Molly Janczyk: Notes on STRS Board meeting 11/17/05

From Molly
Nov.17, 2005

PUblic Speakers:

1-3: impressed with STRS; HCA; efforts and good job.

3. Mike M.?: Rehire: his funds have been reduced as rehire; went on to say new teachers are asking why they should approve more deductions for increased contributions. He stated he contributed for 31 yrs towards older educators ; now it is there turn; that is how it is done.

(We are always paying ahead and the next generation will do the same and so on if there is a steady stream of revenue generated by increased contributions. This is the closest thing educators can come to guaranteeing their future HC in retirement.m.j.)

4. Bob Buerkle(ly): Listed the 8 STRS Guiding Principals for Benefits Design: They include: offering a range of retirement benefits meeting member needs while providing equal and equitable access; maintain high level of member trust and satisfaction; proactively provide members with benefit education to enhance respons. for their retirement planning; propose future benefit improvements failrly and equitably balanced bet/ active and retired members and consider employee/employee contributions while ensuring financial stability of fund; be viewed as leader in providing retirement benefits and services; uniform pension benefit options for recipients and survivors similiarly situated as to length of service.

Then Bob presented a list of what he calculated to be inequities for pension beneficiaries who are rehires and D.C. Plan participants:

ARP, Defined Contrib. and Money Purchase plans collect 14% of payroll from employer and retains 3.5% for the benefit of others to reduce unfinded liability.

Reemployed Retired Teachers : A defined contrib. plan: STRS collects 14% of payroll from employer and as of 7/05 retains 9% for benefit of others to reduce unfunded liability of system.

This grp saves STRS over $6 Million on HC where none of the other grps save STRS anything. So, it seems $6Million is not enough and now STRS wants to nearly triple amount from the reemployed retirees as from any other grp.

There was a data sheet:

3166 rehires make $30,000 or more so full-time or nearly full time. Of 3166:
1508 use STRS HC; 1658 do not use STRS HC: receive a $430 HC subsidy if non medicare retiree. STRS saves: $8,555,280 on these 1658 rehires.

226 non full time rehires save STRS $1,166,160 in HC costs.

total payroll earnings = $11,800,000.
14% of 11.8million is $25.2million

At 4% STRS kept $7.2 million

now at rehirees' 9% STRS keeps $16.2 million

Take the $8,555,280 saved by 1658 rehires not using STRS HC plus the $16.2million STRS now keeing to = $24.75million rehires saving system.

3 Pension Plan comparisons of unequtible, unfair and dissimilar outcomes:

1. 1st time to Ohio teacher begins at age 60 and selects the DB (defined benefit) plan; earns $50,000 for 5 yrs and contributes $25,000 in employee contrib. Pension at 65: 11% of FAS of %50,000 or $5500 per yr.

2. 1st time to Ohio teacher begins teaching at 60 yrs old and selects DC
(defined contrib.) plan; earns $50,000 for 5 yrs. Pension: at 65 = $5500 per yr based on $26,000 of employee contrib., $26,250 of eligible employer match contrib. and a total account of : $62,525 by earning an average and continuing return of 8.8%.

3. Re-employed retired Ohio teacher begins at 60 as rehire earning $50,000 per yr for 5 yrs under DC plan. Makes the same $25,000contributions as 1. and 2. but only receives a match of $12,500 and will earn 5% on account for a total of $42,188 at age 65 : over $20,000 less in than case 2. and earns $3713 per yr at 8.8%. $20,337 less inheritance.

5. Ralph Roshand?. retiree who spoke of fight by school boards against inc. employer contributions. he opposes increases by school boards as well. thought 14% was great
((even tho has not been increased for 20 yrs.m.j.)) He also opposed SB190 and thinks will ruin system; told STRS not to make permanent changes; use temporary modes; Thought the discussion by board members best he ever heard on investments though. Told STRS to go back and revisit SB1990; don't like going back; but need to.

6. dianna Ball: elected OEA Central reflections after talking with educators: active are supportive of STRS and HCA and their efforts-collaboration benficial to members; need greatest benefit for greatest number; NOT tolerate of reductions in benefits; Rumor that future actives to get less than current. ((Assuming she is talking about SB190 and the 35 yr enhance 88% plan. m.j.))

7. Duke Snider: 'one of the malcontents' if can't hear-raise hand as seems some not listening; only supporters of retirees are Lazares and Leone. others-are you up there for status or to help? if you obj. to my calling you by name-raise hand. none did. Dr. Brown: I asked you twice previously what you would do if something was wrong at STRS and you danced around the ans. when you were campaigning. Leone wanted interactipn and you slappe him onl wrist. Does OSU pay you? brown nods yes. Isn't that a conflict of interest and if so, resign. Dr. Brown: did you inform the board that there was a BUCK report already before overpaying for another one? Have your read it/

WHY are you letting non investment staff run show? They showed you their loyalty by suing you. terminate them.

Dr. Asbury: Will you change your mind and take the bonus for non investment employees?

Mitchell: why Fannie Mae?

Rest: keep checks and balances in place according to ORC:3307.15

Damon Asbury Exec. Direc. Report:

1. HC member educ. campaign kicks off
2. benefit recipients encouraged to sign up for direct deposit: electronic and in view of natural disasters , use this direct deposit; mailings went out to 8.860 and in first 2 wks 335 signed up.
3. medicare part D subsidy approved by medicare.
4. DB and DC members receive statements
5. HC program open enrollement began 10/10
6. compounded COLAS would cost addt'l 3.6% contribution to actives to fund. Buser challenged that figure and wanted real dollar amounts as this percent is = to 10% of funds. Says that is way too high to make sense. Damon said it will be reviewed.
7. KPMG audit near completion
8. SB 9 does not speak to divestitude for retirement systems; will go back to Senate for some type of certification by those doing business with the state that they are not connected to nor are terrorists.
9. retirement system legislation on committee schedule: HB 272 to change language to OPERS statues re: medical accounts and rehire HC. STRS will likely be included. HB320: relative to SERS administration; HB340 for estab. of HC savings accounts for highway Patrol.
10. Election process begins.
11. STRS recognized by Public Pension Coordinating Council : qualified for Councill's Standards Awards for 2005: met professional standards for plan design and admin.

Rep. Dan Dubp: 88th district spoke for a min.; reps Brown Co. area; I love this awesome structure; building. just introducing myself as one who reprsents many retirees.

HC Member Benefits: HCA Proposal: seems most approving of proposal with numbers like 62% approve and 29% oppose in active phone surveys; 71% vs. 17% for retirees polled by phone;

Favor: online 68%, postcard 73% and meeting numbers 84% Oppose: in same order; 27%,20%, 10%

Leone complimented presentation and presenters. Concerned when school boards mount anti campaign if numbers hold.

meetings: hearing same 3 things:
1. frustration that legislators doing nothing in Wash. glad STRS part of nat'l movement
2. doubts that employers will agree or be able; Some actives saying just take entire 5% from us-employee for future HC
3. will it guarantee HC for us; nothing is a guarantee; but closest can come;

BUSER: can we set aside a portion just for actives? divide into popts: one for retirees; one for future retirees (actives) and one for needed area.

HCA meetings are providing for visibilty that STRS and HCA are working tog for solution.

#1 concern: value for product.

Medicare Part B:

Buser moved and Leone seconded that this area only increase 3% as with HC premiums for non medicare recipients. This is revisited every year. motion passed with a single NO by Myers.

All present by Fisher today.

Mary Ellen Angeletti will address investment issues which extened into CORE meeting time. Chuck stayed back for us to hear the discussion re: upping benchmarks for investment staff.