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Public sector employees make a break for exit door

PERS changes spur employees to get out while getting is good


by: TIMES PHOTO: JAIME VALDEZ - Janice Avidan teaches math to her fourth-graders at Buckman Elementary School. Shes one of about 100 Portland Public Schools teachers who filed to retire last week. That trend doesnt seem to be the case in Tigard or Tualatin that saw few retirements this year.A flurry of teachers and other Oregon public employees are retiring this year, by far the largest retirement bulge since before the Great Recession.

Statewide, more than 9,500 people have filed to start receiving Oregon Public Employees Retirement System pensions — 44 percent more than last year. A large share of them filed to retire on Dec. 1 to avoid taking a modest hit to their PERS pensions.

Across the Portland area, people are racing to retire before new rules take affect.

Janice Avidan, a fourth-grade teacher at Buckman Elementary School in Portland, is one of 99 Portland Public Schools teachers who officially retired Dec. 1.

“I’m just ready; I felt it in my bones,” says Avidan, who turns 60 in January, and has taught 29 years.

Avidan had planned to formally retire at the end of the school year next June, but moved her date up when she found out her PERS pension will be trimmed roughly 2 percent if she retires Jan. 1 or later.

Avidan, like many others, will continue teaching until the end of the school year, since retirees are allowed to work a half-year or half-time while drawing PERS checks.

Including non-teachers, 149 Portland Public Schools employees officially retired at the start of the month, according to data supplied by district spokeswoman Christine Miles. That’s more than the entire number who retired all last school year, or the five prior school years.

But few public employees in Tigard and Tualatin have opted to leave early.

According to the Tigard-Tualatin School District, six people have announced their retirement this year, the same number that retired two years ago.

At the city of Tigard, Human Resources Director Sandy Zodrow said no public employees eligible for PERS had announced their retirement this year. In Tigard, city employees receive retirement benefits through the International City Manager Association, which is not impacted by PERS changes. It is one of the few cities in the state that doesn’t use PERS for the majority of its employees.

Only sworn police officers are covered by PERS in Tigard, though city officials did seriously consider the idea of joining PERS more than a decade ago. Ultimately, the city decided against it for all but its police department, citing future cost increases as a concern.

In Tualatin, city and law enforcement employees participate in PERS, according to Deputy City Manager Sara Singer. For management and non-management city employees, as well as sworn Tualatin law enforcement, the city pays the employer contribution to PERS, with employees required to contribute 6 percent of the overall contribution. There is an exception for police sergeants, for whom the city pays the entire contribution.

This year, two employees of the Tualatin Police Department recently retired: a longtime parking enforcement technician last autumn, followed by Sgt. Larry Clow. Public Information Officer Jennifer Massey said two department employees were eligible to retire this year, but neither planned to.

Elsewhere across the region, public employees are seemingly racing to get out the door.

At Metro, the regional government, 24 people retired in 2013, the largest number in more than a decade, says Mary Rowe, human resources director.

One of them is Bill Doran, a park ranger at Oxbow Regional Park who retired at the start of the month. Doran, 62, had planned on retiring at year’s end, after 36 years on the job. By retiring a month early, he figures he avoided a 2.3 percent hit to his pension.

“When I heard that was a possibility, I left,” Doran says. “It was kind of a no-brainer.”

One-third of all PERS-covered public employees are now eligible to retire, says David Crosley, PERS spokesman. Many of them get more anxious whenever there’s talk of PERS reforms, he says, as there was throughout this year’s regular legislative session and the fall special session. PERS retirements often jump in years when there are regular legislative sessions, Crosley says.

But the much-publicized PERS cutbacks made by the Legislature this year — reducing cost-of-living adjustments and ending a tax subsidy for out-of-state retirees — only affect people once they are retired, Crosley notes.

Public employees still on the job won’t face those cuts until they retire, and there’s nothing they can do to avoid them, he says, unless the courts overturn the PERS reforms.

But there were two changes made by the PERS board this year that will reduce pensions for those who retire starting Jan. 1.

Board actions

The PERS board reduced the 8 percent “assumed earnings rate” to 7.75 percent, and it updated actuarial tables to adjust for changing life expectancies and related factors.

The pension system operates with an assumption that its investments will earn enough to boost workers’ regular retirement accounts by 8 percent a year. Tier 1 public employees, who joined PERS before 1995, are guaranteed their regular accounts will grow 8 percent a year, no matter how PERS investments fare. If those employees retire under the Money Match program, PERS calculates their pensions on the assumption their funds will continue to earn 8 percent a year.

But professionals now project that investments won’t earn as much in coming decades, so the PERS board dropped its assumed earnings rate to 7.75 percent. As a result, when Tier 1 workers retire under Money Match, their pensions will be “annuitized” — converted to a monthly payment for life — assuming their accounts will earn slightly less in future years.

The changes in actuarial tables also reduced pensions somewhat, and the combination caused many public employees to hit the exit doors rather than see their pensions fall.

But when the PERS actuary calculated the impact of the two board decisions, it turned out to be relatively small. And, it’s important to note, the reductions only affect Tier 1 members retiring under the Money Match calculation. Those who joined the system after 1996, or who retire under the formula — a fixed percentage of their final average salary for each year they work — won’t see any reductions from the two board changes.

For those affected, it’s roughly a 2 percent hit. The PERS actuary calculated that a typical 55-year-old retiring Dec. 1 on Money Match would avert a 1.9 percent reduction in his or her pension that takes effect starting with 2014 retirees. A 65-year-old in the same boat would avert a 2.3 percent reduction.

But those employees could make up much or all of those losses merely by working several months longer.

People decide to retire based on multiple factors, including job satisfaction, family situations, health care, children in college and other funds.

Many people delayed retiring when the Great Recession ravaged their home values and other investments. That pent-up demand may partly explain this year’s surge in retirements, because many peoples’ home values have recovered, and the stock market hit record highs. That gives people more confidence about retiring, or the necessary earnings if they or their spouse plan to supplement PERS pensions with IRAs or 401(k)s.

Times reporters Geoff Pursinger and Saundra Sorenson contributed to this story.




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