Tag Archives: PERS

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True grift: Oregon’s Gov. Kate Brown rewards another politician with a cushy pension-enhancing appointment

Gov. Kate Brown Brown has found a nice new lucrative home for State Sen. Ginny Burdick (D-Portland).

State Sen. Ginny Burdick (D-Portland)

Last week Brown nominated Burdick, who has no particular power and conservation expertise, for a seat on the Pacific Northwest Electric Power and Conservation Planning Council. The Council is a federally funded panel that provides policy and planning leadership on regional power, fish and wildlife issues.

If Burdick, 73, is approved by the Senate Rules Committee for a three-year term on the Council, beginning Nov. 1, 2021, not only will she make $120,000 a year, but she’ll likely end up with a much fatter PERS pension payout than her 25 years of legislative service alone would have provided.

That’s because lifetime retirement benefits under PERS are designed to provide approximately 45 percent of a state employee’s final average salary at retirement. Final average salary is generally the average of the highest three consecutive years or 1/3 of total salary in the last 36 months of employment.

As a legislator, Burdick has an annual salary of just $31,200 plus $149 each day of the legislative session to pay for meals and lodging.  After three years on the Council, Burdick’s pension will be calculated using her new substantially higher salary, potentially rewarding her with hundreds of thousands of extra dollars over here lifetime. This when PERS is already overwhelmed with billions in unfunded liabilities.

To say it’s all a scam is being too charitable.

Brown played the same game in 2017 when she put then Sen. Richard Devlin (D-Tualatin) and Sen. Ted Ferrioli (R-John Day) on the Council.

In March, Gov. Brown nominated Pendleton resident Chuck Sams, interim Executive Director of the Confederated Tribes of the Umatilla Indian Reservation, to replace Fererioli on the Council.  If approved, Burdick will replace Devlin.

Welcome to the trough, Sen. Burdick.

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Hy·poc·ri·sy in action: Oregon Senate Committee approves appointments by Gov. Brown that will undermine PERS

PERScartoon

Oregon legislators of both parties, with some help from Gov. Kate Brown, took care of their own today (Nov 13) and set up a raid on an already burdened PERS in the process.

The Senate Committee on Rules and Appointments, meeting in a packed Hearing Room B at the State Capitol, approved Gov. Brown’s appointment of two state senators, Richard Devlin (D-Tualatin) and Ted Ferrioli (R-John Day), to high-paying positions on the Northwest Power and Conservation Council.

committeeHeAringSen. Devlin (L) and Sen. Ferrioli (R) appear before the Senate Committee on Rules and Appointments

The Council is a federally funded panel that provides policy and planning leadership on regional power, fish and wildlife issues. Though the Council is a regional body with representatives from four states (Oregon, Washington, Idaho, Montana), Oregon members are considered state employees and take advantage of state benefits, including PERS.

As members of the Legislature, Devlin and Ferrioli are each paid an annual salary of $24,216. At the committee meeting, Ferrioli acknowledged that his new job will be a “lucrative position”. As members of the Council, they will each make $120,000 a year.

Neither man noted that the appointments will also mean big retirement rewards.   Conveniently for Devlin and Ferrioli, they have each been appointed to three-year terms. Lifetime retirement benefits under PERS are designed to provide approximately 45 percent of a state employee’s final average salary at retirement. Final average salary is generally the average of the highest three consecutive years or 1/3 of total salary in the last 36 months of employment.

That means Devlin and Ferrioli will likely end up exploiting PERS for big payouts, potentially rewarding them with hundreds of thousands of extra dollars in benefits. This when PERS is already overwhelmed with billions of dollars in unfunded actuarial liabilities (UAL) and a task force appointed by Brown has just released a report outlining drastic measures that could be taken to partially address the problem.

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Attorney General John Mitchell

“Watch what we do, not what we say,” President Nixon’s Attorney General, John Mitchell, told the press at the start of Nixon’s presidency in 1969.  Oregonians should do the same with the constant blathering of Gov. Brown and legislators about PERS’ deplorable financial condition and their determination to address the problem. Words, just words.

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Just Say No! Stop Gov. Brown from helping former legislators cash in on PERS

GovBrownFastOne

What, me try to pull a fast one?

