Don’t cry for Mike Bellotti – PERS decision boosts his take back up to $13M

Ted Sickinger’s amazing 2011 story on how the people of Oregon came to be paying former Duck coach Mike Bellotti $500K a year in pension benefits is here. In essence, Bellotti PERS payout is based on all the money he got in bonuses and Nike deals, even though the state never withheld anything for PERS. This on top of the buyout deal he got after former UO GC Melinda Grier neglected to get a written contract for him, and then assistant GC Doug Park helped keep that from reporters.

As Sickinger’s story explains, a good chunk of state PERS costs go to fund past deals like these – not to accumulate reserves for the retirement of current workers. And the UO administration bargaining team will soon use these costs to argue that they can’t afford raises for the faculty and staff.

Bellotti was one of the big losers from the 2013 reforms, which cut COLA increases from 2% a year on the full pension payment to 1.25% on the first $60K plus only 0.15% for amounts over that. So he’s a big winner from the recent Oregon Supreme Court ruling that restored the 2% rate. Regular retirees will benefit a little – but people like Bellotti with big PERS checks are the big winners.

The Gain columns are per year – e.g. Bellotti’s payout for 2015 will be $109,147  higher after this court decision, a more typical state worker will get $6,290 more.

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Note: Everything is in future values – i.e. not discounted back to reflect the time value of money. These calculations are back of the envelope and don’t consider all the twists in the law, including some retroactive payments that PERS will now have to make, e.g. for 2014.

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20 Responses to Don’t cry for Mike Bellotti – PERS decision boosts his take back up to $13M

  1. omg says:

    Can this decision be appealed?

    Why aren’t PERS COLA’s tied to inflation (which is 0 right now anyways).

  2. Max Powers says:

    “And the UO administration bargaining team will soon use these costs to argue that they can’t afford raises for the faculty and staff.”

    These costs will be very tough for local governments, municipalities and school districts to deal with. That also includes some of the smaller universities in the state. This combined with a new funding model will really strap some of the smaller schools for sure.

  3. SaveUofO says:

    It is an outrage that anyone from athletics is getting PERS to begin with. Just what exactly is the public service Bellotti, Helfrich or any of the other athletics staff provide? There isn’t any and they know it. They’re opportunistic leeches willing to suck the blood out of this school at the expense of all but themselves by exploiting the letter of the law. We seriously need to put an end to this but I think we’d have a very hard time finding anyone in this state to lead the cause.

    • just different says:

      Again, this is about running a multimillion-dollar NFL or NBA farm and not about college athletics in general. In a sane world where college athletics was auxiliary to a college education, there’s no reason that coaches shouldn’t get the same benefits as other Student Life personnel.

    • uomatters says:

      “Leeches” is a bit over the top, though I sure agree with “opportunistic”. I’m sure these are all fine people, as are the university administrators who have allowed this all to happen.

      The NCAA cartel has given them some unfortunate incentives and the president’s are unwilling to organize collective action to fix things. Here’s hoping Congress will step in, first by eliminating the tax-deductibility of the donations that fund these salaries. Meanwhile Ed O’Bannon and the courts are stepping up to the plate.

  4. honest Uncle Bernie says:

    The athletic people leeches? Maybe they were just state employees like the rest of us, who legally had no choice whether to be in PERS or not? Maybe Bellotti simply accepted the deal that was offered him, like the rest of us did?

    As for

    “In essence, Bellotti PERS payout is based on all the money he got in bonuses and Nike deals, even though the state never withheld anything for PERS.”

    I don’t believe it. The state DID withold money for Bellotti for PERS. Did they withold no money for the Nike deals that were funneled through UO and PERS (according to state law)? I would like to see the evidence for that.

    It is true that Bellotti has a huge pension. Probably through “spiking” with the big deals he was getting during his last years at UO. Is it Bellotti’s fault that the State of Oregon set up such a ridiculous pension system?

    And don’t think that the PERS haters only want to come after Bellotti. They would like to take your pension, and yours, and yours. Ask them what they think of the Money Match deal. Even though few of them understand it, they would end it in a second if they could. What do they think of the PERS deal that gives essentially a 7.75% annuity on your accumulated account, plus cost of living adjustments that very few people outside of government get? They would love to steal it from you. It doesn’t matter whether you are Bellotti or lowliest janitor.

    It’s true that some of UO PERS payments are going to cover the unfunded liability for already retired people. It is also true that UO will use the PERS payments as a reason why they can’t give raises.

    But do you have an answer for that? Do you believe for a moment that UO doesn’t have to make the PERS payments? Do you believe for a moment that that will not detract from the pool of money that remains? What do you expect them to do, plant money trees all over campus?

    You want athletic donations to be no longer tax deductible? Here’s a secret: plenty of people who would like would also like to make ALL donations to universities non-tax deductible. Some would like the federal government to tax their surpluses like businesses get taxed. You have money to build a new classroom, a new science lab? Pay taxes on it!

    • uomatters says:

      I love you Uncle Bernie, because you’re often right. But you’re wrong about UO witholding money to cover Bellotti’s $13M PERS. It’s on the taxpayers. Quoting from Sickinger’s report:

      Bellotti says he’s no expert in PERS calculations, but his initial understanding was that the UO athletic department and his own contributions were funding his pension, and not one penny would come from the State of Oregon or its taxpayers.

