It is that time of year again. PERS just sent out the 1099R forms for you to begin the task of preparing your State and Federal Income taxes. Just for you, I've gathered together a couple of good deals from Amazon. You can find them here. Personally, I use Turbo Tax, but I've used Tax Cut and a few of the others as well. I just find TurboTax to be easier to use than most, plus it imports information about as easily as it comes. Amazon's prices are pretty good, typically matching Costco's fairly closely. And you'll get free shipping. For me, this is a painful time of year because I get to find out how good (or usually bad) my tax planning has been.
Oregon PERS Information is Copyright Marc R. Feldesman (c) 2003 - 2013. All Rights Reserved. Posts may not be reprinted without prior consent.
Please don't post your comments more than once. I moderate all comments and a delay between posting and appearing is part of the drill here. I get to all comments in due time. Please don't continually repost the same comment. Only one will be posted.
Sunday, January 31, 2010
After receiving 58 yes votes and 0 no votes and then being vetoed by Oregon's pimp daddy, Ted Kulongoski, SB 897 is back for a veto override on February 1 in the Legislative Special Session. If you recall from my harangues last summer, SB 897 is a bill that would require PERS to clean up its estimates and take ownership of them. This would prevent the kinds of fiascoes that Kay Bell was subjected to when PERS kept reassuring her there were no errors in her estimates and then found the same error she had been reporting for years, after she retired. The veto override is being led by Senator Ted Ferrioli (R, John Day).
Friday, January 29, 2010
On Wednesday the Oregon PERS Board held a joint meeting with the Oregon Investment Council and interested stakeholders. I didn't attend, but a reliable scribe was in attendance. If I didn't know better, I would have thought that the PERS Board might as well have declared the following: "Dear Current PERS Retiree: Please drop dead as soon as possible." At issue were the growing employer rates for the PERS Retirement System. The Board seemed to think that the real problem is that employers had to continue to pay for existing retirees and that retirees were making it hard because they weren't dying. Of course other ideas were also floated, including the possibility of a Tier 4, for new hires which would be no retirement system at all.
The fact that any of this was discussed in a public meeting is utterly repugnant and contemptible. The current PERS Board acts like PERS members and retirees are an inconvenient group of people for them to deal with (please see note below for a correction). They'd prefer dealing only with employers. Of course, without PERS Members and Retirees, there isn't a retirement system. Unless my understanding of state statute has been gravely flawed, it is stated in law that the PERS Board acts as the fiduciary for the system. They are responsible TO and FOR members. WE ARE NOT INCONVENIENT STATISTICS THAT MUST BE TRIFLED WITH. I find this behavior by the Board, even if tongue in cheek to be reprehensible and I hope the Board finds a copy of this post in its collective mailbox. Otherwise, the bullet will have butterfly wings and, if you recall, chaos theory starts with the flapping of butterfly wings. Expect a tsunami of complaint about this stupidity. I'm offended deeply and even sorrier I wasn't able to make the meeting. Had I been there, I would have objected out loud and in person face-to-face.
Note added at 8:00 p.m. My source for this information attended today's meeting as well. I was corrected that the remark about pesky retirees didn't come from a PERB member but a member of the Oregon Investment Council. I'm not any more mollified to know this as the OIC is also charged with the responsibility to invest OUR money. If they find us annoying and pesky and inconvenient, every member has the option of resigning. I'm sure there are many other folks out there who would be perfectly happy investing our money and would do just as well.
Thursday, January 28, 2010
The Oregon Legislature's special session convenes on February 1, 2010 and will run to February 26, 2010. One of the first agenda items will be to consider a motion to override Governor Kulongoski's ill-informed decision to veto SB 897, which passed in the House and Senate by a combined 58-0 vote. SB 897 is intended to require PERS to develop a mechanism that insures potential retirees of getting accurate and audited and certified benefit estimates BEFORE retiring and that such benefits would be fixed (as in not subject to change) after retirement. This bill was inspired by the Kay Bell litigation. It is vitally important that you write to your legislators (Representative and Senator) and urge them to support the veto override. Only by overriding this veto can prospective retirees get a grip on their benefits and the important assurance that PERS won't be coming back long after you retire and say, "oops. We made a small mistake. You owe us $100,000 payable in non-sequential $20 bills". A form of a letter was sent to me today, which will serve as a useful template. I reprint here a slightly modified version:
Dear Representative XXXXXX:
Dear Senator XXXXXX:
As a member of [fill in your union, your organization, whatever], I’m extremely appreciative that both the House and Senate voted unanimously to pass Senate Bill 897 in the 2009 Legislature. This broad support reflected the fact that the legislation will provide fairness and accountability for Oregon’s public employees by requiring that PERS’ benefit calculations be accurate and, once fully verified, become my fixed base benefit. I want to urge you to vote to override Govenor Kulongoski’s ill-considered veto of Senate Bill 897 when the legislature meets for its February 2010 special session.
