Unions file lawsuit against PERS cuts

7/20/2013: Brent Hunsberger writes an excellent personal finance column for the Oregonian. His take on the impact of the SB 822 PERS COLA cuts is here.

7/3/2013: That was quick. From the law offices of BENNETT HARTMAN MORRIS & KAPLAN, full pdf here.

For someone retiring with a $60K per year starting PERS annuity, the COLA cut in SB 822 would reduce the annuity 20 years out from $87.4K to $77.5K, and cost a total of $84K over 20 years.

For someone like Dave Frohnmayer, with a current annual annuity of $257,373, the cuts will reduce the annuity 20 years out from $375K to $284K, and cost a total of $837K over 20 years.

Replace “cost” with “save” if you are looking at this from the state’s point of view, and note that these costs or savings are not discounted back to present values.

7/3/2013: Latest update from Mr. Fearless:

It just may die there. If these bills fail, there will be no cut to inactive benefits, no additional cuts to the retiree COLA, no phase out of senior medical deduction, and a host of other noxious tax increases.

Democracy is messy. I personally know 5 UO faculty who retired early, losing substantial amounts of income, causing a moderate amount of disruption to teaching, and a lot of lost sleep and administrative time, because of fear the legislature would do something arbitrary and capricious to cut PERS ORP inactives with no warning. Sounds like we’ll go through it all again next session.

http://persinfo.blogspot.com/7/2/2013: From Harry Esteve in the Oregonian:

It’s the last-ditch effort to raise more money for education and other state programs in exchange for deeper cuts into the Public Employees Retirement System. The Senate gavels in at 10:30, and the agenda includes House Bill 2456, which raises about $200 million in corporate, income and cigarette taxes, and Senate Bill 857, which puts further limits on cost of living increases for government retirees.

6/28/2013: From Hannah Hoffman in the SJ. Sounds like people who switched to ORP may be OK so long as they still work for the state:

The amendments discussed Thursday also included one further reduction to the Money Match program, beyond the COLA reductions. It would change the annuity rate on Money Match accounts for “inactive” retirees, or people who have left public service for more than three years and not re-entered. The current rate is 8 percent, and that would get cut to 4 percent.

6/27/2013: Read it all, from Mr. Fearless at persinfo.blogspot.com, regarding SB 857. Details here.

If you aren’t eligible to retire either due to age or service or both) you are screwed (unless the court overturns these changes before you retire) as your money match benefit will see a 37% or more reduction. The PERS Board is considering changes to the assumed rate, which will affect Tier 1 earnings guarantee on August 1, 2013 and thereafter. Since the time is not adequate for the bill to be completely processed by close of business tomorrow, anyone who is inactive and who is already eligible to retire is taking a huge risk if tomorrow passes and a retirement application for July 1 isn’t already in PERS’hands. … 

Lest you think this bill isn’t going to survive the end of session games, think again very carefully. The bill has the support of the Governor, Senate R and D members, OSBA. OBA. 

6/27/2013: Update from Hannah Hoffman of the SJ:

It’s rising from the grave today as the Senate Committee on Revenue and Finance takes up two placeholder bills introduced last week. One provides space for legislation further cutting the cost of the Public Employees Retirement System and the other would allow for the tax deal. 

The committee meets at 2 p.m. in Hearing Room A.

6/27/2013: persinfo.blogspot.com is a great source for PERS news. While anything could happen, Mr. Fearless thinks that the inactives are safe for now, and that if the legislature does do anything more this session they will cut the COLA for everyone (even more than the SB 822 cuts) and appoint a committee to try craft legislation that might stand up in court to decouple the annuity payout rate from the assumed earnings rate. This would mean large cost savings for employers, and large reductions in the monthly annuity for new retirees. That would take legislative action, presumably next session.

In addition, the PERS board is meeting in July and will presumably reduce the 8% rate to 7.5% or so, and update the death tables to reflect current longer life expectancies. These changes can be done administratively and will supposedly start phasing in starting in December. Word from people who know is that Tier one PERS (inactive or not) would have to work an additional 6 months or so to make up the difference, so people on the verge of retiring might consider speeding it up.

On the other hand, another factor to consider is that the TRP plan has become significantly less attractive. Under the TRP you get a 6% pay raise when you sign up, and then must give up your tenure within three years, then UO must hire your for 3 years 1/2 time or the equivalent, spread out over more years. But as of a few years ago UO stopped making retirement plan contributions after you have given up your tenure and started working part time. For Tier One people this is effectively a 20.5% pay cut, and that’s pre-tax money.

