts.  The PERS Coalition expects to file suit shortly, although it is not clear exactly when that will occur - "...sooner, rather than later."   Coalition Attorney Greg Hartman cautioned that even with the expedited review process, it may take 18 months before the court renders its final decision, given the legal complexity of the decision, the number of affected parties, and the intense public and political stakes involved.

Caution:  For those easily offended, don't click on this next link.  It is an editorial - a work in progress - about my thoughts on the Legislature and other things.

Click here for "Some Thoughts on ..."

May 8, 2003.  The Senate completed the major "PERS reform"  today by passing HB 2003-B with 19 "yes" votes. (I am happy to report that my own Senator, Richard Devlin, voted "no" on HB 2003).  HB 2003-B makes a brief pit-stop at the House to be reapproved and is expected to be on the Governor's desk sometime tomorrow or Saturday.  If you want to read the bill, as approved by the Senate, it is available here.  The Governor's Office has made a web posting available so employees can assess the impact of HB 2003 (and HB 2004).  You can do your own "damage assessment" by reading this.

In my estimation, there is very little momentum left in "PERS reform" except for the successor plan for new hires (HB 2020), whose fate rests in the hands of the Senate General Government, and SB 258, which would allow inactive PERS members to withdraw 150% of their member balance between 7/1/04 and 6/30/06.  With HB 2001, HB 2003, HB 2004, and HB 2005 now adopted, the action will shift to the Oregon Supreme Court.  While legal papers may be filed quickly, it is unlikely that the Court would start hearing any of the cases until late Fall, if not later. 

Once HB 2003, HB 2004, and HB 2005 are signed into law (?Saturday), I will be making less frequent updates to the web site and emailing less often.  There just won't be that much happening for awhile.  In the meantime, in my spare time, I will try to digest the meaning of HB 2003 and reprogram my PERS calculator to give ball-park retirement estimates for the next several years.  There are some significant "implementation" details that I don't yet understand and so re-doing the calculator will have to wait until I have a clearer idea of how PERS will implement certain features of HB 2003.

May 7, 2003.  The Senate General Government Committee voted out HB 2003-14 with a "do pass" recommendation.  The vote was 3 - 1; Senator Vicki Walker voted against HB 2003.

I have not seen the "dash 14" amendments, but listened to the 28 minute explanation of them today.  Several substantive changes were made.  Two pieces of the bill were delayed to 1/1/04 rather than 7/1/03.  These were:  1)  6% contribution doesn't start going into a "transition account" until 1/1/04.  Presumably the 6% employee contribution will continue into the Tier 1 account until 12/31/03.  2)  The "transition accounts" don't go into effect until 1/1/04 to coincide with the previous change.  All other provisions go into effect on 7/1/03.  With respect to the retiree COLA, the effective dates will be for retirements between April 1, 2000 and April 1, 2004, instead of February 1, 2000 to February 1, 2004.  There were also some technical changes in the language pertaining to the "transition account" suggested by the Treasury Department. 

The bill also amends the "lookback" provision of HB 2004.  These amendments add years of service at 6/30/03 and final average salary at 6/30/03 to the "lookback".   This is presumably a "fix" to the obvious problem that under HB 2003 there was no way for the new actuarial tables to come into play for some Tier 1 members. 

I have NOT seen the amendments and am basing my remarks solely upon listening to the audio transcript.  I'll post the amendments as soon as I get a copy.  Hopefully soon.

May 6, 2003.  The Senate General Government Committee met today for nearly 2 hours taking invited testimony for and against HB 2003-A.  Bill Gary testified in favor of HB 2003, Greg Hartman testified against, Bill Linden and Mark Nelson, testifying on behalf of OPRI (Oregon PERS Retirees Inc) offered two amendments (-8 and -10) which would, if accepted, remove Sections 9, 10, and 14(a) of HB 2003 (all dealing with the COLA freeze for retirees).  Gary and Hartman testified against making HB 2003-A the "exclusive remedy" for the Lipscomb decision, while Senator Minnis was not convinced that HB 2003-A shouldn't be the "exclusive remedy".  Hartman promised that if the "exclusive remedy" language were left in, he would have no choice but to pursue a "class action" on behalf of all 300,000+ PERS members and retirees at the cost of significant additional time for resolution and money for litigation costs.  After 2 hours of testimony the Committee adjourned without taking any action on HB 2003-A or any of the proposed amendments. 

May 5, 2003.  The Senate General Government Committee will hear invited testimony on HB 2003-A tomorrow.  It is unclear whether additional testimony will be taken or whether "this is it".  Rumor has it that it could be voted out of committee tomorrow and onto the Senate floor for a full vote by Friday May 9th.  If enacted, HB 2003 would have an effective date of 7/1/03, coinciding with the effective date of HB 2004.

