Gary Hollow commentary: Do the Math

From RH Jones, February 10, 2006

Subject: NEOEA-R's Chair, Gary Hollow, Missed Math Problems

To all:

This article [Do the Math, by Gary Hollow, printed below] appeared in my NEOEA--Retired, publication of Feb. 2006. As a retired member, I will respond later.

RHJones

DO THE MATH

Comment by Gary Hollow,

NEOEA-R Chair

STRS Ohio is a mature retirement system, meaning that retirees are receiving more money in benefits than STRS Ohio is collecting from its active teachers and employers. During fiscal year 2005, STRS Ohio paid out more than $3.8 billion in service retirement, disability, survivor and health care benefits. Meanwhile, total contributions from active teachers, employers, benefit recipient health care premiums and other retirement systems totaled just $2.5 billion, leaving a shortfall of more than $1 billion that must be made up through investment income.

Unfortunately, some members don't understand the math. Even though health costs keep climbing in double-digit percentages, some retirees are demanding that health care premiums be reduced; spousal health care premiums be restored; and the supplemental benefit or thirteenth check be paid. Others are demanding a compounded COLA. But where will the money come from for these benefit improvements?

Some members think that reducing staff and administrative costs will save the health care program. But even if administrative costs were reduced to $0, the money saved would cover the claims of program enrollees for less than two months. It's time we face reality and work together to find a steady stream to support health coverage for current and future retirees. This is the only viable solution to the health care problem.

The STRS Ohio staff and the Health Care Advocates for STRS Ohio recently completed the first phase of their Member Education and Engagement Campaign. The purpose of this campaign was to educate active members about the economic realities of health care costs and to gauge their support for contribution increases that would create a dedicated revenue stream for the health care program. Data collected from the 10,000 active members showed that the information shared by the STRS Ohio increased members' recognition of the need to save for health care. The active teachers in Ohio also said they would do their part to help fund retiree health care. The active teachers in Ohio also said they would do their part to help fund retiree health care long-term by supporting legislation that would phase in employee and employer increase over five years to create this dedicated health care stream.

But to succeed in getting legislators to support this initiative, we must work together. Demanding lower health care premiums, increased COLA's and a thirteenth check at the same time active teachers are being asked to pay for a benefit that will help current retirees and is not guaranteed will quickly destroy support for this legislative proposal.

It's important to understand the math. Our focus should be on solving the health care funding problem.