Oregon’s Senate Rules Committee needs to straighten up and fly right when it considers proposed appointments by Gov. Kate Brown one week from today.

Brown has nominated Sen. Richard Devlin (D-Tualatin) and Sen. Ted Ferrioli (R-John Day) to the Northwest Power & Conservation Council, a federally funded panel that provides policy and planning leadership on regional power, fish and wildlife issues.

The Senate Rules Committee is scheduled to consider the nominations on Nov. 13. It should just say no.

If the two men, neither of whom have power and conservation expertise, are approved for the Council positions, not only will they each make $120,000 a year, but they’ll likely end up exploiting PERS for big payouts. That’s because their pensions will be calculated using their new high salaries, potentially rewarding them with hundreds of thousands of extra dollars. This when PERS is already overwhelmed with billions of dollars in unfunded liabilities.

I remember when smug Enron executives tried to intimidate Oregon Public Utility Commissioners in an effort to secure approval for Enron’s takeover of PGE. Commissioner Joan H. Smith blasted the Enron people at a hearing for assuming Oregonians were simple-minded country bumpkins . “Do you think we all just fell off a turnip truck,” she said.

Gov. Brown must think the members of the Senate Rules Committee just did.

Members of the Senate Interim Committee on Rules and Executive Appointments

Chair Senate Majority Leader Ginny Burdick
Vice-Chair Senate Republican Leader Ted Ferrioli
Member Senator Lee Beyer
Member Senator Brian Boquist
Member Senator Arnie Roblan

 

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Double dealing with PERS: enough of Gov. Brown’s shenanigans

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What, me two-faced?

What one hand giveth, another taketh away.

Gov. Kate Brown knows how it works.

Just as a task force she appointed puts out a report on how PERS’ massive unfunded actuarial liability (UAL) might be reduced, Brown appoints two legislators to jobs that will drain PERS of hundreds of thousands of dollars.

The Task Force, which Brown charged with identifying options to generate additional funding to reduce the PERS UAL by up to $5 billion over the next five years, issued its report yesterday (Nov. 1). Ideas put forward in the report to generate revenue for PERS , which would impact all Oregonians, include:

  • Privatize state universities
  • Sell surplus port and airport property
  • Sell additional Common School Fund land assets
  • Expand the types of gaming the Oregon Lottery offers and direct revenue from these new options toward PERS
  • Impose a charge for new water rights based on market prices.
  • Sell or do an IPO of SAIF
  • Institute more aggressive foreclosures on properties with property tax and other liens (“Cities could use their own discretion to use the streamlined process (in order to make sure they don’t evict 85-year old grandmothers,” the report notes.)
  • Increase OLCC’s flexibility to operate the spirits business to maximize profits; Increase alcohol licensing fees and excise taxes on beer and wine; impose a surcharge on all distilled spirit (liquor) sales in Oregon, calculated as a percentage of the retail sales price (e.g., 1%, 5%, or 10%).

While all this revenue-raising analysis is going on, Gov. Brown is proposing to undermine PERS’ financial health by conspiring with Sen. Richard Devlin (D-Tualatin) and Sen. Ted Ferrioli (R-John Day) to enrich the legislators, fleece PERS and drive up the costs of PERS payers, such as schools and local governments.

As I’ve pointed out previously, on Oct. 23, Brown nominated Devlin and Ferrioli to the Northwest Power & Conservation Council, a federally funded panel that provides policy and planning leadership on regional power, fish and wildlife issues. The Senate Rules Committee is scheduled to consider the nominations on Nov. 13.

The council positions come with a $120,000 annual salary, substantially more than Devlin and Ferrioli have been making from their legislative salaries.

Furthermore, as The Oregonian’s Ted Sickinger reported this past week, both men will likely end up raiding PERS for big payouts.

The jobs “…will allow both legislators to double dip, turbocharge their public pensions, or both,” Sickinger reported.

As Sickinger explained it:

“Ferrioli already draws a $33,083 annual pension from the Public Employees Retirement System. That benefit stems from 6½ years working for the Oregon Department of Veterans Affairs in the late ’70s and early ’80s…And because he is already at retirement age, he is allowed to double dip, continuing to collect it while working full time at the council.

