Tom Curtis & Steve Buser on grandfathering
Steve Buser to Tom Curtis 1/25/06
Re Grandfathering
I do indeed understand why you and others are angry. You understand the history better than I do. So I cannot challenge anything you have said. Nor can I add to it significantly.
In particular, I do not know what prior boards were thinking when they decided to carve out an endowment in support of HC. On the one hand, it is remarkable that STRS was able to create an HC fund of more than $3 billion without the benefit of any dedicated income stream. On the other hand, as you have noted, $3 billion is no where near as much as is needed, and it is not nearly as much as OPERS was able to set aside.
With respect to communications between you and STRS regarding HC premiums, only you and others who may have had similar conversations, would know what you were told. By the time I retired, in 2002, STRS had not yet made the big change in HC premiums. However, the overall picture had changed for STRS, and I was informed that the issue of HC premiums was in flux and that nothing was assured.
With respect to a possible law suit, as a trustee of the system, I cannot imagine that I would ever want to advise anyone to sue the system. Nevertheless, I can understand your feeling and will respect whatever decision you and others make. I do not want to attempt to speak for the Board, and did not mean to do so in my prior email. But neither did I want to encourage false hope that the Board plans to discuss such adjustments in the near future. The best I can say is that the issue is clearly on the radar screen. If and when STRS funding improves to a significant degree, I suspect that there will be members of the Board who will want to revisit the issue of equity across classes of members.
The obvious question is when might it be reasonable to hope for a meaningful consideration? For that question I turn to the STRS investment staff. For better or worse I see them as our best chance, if not our only chance, for a quick fix. (If there is another possible source for multiple billions of dollars, I do not know about it.) Returns for the past couple of years have been better than expected, including the first half of this fiscal year. If we can keep our key contributors at STRS and keep them producing good returns, we just might be able to earn our way out of our current financial condition. We are also hopeful of winning approval for a new dedicated income stream for HC. However, even if that effort is successful, we will still need help from the investment staff to increase support for HC beyond current levels to any significant degree. For the most part the HC initiative simply seeks to secure funding for the HC structure as it currently exists. I am not aware of any plan for a carving out of funds to restore any portion of prior benefit levels.
Given what you have been through, I cannot ask for your patience. But neither can I offer you hope for significant improvement in the short run unless and until we can get there on the backs of our investment staff. I wish I could be more optimistic. Unfortunately, that is not the case.
At 04:17 PM 01/25/2006, Tom Curtis wrote:
Hello Steve,
Thank you for responding to our concerns. You are one of the few who have the time and are willing to do such. The following will be another one of my releases of my utter frustration with a pension system that has not met their fiduciary responsibility to me, as far as I am concerned.
You certainly would know better then I that the OPERS system may be offering something in HC they cannot deliver, but their HCSF in 2004 had roughly 12 billion in reserves, whereas, the STRS only had 3 billion. That is because our fiduciaries failed to fund a promise they were making, but not truly taking responsibility for. The OPERS has obviously taken their commitment to supply such far more seriously then has the STRS. They certainly have a much greater reserve, which would lead one to believe they are in a far better position then the STRS. However, my take on this is only one of what common sense would indicate and not based on any actual figures or knowledge of such. Further, I realize and appreciate that making comparisons of this nature are not comparing apples to apples.
I have asked Damon for the figures of those of us who have suffered the greatest burden, due to the 2004 changes. That would be the age group between 50-64. It is my understanding after talking with Mike Billirakis and Gary Russell that the number of benefit recipients needing the spousal and dependent child subsidy is 30% or below. Remove from that 30%, those ages 65 and above, who have reduced health care costs due to subsidies from Medicare or Medicad, then that number becomes even smaller.
I have asked Damon for that number of actual recipients in need and the cost of grandfathering the spousal and dependent child subsidy for those needing such. I trust he can supply those numbers without order another consulting contract, would you agree?
