See their resolution.

Comment is as follows:

Suppose that I were to advocate that the Oregon Constitution should be modified in total -- How reasonable would it be for me to say, perhaps, that the new replacement Oregon Constitution only applies to persons who were born after the new one is adopted?

I believe that creating multiple tiers of citizens is just that loony, and the same too for multiple tiers of firefighters and police officers.

Could I likewise advocate, as to a whole new Oregon Constitution, that earlier born folks (all those alive at the time of passage) would be prohibited from demanding that they be able to rely on the replacement Oregon Constitution to give order and predictability to their lives going forward?

Yes -- I think you folks have lost your minds.

I need just one and only one of the tier-one and tier-two FPD&R special beneficiaries to demand that they want a final court resolution for all pay related matters for all past work and that all new work shall be governed by the replacement plan, just as if the replacement plan applied to all employees for all future work -- consistent with the Oregon Constitution's Equal Privileges and Immunities Clause.

You can download the full text of the proposal in the attachment below. This is much more information than simply the ballot title.

[UPDATE Sept 9. It seems that in order to see the links to the attached files you would first have to register with a username and password.]

UPDATE Sept 13 in response to "A band-aid won't fix it"

Surprise Surprise Surprise (in my best Gomer Pyle impression) someone outs the intention (as it was all along) to get to a point of issuing Pension Obligation Bonds.

The GASB has zero, absolutely zero, force of law. It had previously left open (open to local government resolution -- and for good reason) the stark difference between pay-as-you-go and fully funded.

Shall we play a game of catch-up on the issue?

How about accepting the notion of attacking the multi-tier nature of the proposed scheme going forward for pay for future work. (etc)

Review the first utterance I made at the city council hearing to adopt a report on the matter. "I oppose issuing bonds for the purpose of sending the proceeds to Wall Street." (roughly those words) Take that focus and work backwards to hunt for the team of local folks that believe, unwittingly or wittingly, that it does make sense.

In today's style of government a liability can be converted into an asset, here the OIC will be arbitrarily and unaccountably deciding where to invest all those bond proceeds. Who gets a cut of the investment -- just like the OIC/TPG/PGE thing, all over again? Let's not lose sight of the fact that there are some players that know exactly what they are doing and why.

Nationwide, a sound pay-as-you-go "government" pension scheme is not very amenable to channelling public dollars to Wall Street. If it is not sound pay-as-you-go, but rather the private dollars of the private folks then let them make their own private decision to place their bets on Wall Street, fully at their own risk. Can the legislature ordain that there shall be 8 percent returns on private investments, in fact, in the future (but only for the private investments of public employees)? An actuary's "assumption" is just like that. Snake oil from a mystic, here a (likely) federally qualified expert witness on mysticism. The proposed cure is worse than the disease.

It is the O that proclaims that bond ratings are like God -- where the super Man of Steel comes to the rescue. Yeah -- and I am the Joker. Just call it "unsound" not underfunded.

UPDATE Thursday, September 14 AM:

Suppose I convince a judge to declare the amendment violative of the superior prohibition on the creation of a closed class of folks, as to future pay for future work, so as to vindicate the Equal Privileges and Immunities clause of the Oregon Constitution. Which of the two alternative remedies should I demand:

One, void the amendment and thus give the new hires the same plan that all presently living members now enjoy; or,

Two, demand that all terms of pension pay for future work, for all safety workers, be governed by the terms that are set for the "new hires."

The second one would force a single one-time and one-time-only resolution in court that conforms to the judicially self-imposed limit on their own jurisdiction to matters that can result in "finality," here as to the "contract" for past [I guess I should say contracted rather than past] pay for past work. It can closely resemble the terms for terminated private pension plans, an annuity stream that begins at a future date.

I have not yet heard anyone argue that if the present plan were terminated in total for all and for all future work that the city would NOT MAKE PAYMENTS FOR PAST WORK AS THEY COME DUE. Unlike a private pension plan the government here also wears the "insurer" hat. (See, for context, a congressional finding : "(3) the existence of a sound termination insurance system is fundamental to the retirement income security of participants and beneficiaries of such plans;" -- for private pensions.)

As with terminated private plans, at the instant that the insurer steps in to cover for the employer sponsor, further contributions are prohibited.

The notion "that the pension payments exceed contributions" is wholly off-point in describing the nature of the obligation to cover future payments for past work; as there would be no new contributions nor would the "final" resolution in court allow for the pay for past work itself to be a moving target prospectively.

The amount to cover can find a place in the budget, the future budgets, with a footnote reference to the final settlement or order.

I tend to think that the pro-full-funding argument is a bias toward remedy One above rather than remedy Two, and continued "unsoundness," as a sound pay-as-you-go plan has an optimal fund balance of zero.

Tactically, it would be virtually impossible for the PERB and the legislature to assert that the pay-as-you-go FPD&R is not equal to or better than PERS and thus take it over if it was terminated as to all future work and was the subject of litigation that resulted in a "final" determination as to future pay for past work and where the City's obligation were reduced to a fixed set of annuity payments. The government is accorded the presumption that they will comply with the law, and particularly with court orders, thus defeating any need to separately obtain a bond to assure payment on the future annuity payments.

