Unanimous among the players or among the beneficiaries? Your plan for unanimity identifies the wrong set of folks to be in agreement.

My comment (too long for Jack's site and this thread):

It is not personal. Pretend that Randy was just a normal initiative sponsor and had just collected the number of signatures for placement of a charter amendment on the ballot. If it is on the ballot then Randy has just one vote among all registered voters, while retaining only a bully pulpit.

PERS, if it was lawfully administered and confined to the fund itself, without topping off with "employer contributions" etc., would provide LESS protection to the Portland safety workers than the current CoP plan. If the fund investments tanked then the fund beneficiaries of the "independent" system (critical to the allowance for the investment in stocks and such rather than investment solely in stuff like US Treasuries) would have no recourse against the general public for such capitalist risk. (In theory and design only, of course, not as applied.) Thus it would be against Randy's self interest to support the swapping of a fixed and lawful claim to the benefits of the current charter and substitute it for a funded system. Therein lies the problem of analyzing the process for modifying an ongoing pension plan . . .

. . . will the current charter serve as one of two alternative minimums for calculation of benefits for non-retired current workers? Given that a federal judge has characterized a change in pension plan, covering future pay for future work, does not violate the federal contracts clause the City Attorney can inform any panel of City Councilors (and the voters too as to a charter amendment) that the entire pensions scheme could be terminated in total. This termination would/could cover all current employees who have not yet retired. The rub here is that the legal staff, at the direction of the present panel of City Councilors, would pretend that there is a legal obligation to create a blended plan going forward with two tiers; one for the current non-retired employees and another one for new hires. The present workers would thus have the current Charter as a backstop while they also get the apparent benefit of the potential investment returns from dollars that are borrowed and thrown out the window into risky investments. For the current employees the funded scheme is just a bonus, potentially, based on investment risk that the CoP residents assume (in practice, but incompatible with the Oregon Constitution). We become the stock broker than lends the safety workers money for their private margin trading accounts but we retain all the downside risk for loss (in practice).

If by "funded" Randy means that an employee is paid once and thereafter on their own entirely for their own investment folly or gain (as is compatible with the Oregon Constitution), then this would be OK. But this is not what Randy has in mind. It would not allow for a billion dollars in borrowing. Simple termination and settling-up would not require any borrowing at all, not a dime. As no pension payment would become due until its was payable in some future year. A West Virginian case highlighted the challenge of borrowing for a supposed liability where an obligation had not yet become due and payable, and would only be due in some future year. The court refused to offer an advisory opinion authorizing a bond issuance, which effectively required that the pro-bond community to go to the voters and ask for permission to borrow.

The funny thing here, as to the CoP, is that the Charter is not the Oregon Constitution. Randy is just following the game plan, as etched out by some lawyers on a little chalkboard. He is just a player, not the coach. I am saying that the coach, Orrick (their local staff), needs to go back to the drawing table. You cannot rely on the Charter change, unless it is but one component of a larger design that necessarily involves PERS, but then it too limits recovery to the "fund" and only those resources that an employee delivers from their payroll deductions and not a dime more. The current non-retired workers have deposited nothing to such a fund. If the city owes them something, it is confined to some fractional annuity payment that is not yet due until they reach retirement age, what ever it is, in some future year. The plan to "fund" their claim to such future payments today is an acceleration of their claims. If they want to accelerate such demands then let them do so in response to a full termination of the current plan, and then go to court if necessary, and let the city be done once and only once, and never more, as to the current non-retired workers.

The O's words below:

The push for reforming police-fire system should be unanimous
The city shouldn't sever disability and retirement changes
Friday, January 06, 2006

That was a heated work session that the Portland City Council held the other day on reforming the city's expensive fire and police disability and pension system. But the flashes of temper and friction in the meeting weren't necessarily bad signs. They underscored that a transformation is under way.

Underneath the irritation, a change in conventional wisdom seems to be coalescing. Although many disagreements remain, a rough consensus is emerging that the city's pay-as-you-go fire and police disability and retirement system must be drastically altered.

