Grandfathering Those Affected: Curtis & Asbury, with thanks from John Bos

From John Bos
Nov. 11, 2005

Thank You Tom Curtis for a letter that speaks from the heart. It is amazing to me that we read about the issues of Medco, the issues with Caremark, the issues of the retirees and their dependents who were considered as "throw away trash" when the decisions about increased retirement and benefits were made by the former board. We have retirees that are splitting pills, making decisions about food, utilities, or medication and yet the STRS staff have minimal empathy for their suffering.

Thank you Tom Curtis, Thank You Nancy Hamant, Thank You Dave Speas, Thank You Dennis Leone, Thank You John Lazares for your caring and concern! Thank you to the many others that are working to improve and correct the errors of the previous STRS board.

It is no surprise that the staff medical coverage will be decided in a few weeks and our issues are on the table until February.

WE WILL WIN!

John Bos


From Damon Asbury:
November 08, 2005 3:33 PM

Tom:

You ask some important questions about grandfathering. The Board has asked that this be made a topic for review and discussion at their February retreat. I will see that your questions are included in that discussion.

Damon


From Tom Curtis
10/28/05
Hello Dr. Asbury, Exec. Staff and Board Members,

Would you, the Executive Staff and the Board kindly address an issue with earnest, which has resulted in other retirees and me to become very active in the reform process at the STRS? The issue I speak of, is one of providing a "grandfathering" of health care benefits educators were told we would have for the rest of our lives, but then had revoked. This reform is greatly needed for obvious financial reasons.

As you are aware, those educators that initially established and/or supported the group known as C.O.R.E. did so, because they found their cost for their health care benefit increasing at an alarming rate. This increasing of health care costs continued to the point that on January 1st of 2004, the entire cost of health care for a non-teaching spouse, or one with less then 15 years of service, and dependent children, was placed totally upon the shoulders of the retiree. That decision resulted in roughly an 800% increase of cost to each effected retiree. That is simply outrageous! We were promised and deserved better from our fiduciaries. Simply being told that it was only a promise, not a guarantee, is unacceptable. I would most certainly feel that had you been placed in a similar situation, you would be actively involved in attempting to reverse or revise that plan.

To repeat, in 2004 the entire subsidy for all non-teaching spouses, or ones with less then 15 years of service, and all dependent children was removed, but had been provided before January 1st of 2004. There probably would be many more active with CORE, if they were physically able or were not out working to provide health care insurance they could afford for their spouse and dependent children.

Another issue arose due to this decision to eliminate spousal and dependent children subsidies. As many as twenty to thirty thousand or more healthy benefit recipients and their family members left our health care plan to find one for a much more reasonable cost. One they could afford. This resulted in creating a health care group of high incidence of usage, or ones with pre-existing conditions that would not permit them to be accepted by another carrier. I believe they refer to us as a "sick group". Obviously, the cost to provide coverage to such a group would be much higher, because the cost to maintain those left in that group is much higher, once you remove the healthy people.

I am sure these issues and many others were all discussed by our fiduciaries prior to making this change. This is a very sad scenario and in my opinion, one created by the STRS fiduciaries of that time. Many of those fiduciaries are still employed by the STRS. Most all STRS employees and their family members are today receiving health care benefits, which far exceed what any educator has ever received. I personally do not know an educator that received free dental care in the cost of their insurance while employed; yet our employees do.

Yes, health care costs have risen country wide, it is a national problem, but the STRS fiduciaries knew about that far in advance of it actually becoming a reality and did little to offset it. This can be acknowledged by reading past STRS Newsletters. The STRS fiduciaries knew about this in the early 90’s when they had to provide substantial amounts of revenue from the retirement fund into the HCSF to keep it solvent. Articles in the 1992 STRS Newsletters, numbers 78 & 79, indicate concerns were acknowledged and it was stated that a dedicated flow of income was needed to fund health care. In the 1992 STRS August Newsletter, #78, it states, "On the positive side, Grothaus (C. James Grothaus was the STRS Executive Director at that time) anticipates that the Retirement System will continue to find ways to provide meaningful and affordable health care coverage to retirees, even though health care costs continue to escalate at a pace greater than the inflation rate. He also believes STRS assets will grow at a pace similar to that experienced over the past decade." From my understanding, the assets grew far more then was experienced and yet sufficient contributions were never placed in the HCSF. Why not, Bob Slater?

It is now almost 2006 and the very same fiduciaries that were supposedly looking for that dedicated flow if income are still looking for it! What does that say for the very people that we have paid hundreds of thousands of dollars each year to manage our funds? Obviously, it does not show they were following the ORC 3307.15. Otherwise, our HCSF would be much larger and would still provide the benefit we were promised throughout our careers and when we retired.

Damon, you have questioned me before, when I have briefly discussed this issue with you, as to who promised us that benefit, as though that never occurred. That concern can certainly be documented by many of us and by literature printed and distributed by the STRS during our careers. I personally found it very alarming and uncaring on your part, that you even posed that type of question to me, considering the true spirit of the ORC 3307.15.

A "grandfathering" plan would provide us with the health care benefit we were promised throughout our careers and those near, or at retirement, by our STRS counselor. I would feel this would include all of those teachers that were unable to benefit from SB190. Meaning anyone that retired prior to 1999 and possibly as much as five years beyond.

SB190 provided educator‘s who continue working until they obtain 35 years of service a much higher pension benefit then those retiring with 35 or less years of service prior to 1999. Obviously, the increased pension benefit for those retiring after 1999 with more then 30 years of service would help pay for the increased cost of the spousal subsidy, which was totally removed in January of 2004.

The decision to revoke the subsidized benefit for those other then benefit recipients by the STRS executive staff and I believe supported by the Board, has placed our financial future in jeopardy. This is a consequence we were never made aware of by our STRS counselor, at or near the time of retirement. Further, it was something the STRS executive staff certainly was well aware of at that time and made no attempt to have their counselor’s advise us to consider such before retiring. We each reviewed the information provided by that counselor and then made a decision to retire based upon that information. Most of us definitely did plan for our financial future, it was the STRS fiduciaries that promised such, but failed to provide for it during all those years of extremely high yield returns on investments in the 90’s.

Please find this request to be of utmost importance for those retirees effected. I would ask that a study be completed to establish those that have been effected by that change in subsidy. I can understand and accept the need for the increase in cost to each benefit recipient, but let us place all of those involved on an equal playing field. I feel as many others I have spoken with, that we have been treated unfairly. Please remember that in June of 2003, which was the first time I spoke to the STRS board, I stated that I have the rest of my life to deal with this issue. I still feel that way and have shown that commitment for the past three years. I will continue to do so, as long as I feel I have an ability to see that change of spousal subsidy replaced for those educators who believed that would be the case.

If the STRS non-investment employees are successful in their suit in receiving their bonuses for doing little more then the job they were hired to do, which I believe was nothing more then a promise, then don’t you think those of us that were promised affordable health care could also be successful in obtaining such? Please let us all get our heads together and solve this issue very soon, before we too file a class action suit.

Sincerely,

Thomas Curtis
1998 STRS Disability Recipient