As I indicated in my presentation to the board in December, that I was reminded of this health care benefit throughout my career as a means of justifying the low income I received as a teacher. It was taunted as such in the STRS printed brochures. Then during my STRS counseling session, prior to retirement, I was reminded that the greatest benefit my wife and I was going to receive was a very affordable health care plan for the rest of our lives. This benefit, by the way, was to be second to none and always referred to as the "Cadillac" plan of the industry. Neither of these promises has come true. Why not?
I honestly feel those of us in this position have a legal case here. If the STRS board is not willing to address this issue and make a change for such, then we have nothing left to do, but take this issue to court, for a determination of our benefit rights. If the STRS employees can win such a case for promised bonuses, which should have never been instituted in the first place, then we should have no problem arguing such. If we are successful in such a case, the cost to the STRS will be far greater then if the board decides to address this now and do what is right by their benefit recipients.
The HCSF was I believe instituted in 1974. The STRS fiduciaries knew in
1990 that health care costs were going to rise substantially, yet they failed to address this impending problem. In a 1992 STRS Newsletter, it clearly states that the STRS needs to derive a dedicated flow of income to fund the HCSF. They new this was an issue, yet they failed to resolve it and today are still asking for the same thing. That is what we have paid these high priced employees to figure out, not to simply let it take it's course and then say we did not realize the situation. They have virtually wasted billions of dollars on consultants that have also advised them to fund their promises, but they chose to ignore their responsibility to their stakeholders. I certainly do not desire to spend the necessary time involved in a court case, but if that is our only avenue remaining, I for one will pursue such. The outcome could mean a big difference in my financial future. I would rather place my house and properties on the line to fight this now, then to see it taken by a HC provider, because I have no health care coverage in the future.
Now I must ask you, knowing that you may not desire to offer your opinion on such. Is what I have just stated a bunch of wishful thinking, or do you feel I have some merit in my presentation? If nothing else, please present my concerns to the rest of the board. I will send this email to each of them, but I get the feeling that few actually read what others and I in CORE send them. I for one, thought the employees winning the right to receive bonuses for simply doing their jobs was outrageous, but I was certainly wrong about that and it has cost the fund dearly.
You may have read this before in correspondence I have sent to others, but my out-of-pocket costs in 2004 were just in excess or $13,000. That is in excess of one-third of my pension. My out-of-pocket expenses will exceed that number for 2005. The COLA we receive may be better then nothing, but it is a far cry from what retirees need to keep their purchasing power current with inflation. The majority of other states provide a compounded COLA, why has the STRS never entertained such? In my opinion, they have not done so because their first interest does not appear to be what is best for the retirees. That is why I have asked that ORC 3307.15 become a high priority topic at your retreat. I do not feel that each board member has the same interpretation of such.
Steve, the STRS fiduciaries have spent far more time looking out for themselves then they have for the stakeholders. This could be evidenced in many ways, but probably the most glaring was the institution of free vehicles and the expense to operate such for the upper management. Further, these people threw caution to the wind and permitted their family members to drive these vehicles, which placed the entire fund at risk. These individuals are shameless and greedy and are all still there, with the exception of Herb Dyer. That is inexcusable and shows just how blatantly these people felt about their own entitlement. They did these things without caring what they promised the stakeholders. I assure you, that if this does go to court, it will scar the STRS far worse then anything that has occurred to date.
I have not been at the STRS month after month since 2003 learning about the STRS operation, because I do not have anything better to do. I have put a great deal aside to deal with this problem. This is a problem I never dreamed would take place. I always had the utmost faith and trust in the STRS, but the STRS has let us down. I do not take the fact lightly that my purchasing power of my pension has been reduced significantly in the short time I have been retired. This is not what I spent in excess of
30 years preparing myself to accept.