As of tonight (8:00 p.m.), I've moved the email list to a daily "DIGEST" format.  This will reduce the email volume to no more than one message per day, with all messages sent within a 24 hour period aggregated into a single message.  [Well, the best-laid plans go awry.  I *hoped* that the list would have gone to DIGEST format today.  In fact, this is something a system administrator - not me! - needs to do.  I've made the request, but it may take a day or so for it to be implemented.  Communications via the email list could be spotty for a brief period of time while this transition occurs.]

May 3, 2003.  It is always worrisome when legislators vote for bills they appear not to understand, but then add confusion by explaining the bill's features incompletely or incorrectly to their constituents.  The latest example of this is the email Representative Vic Backlund sent to some of his constituents after voting in favor of HB 2003 yesterday.  Representative Backlund wrote yesterday (in part):  "This [HB 2003] is a very complex piece of legislation.  The most critical parts call for an end of the employee 6% contribution to PERS accounts "picked up" by a majority of PERS employers (state agencies, school districts, etc.). This amount will no longer be co-mingled with worker PERS accounts, but will be placed in a separate transition account.  This is combined with the provision that there will no longer be a "money match" formula for retirees (the money match formula requires that the amount an employee has earned in his or her account be matched by the employer).  The money match option has been a heavy obligation for public employers and is considered to be one thing that must change in order to save major costs for all public employers." 

I guess people must think that if they say it often enough, it must be true.  HB 2003 does not eliminate Money Match in statute; it remains as a retirement calculation method. It does eliminate it on employee contributions made after 6/30/03, but it does not eliminate it on account balances accrued up to 6/30/03.  As a result, people retiring in the short run will still retire under Money Match.  It becomes less-likely a "winner" after 5 - 6 years, and irrelevant for members retiring more than 10 years from now.  But, while the "effect" of HB 2003 would be to eventually make Money Match irrelevant, HB 2003 DOES NOT eliminate it. 

The best summary of the effects of HB 2003-A, approved by the House yesterday and including example calculations, can be found in Steve Law's Salem Statesman Journal article today.  See left for link.

HB 2003 and HB 2020 move to the Senate General Government Committee for hearing on Tuesday May 6, 2003.  It is rumored that there may be minor amendments to HB 2003 (I've heard about several, but don't want to report on any rumor until I have more reliable information), while there is considerable opposition to HB 2020.  Steve Law (Salem Statesman Journal) reports that there may be a "gut and stuff" with HB 2020 to substitute a hybrid defined contribution/defined benefits plan it its place (perhaps along the lines of the late HB 2008 proposed by Representative Macpherson).

May 2, 2003.  Busy Legislative day today.  In the Senate, HB 2004 (Actuarial equivalency factors) passed in a vote of 25-5.  It briefly moves back to the House for revote, before moving on to Governor Kulongoski for his signature.  In the House, both HB 2003 (vote: 38 - 20) and HB 2020 (vote: 32 - 26) were passed and now move on to the Senate General Government Committee.

May 1, 2003.  The House votes tomorrow morning (May 2, 2003) on HB 2003 and HB 2020 ("Successor" plan for new hires).  

The PERS website posted a letter from Mr. Jim Voytko and a "Notice to Members" on its website today.  You can read Mr. Voytko's letter here and the Notice to Members here.  Everyone who reads this web page should take note of both these postings.

April 29, 2003.  HB 2004 will be up for a floor vote in the Senate this week (Wednesday or Thursday I'm led to believe), while HB 2003 will move to the full House for its floor vote this week as well (it moves to Senate General Government if it passes the House).  If HB 2004 passes in the Senate, I believe there will have to be a re-vote in the House (pretty pro forma by my way of thinking) because the Senate amended the version approved in the House.  From there it is a short trip to the Governor's Office. 

The Eugene Register Guard set off a panic attack amongst Lane County public employees by reporting that HB 2003 would eliminate "Money Match".  This is not correct.  For the reasons why, please see my email to list subscribers today in the List Archives (top left).  Since the article is, in my opinion, both factually and technically incorrect on this, I don't want to confuse matters by allowing people to link to it.  There is a link contained in my email for those who wish to read the article it its entirety.  As one informed reader/subscriber wrote to me:   "...this story illustrates the dangers that await a reporter who is novice in writing about PERS -- and the danger to readers who may be tempted to rely on such reporters for their information about PERS."