Thank you for your consideration.
You can find email addresses for all legislators by searching for "Oregon Legislature" using the search engine of your choosing. If you don't know who your legislators are, the same search will take you to the Oregon Legislature's web site where you can enter your address and find out who your legislators are.
Since this veto override will be taken up at the beginning of the Special Session, we need you now to send these emails, phone calls, or letters. If you wait until after the session starts, it may be too late. If you are interested in equity for PERS retirees, this issue is vitally important and your support is needed to urge any reluctant legislator to really consider voting FOR the veto override.
Monday, January 25, 2010
I hope that OPRI officials get the message that its romance with lobbyist Mark Nelson is not popular with the rank and file. The poll below, at the time of this writing, shows that 156 people of 179 voting, think that OPRI should find a new lobbying firm. While OPRI seems to have taken no "official" stand on Measures 66 and 67, its affiliation with Nelson's group leaves it in the curious position of being "associated" with the NO on 66 and 67 group. If OPRI wants a reason to sever a bad romance, there are quite a few we could list. Just pursue a list of all the lobbying efforts Nelson's PAC Counsel has been associated with - no on tobacco taxes, no on beer/wine taxes, no on any other taxes, against health care reform, and the list goes on and on and on. If I were involved with the administration of OPRI, I would run as fast as I can AWAY from Nelson and his confederates. He's bad news and he's bad company. I'd take out a restraining order to keep him away. OPRI is still seen as an advocate for PERS members and retirees, but this lobbying relationship is straining bonds of credulity.
If you are reading this Kathleen, et al, take a page from AOF's book. Find a new firm and contract out with an unrelated firm to run your office.
Thursday, January 21, 2010
Wednesday, January 20, 2010
Not surprisingly, Mark Nelson, OPRI Lobbyist, is about as popular as the plague for all his work for anti-tax clients. Nelson was recently ranked as one of the most "awful" lobbyists by a recent article in the Portland Mercury. Today, it was announced that the Association of Oregon Faculties, which represents faculty members in the Oregon University System, parted ways with Nelson (see article in Blue Oregon by Carla Axtman). They gave him his walking papers because they had become fed up with his work with clients taking stands inimical to what AOF represented, and they were getting a lot of flak from their members about this association. One wonders what it will take to get OPRI to part ways with Nelson. He is a cancer and a pox and I will not encourage anyone to donate to OPRI's lobbying fund - indeed I will encourage people to sit on their wallets - if OPRI does not tear up their contract with Public Affairs Counsel (Nelson's firm). In addition to Mark Nelson, they also employ, David Reinhardt, the former conservative columnist from the Oregonian whose hatred of public employees was palpable in his columns. Nelson and his group may be effective in its lobbying efforts - something the Mercury acknowledges - but they are regarded as utter scumbags by those interviewed for the Mercury's piece. So, AOF has gotten religion and dissassociated itself with Nelson and his band of merry pranksters, while OPRI does nothing. Sooner or later, this association with Public Affairs Counsel will come back to bite OPRI really hard, in the pocketbook where it will hurt most. Since there are alternative lobbying firms that have both good reputations as progressive, and equal effectiveness as Nelson, it makes no sense for OPRI to continue in this unhealthy relationship. OPRI needs a divorce soon. Otherwise their effectiveness, whatever it is, will be diminished by its affiliation with a lobbying firm that is consistently on the wrong side of issues that affect PERS members and retirees. AOF got the message. Will OPRI? I'd suggest you contact OPRI to register your displeasure, but all OPRI email and phone calls go directly to Mark Nelson's group. OPRI contracts out all business operations of the organization to Mark Nelson's Public Affairs Counsel. This makes it hard to criticize OPRI's affiliation since we have the fox guarding the henhouse. So, I think that would not be the obvious way to go. Perhaps by tomorrow I can get together a poll posted on this blog that will give OPRI some feedback on how we, as members, feel about continuing this unhealthy relationship. Look for a poll in tomorrow's blog followup. Feel free to add your comments as well to this post. The more the merrier.
