June 4, 2004
Oregon PERS,
“PERS/OPSRP
Retirees and Returning to Work”
PERS members
choosing Double-Lump Sum Option and wanting to
return to work under existing rules are singled
out. Reinterpretation of rules by PERS Board
penalizes PERS members who followed the rules.
Penalties include “New” rules being retroactive
to January 1, 2003. The limitation of hours
allowed immediately following reemployment has
also been reduced from 1,039 to 599.
“If PERS receives information
that a member has exceeded the 599-hour limit,
we will evaluate and resolve each instance on a
case-by-case basis depending on the facts and
circumstances of the member’s individual
situation.”
Oregon’s Public Employees
Retirement System has also adopted a “Don’t ask,
Don’t tell” policy regarding their
reinterpretation of existing rules.
June 5, 2004
The Oregonian, “Fluctuations affect
PERS funds”
“The Public Employees
Retirement System Board decided that state and
local governments no longer must provide a
dollar-for-dollar match of workers’ variable
accounts upon retirement.”
“Last year, variable accounts
grew about 35 percent. Workers who retire before
July 1 of this year will see their variable
accounts doubled by their employer upon
retirement, under the PERS Money Match
provision.”
“‘The member is still going
to get the benefit of the reward for the risk he
or she took on their own money,’ said PERS
actuary Mark Johnson. ‘It’s just not going to be
doubled any more.’”
The Oregonian,
“PERS aided by flat stock market”
“Under a 2003 state pension
reform, 6 percent of every Oregon public
employee’s salary was supposed to be invested by
early 2004 into a new account for each worker.
But the Legislature’s rushed deadline, combined
with computer and accounting glitches, has
delayed creation of the accounts. As a result,
workers’ money isn’t getting invested into
stocks, bonds and other state investments for
five months or more, potentially depriving
employees of investment gains.”
“On Friday, the Public
Employees Retirement System Board ruled that its
flat investment portfolio for 2004 makes the
delay largely a moot issue. The 6 percent
employee contributions for 46,000 workers will
be invested as of June 1, and there will not be
a need to boost those accounts because of
forfeited investment gains, or shrink them
because of market losses. PERS won’t take its
usual cut for administrative fees.”
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June 22, 2004
The Oregonian, “Digging deeper into
the Texas Pacific deal”
“‘PGE is Enron, for chris-sake,’
said Dan Meek, the Portland lawyer who has gone
to court to stop this travesty. ‘PGE’s board is
appointed by Enron. And the money is going to
Enron.’”
“The new company desperate to
get its hands on those state and federal taxes
–which total $93 million each year – is the
Texas Pacific Group.”
“In making its play for PGE
in the Enron bankruptcy proceedings, Texas
Pacific is trying to claim those tax receipts
and take advantage of a marvelous loophole in
the tax code.”
“For reasons only the
accountants understand, private equity groups
such as Texas Pacific can use the losses from
one company to offset the profits of another
company and not pay a dime in taxes.”
“Earlier this month, Meek –
the attorney with the Utility Reform Project –
won a court order requiring another utility
commission review as to whether PGE fraudulently
collected $665 million from area ratepayers to
cover corporate taxes that PGE and Enron never
paid.”
“Meek is not optimistic the
PUC will change its cluttered mind and order an
end to a rip-off in which the ratepayers are
sending Enron $254,000 each day.”
“That’s precisely what Texas
Pacific is counting on in its bid to buy PGE and
take over that tax collection.”
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June 25, 2004
The Oregonian, “PERS requests extra
money to pay lawyers’ fees”
“The state’s Public Employees
Retirement System has paid more than $2.1
million in legal fees…”
“The fees total twice the
agency’s current budget for legal costs with a
year to go in the two-year budget period.”
“Agency director Paul Cleary
told lawmakers Thursday that he expects the
legal bill for defending the agency against
lawsuits challenging reforms adopted by the 2003
Legislature could climb by another $2 million
before the biennium is over in June 2005.”
June 29, 2004
The Oregonian, “Stakes are enormous
for Oregon in PERS court case”
“Without PERS reform, our
state faced an unprecedented fiscal calamity. No
state in the nation had a more structurally
flawed pension system than Oregon. To cover an
unfounded liability of $17 billion over the next
25 years, public spending reductions totaling
hundreds of millions of dollars
per biennium would need to be
implemented.”
“Last year, an ECONorthwest
study found that if PERS remained unchanged,
employer rates would average 24 percent of
payroll over the next 25 years – a rate more
than twice the historic average of 10.74
percent. This rate does not include the
additional 6 percent employee contribution
picked up for most public employees.”
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July 1, 2004
Senate Bill 258 allows PERS
members who became inactive prior to January 1,
2000 to withdraw 150 percent of their account
value between 07/01/04 and 06/30/06. PERS does
not intend on notifying inactive members of SB
258.
July 14, 2004
The Oregonian, “Goldschmidt won’t
rejoin firm”
“Former Oregon Gov. Neil
Goldschmidt has left the Portland-based
consulting firm that he founded and infused with
gold-plated connections.”
“Initially, Goldschmidt had
said he would take a leave of absence from the
firm, Goldschmidt Imeson Carter.”