April 28, 2003.  Folks retiring in 2003 *may* be in for an additional "surprise" from the Legislature.  There is considerable confusion over how the "accrued interest freeze" on Tier 1 regular accounts will be implemented for 2003 retirees.  HB 2003 mandates that the assumed interest rate be 0% until such time as the deficit reserve is eliminated.  It also mandates that the effective date of this "freeze" is 2003.  However, the 2003 interest accrual won't be paid into any accounts until March 2004.  As a result, folks who retire during 2003, will receive pro-rated crediting for the portion of the year worked up until 6/30/03.  This is where HB 2003 and HB 2004 play together.  After 6/30/2003, the practical effect of HB 2004 (the mortality table bill) will be to stop the interest accrual on regular Tier 1 accounts.  So, next March, the actual crediting to Tier 1 accounts will be 0%, as mandated by HB 2003, but people who retired DURING 2003 will have received as much as 4% on their regular accounts.  What does this mean for members who retired during 2003 and received a partial interest credit on Tier 1 regular account balances - interest credit proscribed by HB 2003?  Does this become another amount to be "paid back" on top of the 1999 overcrediting?  There is a lot of discussion about this in the email back-channel, but I haven't seen any definitive answer to what will actually occur.  If you're retiring during 2003, you should be asking this question often.  Maybe someone will get an answer that makes sense.

April 26, 2003.  In response to a whole lot of questions, I've developed an example spreadsheet (in PDF form) to show how I THINK the retiree COLA suspension will work.  The example is completely HYPOTHETICAL, but encompasses what I understand of the language in HB 2003-6 and Mark Johnson's explanation in his letter to the Governor's office.  If you're interested, you may get the Retiree COLA example here.  (Please note that if you retired before 1/1/03 and took the half lump sum settlement option (i.e. you're getting some form of optional payment from PERS monthly for the employer part), my understanding is that your COLA suspension will last much longer since the plan is to recover the full overcrediting from whatever monthly payment you receive).  Please also note that this example assumes a retirement after 7/1/02 so that no COLAS have yet been paid.  If you retired earlier than 7/1/02, you have already received one or more COLAs on your benefit.  Consequently, the amount you're currently getting is a "COLA'D up" version of what you got at retirement.  Thus, to figure the payback, you'd have to "COLA up" the adjusted benefit so that you could compare "apples to apples".  This isn't hard math, but for some people the calculations could be tricky to do.  There isn't a simple way to produce a one-size fits all template for this.  Nevertheless, a good rule of thumb for this is that regardless of when you retired (after 2/1/00 and before 2/1/04), it will take APPROXIMATELY 3 - 4 years of COLA suspension to recover the 1999 overcredit (except for retirees taking the half lump-sum; for these folks, it will take longer).

April 25, 2003.  For those hellbent on reading the legalese approved by the House PERS Committee yesterday, here is a crude version of HB2003-6.  In order to make sense of this, you need to have the original version initially proposed.  You can get that here (original HB 2003, as first proposed).  Several articles that are part of the media feeding frenzy appear to the left.

April 24, 2004.  The House PERS Committee voted HB 2003-6 out of committee today with a "do pass" recommendation.  The referral to the Ways and Means Committee was rescinded, clearing the way for a rapid vote in the House, and an equally rapid vote before the Senate.  Senator Tony Corcoran, Chair of the Senate General Government Committee, has already endorsed the revised bill, which will go to Senator Corcoran's committee on its way to the full Senate.  This pretty much ensures that the bill will get to the Governor relatively soon, although it is not clear whether everything in the bill will remain.  Senator Corcoran was quoted in the Salem Statesman Journal today suggesting that the retiree COLA freeze might not survive, although he predicted it might go today.  It didn't get taken out, which means that it remains an issue for recent retirees.

PERS representatives also testified before the Ways and Means Committee to offer their approach to implementing the "lookback" and handling the purchase of service credit under HB 2004B.  The Ways and Means Committee accepted the testimony. 

The most recent set of revisions of HB 2003-5 (?6) is available here (HB2003).  The PERS testimony is here (HB2004-Document 1, HB2004 Document 2).

April 23, 2003.  The House PERS Committee will hold another work session on HB 2003 tomorrow at 3:00 p.m.  Governor Kulongoski's proposed amendments (and several others) presumably will be introduced tomorrow.

Only Greg Hartman provided written testimony to the PERS Committee yesterday.  Bill Gary's testimony was only given orally.  You can read Mr. Hartman's letter to Senator Corcoran and Representative Knopp here (PDF format).

April 22, 2003.  The House PERS Committee met today in a work session.  The only topic was HB 2003; however Chair Knopp announced that the amendments HB 2003 were not ready to be released to the committee - the language isn't finalized and the fiscal analysis isn't complete.  The Committee hopes to have them by its meeting on 4/24/03.  Today's hearing was given over to testimony from Greg Hartman, representing the PERS Coalition, and Bill Gary, representing the League of Oregon Cities and various plaintiffs in Eugene v. PERS.  Mr. Hartman explained his position, which is that the nature of the PERS "contract" makes the changes proposed in HB 2003 (as amended) legally unsupportable.  Mr. Gary came in support of the revisions to HB 2003.  Both Mr. Hartman and Mr. Gary provided letters to the committee, and I hope to have copies of both soon.  Stay tuned!

