Flashback - Paul Kostyu Article: Plan’s approval rating falls after scandal

Plan’s approval rating falls after scandal

Nov. 21, 2003
By PAUL E. KOSTYU Copley Columbus Bureau chief

"Consultant Kim Nicholl of Mellon Co. discussed the effect of various pension-plan changes to protect both the pension and Health Care Stabilization Fund. Board members repeatedly emphasized that Nicholl only was providing information for them to study. The board has not decided what changes to make.

Nicholl addressed changing retirement to age 57 years with 32 years of service, any age with 32 years service and any age with 35 years service. She was asked to collect additional information for the board’s January meeting."

COLUMBUS — Members of the State Teachers Retirement System were less satisfied with their health-care plan in August than they were in February.

That came as no surprise to the State Teachers Retirement System board which has been inundated for months with letters, e-mails, and phone calls from members complaining about their health-care costs. On Thursday, however, the fall in satisfaction became official with the release of survey results. Still, the State Teachers Retirement System beat the national average for health-plan satisfaction.

The retirement system has been under scrutiny since mid-June after media reports, many by Copley Ohio Newspapers, about spending on travel, parties, art work, pay and bonuses, while the system’s portfolio plummeted and the cost of health-care benefits increased.

The survey, conducted by Morpace International of Michigan, showed the State Teachers Retirement System health plan’s approval rating fell from 80.4 percent to 76.3 percent. The national average is 62.5 percent.

Also, telling in the survey was a question that asked participants to rate the value of what they pay for health coverage and care. The number of those who rated it excellent dropped 6.6 percent, and very good by 2.8 percent, while the number of respondents rating it good, fair or poor increased.

The retirement system’s February excellent ratings in other categories also fell by August, some by as much as 15 percent.

Lynn Hokanson, director of health care, called the numbers “bad news.” Though she was not able to pinpoint the reason for the decline, she and Sandra L. Knoesel, deputy executive director of member benefits, suspected the publicity the system has been received contributed to the fall.

The good news, Hokanson said, was that the total net cost of the health-care program from January to September fell 13.3 percent. The per-member, per-month cost also plummeted 14.2 percent.

She said those savings came from the changes in health-care plan design the board implemented in January, saving the system $51 million. Those changes included an increase in the annual medical deductible, a decrease in the in-network facility coverage and an increase in the prescription drug mail order co-pays, among other changes.

Knoesel said the dollar figures are likely to change once the State Teachers Retirement System gets the complete figures for 2003. She said generally there is a lag in claim filing at the end of the year, which could affect how much the system saved.

The board also learned from Stephen A. Mitchell, deputy executive director for investments, that the market value of the pension fund’s portfolio climbed to $50.5 billion up from $47.2 billion in June.

He estimated growth to continue at roughly 3.5 percent for the reminder of the fiscal year, which ends in June 2004. He said the last three months exceeded expectations.

Consultant Kim Nicholl of Mellon Co. discussed the effect of various pension-plan changes to protect both the pension and Health Care Stabilization Fund. Board members repeatedly emphasized that Nicholl only was providing information for them to study. The board has not decided what changes to make.

Nicholl addressed changing retirement to age 57 years with 32 years of service, any age with 32 years service and any age with 35 years service. She was asked to collect additional information for the board’s January meeting.

You can reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail:
paul.kostyu@cantonrep.c