“Texas Pacific remains a
client of the firm even though Goldschmidt
withdrew from the PGE deal. Imeson would not say
what the account is worth, but it probably is
valuable. A relationship with PacificCorp, worth
about $200,000 annually to the consulting firm,
according to PacificCorp Chief Executive Officer
Judi Johansen, was severed to work with Texas
Pacific.”
(Note: Goldschmidt who was to
be appointed Chairman of Oregon Electric
Utility, the company formed by Texas Pacific to
takeover PGE also initially planned to invest
$880,000 of his own money in the deal. The
amount of his initial investment was eventually
bumped up to $1 million. This is a position he
has since withdrawn from. No word on whether he
intends to withdraw his $1 million investment
from what state officials call a solid, low-risk
investment.)
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July 15, 2004
The Oregonian,
“Audit puts teachers’ retirement plans on ice”
“The Beaverton
School District will make a special deal with 16
teachers whose retirements are being delayed
after the district found that unpaid leaves had
been counted as work time.”
“As a compromise, the
district will extend an early-retirement stipend
by one year. The 16 teachers will be eligible
for the incentive next school year, though the
stipend part of the district’s contract with its
teachers was to end June 30.”
“The stipend is $700 a month
for four years, or a maximum of $33,600 for each
teacher.”
July 22, 2004
The Oregonian, “Staff of state
utility panel says bid for PGE too risky”
“The Oregon Public Utility
Commission staff on Wednesday recommended
rejecting Texas Pacific Group’s bid for Portland
General Electric, criticizing the $2.35 billion
acquisition plan for carrying too much financial
risk and too little rate relief.”
“Under the proposal, Texas
Pacific, a private equity firm based in Fort
Worth, Texas, would provide $1.25 billion in
cash – roughly $525 million in equity and $707
million in new debt. It would assume $1.1
billion in PGE debt.”
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July 25, 2004
The Oregonian, “State investment
panel’s turmoil breeds concern”
“The Oregon Investment
Council, which manages a $58 billion portfolio
of state funds, has hit perhaps the rockiest
times since its inception in the 1960s.”
“Its most knowledgeable
member, discount broker Jerry Bidwell, resigned
earlier this month without explanation. Another
member, Diana Goldschmidt, has come under a
cloud of accusations related to her marriage to
disgraced former Gov. Neil Goldschmidt.”
“The turmoil on the council
comes at a bad time for Oregon, which relies on
sound investment returns to help cover the cost
of public employee pension payments. Those costs
have risen dramatically in recent years, to the
point where multi-billion-dollar shortfalls loom
in the $45 billion retirement trust fund.”
July 29, 2004
Statesman Journal, “Hearing on PERS
reform to begin”
“Oregon’s high court will
rule on two laws enacted last year.”
“The two bills:
-
Set up
investment accounts for each worker, where 6
percent of workers’ salary – known as the
employee contribution into PERS - will
be invested. Taking that money out of
workers’ PERS accounts means that it won’t
be matched by employers at retirement, or
used to set future cost-of-living increases
for retirees.
-
Ended the
guaranteed 8 percent per year increase in
workers’ regular accounts if they joined
PERS before 1996, derived from investment
earnings on their accounts. The guarantee
was watered-down, lowering the ultimate
pensions workers will receive.
-
Froze earnings
on those regular accounts for 2003 and
perhaps more years, until PERS erases a
deficit.
-
Canceled
cost-of-living increases for those who
retired between April 2000 and April 2004, a
freeze likely to last several years.
-
Updated the
antiquated life-expectancy tables used by
PERS to set pensions. Those resulted in
larger-than-warranted checks because
pensions weren’t set to last long enough
given retirees’ lengthening life spans.
-
Halted new
investments in workers’ variable accounts,
where they risked money by buying only U.S.
stocks.”
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July 30, 2004
KATU 2 News, “Saxton: State cannot
afford to reverse PERS”
“The blame for the PERS mess
belongs with the elected officials who made
these promises that cannot be kept.”
(Note: Elected officials
and Judges are PERS participants who will
obviously profit from increased benefits.)
July 31, 2004
The Oregonian, “PERS reform case
opens at state high court”
“Attorneys tried to persuade
the Oregon Supreme Court on Friday to overturn
the sweeping, cost-saving reforms legislators
made to the Public Employees Retirement System
last year.”
“Attorneys for state and
local governments countered, saying the reforms
were intended to correct errors and
mismanagement by PERS and do not reduce benefits
earned for work that’s already performed.”
“State and local government
attorneys argued that none of the changes
substantially impaired worker contracts.”
“They cited, for example,
that the Legislature may have promised workers
hired before 1996 that their accounts would earn
at least the guaranteed interest rate, but it
never promised earnings greater than that.”
Statesman
Journal, “PERS reform in state justices’
hands”
“The PERS reform challenge
now moves into the opinion phase, but there’s no
telling how long it will take for the seven
judges to reach conclusions.”
“There is no deadline for
them to decide the case, and some cases can take
years before an opinion is reached.”
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All information is from sources believed to be accurate and reliable. Please consult your advisor before making any decisions regarding PERS.