April 21, 2003.  The House PERS Committee will take up amendments to HB 2003 tomorrow when it convenes at 3:00 p.m.

Regarding the COLA suspension for retirees, there is a bit more clarification in order.  The actuary assumed that the annual retiree COLA would be 2%.  This is an appropriate assumption for people who retired prior to 7/1/01.  The COLA is spelled out in statute as between 0% and 2%.  In years where the CPI exceeds 2%, the excess is carried forward, where the excess can be added to subsequent year's CPI (if under 2%) to bring it to a maximum of 2%.  The CPI has rarely been less than 2% and the excess accumulated beyond that is substantial; however it was only 0.77% for 2002 according to the Bureau of Labor Statistics. Thus, as I understand the next COLA (7/1/03), for people who retired between 8/1/02 and 6/30/03, it is scheduled to be 0.77%.  For people who retired between 7/1/01 and 6/30/02, the 7/1/03 COLA will be 1.24% (0.77% + 0.47% carryover from reserves), and for earlier retirees the COLA will be 2% (0.77% + 1.23% carryover from reserves).   

April 19, 2003.  I've now had a chance to read Mark Johnson's letter more closely on the details of the HB 2003 revisions proposed by Governor Kulongoski.  As I read the analysis, I can't see any way for the new actuarial tables to come into play for people retiring within the next two or three years.  There are several factors that guide my observation:  1)  future employee contributions (the 6%) won't be going into PERS Tier 1 or Tier 2 (for that matter) accounts anymore.  They'll be going somewhere (call it "new" PERS), but just not into "old" PERS as we know it.  This means quite simply that the account balance as of 6/30/03 (the date of the "lookback") will still be the account balance on 6/30/04 or 6/30/05 because no new employEE contributions will go there.  2)  The "assumed interest rate" on Tier 1 regular accounts will be 0% until the deficit reserve is completely liquidated - more than 3 years down the road according to the PERS actuary.  Consequently, there will be no earnings applied to the 6/30/03 balance UNLESS members have money in the variable and the variable gains value in that period of time.  On the other hand, the variable could continue to decline, in which case, the employee balance at 6/30/03 could FALL if retirements were deferred.  So, assuming that there are no contributions being made after 6/30/03, and no earnings after 6/30/03 and no money in the variable account,  there is no way that the 6/30/03 balance can change for several years.  The obvious conclusion is that under these circumstances there is NO POSSIBLE WAY that the new actuarial tables will produce a higher benefit than the old actuarial tables at the same retirement age and using the identical account balance.  This does NOT mean that benefit levels won't change by staying on.  The older you are at retirement, the higher your benefit will be on a fixed account balance (except under a complete lump sum settlement) regardless of actuarial tables .  (Of course, there is the matter of the "new" PERS post-7/1/03 member contributions, but that matter isn't currently fleshed out in any way so far, but this money will be at the mercy of the market - you could keep all 6%, make money, or lose money - no guarantees at all).

Lots of people have asked me for advice on what they should do.  I don't give advice.  If you are considering retiring ONLY because of the current situation with PERS, please do think long and hard about this before making your decision.  Retirement is a MAJOR, MAJOR, MAJOR decision with very long-term ramifications.  On the other hand, if you were planning to retire anyway, the current climate suggests that sooner is probably better than later, despite the claim there is "no incentive to rush to the door".  The noose is tightening and there appears to be no way to avoid some fallout from the current crisis, but you have to decide how much tolerance you have for uncertainty in the current climate.  Is it better to be "...on the other side" or is it better to hang in and wait for the courts to settle some of the legal issues?  Will you be better off or worse off waiting?  For me, there is no decision to make.  I'm already on the "other side".  But if I weren't where I am ...  You'll have to decide for yourself.

RE:  Retiree COLA suspension.  Bear in mind that the assumption in the revisions to HB 2003 is that the retiree COLA would be at 2% annually.  In fact, a careful reading of the Oregon Revised Statutes on this requires only that the COLA be between 0% and 2% (based on the annual CPI change for the Portland Metro Area).  Examining the 2002 CPI final, all item, index for the Portland-Salem area, we find that it was 0.8% for 2002.  This means that, in all likelihood, the "normal" July 1, 2003 COLA for PERS retirees is only going to be around 0.8% (I've actually heard rumors that it will be 0.77%).  Consequently, the COLA suspension for retirees in the 4/1/00 and 4/1/04 range could last considerably longer than would be the case with an annual 2% adjustment.  