From a strictly financial standpoint it therefore may well make sense for potential retirees to keep working full time rather than plan on part-time work under the TRP. On the other hand you have to sign up for the TRP to get the 6% raise. At the margin I think this will mean more faculty will delay going on the TRP, which is quite cheap for UO, and so UO may have to sweeten the TRP deal in order to encourage higher paid full profs to retire. Of course that possibility gives yet another reason to delay taking the TRP.

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48 Responses to Unions file lawsuit against PERS cuts

  1. Sure it is good source of information to know about union file lawsuit against PERS cuts.

  2. Anonymous says:

    The double lump sum option is looking better, rather than taking the PERS pension. Don’t spread the word too far though, they might try to screw us out of the double part of the lump sum.

  3. Anonymous says:

    Some questions about quick retirement. I expect them to keep stalking PERS, and at some point, I might want/need to retire in a big hurry.

    Like suppose next year, they go through this PERS-slashing exercise again.

    Suppose it’s May 15 and I decide that I need to retire real fast, because come July 1 they’re going to reduce my projected pension by 37%.

    How much notice do I need to give the university or state to retire? My understanding is I can sign the papers May 15 and I’m retired effective June 1. Is that correct?

    Now, suppose I’m teaching classes in Spring 2014 and all of a sudden June 1 rolls around. Who takes over my classes? Can I finish the term and give grades? If so, do I get paid? If I don’t/can’t finish the class, what happens?

    I never dreamed I’d have to think about stuff like this, but thinking I am. Any help?

    • Anonymous says:

      Its been years since I retired in a hurry to beat a pending retirement system change that would have cost me a few hundred bucks/mo. But as I recall, you have to get your retirement application in the hands of PERS not later than the last business day before the effective retirement date. If you wait to the last couple of days at the end of the month, then you probably should drive the retirement application to the PERS office in Salem (if it still exists) or to the main PERS office in Tigard to turn it in. You should consult with HR and/or PERS on this. Maybe you can FAX the application in on the last business day and get confirmation of its reception.

    • Anonymous says:

      Thanks for the info.

      How about classes and the questions I had about that? Any info or advice out there?

  4. Anonymous says:

    Since DF will take a huge hit from the SB822 COLA cuts to his PERS retirement income over time, perhaps he’ll offer his litigation services pro bono to the state’s employee unions attacking SB822.

    • UO Matters says:

      Nah, he’ll just free-ride off the unions’ efforts.

    • Anonymous says:

      Perhaps a more likely scenario: DF joins the union challenge — at only half his lofty $550/hr (?) normal rate. Having a marquee lawyer on board with DF’s resume, including being a former AG, would bolster the union’s case. And this way DF will quickly make up the PERS COLA cuts, even if the union challenge fails. Especially with the usual lawyer bill padding. Thus DF wins either way!

    • Anonymous says:

      Makes me wonder what role Frohnmayer had in approving the funny accounting that let Mike Bellotti scam his way to half mill a year from PERS.

    • Anonymous says:

      “Makes me wonder what role Frohnmayer had in approving the funny accounting that let Mike Bellotti scam his way to half mill a year from PERS.”

      The answer is no role.

    • Anonymous says:

      “Having a marquee lawyer on board with DF’s resume, including being a former AG, would bolster the union’s case.” What?

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

    PERS members and faculty in particular, whether PERS or ORP, really need to get organized, and they need to come up with a reasonable defense of PERS.

    The cause of the recent crisis was the increase in employer rates from 22% to 27% from the 11-13 to 13-15 biennia. Clearly 22% is high and 27% became intolerable.

    This was “fixed” this time by postponing part of the increase, and negating part of it through cola cuts, which may or may not survive in court.

    But the rules will force rates up even more next biennium and thereafter, until the PERS unfunded liability reaches zero. No matter how well the markets are paying down that unfunded liability — until it reaches zero, the rules put the taxpayers/employers on the hook for more and more.

    This clearly is not going to work — something has to give.

    PERS defenders had better come up with an alternative that can be sold to the politicians and the public.

    • UO Matters says:

      This seems like a good job for Dave Frohnmayer and Mike Bellotti.

      More seriously, the faculty union and the legislators the unions have elected seem to have done a pretty good job defending the faculty’s interests here, though they were not always transparent about keeping the faculty informed about what they were doing behind the scenes.