In a surprising move, Elizabeth Hovde, the new resident conservative at the local Portland paper has published a followup to her partial hit piece linking PERS and Measures 66 and 67. Surprised by the more than 100 comments she received at Oregonlive.com she tries to set the record straight on the blog. Basically, she admits that she didn't expect the flack from PERS members and retirees and she didn't mean to 'dis public employees. She essentially apologized and then cited her sources for much of the information she provided in the original piece. Not surprisingly, she doesn't back down on much but relies on slippery semantics to try to qualify her answers. It is true that she didn't say "all" public employees get fully-paid medical care, but then cites the numbers who do. She acknowledges my point about the diminishing numbers of Tier 1 members subject to the rate guarantee, but then says she hasn't verified my numbers. At least she admits they "might" be right.
In the end she accepts that Tier 1 members and retirees are probably safe from any further changes to the system, citing the court decisions that have made this abundantly clear. But she argues that the unions and the members are going to have to sit down with management and negotiate out of the current mess (which is?) so that the system will be sustainable for all.
More entertaining are the responses to Hovde. One PERS retiree is having a field day tweaking all the conservatives and others by raving about his benefits and how much he is enjoying retirement life. While I understand the principle, deliberately flaunting this in peoples' faces is probably not a strategy I would use. It is sufficient to make the point that the benefits were earned fairly and squarely by hard work and under a unilateral contract. Beyond that, lavishing attention on the benefits in retirement is like poking sticks in people's eyes. I think it is counterproductive to our cause. The more attention we draw to ourselves by writing these kinds of inflammatory responses, the worse off we'll be. Some may think I'm being hypocritical as I am the most prominent defender of PERS benefits in the state. Nevertheless, if you go back and read my posts you'll see that I've been careful not to expose my benefits to people on a public blog. I'm very happy with my benefits, but that's as much as I'm going to say about them.
On an unrelated topic, the PERS Board and the Oregon Investment Council will be having a joint meeting in late January (the 29th) beginning at noon. This will be preceded by a conference meeting on January 27th. The topic of discussion will be employer rates for the next biennium in light of PERS' returns for 2009. The semi-official returns through November 30, 2009 were 15.5% and with December's runup, the final year's earnings ought to be pretty good. California's PERS ended up with an 11+% gain for CY 2009, which helps their bottom line tremendously. I think the 2009 returns may help mitigate the size of the employers' rates for 2011-2013, although there will be no way for the employers to completely avoid the 2008 hit. You can run, but you can't hide.
I close with my personal thanks to PERS for helping a friend in need. I can't tell you how much it means for people to know that PERS is actually going out of their way to help a family whose situation is, to say the least, quite dire. I do this for friends; I do this for total strangers. If you are frustrated with your dealings with PERS and can't seem to get anyone to listen, please let me know. I do have contacts and I'm not afraid to use them.
Tuesday, January 19, 2010
Please make a note that if you were planning on attending the Court of Appeals arguments in the Arken et al case, the Court of Appeals has rescheduled the hearings for Friday morning, March 5, 2010 at 9:00 a.m. I will post updated information as soon as I get the location firmed up. I presume the hearing will be in Salem, but I don't know where exactly yet. Just remember that this is change in both day and time.
No reason to get annoyed or upset about the time and date change. This kind of stuff happens a lot in court cases.
I hope you notice the new Amazon links to the side of this blog. I've added them to help defray the costs of running this blog (time, ISP, computer equipment, etc). If you link through this site to Amazon and purchase (at the identical price you'd pay anyway), this blog will receive a small percentage of your purchase price for the referral. It isn't much, but every bit counts. While I do this as a labor of love, there are expenses even though the platform (Blogger) is free. So I'd appreciate it if you use Amazon that you consider linking through the boxes on the left side of this blog. You're here anyway. Why not save a few keystrokes and a few seconds of your time to make the link directly and contribute a few cents to the ongoing operation of this site.
Sunday, January 17, 2010
The Whoregonian's new resident conservative, Elizabeth Hovde, still doesn't seem to grasp anything about the PERS system. The fact that she works for the local rag may have something to do with it. The editors of that paper must wear a pair of shades over their eyes that prevents them from seeing the constant error their staff makes about PERS. In today's screed against PERS, Hovde repeats the same tired crap that has cluttered the news for at least the last 15 years. It is time for them to both let is go and to get a clue.
Earth to Elizabeth: only a small fraction of PERS members have a "guaranteed" rate of return. The Oregon Supreme Court ruled in 1996 in OSPOA v Oregon that the earnings rate guarantee for Tier 1 members was part of the members' contract and therefore could not be changed, period, end of story. Furthermore, the court in 2005 in Strunk et al v Oregon ruled that PERS could not temporarily reduce the guarantee to zero. The guarantee is the guarantee. How many more court decisions do you need to spell out that the guarantee is not going away, now or ever until the last Tier 1 member and beneficiary dies.
