PERS Board Reversed on Variable Account Administrative Expenses

Today the Oregon Court of Appeals reversed the Oregon PERS Board on its decisions to charge the PERS Variable Account for administrative expenses in years of account loss. This will result in almost two-million dollars being returned to PERS members. This case arose in 2001 and 2002 when the PERS Variable Account suffered losses due to the equity market downturn. Normally, Variable Account administrative expenses are charged against Variable Account interest in the same way that the PERS Regular Account earnings are charged for Regular Account administrative expenses. However, when the Variable Account had no earnings in 2001 and 2002, PERS charged those expenses against its principle. This was different than what PERS agreed it was obligated to do for the Regular Account. For that account, in non-interest years, employers are charged for administrative expenses. PERS argued that the statutes allowed it to treat the Variable Account differently and charge against its "negative interest". The Court "readily" rejected this "negative interest" argument and held that the Variable Account was entitled to be treated on the same basis as the Regular Account when allocating administrative expenses.

Tom Doyle represented the Petitioner in the administrative hearing and on appeal.