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Miami

Cypen & Cypen
NEWSLETTER
for
APRIL 22, 2010

Stephen H. Cypen, Esq., Editor

1.         COBRA AND OTHER AUTHORITIES EXTENDED:  The White House, Office of the Press Secretary, has issued a Statement confirming that the President has signed H.R. 4851 into law.  The “Continuing Extension Act of 2010,” provides short-term extensions of several authorities, including those related to:  (1) unemployment compensation; (2) COBRA health insurance premiums; (3) Medicare physician payments; (4) Federal poverty guidelines; (5) flood insurance programs; and (6) small business loan guarantee programs. 

 2.            CAN YOU TAKE SOCIAL SECURITY WITHOUT MEDICARE OR MEDICARE WITHOUT SOCIAL SECURITY?:  Although the requirements to be covered by Social Security or Medicare are remarkably similar (generally, at least a 10 year work history or marriage to someone who has such a work history), you need not choose to take Social Security and Medicare benefits at the same time.  In fact, eligibility for Medicare typically starts at age 65, while normal retirement age for Social Security is usually later (66 if you were born as late as 1954 and, eventually, age 67).  Of course, you can choose to take your Social Security sooner than your normal retirement age by taking an early retirement.  Furthermore, you can increase your benefit by delaying your retirement benefit (as much as 0.67% per month for each month beyond normal retirement age).  Either way, you can take Social Security before Medicare or take Medicare before Social Security.  About.com always has good retirement stuff. 

 3.            RELIEF FOR SOCIAL SECURITY?:  Apropos  the above item, a study by the RAND Corp. found that the number of older Americans who delay retirement will grow over the next two decades, which could ease financial strains on Social Security and Medicare.  Reported in Employee Benefit News, the study contradicts government projections, which estimate that the number of older Americans working longer -- a trend that started in the late 1990s -- will plateau over the coming decade.  But RAND cites several factors that lead to a different conclusion:  longer life expectancy, less disability, jobs that do not require physical exertion and rise in the number of dual-earner families will delay retirement to wait for their wives.  (Couples tend to retire together, and men, are often older.)  According to RAND, the number of older American men and women in the workforce began to rise modestly during the 1990s.  Roughly 17% of people aged 65 to 75 were employed in 1990, a number expected to rise to 25% this year.  Too many workers still begin claiming their Social Security benefits at 62, which reduces benefits by about 25%.  Employers and advisers would be wise to educate workers about the advantage of delaying their claims. 

 4.            POLLS SHOW MOST EMPLOYERS WILL PLAY, NOT PAY, UNDER REFORM LAW:  Another piece from Employee Benefit News says that although many tea-leaf readers predicted that health care reform would spur employers to drop health benefits, a new poll of nearly 3,700 executives shows such forecasts may have been based more on fear than fact.  True, the full force of the reform’s impact has yet to be felt by employers -- and will not for several more years (see C&C Special Supplement for March 30, 2010).  We all know the statistics:  The Patient Protection and Affordable Care Act puts employers with more than 50 employees on the hook for a $2,000 per employee-per year fine, starting in 2014.  Still, the poll found that 52.5% of employers strongly disagreed that it would be better for their organizations to stop offering health care benefits and pay a fine under the new law.  Another 15.3% somewhat disagreed with the notion of dropping coverage and paying the fine.  Eighteen percent somewhat agreed with the idea of dropping coverage; 14.1% strongly believe their organizations would be better off in dropping benefits.  Among employers with 25,000 or more employees, 64.9% strongly disagreed that their organizations would be better off dropping health care benefits.  Another 12.4% somewhat disagreed; 14.2% somewhat agreed and 8.4% strongly agreed.  Among respondents with benefits decision-making responsibility, about 18% strongly agreed they understood the impact of the law, while 37.3% somewhat or strongly disagreed.  More than half of benefits decisionmakers say they strongly disagree it would be better for their organizations to drop benefits, while 18.5% somewhat agreed it would be better, and 14.8% strongly agreed.  Lastly, 65.7% of respondents strongly agreed that they would continue offering health care benefits because they are critical to employee recruiting and retention. 