I realize that this galls people, but there is absolutely nothing, zero, nada, and zilch the state, the legislature, or the courts can do about it. Get over it already. Move on to another topic. This fish won't fly.
It does no good to tell the Oregonian any of this. They KNOW it; they just don't want to acknowledge it. It is an unpleasant fact that they want to go away. If you repeat something often enough, it still doesn't make it true.
I will give Elizabeth Hovde one clap. She did her smarmy best to NOT trash PERS members. Her angst is with the unions and the employers. One cheer for the Oregonian today.
Friday, January 15, 2010
A trip to Salem across the concrete and near the barbed wire seems to be in order. The Oregon Court of Appeals has set the date for oral arguments in the Arken et al litigation for 1:30 on Wednesday March 3, 2010. I don't know the location of the hearing (note to self: probably the Oregon Court of Appeals in Salem). According to what I've heard, this will be a very short hearing and will focus almost exclusively on legal issues. I'm not sure I'll drive all the way to Salem for a half hour hearing, but those of you living in the area might want to attend. It will be interesting to see who presides over this appeal.
Wednesday, January 13, 2010
I've gotten notes from several 2009 retirees that they are still waiting after 6 or so months of retirement without an official Notice of Entitlement. They are receiving estimated benefits that are deliberately low so that there is no possibility that the retiree will owe PERS money for overpayments. While this is very thoughtful of PERS, I'm having trouble understanding why it is taking PERS so long to get out a Notice of Entitlement. The cases I've heard about are all pretty straightforward and PERS is not *that* overworked right now. Why would retirees in June and July still be waiting for their Notices? Anyone else having this trouble with PERS? If so, it might be time for a group exorcism.
Sunday, January 10, 2010
It is a rare occurrence when I find myself agreeing with The Oregonian in an editorial. Last Sunday they came out *against* Ballot Measures 66 and 67. As someone who has supported nearly every tax increase ballot measure and opposed every tax limitation measure, my view of M66 and M67 will surprise many.
I am categorically opposed to the measures introduced by the Legislature and which we will vote on anytime between now and January 26, 2010. My opposition is not to the principle of tax increases, but as an objection to the methods and ways the Legislature sneaked in all sorts of nasty things into these "reforms" and increases. They did not even consider alternatives and any legislator who tries to convince me otherwise is dissembling.
I don't doubt that the schools need more money, that higher education, and human services need more money. But, the Legislature chose two groups to single out for PERMANENT tax increases and did so in the most perverse of ways.
First, let's discuss M66. This is advertised as a simple increase of 1.8% in the marginal tax rate of personal income taxes on singles who earn more than $125,000 per year and joint filers who earn more than $250,000 per year. What isn't made clear is that this is only part of the story. Not stated is the fact that (1) the tax increase is permanent; (2) the tax increase is retroactive to January 1, 2009; (3) the marginal rate rises to 11% on incomes over $500,000; (4) M66 phases out the deduction of federal income taxes paid from $5600 to $4000 on incomes up to $290,000, and then to $0 on incomes above that. All tolled, instead of raising the marginal rate from 9% to 10.8% or 11%, the effective marginal rate rises to close to 12.5% or 13% in most cases. This is an outrage. This is enough to drive many individuals who contribute large sums of money to the Oregon Treasury to consider moving out of Oregon. Who will pay the 54% of taxes individuals or couples in those income brackets currently pay when many decide to pick up and move across the river to Washington and base their employment out of WA. Most people in those income brackets are pretty mobile. We certainly are.
To me, it is outrageous to expect that those 1% of taxpayers pick up an additional 5% of the state's revenue, while the rest of the taxpayers get by scott free (or so they think).
Measure 67 is a slightly different story. I am not opposed to raising the minimum tax for business from $10 to $150. While it is significant in percentage terms, it is not significant in dollar terms. But the Legislature wasn't content to leave the tax alone. Instead, they changed the basis of the tax as well. It used to be that the $10 was the minimum tax a business paid regardless of its profits or losses. However, the new minimum tax is now based on gross receipts before expenses are deducted. So a small business whose sales are, say, $60,000 will pay taxes on that amount rather than paying taxes on the NET sales after expenses. A business with $60,000 gross receipts and a net profit of $2000 will be paying about 30x as much in taxes as before. I can't think of a more regressive form of taxation. Instead of encouraging small business to work harder to up their gross receipts, this measure punishes them for succeeding regardless of the expenses needed to up gross receipts.