Meanwhile, Ferrioli is eligible for a separate pension for his 20 years of legislative service. And if his Senate colleagues confirm him to the new position, that pension will be calculated using his new higher salary and the extra years of service he earns at the power council, according to PERS.

It’s unclear how much service credit Ferrioli earned during his years at the Legislature, given the part-time work. But assuming he sticks with the job for the first three-year term, the new salary could quintuple his legislative pension, which could translate to hundreds of thousands of dollars in extra benefits over the course of his retirement (emphasis mine). And he could start drawing that while continuing to work at the council.

Devlin, too, could see a similar multiplier in his legislative pension if confirmed. He, too, has 20 years of legislative service and is eligible to start drawing his pension. But if he holds off, the new salary and service at the power council would balloon those benefits after three years.”

This brazen attempt to exploit PERS when it is already suffering from billions in unfunded liabilities needs to be cut off at the pass.

If they want to maintain their reputations as public servants, Devlin and Ferrioli should either decline the Council appointments or they should refuse any additional PERS benefits that may arise because of them.

And Gov. Brown and the Legislature need to put a stop to this practice of raiding PERS to enrich former Legislators. It’s time to stop taking Oregonians for rubes.

 

 

 

 

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Abuse of Power: Gov. Kate Brown’s PERS Payoff

Kate Brown

Why is Gov. Kate Brown laughing?

Co-conspirators Gov. Kate Brown (D), Sen. Richard Devlin (D-Tualatin) and Sen. Ted Ferrioli (R-John Day) have concocted a bipartisan scheme to enrich the legislators and fleece the Public Employees Retirement System (PERS).

This while a task force appointed by Gov. Brown has been trying to determine the best ways to slash the the crushing PERS debt by $5 billion. The task Force’s report is expected to be submitted on Nov. 1. The PERS Board has predicted that if solutions aren’t found, PERS costs could rise from 17 percent of state and local government annual payrolls to 34 percent in 2021. That would be likely to force worker layoffs.

And you thought Oregon was a corruption-free state.

On Oct. 23, Brown nominated Devlin and Ferrioli to the Northwest Power & Conservation Council, a federally funded panel that provides policy and planning leadership on regional power, fish and wildlife issues. The Senate Rules Committee is scheduled to consider the nominations on Nov. 13.

Neither legislator will bring any expertise in regional power, fish and wildlife issues to the Council. Devlin, 65, is a retired corrections officer and private investigator. Ferrioli, 66, is a retired public relations executive.

But their lack of expertise is not the most egregious issue. It’s their exploitation of the public purse.

First, the council positions come with a $120,000 annual salary, substantially more than Devlin and Ferrioli have been making from their legislative salaries.

Second, as The Oregonian’s Ted Sickinger reported this past week, both men will be raiding PERS for big payouts.

The jobs “…will allow both legislators to double dip, turbocharge their public pensions, or both,” Sickinger reported.

This is how Sickinger put it:

“Ferrioli already draws a $33,083 annual pension from the Public Employees Retirement System. That benefit stems from 6½ years working for the Oregon Department of Veterans Affairs in the late ’70s and early ’80s…And because he is already at retirement age, he is allowed to double dip, continuing to collect it while working full time at the council.

Meanwhile, Ferrioli is eligible for a separate pension for his 20 years of legislative service. And if his Senate colleagues confirm him to the new position, that pension will be calculated using his new higher salary and the extra years of service he earns at the power council, according to PERS.

It’s unclear how much service credit Ferrioli earned during his years at the Legislature, given the part-time work. But assuming he sticks with the job for the first three-year term, the new salary could quintuple his legislative pension, which could translate to hundreds of thousands of dollars in extra benefits over the course of his retirement (emphasis mine). And he could start drawing that while continuing to work at the council.

Devlin, too, could see a similar multiplier in his legislative pension if confirmed. He, too, has 20 years of legislative service and is eligible to start drawing his pension. But if he holds off, the new salary and service at the power council would balloon those benefits after three years.”

This brazen attempt to exploit PERS, which Brown, Devlin and Ferrioli know is already in deep trouble, needs to be cut off at the pass.

If they want to maintain their reputations as public servants, Devlin and Ferrioli should either decline the Council appointments or they should refuse any additional PERS benefits that may arise because of them.

