PERS follies get recursive

6/12/2013: From Hannah Hoffmann in the SJ:

Public sector retirements this year are up 54 percent over last year, according to statistics kept by the Public Employees Retirement System. Workers say the proposed cuts in the legislature are driving their early exits. 

PERS spokesman David Crosley said 2,305 public sector employees retired last year between January and June. This year, 3,539 people have retired between January and June.

Fortunately Salem has announced they will not raise the cost of dulling the pain.

6/8/2013: From Harry Esteve and Christian Gaston in the Oregonian:

Revenue: Lawmakers would approve $275 million in additional spending by reducing medical care tax breaks given to the elderly; increasing cigarette or beer taxes; lowering personal income tax deductions; and raising corporate tax rates.

PERS: In addition to the $460 million savings approved last month in Senate Bill 822, the state would save $440 million by further reducing cost-of-living increases for retirees and by changing the payout formula for workers who are no longer in the PERS system.

6/4/2013: Panic update:

Kitzhaber holds more secret meetings with legislators.

Persinfo blog advises those who can, to consider retiring by 7/1/2013, to avoid getting hit by death table revisions.

Rumor is that at least 3 B-school profs and several other quant types retired Friday 6/1/2013.

Read the thoroughly frightening Friday post from the PERSINFO blog:

The Oregon Republicans in the Legislature used a lazy Thursday afternoon, very late in the month of May to announce their newest “compromise” proposal on PERS Reform.  I’m not going to bore you with too many details; you can read the proposal for yourself here .  What’s notable about the proposal is that it contains every element of the former SB 754, with just a few of them scaled back in their extent.  From here on out, I will refer to the new proposal as “SB 754 sorta lite”.  The hands behind this bill are principally the Oregon School Boards Association (OSBA) and its umbrella group “Fix PERS Now” (see yesterday’s post).
The bill is audacious in its scope, revisiting the retiree COLA even more punitively than before, it goes after inactives by proposing a cut to the Money Match annuity rate from the current 8% to 4% (the PERS Board will take up the assumed rate at today’s Board meeting and will undoubtedly cut it to 7.5% in July, to be effective for all retirements after December 1, 2013), “fixes” the Judges pension (how isn’t clear), ends pension spiking without completely eliminating sick leave (I guess you can have 40 hours) and vacation time, it redirects 1% of the IAP to the PERS fund your own retirement, offers flexibility to employers to renegotiate the 6% pickup, removes Legislators and other statewide elected officials from PERS, and creatively goes after OPSRP members (Tier 3) by reducing the accrual rates by 25 basis points going forward.  It also raises the retirement age for OPSRP by 2 years.

5/31/2013: They’ve put 22% of their our portfolio into private equity. Earnings?

  • PERS private equity picks: 5.59% annual over past 5 years. 
  • PERS stock picks: 2.52% over 5 years. 
  • The Russell 3000 benchmark?: 5.63% over 5 years. 

The comparison is even worse if you look at last year, disastrous if you look at this year so far. So why are they paying big salaries to state employees to schmooze with the private equity salesman and pick stocks? They had a few lucky years way back, and now they think they are Warren Buffett. Nope, just buy the benchmark basket. More PERS info here.

What about Jamie Moffitt’s claims that UO couldn’t give raises because of the scary upcoming PERS cost increases? P64 of the pdf here:
Costs this biennium will increase by only 0.7% of salary, not 5.1%. So, she can now boost the UO raise proposal from 10% to 14.5%!

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19 Responses to PERS follies get recursive

  1. Anonymous says:

    So who exactly is representing UO faculty on PERS/pension matters? Haven’t heard a peep from the admin, nor would I expect to.

    So — the union? Where are they and what are they doing?

