As discussed at the OSFFC convention in April, we are very concerned with many of the decisions being made by the PERS Board and the impact these decisions are having on our members.

One of the most pressing decisions being contemplated for implementation by the PERS Board has to do with a portion of the Lipscomb decision (The City of Eugene case et al filed against PERS) regarding the Employer Variable account as it pertains to the Money Match calculation.

In short, Judge Lipscomb in the circuit court case heard two years ago, ruled that employers only have to match an employees account for purposes of the Money Match benefit up to what would have been earned in a member’s Regular account (sometime referred to generically as the "fixed account"), and not the full amount that was earned by the Variable account. For example, if the Regular account earned 8% and the Variable account earned 20% in a particular year, the employer for purposes of calculating the Money Match benefit would only have to match the 8% and not the full 20%. Needless to say, we take extreme exception to this interpretation and feel it is not only unlawful, but makes no sense whatsoever. Unfortunately, the PERS Board has agreed to settle the Lipscomb decision without the approval or even entering in to discussion with our counsel, Greg Hartman, and therefore has elected to start implementing portions of the Lipscomb decision through the administrative rulemaking process. While we will take the appropriate and necessary actions to protect our members pension benefits, the time constraints and ultimate outcome will more than likely not be known prior to the implementation of the temporary rule. In other words, some members may very well be harmed by this proposed rule imposed by the PERS Board.

In this particular case, PERS has crafted a temporary rule that is to go in to effect July 1, 2004, which means in order to avoid being impacted by this rule,a member must retire in May to have an effective retirement date of June 1, 2004.

The temporary administrative rule, ( 282 KB) adopted by the PERS Board at its April 12, 2004 meeting, includes a process to calculate a Money Match retirement for a member who participated in the variable as if that member had only been in the regular account. The new method will mean that members whose allowance would increase because their variable account outperformed the regular will not receive as much of an increase, and those whose allowance would have decreased because their variable account under_performed the regular account will not be subject to as much of a decrease.

I have been in contact with Greg Hartman as well as PERS officials to try and determine whether or not individuals who have elected to utilize their "One Time Rollover" will be included or exempted from this rule. Unfortunately, the earliest that we can expect an answer regarding this question is at the May 11, 2004 PERS Board meeting. For those members who will be negatively impacted by this rule and are already eligible to retire, this will only give you 19 days to make arguably one of the most difficult decisions you have to make. We continually address this problem not only with PERS administration and the Board, but with the Governor’s office and elected officials, and there is hope for improvement, but not anytime soon.

In closing, please make sure that you fully understand the impact this rule change will have on your retirement benefit before you elect to retire. Also, as stated at the Convention, if any of you are in need of additional information, contact your Local President who can get you in touch with either myself or Pat West. It is our hope and intent to continue to provide our members with the most up to date and accurate information as possible. I would strongly recommend that each and every one of you considering retirement to routinely check the PERS website for the most up to date information regarding your retirement decisions.

Sincerely,

Bob Livingston