 5.            TEACHERS’ “RUBBER ROOMS” TO GO:  New York City and its teachers’ union have agreed to do away with “rubber rooms” full of teachers accused of wrongdoing or incompetence, and speed up hearings for them, reforming a disciplinary system that has made both City Hall and the teachers’ union subjects of ridicule.  Under the agreement reported by The New York Times, teachers the city is trying to fire will no longer be sent to the rubber rooms, known as reassignment centers, where the teachers show up every school day, sometimes for years, doing no work and drawing full salaries. Instead, these teachers will be assigned to administrative work or nonclassroom duties while their cases are pending.  The centers have been a source of embarrassment for both the city and the union, as articles in newspapers and magazines detailed teachers running businesses out of the rubber rooms or dozing off for hours on end.  The agreement will also shorten the time it takes for cases to be resolved by allowing more arbitrators to be hired -- 39, up from 23 -- and requiring them to decide cases more quickly.  The number of teachers in rubber rooms has grown to about 550, costing the city $30 Million a year. Bouncy, bouncy. 

 6.            LEGISLATION THREATENS FRS:  The path to fiscal soundness in government is a grueling exercise with many bumps in the road.  As state legislators in Tallahassee attempt to craft a balanced budget, Ken Wood, International Brotherhood of Teamsters vice president and president of Teamsters Local 79 in Tampa, warns we should not lose sight of the things that have worked well -- for example, the Florida Retirement System. Few people realize that the notion of public pensions in the United States dates back to the founding of our nation, when "promises" were made to veterans of the Revolutionary War.  Those who have entered public service since that time have been part of a system where a percentage of their compensation has been set aside over a period of years as income to be used during retirement.  Public pensions have enabled many Americans from across the country to relocate and live their "golden years" in the Sunshine State.  The Florida Retirement System has been cited as an excellent model of fiscal responsibility.  Florida has also been identified as one of the top states in the nation with respect to pension funding and high bond ratings, which reflect a state's overall strength.  FRS is the fourth-largest public retirement system in the United States, and with nearly 1 million participants, it is one of the most effectively run programs in the country based on its low administrative costs.  Nevertheless, the predictability inherent in current plan design, which results in a defined benefit to employees, is in serious jeopardy if the Florida Legislature makes changes that would make FRS participants "gamblers" in the stock market without the requisite knowledge and skills to maximize their investments.  The impact of public retirement benefits on a state or local economy should not be overlooked.  A study of the system in Texas found over $550 Million in public pensions generated over $1 Billion in annual spending and 9,365 permanent jobs.  At the time of the study, TMRS had more than 32,000 recipients.  Clearly, FRS, which paid out nine times as much money to retirees, would reflect a sizeable impact on business activity and employment in Florida. Our elected officials should not overhaul FRS, because it will put more retirees at risk financially and stifle the economic recovery of our communities.  Wood wrote for the Tampa Tribune

 7.            INTERNATIONAL SPEED TRAP EXCHANGE:  Want to find a comprehensive list of speed traps by state and Canadian province?  Go to the national speed trap exchange, at http://www.speedtrap.org/speedtraps/stetlist.asp.  We checked on cities in Florida, http://www.speedtrap.org/state/10/Florida, and found it to be fairly accurate.  Thanks to readers E.R. and D.M. in Miami for this handy tip. 

 8.            SACRAMENTO COUNTY PENSION SYSTEM SUED FOR TOP RETIREES’ NAMES:  The Sacramento Bee and the First Amendment Coalition filed a lawsuit to compel Sacramento County Employees' Retirement System to release the names of retirees receiving pensions greater than $100,000 annually.  In the past year, the newspaper has tried to obtain a list of the top earners, but SCERS officials have refused, calling such information confidential.  That determination has come despite recent court rulings in other California counties that ruled in favor of newspapers.  In those cases, judges required the county pension systems in question to release names of top pensioners.  The California Public Employees' Retirement System also considers such information public, and recently released an updated list of its "$100,000 Club."  Almost a year ago, SCERS rejected The Bee’s request for the top pensioners' names, contending that personal identifiers for retirees (that is, names) are not required to be provided in response to a request for public records.  In a specific response about the lawsuit, an attorney for SCERS said the County Employees' Retirement Law and the board’s fiduciary obligations require that such information be kept confidential.  In Florida, there is little doubt that such information on pensions is subject to public disclosure.  
 9.            CHICAGO COPS WIN HISTORICALLY SMALL RAISES:  An independent arbitrator has awarded rank-and-file Chicago police officers a 10 percent pay hike over five years, the smallest such increase in nearly 30 years.  According to the Chicago Sun-Times, the pay raise falls short of the 16.1 percent the city had once offered and even shorter of the 24 percent the union had requested.  Nevertheless, the pricetag is still a substantial $375 Million,  $160 Million of which is for retroactive pay.

