Public sector employees head for exit door
PERS changes spur Beaverton, Portland employees to get out while getting is good
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.
Janice Avidan, a fourth-grade teacher at Buckman Elementary School, is one of 99 Portland Public Schools teachers who officially retired Dec. 1.
Im 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 that her PERS pension will be trimmed roughly 2 percent if she retires Jan. 1 or later.
Including nonteachers, 149 Portland Public Schools employees officially retired last week, according to data supplied by district spokeswoman Christine Miles. Thats more than the entire number who retired all last school year, or the five prior school years.
Avidan, like many others, will continue teaching until the end of the school year, since retirees are allowed to work half-year or half-time while drawing PERS checks.
Portland Public Schools teachers have more at stake than other public employees right now because the school district also is seeking, via collective bargaining, to eliminate early retirement incentives at the end of the school year. Thats what prompted Avidans initial decision to retire.
Although the Portland school district is not the only local government seeing a surge in retirees, the Beaverton School District so far hasnt experienced the same level of exodus. Thirty-nine of the districts 4,000 employees have retired as of Dec. 1, noted Maureen Wheeler, district spokeswoman.
Were not seeing a mass exodus at this point, she said, noting many teachers who retire in the middle of the school year will remain in the classroom until June. It really helps with the continuity of teaching.
Joan Lattner retired as the districts manager of classified personnel in late November, putting a bow on a near 25-year career with Beaverton schools. The former Banks resident cited a mixture of incentives including potential changes in PERS and the allure of property she and her husband purchased earlier in Santa Fe, N.M.
After selling our home, I had to make a decision to continue working or retire, she said. At first I thought Id finish the school year in June, but with all the chatter in the Legislature, I thought maybe I should get out before this year.
Calling PERS changes a consideration, but not a huge one, Lattner, 59, chose not to wait until December.
I wasnt sure what they were going to do with the actuary tables, she noted, adding shes OK with the Legislatures decision this year to eliminate a tax subsidy for out-of-state retirees. Even though it directly affected us, I thought its rather fair. Its a personal choice on where you live.
Rather, she feels pretty good about the call she made.
It was a hard decision. I totally loved what I did and who I worked with, she said.
After seven years as a kitchen employee at Hazeldale Elementary School, Sandra Romero, 64, switched from full-time to part-time status before retiring on Nov. 26. Rather than receive ongoing PERS benefits, she was disappointed to discover that, as a part-timer, she would receive only a one-time lump sum payout of the 20 percent of her salary that went toward PERS.
And she wont even get that until 120 days after her retirement date.
I had to take a complete buyout, she said. I just went, Wow. Thats all I could say. Twenty percent out, thats almost everything. You think youre going to get something. I found out part-time employees couldnt get benefits. You lose money when you retire.
Fortunately Romero, who switched from full- to part-time status when arthritis limited what she could do with her hands, has Medicare-based health benefits through her husbands retirement package from General Motors.
You think youre going to get a pension, then you come to find out you get nothing, she said. A lot of people were telling me, Get out now. Theyre going to mess up PERS. Well, Im going to get out now.
Metro regional government saw 24 people retire 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 last week. Doran, 62, had planned on retiring at years 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 theres talk in the air of PERS reforms, he says, as there was throughout this years 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 wont face those cuts until they retire, and theres 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.
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 wont 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, its 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 wont see any reductions from the two board changes.
For those affected, its 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.
Many people delayed retiring when the Great Recession ravaged their home values and other investments. That pent-up demand may partly explain this years 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.
Beaverton Valley Times reporter Shannon O. Wells contributed to this storyJW_DISQUS_ADD_A_COMMENT