I have asked for documentation that I feel would be worthy of showing how the fiduciaries have placed themselves above the stakeholders promised needs and failed their fiduciary responsibility. This is beyond just bad business practices, this is out-right rape of our funds and should be shown for what it is. These fiduciaries never had to worry about the dedicated flow of income, as all corporations have to do on a daily bases, until just recently. The funds were always provided. All they had to do was invest them so they could meet the promises they made to the membership. This is incredibly obvious, yet these people make it look like they worked their tails off, when they have not. When have any of these employees offered to take a reduction in pay, because of the huge losses in 2001? I believe that answer would be never! Instead, they have always received multiple increases, which they built into the system and justified by saying everyone else is doing it. Herb Dyer went around this country on our dime speaking of such to every other public retirement system in this country, setting the stage for them to follow. The OSTRS was the "Cadillac" of the industry. Well, Bravo for Herb, Steve and Bob, but where does the STRS stand now? It is certainly not the "Cadillac" of the industry any longer. Now it is probably the laughing stock of the industry from a professional standpoint. Maybe the performance audit will show such, but my intuition would tell me that will not be the case. That would not be politically correct, would it?
Steve, I surely hope you can understand why others and I continue to be so angry. I did what I was asked to do by the STRS. I faithfully went to work each day and paid my contribution into the STRS each and every month for almost 30 years. I was promised a pension and health care plan second to none, that is not what I received for very long and I will not be persuaded to accept anything less. Damon and the others can attempt to convince me of such, but I was not born yesterday and I will go down fighting mad, if that is my result.
Please understand that I place none of the blame for such on the shoulders of any current board member, with the exception of Mike Billirakis. He was the president of the OEA during a time when much of the abusive was taking place at the STRS and possibly at the OEA as well. Then he came onto the STRS board and has attempted to persuade us he had nothing to do with all of this. He has grown so accustom to treating teachers as sheep that he must truly think we are gullible enough to think he was not involved. What a load of garbage that is. Well, I feel a little better by alleviating some of my frustrations for now, but I will wake up tomorrow just as frustrated as I have been for the past three years.
Thank you for listening and may I wish that the board would further consider our financial plight at this time in our lives.
Take care,
Tom Curtis
Re Grandfathering
I do indeed understand why you and others are angry. You understand the history better than I do. So I cannot challenge anything you have said. Nor can I add to it significantly.
In particular, I do not know what prior boards were thinking when they decided to carve out an endowment in support of HC. On the one hand, it is remarkable that STRS was able to create an HC fund of more than $3 billion without the benefit of any dedicated income stream. On the other hand, as you have noted, $3 billion is no where near as much as is needed, and it is not nearly as much as OPERS was able to set aside.
With respect to communications between you and STRS regarding HC premiums, only you and others who may have had similar conversations, would know what you were told. By the time I retired, in 2002, STRS had not yet made the big change in HC premiums. However, the overall picture had changed for STRS, and I was informed that the issue of HC premiums was in flux and that nothing was assured.
With respect to a possible law suit, as a trustee of the system, I cannot imagine that I would ever want to advise anyone to sue the system. Nevertheless, I can understand your feeling and will respect whatever decision you and others make. I do not want to attempt to speak for the Board, and did not mean to do so in my prior email. But neither did I want to encourage false hope that the Board plans to discuss such adjustments in the near future. The best I can say is that the issue is clearly on the radar screen. If and when STRS funding improves to a significant degree, I suspect that there will be members of the Board who will want to revisit the issue of equity across classes of members.
The obvious question is when might it be reasonable to hope for a meaningful consideration? For that question I turn to the STRS investment staff. For better or worse I see them as our best chance, if not our only chance, for a quick fix. (If there is another possible source for multiple billions of dollars, I do not know about it.) Returns for the past couple of years have been better than expected, including the first half of this fiscal year. If we can keep our key contributors at STRS and keep them producing good returns, we just might be able to earn our way out of our current financial condition. We are also hopeful of winning approval for a new dedicated income stream for HC. However, even if that effort is successful, we will still need help from the investment staff to increase support for HC beyond current levels to any significant degree. For the most part the HC initiative simply seeks to secure funding for the HC structure as it currently exists. I am not aware of any plan for a carving out of funds to restore any portion of prior benefit levels.