April 18, 2003.  As expected, Governor Kulongoski has weighed in with a proposal to make significant amendments to HB 2003.  Rather than repeat details I sent out to list subscribers, I recommend that you go directly to the list archives (top left link) and read the email I sent to everyone last night (4/17/03).  In short, the proposal would retain the 6% employee contribution (either self-paid or employer paid) but put it into a DC plan rather than adding it to the current Member balance, suspend the 8% guarantee until the $1.9 billion deficit reserve is paid off (3-5 years), and suspend COLAS for retirees who retired between April 1, 2000 and March 31, 2004 to recover the amount allegedly overcredited to the 1999 Tier 1 regular accounts.

You can read the details of Governor Kulongoski's proposal for amendments to HB 2003 in these two files (Kulongoski Proposal re HB 2003, Kulongoski Graph).  In addition, you can read the PERS Actuary's Analysis of Governor Kulongoski's proposal, which may shed some light on the implementation details of this proposal (Mark Johnson analysis of Kulongoski amendments to HB 2003). 

The implementation date proposed for the "diversion" of employee contributions to a defined contribution plan is 7/1/03; the implementation date for starting the 0% interest rate on Regular Tier 1 accounts is 7/1/03; the effective date for suspension of retiree COLAS is 7/1/03 for anyone who retired between 4/1/00 and 3/31/04.  The methodology for suspending the retiree COLA's isn't completely transparent, although I *think* it will involve backing out about 43% (actually  8.67%/20%) of the 1999 regular earnings and then projecting forward to the final retirement balance with that excess crediting taken out from 1/1/00 forward.    From this, a base benefit will be calculated and it is *this* benefit to which subsequent 2% COLAS will be applied until *this* benefit catches up with the benefit actually being paid.  Once the base benefit plus COLAs (from 7/1/03 forward) catches up with current benefit levels, then the COLAs will resume.  The compounding factor will be 1.02 so that if the difference between current benefits and the adjusted benefit is approximately 10%, it will take about 5 years (from 7/1/03) to to "repay" the overcrediting.  (When I listened to Margaret Hallock's testimony, I got a different impression about how this would be calculated, but I read Mark Johnson's letter somewhat differently.  In any case, my guess is that this will cost most retirees their COLAs for more than a few years.  Hopefully the details will become more transparent shortly.)

In a highly partisan vote, HB 2020 (the pure DC successor plan for new hires) was recommended to the full House with a "do pass" recommendation.  This effectively kills HB 2008 (the "hybrid" proposed by Rep Macpherson with the support of Governor Kulongoski).  Governor Kulongoski served notice to the PERS Committee of his opposition to pure DC plans as a successor, setting the stage for a possible veto if HB 2020 makes it to his desk.

April 17, 2003.  The House PERS Committee will meet today at 3:00 to consider amendments to HB 2003, HB 2008, and HB 2020.  Although I have not seen any of the amendments, it is clear that one of the amendments to HB 2003 will be to eliminate the 8% "guaranteed" interest rate for Tier 1 PERS Members (active and inactive).  I haven't heard any reports of whether the amendment would be to simply turn Tier 1 rates into Tier 2 rates, or whether Tier 1 rates would have some "floor" (like 0%) underneath them.  It also isn't clear how this might affect employer rates, since the employer rates are based on, among other things, the actuary's assumption that the portfolio would experience an average rate of return ("the assumed interest rate") of 8%.  If that rate is lower, then the employers would have to pay more to support retirees who have the 8% rate built into their pension calculations.  Hopefully, there will be more information available later today or tomorrow.

The May 1, 2003 "deadline" for significant money-saving bills to clear the Legislature is rapidly approaching.  It is hard to see how some of these more controversial bills will make it all the way to the Governor by then.  However, next week (April 20th) appears to be the week the House PERS Committee will vote out significant bills.  It is predicted that HB 2003 (as amended) will be recommended to the full House with a "do pass", as will HB 2020 (the DC successor plan).  HB 2008 faces a more uncertain future.  Even if these bills pass out of Committee and out of the House, presumably they will move to the Senate General Government Committee chaired by Senator Tony Corcoran.  The Senate is split 15-15, and they have been very deliberative on all PERS legislation so far.  (This is not to say that the House PERS Committee has not been deliberative; on the contrary, they have bent over backwards to take testimony from every conceivable interest group and have moved carefully on all legislation; however, the House is more heavily tilted towards the Republicans, who have a clear majority on the House floor.  Thus, any bill coming out of the PERS Committee is unlikely to be defeated on the House floor, in contrast to the Senate where many bills face an uncertain fate). 