Thanks to an independent committee, which worked hard in 2005 to come up with recommendations, the logic behind reform is now overwhelming. The questions that remain aren't trivial, but they're more about strategy and tactics than about fundamentals. Here's what the council should do:

1. Crystallize the consensus. It may not be possible to achieve unanimity, but that's what Commissioner Dan Saltzman, the lead reformer, should be seeking. Saltzman should be prepared to give an inch or two on tactical considerations if that will help to nail down the consensus that seems to be shaping in the air.

2. Keep reform of disability and retirements together. The independent panel recommended that the disability system transition to the state workers compensation program, and the retirement system move new hires into the state's Public Employees Retirement System. Taking one reform to voters in May and the other in November has been proposed, but the arguments for both reforms help to buttress each other. Splitting them could weaken the case for both while demanding twice as much persuasive zeal. Why pick two fights if you can pick one?

3. If keeping the reforms together means going to the voters in the November general election instead of the May primary, go in November. Saltzman is concerned about the push for reform losing momentum. It's a valid concern, but switching to November could help build momentum by consolidating council support. One persuasive line of thinking at City Hall this week was that Saltzman should "declare victory," then heed his colleagues and switch to November.

The city has what Commissioner Erik Sten described the other day as a historic opportunity to transform the system. As commissioner in charge of the fire bureau, though, Sten also pointed out that people directly affected by these reforms need time to absorb them. A careful study of the independent committee's work is likely to reassure some individual police officers and firefighters, but few have had time to make such a study.

You can be skeptical about whether union representatives will ever sign on to real reform, while also agreeing with Sten that rushing people doesn't get them to a yes. It gives them an excuse to say no. And the council also needs time to attract other potential allies, organize a campaign and plot a victory.

That friction at the meeting? Maybe we're being overly optimistic, but we hope it was the sound of gears shifting, leadership emerging and the council grasping the imperative for reform.

It's the most important thing the council will do this year.
[ The push for reforming police-fire system should be unanimous ]

UPDATE: From BlueOregon and Randy's post

I believe that the system can be changed in a way that addresses every legitimate criticism that has been levied against it with both the fire and police unions supporting those changes.
[ BlueOregon: Dan's Plan ]

Randy -- "there is no disagreement by anyone on the plan to fund the system. We should use the plan the experts have told us makes the most sense to accomplish that."

Let those experts go out into the private financial community to find any entity that is willing, for a price, to guarantee that their rosy assumptions on returns become fact, at least from the perspective of the Portland citizens. I had made a more detailed letter, memorandum, on that very point and delivered it to the Auditor for the Portland Public School's. In it I demanded that the cost of any bonds must itself be paid from the returns on investments of the bond proceeds themselves. The net gain of returns in excess of the cost to borrow are perhaps only 2.5 percent (8 percent on returns versus 5.5 percent to borrow). This is a rather meager return considering that stocks and such could drop to one half or even one tenth their most recently traded price. The risk of loss is many orders of magnitude greater than the meager gain that would go to the City of Portland, with an upper limit of roughly 2.5 percent, with the balance of any higher gain going to someone other than the City of Portland.

Surely it would not be too much hassle to at least ask those experts to shop for a guarantor of the returns they say are good enough to justify issuing bonds.

I think the RICO statutes are designed to accommodate those experts to which you wish to defer. Get a guarantee, or at least put into the record, for your own sake, a demand to have the experts (or their personal lawyers) give you a price on the cost of obtaining such guarantees on returns. Be sure also to insist that the owners of the guarantor entity cannot escape personal liability through bankruptcy.

This is just a little free expert advice.

< a href="http://pdxnag.com/drupal/node/901">(The O's Trial Balloon, Multiple Tier Nightmare) The push for reforming police-fire system should be unanimous

UPDATE:

Abbreviated notes for comment at Jack Bog's site.

Frank -- "I have no control over"

You have the right, a federal constitutionally provided liberty interest, to demand to individually opt out. Really. If you feel restricted in your choice then that is a feeling that is best characterized as a "cry for liberty."

Mr. Wade -- "rabid randy and peter potter"

The City does not need authority from a city charter to join PERS, as that authority is provided by state statutes that govern local governments. The only legal context for the charter vote is to repeal the current city provided pension system.