Given what you have been through, I cannot ask for your patience. But neither can I offer you hope for significant improvement in the short run unless and until we can get there on the backs of our investment staff. I wish I could be more optimistic. Unfortunately, that is not the case.
At 04:17 PM 01/25/2006, Tom Curtis wrote:
Hello Steve,
Thank you for responding to our concerns. You are one of the few who have the time and are willing to do such. The following will be another one of my releases of my utter frustration with a pension system that has not met their fiduciary responsibility to me, as far as I am concerned.
You certainly would know better then I that the OPERS system may be offering something in HC they cannot deliver, but their HCSF in 2004 had roughly 12 billion in reserves, whereas, the STRS only had 3 billion. That is because our fiduciaries failed to fund a promise they were making, but not truly taking responsibility for. The OPERS has obviously taken their commitment to supply such far more seriously then has the STRS. They certainly have a much greater reserve, which would lead one to believe they are in a far better position then the STRS. However, my take on this is only one of what common sense would indicate and not based on any actual figures or knowledge of such. Further, I realize and appreciate that making comparisons of this nature are not comparing apples to apples.
I have asked Damon for the figures of those of us who have suffered the greatest burden, due to the 2004 changes. That would be the age group between 50-64. It is my understanding after talking with Mike Billirakis and Gary Russell that the number of benefit recipients needing the spousal and dependent child subsidy is 30% or below. Remove from that 30%, those ages 65 and above, who have reduced health care costs due to subsidies from Medicare or Medicad, then that number becomes even smaller.
I have asked Damon for that number of actual recipients in need and the cost of grandfathering the spousal and dependent child subsidy for those needing such. I trust he can supply those numbers without order another consulting contract, would you agree?
As I indicated in my presentation to the board in December, that I was reminded of this health care benefit throughout my career as a means of justifying the low income I received as a teacher. It was taunted as such in the STRS printed brochures. Then during my STRS counseling session, prior to retirement, I was reminded that the greatest benefit my wife and I was going to receive was a very affordable health care plan for the rest of our lives. This benefit, by the way, was to be second to none and always referred to as the "Cadillac" plan of the industry. Neither of these promises has come true. Why not?
I honestly feel those of us in this position have a legal case here. If the STRS board is not willing to address this issue and make a change for such, then we have nothing left to do, but take this issue to court, for a determination of our benefit rights. If the STRS employees can win such a case for promised bonuses, which should have never been instituted in the first place, then we should have no problem arguing such. If we are successful in such a case, the cost to the STRS will be far greater then if the board decides to address this now and do what is right by their benefit recipients.
The HCSF was I believe instituted in 1974. The STRS fiduciaries knew in
1990 that health care costs were going to rise substantially, yet they failed to address this impending problem. In a 1992 STRS Newsletter, it clearly states that the STRS needs to derive a dedicated flow of income to fund the HCSF. They new this was an issue, yet they failed to resolve it and today are still asking for the same thing. That is what we have paid these high priced employees to figure out, not to simply let it take it's course and then say we did not realize the situation. They have virtually wasted billions of dollars on consultants that have also advised them to fund their promises, but they chose to ignore their responsibility to their stakeholders. I certainly do not desire to spend the necessary time involved in a court case, but if that is our only avenue remaining, I for one will pursue such. The outcome could mean a big difference in my financial future. I would rather place my house and properties on the line to fight this now, then to see it taken by a HC provider, because I have no health care coverage in the future.
Now I must ask you, knowing that you may not desire to offer your opinion on such. Is what I have just stated a bunch of wishful thinking, or do you feel I have some merit in my presentation? If nothing else, please present my concerns to the rest of the board. I will send this email to each of them, but I get the feeling that few actually read what others and I in CORE send them. I for one, thought the employees winning the right to receive bonuses for simply doing their jobs was outrageous, but I was certainly wrong about that and it has cost the fund dearly.