    • never wanted to know this much about PERS says:

      Actually, Dave Frohnmayer would be a great front man for it, if he wanted the job.

      Did the legislators really defend ORP faculty interests? Not at all clear to me by what clause(s) they would have been spared in the legislation that was turned away. Had the Republicans agreed to the tax plan, ORP people would be in a very difficult position right now, unless I’m wrong.

      But granting that the unions did avert a disaster, I believe my other points still hold. There was not reasoned defense of PERS, and more to the point, no way around the catastrophe build into the rules and procedures that PERS follows, probably all state-mandated.

      Some people will say tax the well-to-do to pay for all of it, I say that is not going to happen and worse than burying your head in the sand.

  6. Anonymous says:

    I hear there’s something about an exclusion for people who worked 20 years or more for the state. Would this save the ORP people? Does anybody know about this?

  7. Anonymous says:

    see this article. last chance, yeah last chance for them to fuck you. Look at senate leader Peter Courtney. last chance to let your state senator know that you are watching very carefully: send him her know by email this weekend:

    http://www.oregonlive.com/politics/index.ssf/2013/06/last_chance_pers_and_tax_bills.html#incart_m-rpt-2

    • Uncle Bernie says:

      Peter Courtney. Oregon senator from Ashland. Isn’t there some kind of a state campus there? Do they not have ORP members? Yet he can’t even move himself to keep these constituents from getting royally screwed! Does he not know what he’s doing?

    • Anonymous says:

      Nah, Bernie, your wireless isn’t working at that special hotel you stay at.

      Peter Courtney, Oregon senate president, is from Salem.

      Peter Buckley, Oregon representative, is from Ashland.

  8. Anonymous says:

    Yeah, that AOF website shows that they are real up-to-date on things. The first page says there will be an annual meeting of the organization in December — 2012.

    • Uncle Bernie says:

      Is there someone better representing you?

      What the hell is going on with you guys?

    • Anonymous says:

      What the fuck is our expensive union doing for us on this?

    • Anonymous says:

      Your union (which is still largely a volunteer effort and hasn’t cost you a dime) has been supplying information and analysis to state legislators and staff, and AFT reps have been opposing this legislation. Of course, the best thing at this critical point would be for lots of people to contact their legislators. So what the fuck have you been doing about this, besides whining? I’m happy to sign my name to this, but the iPad won’t let me.
      Peter Keyes

    • UO Matters says:

      I agree with Peter.

      The state’s public employee unions, which AAUO is affiliated with in various ways, have been lobbying the legislature intensively trying to stop these cuts. Look at the OLIS website to see the reams of public testimony they’ve submitted. They’ve also recruited UO faculty to write and testify against the cuts. All this has been organized by the unions’ professional staff, including the AAUO staff, and with volunteer help from the faculty organizers and union members.

      None of us faculty have paid a dime in dues yet to support these unions in any of these efforts.

    • Anonymous says:

      There is a post about PERS at the UO faculty union website:

      http://uauoregon.org

      scroll to bottom, click on “see more” and there is a post from June 6 about PERS.

      UOMatters: The OLIS (legislative) website is incomprehensible — can you give a link to the “reams of public testimony”?

  9. Anonymous says:

    I looked for AOF too, can’t find them.

    I’m not eligible for the UO faculty union. To this outsider, it appears that OUS faculty are completely unorganized on this. Legislation involving hundreds, thousands of faculty, in some cases hundreds of thousands of dollars apiece over a lifetime, being written without any lobbying or even any input from us?

    • Anonymous says:

      Thanks, Dog, that is the AOF website. They have been involved before in protecting ORP and other faculty pension interests, successfully. They are part of the PERS Coalition litigation team, and will take contributions for possible future litigation.

      I recommend that everyone take a look at their website, oregonfaculties.org, consider joining, get involved, and ask your faculty union(s) what they are doing, possibly in conjunction with AOF.

  10. Anonymous says:

    Read the comments/answers at persinfoblogspot. It appears that Mr. Fearless thinks there is no protection in those amendments for ORP. There is some indication from an Associated Oregon Faculty rep that they know about us and are quite ready to sacrifice us in the cause.

    Speaking of AOF, do they have a website? I can’t find one.

    I would really like to know who is representing us. Right now, I haven’t a clue. Nothing on the UO faculty union website that I can find, can’t find AOF.