On Tuesday April 15th, Mr. Jim Voytko gave a presentation to the Committee on an analysis of replacement ratios under HB 2008 ("the Macpherson plan") and HB 2020 ("the Richardson FAIR plan").  He also reported on PERS' experience managing the Oregon Savings Growth Plan (a optional IRS 457 plan for certain public employees).  Copies of Mr. Voytko's testimony as well as different scenarios and presentation are included here.  There are 6 documents.  Document 1 is Mr. Voytko's testimony (PDF file), Document 2, Document 3, Document 4, and Document 5 are all Excel spreadsheets detailing scenarios under HB 2008 (2 & 3), and under HB 2020 (4 & 5).  The first document of the pair is for General Service Employees; the second document is for P & F.  Document 6 (PDF file) is Mr. Voytko's Powerpoint presentation on the Oregon Savings Growth Plan. 

I've posted a few new media links to the left.  The Oregonian  (4/17/03) has finally published something that doesn't savage PERS retirees, reporting that - SURPRISE! - lots of PERS retirees DON'T get anywhere near 100%+ of final average salary.  For the record, I am one of those employees who did not retire at more than 100% of FAS.    

Random musings on HB 2003.  With HB 2004 setting a new AEF implementation date of 7/1/03 with a "lookback" and HB 2003 calling for retroactive to 1/1/03 implementation with no "lookback", which bill would take precedence pending the outcome of a court challenge to both (which is inevitable)?  Does HB 2003 trump HB 2004?  Will the House risk defeating the Senate amendments to HB 2004 and gamble that HB 2003 will triumph in both the House and the Senate?  Does the Legislature have any fallback position in the event that Lipscomb (and HB 2003, if passed) are both overturned by the Oregon Supreme Court?  What policy will the PERS Board adopt (or will the Legislature direct it to adopt) pending the legal appeals of all the PERS-related legislation?  (They've already petitioned for a "stay" of implementing Judge Lipscomb's order).

April 15, 2003.  Steve Law of the Salem Statesman Journal reports that Governor Kulongoski has endorsed a proposal to amend HB 2003 to eliminate the 8% "guarantee" for Tier I PERS Members (active and inactive).  This would make HB 2003 the one bill guaranteed to offend virtually every PERS constituency (active, inactive, and retired), except those who retired before October 14, 1996. There are several rumored amendments to this bill, to HB 2008, and HB 2020 that are supposed to be presented to the House PERS Committee on April 17, 2003. 

Today's PERS Committee hearing dealt with Mr. Jim Voytko's presentation on PERS' experience managing the Oregon Savings Growth Plan (OSGP).  This presentation laid out the various features of the OSGP and details of participation by employees.  This was intended to provide some context for discussion of Defined Contribution plans. 

Representative Richardson outlined some of his amendments (to be introduced on April 17, 2003) to HB 2020 (the "FAIR" defined contribution plan).  The most significant amendment is that the employer contribution would be guaranteed to be at least 3% whether the employee chose to contribute or not.  Subsequently, employee contributions are matched at 1/2% so that at a maximum match, both employee and employer are contributing 6% (12% total)  [Police and fire are figured a bit differently with slightly higher match rates].

April 13, 2003.  The news media hasn't attacked PERS for at least two weeks now, so the Oregonian decided in today's lead editorial that the House PERS Committee is dragging its feet to reform PERS.  It reminded the Committee (and everyone else) that time is running out for enacting significant money-saving legislation before the PERS Actuary recalculates employer rates for the 2003 fiscal year that begins on July 1, 2003.   The Oregonian has decided to come out in favor of HB 2003.

April 12, 2003.  The Senate approved HB 2005-B (the PERS Board Composition) on a 27-3 vote.  It goes to Governor Kulongoski for signature next week.  I posted copies of three new documents that may be of interest to readers.  The first is the EcoNorthwest Analysis (Powerpoint) presented at the PERS Committee meeting on Thursday and described below (4/11/03).  The second is related to HB 2723 (the DROP Plan) from PERS via Steve Delaney, and the third is a more detailed description of Rep Richardson's HB2020 The Fair Retirement Plan.  HB 2020 is a "successor" plan, but Representative Richardson's proposal, Rep Macpherson's version of HB 2008 - the ORP), and HB 2003 should be read carefully in light of the EcoNorthwest presentation and in light of HB 2408, which has not been discussed yet, and SB 258, all of which connect together in some interesting ways.

