More scare tactics by OEA; this time on health care (who do you believe?)

From: Molly Janczyk
Sent: Saturday, January 21, 2006
Subject: HC SCARE by OEA: SB190: Other Board Issues:1/20/06:

1. The recent information sent out by OEA to scare its membership was directly dealt with by Dennis Leone. OEA said STRS is discussing dropping HC for retirees and that this would never happen if OEA was on the board.

Leone: Damon, (Exec. Direc. Damon Asbury): I feel political reasons are why OEA put out that STRS is considering dropping health care. DID ANYONE EVER STATE THAT THIS WAS A CONSIDERATION?

DAMON: NO WAY!

2. The SB190 Buck Consultant study was presented yesterday at STRS. Data was requested on this issue last year by Steve Buser, STRS Investment Appointee. He is concerned that the new board is blamed for this request when he made this request BEFORE the new board was seated based on his questions. Leone stated this rumor that the 'new board' wished this was passed for political reasons and scare tactics.

[[Preliminarily from attendees yesterday: Please correct any item not accurately set forth based on attendees present.]]

*SB190, effective 2000, cost STRS $2.3 Billion to bring up existing retirees to 2.2% and make it retroactive to 1999.

*This increased the unfunded liability from 23.1 years in 2000 to 27.5 years in 2001.

*Buck Consultant Rep McNichol (sp) tried to show a monetary gain on a piece of paper that the attendees could not see. Leone said the attendees should be able to view the paper and so they were invited up to see a small sheet of paper unable to really see the point attempted to be shown.

*Needed returns to help pay for the plan and unfunded liability was raised from 7 and 1/2% to 7 and 3/4% in 2000. They have now been raised to 8%. STRS states this reduces the costs of the 35 yr. incentive plan.

*The current unfunded liability is 55 years. IF there had never been a 35 yr. enhancement, it would be 37.7 years now. If the 35 yr. enhancement was stopped fiscal year 2006 (7/05), unfunded liability would be down from
55 years to 39 years.

*Investment STRS Board member Buser stated this created a 2 class retiree system. All retirees pay the same amount into the system but 35 yr retirees receive much more in return. If there is to be another plan, he suggests beneficiaries pay more upfront into the system to make it more equitable for all. He feels not nearly enough is paid into the pension system by those who wish the 35 yr. enhancement to pay for the plan longterm.

*Other factors visited on SB190:

-Is the 35 yr. incentive the real reason actives staying longer or would they stay for 35 yrs. anyway due to increased health care costs of retirees. They would probably stay anyway for cheaper HC costs if able bodied vs. retiring to huge health care premiums and out of pockets and RX's.

-STRS, I believe, said there were gains made with the 35 yr. enhancement to the system BUT insignificant and costs to STRS would increase significantly longterm as payout continues and contributions don't support the payouts.

-Payouts will get much higher as salaries get much higher.

**IMPORTANT: THIS WAS DISCUSSION ONLY AND NO DECISIONS MADE OR MOTIONS MADE.

3. OTHER MATTERS:

Dawn Leibensperger, (Bill's wife), approached Tom Curtis asking about one of Mark Meuser's interview questions with CORE. It confirmed for some of CORE members, suspicions that Mark was sent to find out questions and goings on. It doesn't matter as we are open in our dealings but it is disappointing if that were Mark's only motives. We let Allen and Bill L. know before interviews that it was felt they were attempting to slip in through the back door. Sadly, it is not necessary as we would have welcomed Mark anyway. Mark, himself, did not hesitate to announce he alliances to his credit.