You may have read this before in correspondence I have sent to others, but my out-of-pocket costs in 2004 were just in excess or $13,000. That is in excess of one-third of my pension. My out-of-pocket expenses will exceed that number for 2005. The COLA we receive may be better then nothing, but it is a far cry from what retirees need to keep their purchasing power current with inflation. The majority of other states provide a compounded COLA, why has the STRS never entertained such? In my opinion, they have not done so because their first interest does not appear to be what is best for the retirees. That is why I have asked that ORC 3307.15 become a high priority topic at your retreat. I do not feel that each board member has the same interpretation of such.
Steve, the STRS fiduciaries have spent far more time looking out for themselves then they have for the stakeholders. This could be evidenced in many ways, but probably the most glaring was the institution of free vehicles and the expense to operate such for the upper management. Further, these people threw caution to the wind and permitted their family members to drive these vehicles, which placed the entire fund at risk. These individuals are shameless and greedy and are all still there, with the exception of Herb Dyer. That is inexcusable and shows just how blatantly these people felt about their own entitlement. They did these things without caring what they promised the stakeholders. I assure you, that if this does go to court, it will scar the STRS far worse then anything that has occurred to date.
I have not been at the STRS month after month since 2003 learning about the STRS operation, because I do not have anything better to do. I have put a great deal aside to deal with this problem. This is a problem I never dreamed would take place. I always had the utmost faith and trust in the STRS, but the STRS has let us down. I do not take the fact lightly that my purchasing power of my pension has been reduced significantly in the short time I have been retired. This is not what I spent in excess of
30 years preparing myself to accept.
I have asked for documentation that I feel would be worthy of showing how the fiduciaries have placed themselves above the stakeholders promised needs and failed their fiduciary responsibility. This is beyond just bad business practices, this is out-right rape of our funds and should be shown for what it is. These fiduciaries never had to worry about the dedicated flow of income, as all corporations have to do on a daily bases, until just recently. The funds were always provided. All they had to do was invest them so they could meet the promises they made to the membership. This is incredibly obvious, yet these people make it look like they worked their tails off, when they have not. When have any of these employees offered to take a reduction in pay, because of the huge losses in 2001? I believe that answer would be never! Instead, they have always received multiple increases, which they built into the system and justified by saying everyone else is doing it. Herb Dyer went around this country on our dime speaking of such to every other public retirement system in this country, setting the stage for them to follow. The OSTRS was the "Cadillac" of the industry. Well, Bravo for Herb, Steve and Bob, but where does the STRS stand now? It is certainly not the "Cadillac" of the industry any longer. Now it is probably the laughing stock of the industry from a professional standpoint. Maybe the performance audit will show such, but my intuition would tell me that will not be the case. That would not be politically correct, would it?
Steve, I surely hope you can understand why others and I continue to be so angry. I did what I was asked to do by the STRS. I faithfully went to work each day and paid my contribution into the STRS each and every month for almost 30 years. I was promised a pension and health care plan second to none, that is not what I received for very long and I will not be persuaded to accept anything less. Damon and the others can attempt to convince me of such, but I was not born yesterday and I will go down fighting mad, if that is my result.
Please understand that I place none of the blame for such on the shoulders of any current board member, with the exception of Mike Billirakis. He was the president of the OEA during a time when much of the abusive was taking place at the STRS and possibly at the OEA as well. Then he came onto the STRS board and has attempted to persuade us he had nothing to do with all of this. He has grown so accustom to treating teachers as sheep that he must truly think we are gullible enough to think he was not involved. What a load of garbage that is. Well, I feel a little better by alleviating some of my frustrations for now, but I will wake up tomorrow just as frustrated as I have been for the past three years.
Thank you for listening and may I wish that the board would further consider our financial plight at this time in our lives.
Take care,
Tom Curtis
posted by Kathie Bracy at 11:40 PM
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