      But that doesn’t pencil out. At retirement, Bellotti’s post divorce account balance was only $300,000. The university made its own contributions over the 21 years he was employed. But combined, they won’t come close to covering the $5 million benefit reserve that PERS established to cover his payments. Moreover, that reserve may underestimate the costs, depending on the state’s investment returns and Bellotti’s longevity.

      To make up the difference, PERS draws on benefit reserves of its state and local government rate pool, which includes institutions of higher education, community colleges, state agencies and cities. Over time, all members of the pool will pay for the benefits, giving them less money to hire teachers, cops or provide services.

      • honest Uncle Bernie says:

        uomatters — let me quote you:

        “the state never withheld anything for PERS”

        That is not what Ted Sickinger’s report says. It says not enough was withheld to cover the pension. That is true — undoubtedly because of the “spiking” formula — not as far as anyone knowledgeable has claimed on account of any wrongdoing or lapse in payments by UO. Again, it is not Bellotti’s or the AD’s or UO’s fault if Oregon was running his pension under PERS rules.

        Who is making up the difference? As Sickinger says, it comes out of the state pool. Where is that coming from? For all anyone knows, the athletic department may be getting billed enough for its current employees to make up the difference. There is no way that anyone outside of the deep bowels of PERS could probably know.

  5. This is our state's laws in action says:

    Could you share what recent faculty Tier 1 employees are getting and how much they “gained” from the recent legal opinion? Are these pensions because Johnson Hall allowed them or is it because this is how PERS works for Tier 1 employees. I wish I had been a baby boomer so I could get those benefits. When those of us in Tier 3 retire, please make a huge deal about it. Everyone knows that Tier 1 is a problem but it isn’t the fault of the employee or the administration. Tier 1 employees should just say “Thank you” to the tax payers of this state.

    PS – Curious to know what Dr Harbaugh’s expected PERS benefits are compared to his current salary. Will money match benefit you?

    • uomatters says:

      PERS Tier 1 was pretty lucrative for faculty and administrators who retired 10 years back – many retired at more than full pay under money match. But recent PERS administrative changes have ended that, and my anecdotal evidence is that new UO retirees are getting more like 80%. UO full professor salaries, on the other hand, have been ~80% of comparators, so really not so great a deal overall.

      As for me, when hired I opted into the defined contribution ORP plan, instead of the defined benefit PERS. It was a stupid move in retrospect, but hey, I’m just an economist.

      You are correct in implying that PERS Tier 1 is a much better deal than new professor hires get – but then their salaries are much closer to comparators than was true 20 years back.

      • dog says:

        By now, almost anyone who is Tier 1 and has not yet retired
        will likely take the Full Formula as that has statistically exceeded
        the money match in overall yield.

        Also keep in mind (this doesn’t seem to ever get discussed much
        but should be obvious) – PERS Tier 1 pension is a monthly amount distributed over 12 months compared to the 9 months of academic salary. So PERS Tier 1 annual benefit compared to 9 months of salary is pretty good – but compared to 12 months of salary (if one gets summer salary) is less good.

        • uomatters says:

          And UO’s TRP is a shit deal for faculty. (Better for admins, of course). More on this later, but there’s no credit for grad advising or research, and no buyout except the 6% raise. And since UO stops making retirement contributions, that’s actually a pay cut. Some other universities offer 1-2 years salary. Gott got almost 3.

          • dog says:

            The TRP “shit deal” has various flavors. Agreed that the pure “600 hr” teaching assignment is not great but I have been witness to many special deals. For instance, I know of one “600 hr” appointee who teaches 1 class per AY and does grad advising to count for the other 2 term of 1/2 pay. I know of others in which active research as been
            counted. At the moment, and I suspect this will change, departments really determine the nature of these appointments, without any oversight – but like I said, I think that will be changing.

            on TRP 1 – retirement benefits are still paid. When you transition to TRP 2 (no longer working full time) – they may not be paid, I am not exactly sure.

            • uomatters says:

              You can collect retirement benefits, but UO no longer pays into your account.

          • dog says:

            roger that

          • honest Uncle Bernie says:

            For such a “shit deal” it appears that the vast majority of UO faculty, at least the ones I know, end up retiring pretty early, and earlier than at those schools that offer a sweeter deal.

            Maybe the UO TRP is such “shit” because UO doesn’t have to put out more to get people to retire?

            • uomatters says:

              Yes, given that full prof salaries are so far below comparators it doesn’t take much to get people to retire.

          • that effing Dog again says:

            Actually I would really like to see the actual data on “early retirees” – in my anecdotal evidence bag:

            a) I am opting for early retirement (the cheers are now deafening)

            b) over the last 10 years in my department there has only be 2 out of 10 cases where there was early retirement

            c) only about 1 in 3 faculty that I know outside the department (and I only know 3) have signed up for TRP prior to the age of 65

      • honest Uncle Bernie says:

        uomatters — re your having made a mistake in opting for ORP — I have many times pointed out what a good deal Tier 1 or Tier 2 ORP is, and how it should be counted toward total compensation. And you always retort that yeah, it’s good for the ORP people, but the regular unretired PERS Tier 1 and Tier 2 people are getting shafted.

        But now you say you were a “stupid economist” to go for ORP.

        So which is it?