April 11, 2003.  The House PERS Committee heard testimony yesterday from Duncan Wyse of the Oregon Business Council who introduced an economic analysis (done by EcoNorthwest) they commissioned to consider the cost savings from three alternative scenarios being considered by the PERS Committee:  the scenarios were 1) successor plans for new hires (HB 2008, HB 2020); no major changes to Tier 1 & Tier 2 membership (HB 2001, HB 2004); 2) some structural changes to Tier 1 & Tier 2 (HB 2003); and 3) plan termination for all PERS members, introduction of successor plan for all employees.  Not surprisingly, the savings followed the order from least to most, with the implicit message that OBC favored the third option - termination of the current system, cashing out all extant members, and starting a new system.   Representative Macpherson asked some pretty tough questions of the EcoNorthwest representatives, especially regarding the assumptions the modelling made, the qualifications of the people doing the modelling, and assumed behavior of employees when faced with "rational choice" models.  The Powerpoint presentation is available above (see April 12, 2003). 

The first part of the meeting was devoted to a five minute speed opening/closing of public hearings on a dozen or so bills to preserve the bills for future consideration.  No testimony was heard on any of these bills, but this is apparently a parliamentary procedure required to keep the bills "alive" before the committee formally considers them.

April 10, 2003.  The Senate General Government sent SB 258 out of committee yesterday with a "do pass" recommendation.  This bill would permit inactive PERS members to withdraw from PERS and take 150% of their current member account balance to another plan.  This would allow people to capture half the employer contribution, but would save the employers (taxpayers) the other half.   SB 258 goes to the full Senate for a vote soon.  If it passes, it will move on to the House PERS Committee for its consideration.  This bill is significant, especially in the context of HB 2408 (currently in the House PERS Committee) which would make all "active" PERS members "inactive members" as of 1/1/04 (effectively terminating the existing PERS), and HB 2008, HB 2020, and HB 3169, all of which deal with "successor plans" for new hires.

There is a knotty implementation detail of HB 2004 (the mortality tables update), which may require additional clarification and direction.  As currently written (HB 2004-A (engrossed with -16, -17, -23, and -24 amendments), the bill is silent on the question whether service credit purchases would be included in the calculation of the "lookback".  Imagine a scenario on July 1, 2003, a member has 29 years and 6 months of creditable service and could retire only with 30 years service or by waiting until age 58.  Ordinarily, this person would buy back the 6 month "waiting period" and would then have a full 30 years of service credit and could retire on 7/1/03.  There is no question that the person is eligible to "buy back" the 6 months, but does the service credit and its cost get added to the member's account balance and service calculations for the purposes of the "lookback", or does the "buy back of service credit" only apply under the new actuarial equivalency factors?  I haven't seen or heard any discussion of this knotty issue and wonder whether it is being addressed?  (I know the PERS Board discussed this issue in the context of their rule, since revised, that would have allowed these purchases to apply so long as they actually took place and the money actually changed hands before the effective date of the new mortality tables.)  I don't know whether this is still the case with HB 2004-A.  If you are in this position, you would be very wise to ask PERS if they have any policy direction on this matter yet.  

April 9, 2003.  Another anti-PERS piece appeared on the Oregonian front page today.  Frankly, there is nothing new in the article that couldn't have been gleaned from a report Mr. Voytko distributed publicly 5 months ago.   

April 8, 2003.  The House PERS Committee spent much of its time today on HB 2008 and HB 2020, with most of the questions and time spent with Mr. Jim Voytko, Executive Director of PERS, who discussed a number of handouts comparing the relative performance expectations under common assumptions for HB 2008 (the Macpherson "ORP"), and HB 2020 (the Richardson "FAIR" plan).  The discussion moved in a variety of directions, including a brief discussion of the current problems involving "one time variable transfers" for active PERS members, the validity of the long-term actuarial assumed interest rate of 8%, the comparability of successor plans to other public employee plans in other states, and recruitment issues that might (or might not) arise.  The Committee also voted to send HB 2407-A ("Legislators out of PERS" bill) to the House with a "do pass" recommendation.  I lost audio about half-way through Grattan Kerans' (OUS Lobbyist) discussion of proposed amendments to HB 3020 (initially a "housekeeping" bill designed to align PERS rules with Chapter 112 of ORS concerning how death benefits are paid to members not yet retired).  Mr. Kerans was offering a "rider" to the bill that would grant the OUS Board of Higher Education the authority to set "rates" for contribution to the OUS "Optional Retirement Plan".  (This appears to be a classic legislative gambit where an unrelated subject is introduced into an otherwise innocuous bill.  I fail to see what relevance OUS' authority over their ORP is to the subject of aligning PERS rules with Chapter 112 of ORS, which deals with intestacy law).  I have no idea what direction the Q&A took - if any - as the signal broke in the middle of a sentence.  I'll follow up to see if there is anything worth reporting tomorrow.  There was no additional testimony on HB 2003, and I don't know whether the Committee got to HB 2408 or HB 3169.