Since I have made it a practice to try, whenever possible, to patronize small business (my dry cleaners, my local independent service station, my local hardware store, my barber, etc), this will result in them having to pass on the tax increase in the form of raising prices. This, in turn, may drive me back to the big box stores I try to avoid. And the big box stores won't even be fazed by this change in the tax structure.
So, while the Legislature had dozens of different opportunities to come to grips with Oregon's terrible tax structure, its moronic "kicker" law, and the prospect of a "temporary" tax increase, they managed to choose the most offensive forms of tax increases imaginable. Instead of providing measures to increase tax fairness, to spread the burden equally (or semi-equally) across the various tax brackets, they chose a path designed to antagonize the two groups of people who contribute more in raw dollars to Oregon's treasury than anyone else, and to do it in a blatantly dishonest and disingenuous way. Read the ballot titles and then read the tax measures themselves. Ask yourself just how much information isn't being shared in the ballot title.
Don't let the cries of "woe is me" and "the sky will fall" fool you. The Oregon Legislature's special session will not convene until AFTER the results of this election are in. They will have time to come up with a set of alternatives to these tax measures in ample time to prevent the sky from falling. They're telling you that this will leave a $700 million hole in the budget, but they fail to tell you how big the 2010 "kicker" will be. It isn't that there isn't enough money; it's that the Legislature doesn't want to try to spend it. I call BS and urge people to think very carefully before voting on these measures.
The "rich" and "business" are two convenient "whipping people" for those who like to engage in "class warfare". However, the "rich" won't all be paying these taxes. The ordinary citizen of Oregon will end up paying these taxes in the form of higher prices and diminished services. In addition, both businesses and individuals/couples that are mobile will simply pick up and cross the river as soon as possible. I know that we will.
Oregon no longer owns the patent on "psychic income". I don't feel richer because I live in Oregon. It used to be that Oregon sold itself as the land of milk and honey. Now, I'm afraid, Oregon's reputation is simply the land of a cowardly government that uses emotional blackmail to try to get citizens to do the dirty work that the Legislature and Governor refuse to do. It is always easy to vote for taxes that affect someone else. But believe me, these taxes will come back to haunt everyone if they pass.
I know this entry will piss off many of my friends and colleagues still working in the public sector. I'm sorry that you feel that way. But just remember that there is no such thing as a free lunch.
Note: added 1/12/10. For those of you who may want to take advantage of the special deal to convert traditional IRAs to a Roth IRA, expect the conversion to come under the M66 effects. Just another bite from retirement savings. Major bummer.
Sunday, January 03, 2010
Welcome to 2010, two years ahead of the apocalyse according to the Mayan calendar. But not to worry. We have our own version of apocalyptic worry to deal with.
Another story of PERS' worrisome behavior is worth repeating. I've received several emails from people who retired on December 1, 2009. Recall that this was the last retirement date before PERS rolled out the new mortality tables on January 1, 2010. The new tables change the methodology used to compute the mortality factors and these methods reduce benefits slightly across the board. In any case, these readers planned their retirements around the implementation of the new tables. In at least two cases that I'm aware of, potential retirees submitted their paperwork in plenty of time to meet the December 1 deadline. In both cases, the members received notification after December 1 that there were issues with their lengths of service. In both cases there had been brief breaks-in-service in the past that had just been discovered at the time of the retirement audit. In both cases, members were under 55 and were going out under the 30 year provision. In both cases, their lengths of service were reduced by several months, putting one right on the cusp of not being able to retire.
There is a moral to this story. About two years before planning to retire, YOU should do an audit of your years of service. If you've worked for only one PERS employer, this is easy to do. You need only check with the personnel office to find out whether there are any breaks recorded in your personnel file. If you've worked for multiple PERS employers, then you need to do this for all of them. It is a pain, but is absolutely necessary if you are planning to take a 30 year-and-out retirement and are under 55 years of age. Even if you are a Money Match retiree, you MUST be 55 if you don't have 30 years. This is especially a woman's issue if you've taken time out for child birth etc. Prior to FMLA, these leaves may have been recorded as breaks-in-service and you may not even be aware. A good time to perform this audit would be following receipt of your annual benefit statement in May about two years before retirement.
If you depend on PERS to notify you in a timely manner about deficiencies or discrepancies in your service time, you could find yourself in a situation where you've already given up your job on the expectation that you have sufficient time to meet retirement requirements. That would be a terrible, if not catastrophic, error about which you can do little.
So, make this your New Year's resolution to audit that service time to make sure there are no surprises waiting for you at the end. Otherwise, it will be the same old song and dance at PERS, with you sitting on the sidelines without a partner.
Happy New Year.