  11. Anonymous says:

    Re legal questions: is there any organized group representing OUS faculty or ORP faculty? Any legal representation? There are various groups e.g. PERS Coalition, Oregon PERS Retirees Inc. but is there anyone specifically representing our interests?

    Do the people writing the legislation, e.g. that noted by Peter Keyes above, even know that there is an ORP issue?

  12. Mike Kellman says:

    I agree with Peter, I’ve quickly read the parts pertaining to which inactives are in line, I see nothing that allows the ORP people an escape.

    I think that interpretation of Hannah Hoffman’s piece may have been based on her own lack of understanding of all the nuances e.g. ORP, plus wishful thinking on our part.

    I wonder if there is anything in the language that would eliminate the “double lump sum” option. I don’t see anything, but I’m hardly in a position to be confident in my understanding. As noted in posts above, the double lump sum might become an attractive alternative to whatever is left of the money match pension.

    Not being an attorney with expertise in these matters, I would like to hear some expert legal opinion promptly.

  13. Peter Keyes says:

    I just looked at the amendments to SB 827:

    https://olis.leg.state.or.us/liz/2013R1/Measures/ProposedAmendments/SB857

    and I don’t see anything that exempts ORP members from the class of “inactives” who are getting screwed. Of course, the legal language is so opaque that I might not be able to see the exemption, so if anyone can find it, please post your interpretation here.

  14. Mike Kellman says:

    Even if ORP people are spared in this attack on “inactives” it’s still a dirty, dirty deal. And as explained above by “never” — heed carefully — it’s probably a first thrust in an eventual attempt to cut all future PERS pensions. Don’t think you’re safe if you’re ORP or if you’re “active.”

    I hope if this passes the Legislature, that organized labor groups will help lead the fight in court. I will be ready and eager to contribute to legal costs of that fight, whether as an ORP member I’m targeted or not this time around.

    • Wolverine says:

      Completely agree. This is part of a vicious attack on all state workers. If you can support state spending by looting the pensions of retirees, then you don’t need to do the hard work of raising taxes and reforming the state’s revenue structure. It’s a no-brainer for heartless can’t-think-more-than-a-term-ahead legislators.

      We have to take up this fight because our livelihoods and old age are under direct attack. We should go to court absolutely unified and in great numbers. And fiercely.

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

    Don’t think that they’re only coming after the “inactives” or only the non-ORP inactives. They will be back for more cuts next time, if this goes through. A complex story on that, let it pass. But here’s the scenario for PERS people:

    They know reducing the annuity rate is very problematic legally. So, they try to do it first for inactives. A relatively defenseless, unorganized group (unless they’re ORP, perhaps they backed off on us because they know we’ll be organized in multiple ways.) If this survives in court, they do it next for everyone — why not? If the court says it is illegal to do it for anyone, they are at the end of the line. But if the court says it is illegal to apply it only to one class, inactives — that would be a green light and in fact would necessitate that they apply it to everyone in PERS — which is probably their long-term goal, if they can get to it both politically and legally.

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

    last Anonymous — right now, the 37% reduction is for “inactives” — those who left PERS (but apparently, the ORP people have honked enough that they’re not in on this shafting).

    Here’s how it works: the pension reduction is due to the reduction of the “annuity rate” on your member account + money match. From 8% currently to 4% or less in the future. In other words, they assume 4% is what your account will earn in the markets — whether the actual number is 18% or 4% or even -2%. This results in a much lower pension than if the annuity rate is 8%. Does that make sense at all?

  17. Anonymous says:

    “If you aren’t eligible to retire either due to age or service or both) you are screwed (unless the court overturns these changes before you retire) as your money match benefit will see a 37% or more reduction.”

    Sorry for not being a PERS News Addict, but can someone explain (again, I realize) why retiring today (before July 1) would prevent suffering a 37% cut in Money Match for those of us who are Tier 1 and joined 30-odd years ago — if that is the case?

    Where does that 37% reduction come from — and does it apply to everyone?

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

    The latest installment on persinfblogspot says that the plan for the inactives now is to reduce the assumed annuity rate to about 4%, more or less.

    This will have the effect of reducing your money match pension, if you are ORP and ORP members are included in this dirty deal, by about 30%. That’s right, 30%.

    I’m doubtful that it can survive in court, especially for ORP members, but even if it does, consider the silver lining. Money match still intact — meaning they’re not (yet, at least) trying to screw you out of the state match to your employee account.