Gov. Brown needs to stop taking Oregonians for rubes. It’s time to put a stop to this abuse of the system.

 

 

 

 

 

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PERS problems? Some charter schools say, “Fugettaboutit”

PERSlogo

Oregon’s traditional public schools may be struggling with escalating pension costs, but some charter schools aren’t worried. They’ve figured a way out.

Oregon’s charter school law says public charter schools are public employers, so teachers and staff are required to participate in PERS, the Public Employees Retirement System.

For charter schools, that has traditionally meant teachers and staff were required to contribute a percentage of their pay to PERS and the employing agency had to match these contributions with a percentage of total payroll. The problem is employer contribution rates have been escalating, imposing an increasing burden on charter school budgets.

In early 2011, after PERS announced an increase in the employer contribution rate, Kings Valley Charter School, sponsored by the Philomath School District, worried that increases would force the school to reduce its operations or even close.

kingsvalleycharterschool

In Sept. 2000, an opinion from Oregon Attorney General Hardy Meyers declared the following:

  1. Under ORS chapter 338, may a public charter school contract out its operations to a private, for-profit entity? Yes, assuming that the contract is consistent with the terms of the charter and all applicable laws.
  2. Would contracting out a public charter school’s operational responsibilities to a for-profit entity violate the Oregon Constitution because it would result in the loss of governmental accountability for the performance of governmental functions? No, but in order for a public charter school’s contracting out of the school’s operations to a private, for-profit entity to be constitutional, the public charter school must :(1) maintain a right of control over delegated governmental functions; (2) provide procedural safeguards to affected members of the public in relation to those aspects of the school’s operations that constitute the governmental function of providing a public education.

A non-profit group, People Sustaining Kings Valley (PSKV), was formed to come to Kings Valley’s rescue as an independent contractor. At the start of the 2011-2012 school year, the school contracted with PSKV to have it hire 35 of its 36 employees, everybody but the school’s director. The school subsequently agreed to pay PSKV $973,637 for specified services that school year, including providing instructors and teacher assistants.

With that move, the teachers and staff, as private employees of PSKV, were no longer required to participate in PERS, saving the school about $80,000 a year in PERS contributions.

This also allowed teachers and staff to participate in a pension program provided by PSKV. Under the new system, PSKV automatically contributes 6 percent of the employee’s salary to a 403b retirement plan and the employee can decide whether to contribute more.

“The school has received considerable positive feedback from the teachers and staff regarding the new arrangement,” reported a Jan-Feb. 2013 Charter Starters Newsflash, though it wasn’t at all clear whether the end retirement benefit with the 403b, which would vary with the market, would be better or worse than a PERS benefit.

As for PERS itself, the impact of decreased member participation resulting from any PERS employer engaging “independent contractors” who are not eligible for PERS participation rather than “employees” who are eligible for PERS participation is somewhat neutral, PERS says.

Generally speaking, to the extent any public employer has more “employees” participating as members of PERS it would help to decrease the unfunded actuarial liability (UAL) in the short term because of the corresponding contribution payments. However, it would also increase the future pension liability in the long run because of the increased benefit obligations accrued by those members. Conversely, if a public employer has less employees participating in PERS it would not help decrease the UAL in the short-term, however, neither would it increase the future pension liability.

logoslogo

Logos Public Charter School, sponsored by the Medford School District, has a similar arrangement with a private company, Western Collegiate Consulting (WCC). On its website, WCC says it is “a state certified Professional Employment Organization (PEO) that was specifically created to provide charter schools in Oregon… qualified teachers and staff …”

WCC registered with the Oregon Secretary of State as an Eagle Point, OR business on Oct. 28, 2015. In a rather interesting relationship that could pose a conflict of interest, the Chief Executive Officer of WCC is Joseph D. VonDoloski, who was a principal organizer of Logos and served as its Executive Director until Aug. 2017. VonDoloski left Logos and simultaneously, as CEO of WCC, hired all its teachers and staff.

Logos entered into a 30-page contract with WCC on August 1, 2017, according to Cassie Zimmerer, WCC’s Chief Human Resources Officer. Logos’ former business manager, she is the daughter of Logos’ current Executive Director, Sheryl Zimmerer.

