Nancy Hamant: Some notes on STRS Board meeting 5/18/06

From Nancy Hamant, May 19, 2006

10:00 am--Reden & Anders, Ltd. Presentation of Health Care Study

The research presented to the STRS Board focused on the impact of Adverse Selection to the STRS Health Care Fund specifically looking at the increases to STRS Benefit Recipients" (Non-Medicare and Medicare) monthly premium payments for years 2003 and 2004. Results indicate that the increased monthly premiums caused the "youngest" and the "healthiest" STRS Benefit Recipients (both STRS members and spouses) to look for coverage elsewhere at a better rate.

Reden & Anders, Ltd. indicate that replenishing the risk pool is critical. The following overall principals for ensuring viability of the STRS risk pool for the long term, include: (1) increase the number of new entrants;
(2) limit/restrict late entrants, especially for non-Medicare; (3) retain existing members; (4) continued subsidy for teachers having 15 years service or greater.

STRS Board members had many questions about the adverse selection data. STRS Board members felt it was crucial to understand the analysis before making decisions regarding the STRS Health Care Plan for 2007. STRS Board members requested additional information for the next STRS Board meeting.

The Board broke at 11:30 am for lunch and an Executive Session.

CORE members met from 11:45 to 1:00 pm. (CORE minutes of meeting will be forwarded in a separate email.)

1:20 pm--STRS Board Meeting Reconvened

Damon Asbury (STRS Executive Director) presented his 2-page update.

STRS Board members had many questions regarding the STRS presentation on May 10th to the Ohio Retirement Study Council (ORSC) as to STRS's plan for reducing the pension fund's unfunded liability to 30 years from the current 55.5 years. ORSC responded negatively to any increase in employer contributions to the STRS fund. Changes to age and service benefits of Ohio teachers were not mentioned by the ORSC.

Dr. Leone and Dr. Buser both pressed Dr. Asbury about STRS being "open" to all possible avenues as STRS works with the Legislature to obtain changes necessary to improve STRS. Dr. Asbury responded that you "don't lead with a compromise position." Dr. Leone and Dr. Buser stated STRS needs to be ready to answer the ORSC's questions regarding the research STRS has completed on all possible changes, if STRS is going to be successful in obtaining positive legislative change for the STRS fund.

Dr. Asbury also reported that the first Medicare D payment for drug purchases by STRS Medicare recipients, $7,508,537.18 for the self-insured Caremark and $128,886.58 for Aultcare was "in the bank." The next Medicare D payment is projected to be larger, then the Medicare D payments will be made monthly.

Also, payroll growth is falling below actuarial assumption. Based on member contributions received through April, total member payroll in Ohio has increased about 2.1% compared to last year. Anything less than 4.5% creates an actuarial loss for the fiscal year.

2:10 pm--Public Presentations to the STRS Board (Two Speakers)

Nancy Boomhower

Good afternoon. My name is Nancy Boomhower and I am a retired first grade teacher from Medina County. I retired with 31¾ years of credit. I also am a part time rehire who teaches the GED program at our local county jail. Quite a change, but one that I am enjoying.

The reason that I chose to speak today is because of the childcare. I have been asking questions and gathering information about child care. The conclusion that I have come to is that our facility is overstaffed and overpaid.

The fees being charged are about in line with other local, profit-making facilities. So, the answer is not to raise fees but to reduce the number of employees and lower their salaries.

With the latest information that I have, the ratio of teachers to students is about one teacher to every 3.5 students. The state regulations call for a 5-to-1 ratio for infants, a 12-to-1 ratio for 3-year-olds, a 14-to-1 ratio for 4-year-olds and a 16-to-1 ratio for 5-year-olds. The state requires two types of employees, lead teachers and associate teachers. A lead teacher is required to have a 2 year associate degree and an associate is required to have a high school diploma with a couple of courses in child care. As I have said before, it does not take a college degree to change diapers.

The pay for a lead teacher starts at about $10.50 to $11.00 and the pay for an associate starts at less than $8.00 and goes up to about $11.50. Yet we have a person with the title of Director of Childcare Services whose salary in 2004 was $63,280. She has an Administrative Assistant whose salary is $35,760 and there is another person with a salary of $50,550 whose title is Child Care Coordinator. These are duties that are covered by lead teachers in other facilities.

I figured a salary for an individual who was earning $10.00 an hour and working 40 hours a week for 50 weeks. The reason that I did not figure in the other 2 weeks is that on the information that I was given, it appears that vacation time is in a separate category. That figure comes to $20,000. All of our employees exceed that figure by half again and much more. We have a part time employee who has a high school diploma and is earning $17.89 an hour. Something is wrong!

I spoke with an employee of a Columbus area day care facility and she said the STRS child care is known as a premiere facility. No wonder! Our employees are given service awards, educational assistance and all sorts of insurance benefits. These are not the norm for child care employees in the real world.

I have attached the charts, etc., from which I took my information. Please look them over and I am sure that you will come to the same conclusions that I have. Thank you.

Tom Curtis

Congratulated Connie Ramser and Mark Meuser for being elected to the STRS Board in this past election. Tom commended the STRS Board for the hours they spend on STRS business each month.

Tom explained his feeling that some on the STRS Board were not listening to the questions brought to the board by himself and others. Tom expressed concern that members questions were ignored, that it appeared no one was listening. He asked that past agendas be reviewed to determine if members' requests have been answered.

Tom asked that the Board makes sure that its actions take in the needs of all STRS populations--particularly both those of retirees as well as actives. (Please read Tom's email of his full address to the STRS Board.)

Tom expressed concern over OSBA's objection the proposed employee/employer increase (5% over 5 years) in contributions to STRS.

In addition, Tom asked STRS Board members last month to review Dr. Leone's 2003 report of misconduct/mismanagement at STRS. Tom reflected that each STRS Board member was provided a copy of Dr. Leone's report and only one STRS Board member had contacted Tom about the report.