    So we should still be able to get the double lump sum payment. No PERS pension, just a transfer of our account to another pension outfit like TIAA, where the money will be ours. No more dealing with the dirty rats running the state of Oregon. No more worrying about whether they will try to reduce the cola adjustments in the future, or otherwise screw us. Just take your money out of their rotten trust fund and make it your own. That is my plan, as of now.

    There’s some risk, of course, the stock market or bond fund or whatever could crash and you lose much of it. But there’s also the chance to earn a lot more than the 8% (and probably dropping, thanks PERS board) return on the PERS account.

    And of course, the opportunity to be completely free of this dirty, double-dealing, low dishonest state (and University, if they don’t start sticking up for us soon).

    I can’t wait. As somebody once said, “Make my day.”

  19. I was your faithful loving whore says:

    Where is the UO adminstration on this? Or Dave Frohnmayer, who was UO President when many faculty signed on to the ORP program in good faith? Or how about OUS? “Dr.” Pernsteiner?

    Or are they all just happy to run with their own money and see their faculty getting uh, reamed?

  20. Anonymous says:

    The Gov really wants to fuck the inactive members, doesn’t he? What does he have up his rectum?

  21. Anonymous says:

    I think UO Matters described TRP pretty accurately and in agreement with Dog, but not in agreement with Dog that UOM is “just plain wrong.”

    TRP indeed does not look like such a good deal now. The 6% raise can be made up with a quarter of extra work at full pay.

    The smart thing to do is work full time until you are really ready to cut back, then sign for the 10 terms of part-time teaching if you think you want to continue that out of interest or enjoyment.

    • Anonymous says:

      Dog

      the “just plain wrong” comments was targeted at this specific statement:

      “go on the TRP for 3 years at half time”

      When you sign up for TRP and it becomes effective you can still work
      for 3 years at FULL TIME not halftime. After then you relinquish your tenure
      and go on 1/3 time. I think the confusion stems from using the term TRP
      to represent both phases of this process.

      As for the economics of all of this, I have made no comment on that.

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

    I think ORP was a great deal up to the point they started talking about messing with the inactives. That is probably illegal, but frghtening that the Governor would come up with this vicious scheme.

    One option that will be looking better the more they cut the PERS pension: taking the double lump sum instead, and taking your chances in the financial martkets. You could come out ahead. it is especially attractive for ORP people who are not entirely dependent on PERS.

    The proposal to cut the payout rate to 4% — not 2.6% — is still alive and well for future consideration. Everyone should watch that carefully and consider the implications. It would mean a cut in your future PERS pension of 30%.

    I knew early on that I didn’t trust the state of Oregon with regard to PERS, but I never expected it would come to this.

  23. Befuddled says:

    The real time bomb here are the caps on the COLA. First, you have the phase out at 24,000 (which is adjusted for inflation). But below that is the 2% cap, which as I understand it is a hard cap (not adjusted for inflation). Over the long run, the combination of these two will greatly reduce the benefits received in real dollars if inflation rises.

    Also interesting here is that the more they screw around with this stuff, the better the ORP looks by comparison. Those of us in the ORP may never make up what we lost compared to sticking with PERS, but I am certain that this gap will close if these types of contemplated changes continue. (BTW, one was to reduce the payout rate to something like 2.6%, but that didn’t get very far).

  24. UO Matters says:

    Thanks Dog I think I fixed this.

  25. Anonymous says:

    Dog clarifies?

    The last paragraph above I don’t think is correct. This is my understanding and since I am likely doing this act, this coming fall, I am pretty sure this is correct. So I will use my expectation as an example.

    1. I sign up for TRP fall term 2013 effective Winter Term 2014.

    2. By signing up for TRP I have now stated that
    I will work full time only for 3 more years (so the act of signing up for TRP does nothing to your benefits). So I relinquish my tenure after
    the end of 3 years. I get a 6% raise starting Winter 2014 and can continue to work for 3 more years full time. This statement above is just wrong: “go on the TRP for 3 years at half time”

    3. Under said signing the last academic term I could work would be Fall 2016.

    4. After fall 2016 I can continue to work for 10 terms at 1/2 time per term with benefits. So, for example, I could work Winter 2017 and Spring 2017 and get benefits. If I worked only
    those 2 terms in 2017 then I would be effectively on “1/3 time” and could continue
    that pattern for 4 more years.

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