“As part of the agreement, WCC onboarded the majority of Logos’ previous existing employees and hired approximately 10-15 more individuals to fit the school’s needs for next year,” Cassie Zimmerer said. She added that WCC WCC offers a benefit package to it’s employees which includes a 401k matching program (up to 6%) that employees are fully vested in day #1.

The Medford School District subsequently raised the conflict of interest issue. It also questioned whether Logos had complied with state contracting statutes when it contracted with WCC. Those statutes, Medford asserted, require Logos to show using WCC is more cost effective than using its own personnel and resources or that it wasn’t feasible for Logos to use its own personnel.

According to the Oregon Government Ethics Commission, the Medford School District has filed an ethics complaint with the Commission over the situation and the Commission is currently conducting a review.

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READ MORE about charter schools:

Virtual Charter Schools Don’t Compute

Too many Oregon virtual charter school students skip state tests

 

 

 

 

 

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City Club of Portland: wrong on Measure 97

tax-increaseAppalling! What else can you say?

Members of the City Club of Portland voted Tuesday to support Measure 97, which proposes imposing burdensome gross receipts taxes on Oregon businesses that could total $6.1 billion in the 2017-19 biennium.

It’s hard to believe that such a distinguished civic group could support such a flawed scheme.

Oregon’s General Fund expenses are expected to grow by about 14 percent, or $2.7 billion, in the 2017-2019 biennium. The budget anticipates only about half that will be covered by new revenue, translating to a projected $1.35 billion shortfall.

Given such things as public employee pay increases, higher Medicaid expenses, and pension rate increases for state government and school district employees covered by PERS, some additional revenue may be justified. But not $6.1 billion. That’s highway robbery.

And collecting the additional revenue through an odious gross receipts tax, which ignores a business’s profitability, or lack thereof, is irresponsible. How well-educated City Club members, many of whom presumably work in the private sector, could endorse such a tax is inexplicable.

Also damning is the uneven applicability of Measure 97’s proposed taxes. Taxation of just C Corporations would create a vastly uneven playing field for Oregon businesses.

As the minority noted in the City Club’s committee report, “Many large businesses are LLCs and S corps, and they often compete with C corps in similar sectors. For example, Fred Meyer (Kroger) and Safeway grocery store chains are C corps and would pay the tax. New Seasons Market, a B corporation,47 and Albertson’s, a limited liability corporation (LLC),48 would not pay it. “

The flaws in the City Club’s arguments in favor of Measure 97 are evident right off the bat.

The City Club committee charged with determining the merit of Measure 97 said it “…presents a long-awaited opportunity to assure adequate investment in the health, education and the well-being of Oregonians.”

Nonsense!

The fact is there is absolutely no guarantee the legislature will apply Measure 97 revenue to early childhood through grade 12 public education, healthcare and services for senior citizens, in the coming years as the measure states.

If Measure 97 is approved by voters, the Legislature can appropriate its revenues “in any way it chooses,” Legislative Counsel Dexter Johnson said in an Aug. 1 letter to Rep. John Davis, R-Wilsonville, a member of the House Committee on Revenue. Not only are Legislators “not bound by the spending requirements” of Measure 97, they can “simply ignore” them,” Johnson added.

What is most likely is that over time Measure 97 revenue would be spread around like honey in response to pressure from self-serving special interests with access to, and influence on, decision-makers.

Rep. Mitch Greenlick (D-Portland) said when endorsing the measure, “If that passes, we’ll have a lot of money to pay for stuff.” The hundreds of groups that spend millions annually lobbying the legislature will have plenty of ideas on what “stuff” to spend the money on.

There’s also a high likelihood that some of those lobbyists will seek exemptions from all or part of the tax, just as Nike cut a deal with former Gov. John Kitzhaber and the legislature in 2012 to protect it from changes in the way the state calculates the company’s state income taxes.

Gov. Brown has already said she’d favor some “technical adjustments” if Measure 97 passes, including:

  • Allowing businesses to subtract a portion of their Oregon payroll from their corporate tax bill.
  • Prohibiting businesses from changing their corporate status “for the primary purpose” of evading the new gross receipts tax. (As written, the measure would exempt “benefit corporations” from the new tax)
  • Helping out software companies in Oregon by classifying sales of their services based on the location of the purchaser, rather than the location of the company selling the service.