10.            DRUNK DRIVER CRASHES INTO JUDGE WHO SPARED HIM:  Last year a drunk driver hit and seriously injured an elderly couple, 81 year-old Ellen Collier and her husband, Edwin Collier, 85.  He is a retired judge, in fact the same judge who had the same driver appear before him in court.  At that time, Judge Collier spared that defendant time in jail over a DUI.  According to findlaw.com, on the day  in question, Rene E. Fernandez was driving erratically and swerving across lanes into oncoming traffic.  A witness says Fernandez was just "out of control" when he struck the Colliers' Honda Accord with his Chevy Tahoe.  Mrs. Collier was hospitalized with a leg fracture, fractured ribs, a fractured hip and neck injuries.  Judge Collier suffered a broken leg and fractured ribs.  According to reports, Fernandez tested at twice the legal limit for alcohol.  The Colliers have had their mobility so greatly diminished by their injuries they have had to leave their home and move into a retirement community.  The original case involving Fernandez, not his only time in court for DUI, came before Judge Collier in 1998.  The judge sentenced him to a 60 day suspended sentence, one year of supervised probation and ordered him to abstain from alcohol and submit to alcohol/drug testing. The sentence did not deviate from the usual for such type of infraction.  But if the suspended sentence given by Judge Collier can be considered a good deed, it did not, as they say, go unpunished.  Although Fernandez managed to stay sober (or at least not get caught) for the next 11 years, his next run in with the law and alcohol was one that also included a run into the judge and his wife.   We can only hope that someone else will drive Fernandez when he has to appear in court. 

11.         PARTY ALIGNED WITH OTHER PARTY ON APPEAL NOT ENTITLED TO ATTORNEYS FEES FROM THAT PARTY:  McGuigan, a retired City of San Diego employee acting as a representative plaintiff, sued the city, contending that certain city funding agreements seriously underfunded the retirement plans.  The parties’ settlement required the city to pay $173 Million into the retirement system, representing obligations for certain years.  The city was also ordered to pay $1.6 Million in attorneys fees in connection with the settlement.  The San Diego Police Officers Association raised numerous challenges to the settlement, but the trial court found all such objections had been adequately addressed, and approved the settlement.  SDPOA appealed the judgment that had finalized the settlement; both McGuigan and the city defended the settlement, which was ultimately upheld on appeal.  Subsequently, McGuigan  sought a further award of attorneys fees from the city on the ground that his counsel's efforts to defend the class settlement on appeal justified an award pursuant to statute.  The statute provides that a court may award attorneys fees to a successful party against one or more opposing parties in any action that has resulted in enforcement of an important right affecting the public interest.  The trial court denied the motion, holding that the statute only allowed fees to be awarded against an opposing party, and the city was not an opposing party to McGuigan at the appellate level, where they were both defending the same settlement against objections.  In affirming denial of additional attorneys fees to McGuigan,  the appellate court concluded that the settlement fundamentally changed the original positions of McGuigan and the city, from adversity to one another, into allies against a common opponent, and after the time of the settlement and judgment, nothing required McGuigan to pursue further argument (thereby incurring further fees) in the underlying appeal by SDPOA.  Perhaps McGuigan’s attorneys (who had a contingent fee agreement)  were upset that the fees amounted to less than 1% of the “recovery.”  Of course, McGuigan’s attorneys could not be paid out of the recovery, since the money the city paid into the pension fund was not accessible to McGuigan.  McGuigan v. City of San Diego, Case No. D055199 (Cal. App. 4th, April 6, 2010).  

12.            MAXINE’S LIVING WILL:  For those of you who like the inimitable Maxine or have a Living Will, or both, here is the best Living Will of all time:  http://bit.ly/928xTR.

13.            OXYMORON:  If work is so terrific, why do they have to pay you to do it? 

14.            FABULOUS RANDOM THOUGHTS:  I love the sense of camaraderie when an entire line of cars teams up to prevent a jerk from cutting in at the front. Stay strong, brothers! 

15.            SIMPLE BUT BRILLIANT...QUOTES FROM WILL ROGERS, PROBABLY THE GREATEST POLITICAL SAGE THIS COUNTRY HAS EVER KNOWN:  Good judgment comes from experience, and a lot of that comes from bad judgment. 

16.            QUOTE OF THE WEEK:  “The toughest part of being on a diet is shutting up about it.”  Gerald Nachman 

17.            PLEASE SHARE OUR NEWSLETTER:  Our newsletter readership is not limited to the number of people who choose to enter a free subscription.  Many pension board administrators provide hard copies in their meeting agenda.  Other administrators forward the newsletter electronically to trustees.  In any event, please tell those you feel may be interested that they can subscribe to their own free copy of the newsletter at http://www.cypen.com/subscribe.htm.  Thank you. 

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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