April 7, 2003.  The House PERS Committee meets tomorrow (4/8/03) with a significantly altered agenda.  They will continue to hold hearings on HB 2003, HB 2008, HB 2020, and HB 3169 - the latter three relating to the successor plan for new hires.  Also on the agenda is a first hearing on HB 2408, which prohibits active membership in PERS after 12/31/03.  HB 2408 is the first salvo in considering some form of "termination" of PERS for active members.  Also on the docket is HB 3020, which directs the method of distributing PERS accounts when a member dies before retirement.    HB 3314 will also be introduced.  This bill would direct PERS to reduce the service retirement benefits of a retiree who is reemployed by a public employer subject to certain limitations.  The effects of HB 3314 would be to sharply limit access to part-time re-employment in the public sector. 

The Senate General Government passed HB 2004-A today.  It now goes to the full Senate for a vote soon (they're trying to beat the May 1, 2003 deadline so that the PERS actuary can recalculate 2003-05 employer rates based on all PERS-related bills actually signed by the Governor).  The only amendments that were approved were A-16, A-17, A-23, and A-24.  Of these, A-16 clarifies that the "lookback" applies to all optional payment forms, not simply Option 0.  A-23 spells out the "expedited appeal" process, and A-24 makes clear that the PERS Board has the responsibility to update mortality tables every two years starting in 1/1/05 (recall that earlier parts of the bill implement the 2001 mortality factors until 12/31/04).

April 4, 2003.  The House PERS Committee met yesterday and heard testimony on HB 2008 (The "MacPherson" hybrid defined benefit/defined contribution plan for new hires), HB 2020 (now referred to as the "FAIR" plan introduced by Representative Richardson - a pure 401-K type defined contribution plan for new hires), and HB 3169.  The Committee will continue work on (among others) HB 2003, HB 2008, HB 2020, and HB 3169 next week.

The Senate General Government Committee takes up HB 2004-A on Monday April 7, 2003.  It is expected that the "dash 21" amendment will be introduced and that the Committee will take some action all outstanding amendments (i.e. -17, -18, -19, -20, -21).  Senator Corcoran expressed an interest in moving HB 2004-A (as amended by the Committee) to the full Senate soon; however, from the sounds of discussion in the public hearing on April 2nd, the Committee is split on HB 2004-A's disposition.   

April 2, 2003.  Mr. William Gary testified at some length yesterday before the House PERS Committee.  Mr. Gary again came in support of HB 2003, but in particular to discuss his lengthy response to an earlier question from Representative Nolan concerning a Legislative Counsel opinion on HB 2003 and HB 2004-A (see Chaimov letter March 23, 2003).  Mr. Gary supplied a very detailed letter and documents supporting his disagreement with Mr. Chaimov's opinion.  If you are interested, you can read this here. (WARNING:  this is a very long pdf document - about 16 MB).

The Senate General Government Committee met this afternoon to consider HB 2004 and HB 2005 (as well as many other bills).  Mr. Greg Hartman testified in opposition to the "dash 18 and dash 19" amendments, and offered that he and Mr. Gary were close to a compromise agreement on the wording of a "dash 21" amendment that would replace the "dash 20".  The "dash 18" amendment would place a cap on the "lookback" to no more than the "final average salary", while the "dash 19" amendment would remove the "lookback" completely if the Lipscomb decision was affirmed upon appeal.  Mr. Hartman argued that as a policy matter, either the legislature believes the "lookback" is an appropriate decision or it doesn't.   If it is an appropriate policy matter, then capping it makes no sense; if it isn't an appropriate policy matter, then the "lookback" shouldn't be there at all.  He also argued that the Lipscomb decision contains no remedy for the problems identified by the court.  Therefore, even if the Supreme Court "affirms" the Lipscomb decision, the matter is remanded to the PERS Board for resolution, with the attendant possibility of additional litigation.  He saw no legal benefit to the "dash 19" amendment.  He suggested that it might be better for the Legislature to create an "exclusive remedy" for the mortality table issues identified in the Lipscomb decision and take that matter off the table.  (Of course, there would still be a potential Supreme Court case, but this would be limited to the question of the "exclusive remedy" offered by the Legislature).  Senator Minnis wanted to kill HB 2004 completely, arguing that it tried to fix something that wasn't broken.  He asserted that if the PERS Board simply obeyed its statutory responsibility, there would be no problem to fix.  Senator Corcoran disagreed, and the bill is still in committee awaiting the "dash 21" amendments.

The General Government Committee unanimously agreed to send HB 2005-A7 (PERS Board composition) to the full Senate with a "do pass" recommendation.

April 1, 2003.  Representative Greg Macpherson released the details of his version of PERS successor plan for public employees hired on or after 7/1/03 with contributions beginning on or after 1/1/04.  You can read the details in the two press releases from Rep Macpherson's office - Macpherson Press Release 4/1/03, ORP-Key Points.