State makes mistake, then demands money back

BEAVERTON, Ore. - Seven years after her husband, a former Beaverton police officer, passed away the state of Oregon is demanding that his widow give back thousands of dollars it gave her in error.

Dawn Gloeckner has been fighting the Oregon Public Employees Retirement System (PERS) over a $75,000 mistake that it made.

“He was my high-school sweetheart,” said Gloeckner about her late husband Allen. They were married 24 years and had two children.

At the age of 31, Allen had his first heart attack, but he still built a career at the Beaverton Police Department. Eight years later he had his second just before he would have qualified for life insurance. He persisted and in early 1996 he became a sergeant. The other officers dubbed him Yoda because he was so wise. But that same year a third heart attack killed him. He was 46 years old.

Grief stricken again by the death of her father just months later, Gloeckner put off dealing with the Oregon Public Employees Retirement System and her husband’s death benefit.

But four years later the state gave her over $300,000, which she put into a retirement account. Then three years after that came another blow.

“They came back after an audit and said they overpaid me $74,975 and they wanted payment immediately,” Gloeckner said.

She hired a lawyer and argued that since the state made a mistake there was no reason she should owe it money. But she lost.

David Crosley, a communications officer with PERS, said he’s not sure how the mistake happened.

“We miscalculated the benefit, we applied the Oregon administrative rule and miscalculated the benefit amount,” he said.

When asked if the state can ask for the money back eight years after Allen died, Crosley said, “I don’t know the timing and if there’s a statute of limitations, but we always work to the law.”

The state began garnishing Gloeckner’s wages at $800 a month. Then it agreed to take $500.

Her debt is now down to $63,000, but she lost her job in car sales over a year ago.

The state has talked about putting a lien against her house but did agree to lower the payments to $250, which is money Gloeckner says she doesn’t have.

There are huge consequences if she removes the $63,000 from her retirement account to pay it off all at once: a 10 percent IRS penalty and taxes.

Her financial adviser says she’d have to take out over $100,000 to pay back that $63,000.

“I’ve lost my husband, my mom, my dad, and I’m unemployed,” Gloeckner said. “So I’m not asking for anything that’s not given to me, I’m just asking (them) to help me out, to give me some time to get back on my feet.”

While Gloeckner may be trapped in a nightmare, Crosley said, “We have a fiduciary responsibility to the fund to collect the overpayment, and I think we’ve demonstrated that we’re willing to work with anybody in this situation and that we’ve worked with this benefit recipient to try to make it as easy as possible to repay $70,000.”

“And if I don’t pay it, they’ll send me to collections,” said Gloeckner. “Well, you can’t get blood out of a turnip. If I’m not going to be getting unemployment anymore, what am I supposed to do?”

The spokesman for PERS said they might re-examine Gloeckner’s payment schedule, but eventually she’ll still have to repay the rest of that money she was counting on for retirement.

Beginning next July new legislation kicks in that will require PERS to give retiring state employees accurate calculations on their benefits and guarantee those amounts even if a mistake is discovered later.