UPDATE September 15:

Amanda,

There is a way to accommodate the pension beneficiary's desire to participate in the stock market if that is what they want.

Bear in mind that if the government wants to issue bonds to cover a present obligation, here to make a stream of annuity payments in the future, that it must simultaneously retire that obligation. The schedule of bond payments would resemble a table showing the stream of pension annuity payments not yet due, but known with reasonable certainty. We would swap one for the other and the pension beneficiaries could take their money and deliver it to some other pension trustee of their own choosing, or keep the cash and suffer the tax consequences. The state treasurer has made many routine refundings of bonds, always retiring prior bond payment obligations. Homeowners do it too with refinancing.

The mechanism to accommodate the pension beneficiary's desire is the complete termination of the present plan. If it is thereafter replaced by another plan, one that the beneficiaries are demanded to participate in, then it is entirely up to them to assert an interest to pick some trustee/investment-manager other than PERB/OIC. But the old plan would be gone in its entirety and we would have a full and final settlement and release from any further obligation as to the terms of pay for past work.

I still believe that the present plan, from the perspective of the beneficiaries, is still better than the PERS plan, notwithstanding that it is trumpeted as an odd and somehow unique and antiquated and just plain weird pay-as-you-go scheme. I think they agree. But that is just my opinion. If the beneficiaries feel as you do that there are gains to be had through private investments then they could demand that the plan be terminated in total, obtain a settlement in exchange for a release, and we can all move along.

I had argued elsewhere that the only way to reconcile prior-issued Pension Obligation Bonds was to treat them as if they were part of a full and final settlement and release from any further obligation as to the terms of pay for past work. This would be the outer limit of plaintiff claims that are based on contractual rights, based on plan termination, and conform to finality in court. Post-Strunk, it is clear that the legislative power to change future pay for future work is not less than a contractual right under state law (with an exception, and consistent with a Federal District Court opinion), radically reversing the OSPOA case that divined a judicial-only-prohibition (sort of pegged to an interpretation of the Oregon Constitution) on ending a pension plan prior to retirement of plan beneficiaries. The court, in a bold recognition of this principal of finality, rejected claims of legislative power to retroactively reshape the measure of claims going back many years, which cost the taxpayers a lot of money, as the parties had the opportunity to complain at that those earlier times. (To conclude otherwise would be like playing a real life game of Back to the Future.) Post-Strunk the legislature could completely terminate PERS in its entirety, today, provided that they also presented an initiative to end the Oregon Constitutional mandated 6 percent contribution from public employees (a remnant of a once sound pay-as-you-go plan of yesteryear, I suppose).

Let me pull out my calculator to figure out the bond payments to cover a 1.6 billion dollar liability. I'll just use a mortgage debt calculation as my example: 1.6 billion loan at 6 percent interest with equal monthly payments over 20 years nets a monthly payment of 11.462 MILLION DOLLARS each and every MONTH.

(FOOTNOTE: This where I started writing this partial-post, with an eye toward sarcasm and invective directed at the so-called "professionals" that know the game, because their pay seems to depend upon spewing out distortion rather than harmonic tones of clarity.) If the pension plan is terminated then the obligations can easily be summarized in a two column table. Column one would be the year, and column two the annuity payment then due. It would look remarkably similar to a schedule of payments on any bond or a multi-year forecast for a wide range of anticipated expenditures. There is nothing magical about pensions that trigger the issuance of bonds.

If borrowing money to throw at Wall Street is a good idea, from the proceeds of a bond sale for that very purpose, then why not consider dedicating it to any other item that would fit neatly in a routine budget. School athletics and music for example. Why not dedicate it to the general fund? And, I suppose we could also simply lower the taxes collected today in rough proportion to the bond proceeds.

Borrowing to cover the stream of future annuity payments is about the same as issuing a bond to make payments on another existing bond, one that is not retired as with a refunding. We would then have more cash on hand. We could use that logic, in a repeat loop (an infinite repeat loop in computer geek speak) that leads directly to a (computer) freeze or hard crash.

The way out of the loop is to retire the obligation which gives rise to the bond issuance. Here, that would be a full and final termination of the FPD&R but with a twist to the normal scheme of an annuity stream but a lump sum payment in exchange for a complete settlement and release from all further obligations pertaining to pay for past work. The members are free to port their pensions to a non-profit trustee without suffering a federal tax hit. (Return to top of this part)

(more, as partial summary, conclusion) But it involves retiring any presently enforceable contractual obligation, in a full and final settlement and release to a terminated plan. Analogous to a typical home mortgage refinancing plan that retires the contractual obligation to make payments on an old loan. Imagine if I tried to get a mortgage-related loan to put into a fund that I would then use to make payments, as they come due, on another still existing mortgage-backed-debt. It would be a separate and distinct obligation, perhaps in second position in the event of foreclosure. The Pension Obligation Bond scheme is actually AGAINST the employees interest in that it is not only a distinct and separate obligation, bond payments AND pension annuity payments, but have been injected into the first priority position (because they're called bonds, as if that is a magic word) ahead of the somewhat more vague pension obligations, and are held in the employers name rather than the pension beneficiaries. This would become crystal clear if PERS, for example, were fully and completely terminated. A savvy bond peddler does cover their bases, backed by the national bond rating folks, like a weapon of war.