The Reason Idaho House Republicans Abused Legislative Process on PERSI

Last week the House Committee on State Affairs voted to kill legislation which would block the PERSI Board of Directors' recommendation to grant a modest 1% COLA increase to participants in the state's retirement system which would mean about $30 a month to the average recipient. Yet the very next day, without warning or placing the matter on the agenda, and without any inquiry or input at all from any representative of PERSI, Republicans reversed their decision from the day before and voted to block the cost of living increase.

Retirees are plenty steamed including former Republican Ada County Commissioner and current Boise City Council member Vern Bisterfeld aggravated that his party is playing politics with retirement funds he earned with his long history of public service. The PERSI fund is separate and distinct from the budget that is mandated to be balanced and which is causing consternation in the legislature this session from lack of tax revenue. Retirees pay into this state run fund which is invested and managed to guarantee benefits for participants. Upon learning of this vote, the AARP issued a stinging report on the state reneging on its obligations to its retirees and demonstrated the devastating impact this decision would have on Idaho's economy.

So what would cause Republican legislators to reverse themselves and overturn a decision from their own team of financial experts hired to manage one of the best run pension plans in the nation? Wayne Hoffman.

Hoffman, head of the Idaho Freedom Foundation, published an “Idaho Pork Report” at the start of the legislative session that decried PERSI retirement benefits as unduly generous. In an article headed, “Work for the state, retire like a king,” Hoffman wrote, “The question for policy makers is whether taxpayers should be forced to continue to subsidize such a generous employee benefits package at the expense of taxpayers.”

It seems Wayne failed to attend the hearing and later contacted Committee Chairman Tom Loertscher (R-Iona) and other Republican members after the hearing had concluded and the committee voted the legislation down. Hoffman was armed with a singular cherry picked actuarial report from the year before which, he alleged, showed cause for alarm. This singular effort, by an ethically challenged Sali stooge turned self promoting citizen 'activist', outside of the legal process, precipitated an unprecedented rejection of the PERSI Board's expert opinion, which the committee had received and approved just the day before. In providing that opinion, the PERSI Board demonstrated the health of the fund with due regard to their fiduciary obligations to the beneficiaries. Hoffman has neither the Board's expertise nor their responsibilities of trust over these funds.

The PERSI Board chairman is Jody Olson:

Of Counsel at Hawley Troxell. Formerly, Mr. Olson was Vice President of Corporate Development at Trus Joist, a $1 billion Boise, Idaho-based specialty building products company. He was Secretary of the Board of Trus Joist MacMillan, a limited partnership with the Canadian forest products leader MacMillan Bloedel, Ltd. He was Chairman of the Board of Norco Windows, Inc and of Outlook Window Partnership, the sixth largest wood window manufacturer in the United States and the largest in Canada.

He has served for many years as Chairman of the Board of the Public Employee Retirement System of Idaho (PERSI), a $12 billion pension fund. He is a member of the Board of Advisors of Galen Associates, New York City, a venture capital fund. He is also Chairman of the Finance and Investment Committee of St. Alphonsus Hospital Foundation and a member of the Board and of investment committee of the University of Idaho Foundation. Mr. Olson is a member of the Board of Directors of Medical Discoveries, Inc., a NASDQ traded company. He is a Board member of the Council of Institutional Investors (CII) Washington, DC.

A 1969 graduate of the University of Idaho College of Business and a 1978 graduate of Lewis & Clark Law School, Mr. Olson is a CPA and lawyer. He was a CPA with Deloitte & Touche LLP for five years. In his capacity Of Counsel with Hawley Troxell Ennis & Hawley LLP, Mr. Olson advances business growth strategies for clients.

Mr. Olson has had the trust of several Idaho governors who recognized his solid education and experience to manage the fund for the past twenty years through tough times and boom times. Ironically the Board also includes Kirk Sullivan, former head of IACI and former head of the Idaho Republican Party, as well as former Republican legislator and current Director of the Idaho Department of Insurance Bill Deal.

In stark contrast, Wayne Hoffman has no financial expertise whatsoever:

After a successful stint as a radio news director in Arkansas, Wayne moved to Twin Falls, Idaho in 1995 and worked as the news producer for KMVT-TV. After that, Wayne worked as city editor for the South Idaho Press, and then state government reporter for the Idaho Press-Tribune and the Idaho Statesman. During 10 years of covering the state legislature, governor’s office and state agencies, Wayne won several prestigious awards [whatever those are] for investigative journalism and political writing. After leaving the news business in 2005, Wayne became the special assistant to the director of the state Department of Agriculture. In 2006, he managed the communications efforts of several successful political campaigns and became the communications director for Congressman Bill Sali.

Today the Idaho Senate unceremoniously killed the House legislation sparking concern of heightening a division between the two bodies as they start hashing out the budget. The hapless House Committee Chairman Tom Loertscher is livid:

When asked about it by reporters just now, House State Affairs Committee Chairman Tom Loertscher, R-Iona, initially said he was too upset to comment about the Senate’s move to kill HCR 42, the measure he helped push through the House to block a scheduled 1 percent COLA for state retirees. “I seriously don’t think that the Senate has discussed the information we had presented to us,” Loertscher said. “I’m a little surprised, I guess.”

"Presented to us" means by Wayne Hoffman, outside the hearing room, without question, with no input from PERSI representatives, and no context. Lurch should be embarrassed. Clearly the senate recognized the weak and illegal maneuver passing the bill, the vast array of expertise ignored in favor of a snapshot of the fund's economic health provided by an attention grabbing political gadfly, and the caustic political consequences this legislation would foment. Or one would hope. This legislation passed the House over strong Democratic objection and procedural efforts to prevent its passage in a timely manner. But House Republicans have now ensconced their position as government hating wingnuts who take pains in going out of their way to punish anyone who, at one time, made government work for its citizens. In so doing, they are completely led by the nose by Wayne Hoffman whose experience is limited to journalistic opportunism parlayed into self serving 'activism'. Future Democratic candidates should take note of the House votes on this legislation for fertile ground upon which to mount a campaign. And House legislators should think twice before listening to Wayne Hoffman.

UPDATED the title and post for clarity. 2/24

UPDATED again to include Popkey's article 2/25, which focuses on the fallout this decision is having on the divide between the House and the Senate. House leadership had endorsed the move to block the COLA increase and how leadership, which is now apparently Mike Moyle, is plenty ticked off at the senate cause they look like idiots. (Whose fault is that?) Lurch pretty much threatens the senate with a long session:

"All bets are off," said Rep. Tom Loertscher, R-Iona, a 22-year House veteran. "I just shudder. You do the easy ones you think are no-brainers and all of a sudden it blows up. It's going to be interesting to see how it all rattles out."

As it is, 48 House Republicans who thought the Senate had their backs are subject to being called anti-retiree. Among the critics is Boise City Councilman Vern Bisterfeldt, a longtime Republican who says he's "mad as hell" and wants to tell "every retiree in Idaho so they won't vote for those jerks again."

Loertscher said the Senate's lack of courage bodes ill when it comes time to pass budgets with unprecedented cuts to schools and other services.

"This sets the stage for a budget wreck," Loertscher said. "You have a few retirees show up out here on the steps of the Capitol and all of a sudden they get their way. It sends a signal that the way you ply the Legislature is go stand on the steps and holler a little bit and we'll fold up."

Yup, he referred to the decision as a 'no brainer'. If it was, then, for god's sake, how did you lose it the first time, Lurch? For some odd reason Popkey didn't read Betsy's report that Hoffman was the ultimate source of the information, not Rod Beck, who said he was just the messenger. But he did correct me that Vern is currently a Boise City Council member.