    • Anonymous says:

      The administration will do nothing, except the older ones who will follow the UO administrative model that will never change at this point, union or no union, because of an engrained mentality of entitlement. Last time the top people cut deals with Frohnmeyer (read them and weep on UO Matters) so that they could retire and avoid any changes while still continuing to work full time and part time for another 15 years and extract over a million dollars from the UO, while faculty benefits and salaries continued to deteriorate. Their response when questioned about it, “you could have done it as well,” right!

    • Peter Keyes says:

      Perhaps you noticed (or didn’t) the email from the union on this June 6. Some of us have been tracking this, analyzing this, and alerting people since the proposal surfaced. (See earlier posts on UO Matters.) We continue to be in contact with legislators and legislative staff, and have had some encouraging feedback from legislators, who are aware of the wide range of people classified as “inactive”. We have tried to get information from OUS or PERS on how many faculty are affected by this, to no avail. We try to respond and furnish additional information as needed, but of course this all coincides with the busiest time of the year on campus. The most critical things to do are to contact legislators, making them aware of your status and concerns, and to alert UAUO if you are in the ORP and so affected. I’m now also hearing from faculty who were in TIAA-CREF before they came to the UO and remained in it, but were forced to put some of their funds into PERS, which have been compounding, but are now also threatened. The hammering of “inactive” employees in the ORP is the longest-standing proposal at this point, but every once in a while, other proposals surface, such as diverting funds from members’ IAP accounts into the general PERS fund. It’s not clear if any of these have traction, or are legal, but don’t think that you’re safe if you’re not in the crosshairs right now. This could all change quickly. As one of my colleagues remarked on another issue, the distance between too early to worry about it, and too late to do anything about it is exceedingly small.

      So I’d say the union is doing what it can in a rapidly-evolving situation, but we need everyone who is concerned to take the time to make their voices heard.

    • never wanted to know this much about PERS says:

      Peter, it’s good that the union is doing all that.

      I can say that I’ve contacted a good many legislators of both parties, with messages tailored for the situation. I can’t say for sure, but I tend to agree that this is the best thing we can be doing now.

      As somebody I know put it, the educational staff of the entire state, from kindergarten on up, is going to be “furious and obsessed” over PERS in the near future. At some point, let’s hope the state wakes up and realizes that this is not exactly conducive to education, whatever your take is on PERS.

      I wish that people who defend PERS were more cognizant of the impact that increasing PERS assessments are having on public services, and offering alternatives.

      I wonder if the faculty union has been working with the the PERS alliance that has employed the firm of attorney Greg Hartman in the past in PERS litigation, pretty successfully. If it comes to litigation over specific issues of interest to faculty — so far, the legislation on cola adjustments passed in the Legislature will affect virtually everyone — it will be essential to have legal representation, and to let the state officials know that it will be coming.

      So, is legal assistance part of the planned mix?

    • Anonymous says:

      Of course Peter you won’t get the list of ORP people from either PERS or OUS. PERS has been assigned the job of screwing them. OUS has always wanted to screw them — remember about 10 years ago when they cut off ORP payments? And now, OUS is trying to save their own skin — they are not going to cross Kitzhaber (who is the biggest screwer of all).

      Face it, they’re all just rats. They need to be regarded as rats and treated as such.

  2. Anonymous says:

    The state can’t pass a school budget because Oregon Democrat Chris Edwards won’t back his fellow Democrats on a $6.75 billion package. He complains that Eugene is one of the few school districts that can’t “turn the corner” on that amount. Hmmmm, maybe there’s something wrong with the way the Eugene school district operates?

    So, the Democrats are trying to get more taxes out of the Republicans, who want even more PERS cuts than the Governor, who in turn wants more than the Democratic leadership in the legislature (except, apparently, Eugene’s own Chris Edwards).

    So, PERS members, you’re on the line for big cuts to your pensions, especially if you’re a future retiree.

    In large part, you have Eugene Democrat Chris Edwards to thank.

    Maybe you should let him know what you think.

    His email address is

  3. never wanted to know this much about PERS says:

    Best to hope that the Republicans don’t give in on i.e. accept tax increases, because the price is going to be steep for public employees.