The majority of the City Club committee that recommended a “yes” vote on Measure 97 also argued that “… the potential benefit of adequately funded state services outweighed any of the tax’s potential detrimental effects and that the consequences of prolonging the state’s revenue shortage where (sic) too great.”

Outweighed “any of the potential detrimental effects”? In other words, satisfying the state’s greed with $6.1 billion in additional revenue per biennium is more important that an expected dampening of income, job and population growth. Give me a break.

Finally, in endorsing Measure 97, the City Club is giving an easy out to liberal Democrats who want to avoid tackling difficult spending issues.

For example, as the minority pointed out, the unfunded PERS liability is $21-$22 billion. If nothing is done to deal with the creeping cost of PERS, even the Measure 97 windfall won’t be enough to avoid a funding crisis.

It’s not as though Oregon’s budget problems snuck up on the Democrat-controlled Legislature, leaving it no choice but to abdicate its responsibilities and leave it to a poorly crafted union-inspired ballot measure to fix things.

It’s been abundantly clear for a long time that trouble was coming. Where was the grit to fix things right?

 

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Hear that sucking sound? That’s Oregon tax Initiative Petition 28

Democrats and their union allies want to suck more money out of Oregon businesses than we thought.

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Oregon’s Legislative Revenue Office predicted today (May 23, 2016) that Initiative Petition 28, if approved in November, would generate $6.1 billion in new revenue by the 2017-19 biennium. That’s almost $1 billion more than the $5.3 billion initially predicted.

Talk about greed!

The Revenue Office’s report also estimated that 38,220 private sector jobs would be lost by 2022 if the initiative passed. Meanwhile, in an odd twist, the public sector would add 17,700 jobs.

Talk about an absurd outcome!

And Gov. Kate Brown’s thoughtful response?  “I greatly appreciate the analysis provided by the Legislative Revenue Office, which helps inform our understanding of the impacts of IP-28,” Brown said. “As I have said previously, the problem I remain focused on is how to improve our graduation rate and fund essential services while sustaining economic growth and protecting Oregon jobs. I will begin discussions with my legislative colleagues about a way forward that, should the measure pass, would safeguard new revenue for education while sustaining economic growth and protecting Oregon jobs.”

Whew! Makes you wonder if the governor is being paid by the word.

Initiative Petition 28 is being promoted by A Better Oregon, a campaign organization operating under the umbrella of Portland-based Our Oregon, a coalition of unions and progressive groups.

The measure would raise the corporate minimum tax on Oregon sales of more than $25 million a year from the current minimum of $50,000 to $30,001 plus 2.5 percent of the excess over $25 million. The tax would be based solely on sales, not profit.

Corporate taxes during the 2017-2019 biennium under the current system are projected to reach about $1.1 billion.

In other words, the passage of Initiative petition 28 would increase corporate tax collections per biennium by almost 600 percent in one fell swoop.

Rep. Mitch Greenlick (D-Portland), when endorsing the measure, said it would eliminate much of the constant need to choose between funding critical budget concerns each legislative session. “If that passes, we’ll have a lot of money to pay for stuff,” Greenlick said.

Otherwise, Greenlick said, most of the additional revenue in the economic forecast for the 2017-2019 budget would go to cover increased PERS liabilities and the state’s increased share of Medicaid funding, leaving little additional revenue for new stuff.

“This measure will make sure that large and out-of-state corporations do their part to fund the schools and services that will make Oregon thrive,” Our Oregon says.

As long ago as I can remember advocates for higher taxes in Oregon have been making “out-of-state corporations” the bogeyman, the malignant beast that’s doing Oregonians wrong and needs to pay.

But as attractive a target as these corporations are, they’re not fools. They will find a way to avoid paying the taxes or they’ll pass on the added taxes to Oregon consumers.

Then we’d all pay.

The liberal coalition behind Initiative petition 28, recalling their success in a tax increase battle in 2010, may be figuring they have a sure thing again with another measure targeting big business, but hopefully Oregonians in their wisdom will see this proposal is a reach too far.