I can target the bonding issues (the cry for full funding) in court. Particularly the fixed annuity streams for the retired beneficiaries, which would neither go up or down based on funding or non-funding, or repeal or modification of the pension provisions in the charter. GASB is irrelevant too, BTW.

[link point to this spot]
Frank -- "I have no control over"

You can assert, in court, a liberty interest to opt out of PERS. You can demand finality, as there surely is enough uncertainty. You can then select your own investments or delegate such investment decisions to whomever you wish. Really . . . continued participation in PERS is your personal choice. If you feel restricted in your choice then that is a feeling that is best characterized as a "cry for liberty."

Mr. Wade -- "rabid randy and peter potter"

The City does not need authority from a city charter to join PERS, as that authority is provided by state statutes that govern local governments. The only legal context for the charter vote is to repeal the current city provided pension system. The Oregon Supreme Court made clear in Strunk that PERS is not a "hybrid"plan, comprised of parts from an employer participant and parts from the state plan. Thus, the sole PERS related decision of the City of Portland would be to join or not join, on behalf of the firemen and police.

There is no reason to presume that the beneficiaries of a terminated city of Portland safety worker pension system must join PERS. Any non-profit entity, even a non-governmental one that is affiliated with police and fireman unions, could be formed to serve as a pension trustee and enable the workers to still be eligible to obtain the tax benefits offered by the federal government for contributions from their future pay checks. In which case the full-funding thing is not a federal dictate that the state of local government must serve as trustee, exclusively. (There is both the 11th amendment and Printz standing against federal compulsion to fully fund, even if congress did not themselves fully exempt state governmental pensions from ERISA. The exception would be the peddling of bonds on the national market where they were arranged through fraud and deception, whereupon the FBI and the SEC could start exercising their prosecutorial discretion to toss a bunch of local folks in jail.)

If they (Randy and Tom) focus on a few key features of PERS, such as a statutory liability limitation, along with a raft of others, they should then vehemently oppose throwing the active police and fireman into the waiting arms of the investment banker client's of the Oregon Investment Council. They should adopt my position on PERS, lock stock and barrel. They cannot keep their current charter rights as a backstop to dreamy speculative gains on newly-borrowed public dollars, they must abandon such charter-based guarantees and flip over entirely to the much lower guarantee of confining all claims (pro-rata) to the fund, whatever it is, if it becomes "funded." This is like asking Tom and Randy to demand that currently employed safety workers commit economic suicide. Surely such a decision should not be taken lightly. (The currently employed firemen and police officers should not place their bets on the perpetuation of the arbitrary exercise of power which has thus far sustained some PERS benefits beyond that which would be compellable in court.) If the City wants to borrow money to achieve full funding, I would (if I were the bargaining agent for the active policeman and fireman) demand that the bond proceeds be offered first to the active members (perhaps individually) in full and complete satisfaction of all claims pertaining to their past work under the present terms of the current city charter. It would be unethical, and unlawful, to deny them this right (this opportunity, this bargainable opportunity) so as to funnel that money exclusively to the OIC.

Randy and Tom have a problem not because they are either firemen or policeman, but because they are retired rather than active. The funding or non-funding of their fixed annuity payments, as distinct from that of current actives, needs to be sculpted out of any and all demands for full funding. Their self-interest would be served, because they are retired, by being the most aggressive against the current actives . . . their own retirement benefits depend on it. You see, if the charter-backed based pension system is merely repealed . . . all the current charter beneficiaries must stroll into court where they will have divergent interests. It is in this realm where the lawyer bargainer's will pretend that there is greater liability than exists, for the purpose of facilitating the issuance of bonds.

I should advance an initiative that merely repeals the charter-backed based pension system. Then I should immediately go to court to seek an injunction on the city council and any lawyers they may hire from conceding too much, particularly that of seeking to include full funding for retired Portland safety worker's already fixed annuity payments. If I file the initiative, as weird as it may sound, it gives me greater power to obtain standing to sue any one or any PAC that chooses to lie.