    The double lump sum option is looking better to me, at least in some cases, e.g. ORP people. If they reduce the “annuity” i.e. the pension enough, might be better to take the double lump sum (employee account + match from employer) and roll it over into TIAA or the like. Can do it if you have enough other dough for retirement.

  4. Old Grey Mare says:

    I’ve always said that if I were lucky my IAP would be enough for an occasional IPA. Now it looks like that aspect of retirement is at risk too. C’mon faculty, brew your own.

  5. never wanted to know this much about PERS says:

    The Governor’s talks Tuesday at his mansion — some wag on web has renamed it Ammonia Hall, I like that! — apparently collapsed, with no continuation planned. That is good news, at least for now.

    Meanwhile, the PERS board is thinking of reducing the assumed rate of return on the PERS trust fund. This will drive up employer PERS rates, igniting further understandable anger in the public.

    Of course, in the real world (1) nobody knows the long-term rate of return and (2) in reality, the current market return is far, far higher than the current assumed return of 8.0%, as one would expect in a recovery from a market crash (2008-09). So the PERS trust fund is recovering nicely even as the actuarial assumptions that control the PERS board drive ever more destructive actions.

    The best thing would be for everyone — Governor, legislators, PERS board, newspaper editorialists — to go into a coma for a couple of years, leaving PERS alone, and letting reality (the economic recovery) fix things.

    But more likely, continuing uncertainty for PERS members, impossible retirement planning, possibility of long court tie-ups.

  6. Anonymous says:

    Their performance judging by that table looks pretty miserable — their only really good figure is the 10-year return. Admittedly, an important one — but looks like a long time — at least 7 years — before they had anything to brag about in stocks.

    They pay something like $300 million/year to these Wall St. geniuses who deliver these kind of results.

    When for something like 1/10,000 of that they could probably hire a bunch of part-time work studies to throw darts at the Russell 3000 stock sheet like monkeys.

    The head of the PERS board is a Eugene guy who got a B.A. at Willamette and apparently an online financial planning certification from something called American College.

    Don’t want to be a snob, but isn’t it comforting to know that guys like this are making the decisions that will determine our pensions?

    Aren’t we privileged to live in a state run by such dumb fucks? Starting with our governor who can’t even wear decent pants when he pretends to dress up. But figures out how to screw over the ORP people. (Hope screw doesn’t count as my second bad word.)

  7. Warren says:

    Give them a little credit. Very little. They’re finally trying to dump the PE, but they probably locked in long-term agreements and don’t want the penalties to show up on the balance sheet for people like you to find them!

  8. Anonymous says:

    Those bastards know damn well that reducing the annuity rate for inactives only would probably be doomed in court — on what grounds could they make such a discrimination.

    So this proposal looks like a stalking horse for reducing it to 4% for everybody.

    The net result would be to cut your money match pension by 30%.

  9. never wanted to know this much about PERS says:

    Isn’t it absurd that they show ever-increasing PERS rates in 2013-15 and subsequent biennia.

    In the first place, they don’t know what the market returns are going to be.

    Second, the markets are going great now, rapidly melting the PERS unfunded liability.

    Why then do rates keep rising inexorably?

    You have to be an actuary to devise something this stupid.

  10. Anonymous says:

    She knows that at least some of the proposed PERS savings are very dubious legally. (We should hope so.) So she’d be a fool to spend the money now.

    • UO Matters says:

      Jamie’s no fool, we’re just not high on Gottfredson’s secret priority list. She’s got $29M in the bank from last year’s tuition increases, plus another $15M or so from this year. Starts to compound pretty quick.

    • Anonymous says:

      You posted data on faculty vs. administrative hiring and also on faculty salaries, showing that administration is still bloating and they don’t give a rat’s ass about senior faculty salaries.

      A little too early to judge Gottfredson on the former issue; clearly nothing has happened on the latter.

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