Jim N. Reed's editorial in the Columbus Dispatch: State Teachers Retirement System in need of repairs

Saturday, June 10, 2006

In a May 30 story, Dispatch Public Affairs Reporter James Nash noted the financial chaos in the State Teachers Retirement System’s health-care package for retired educators. The catastrophic premium increases over the past three years have placed many retirees and their families in serious jeopardy. As retired teacher Molly Janczyk noted, retirees "are selling their homes; people are having to choose between physician visits and prescriptions."

Retired teacher Paul Boyer correctly pointed a finger at the General Assembly for defying the Ohio Supreme Court, which has ruled the state’s school-funding system unconstitutional. Boyer went on to suggest prospective and current educators "will flee the system."

In the same edition of the newspaper, an article about a young prospective geology teacher in Ohio State University’s graduate school corroborated Boyer’s prediction. Education can’t compete with a $75,000 starting salary with an oil and energy company. And the $20,000 signing bonus isn’t far removed from annual starting teacher salaries in some Ohio districts.

Take away what was once considered a blue-ribbon retirement package promised to Ohio educators, and what incentive is there for the brightest of minds to teach today’s and tomorrow’s future of Ohio?

At the core of the recent disaster in STRS retiree health care is a record of horrendous planning for the future by those entrusted with the $65 billion pension fund. Not only did questionable investments go sour, but the inhouse spending practices continued on their shameful pattern of the prosperous ’90s.

The story said that "184,000 retired (Ohio) teachers are struggling under the weight of health-care costs that doubled between 1998 and 2003, when pension administrators began reining in costs."

Doubled is a low-end description of the disastrous increase of health-care premiums between those years. Many retirees would have been delighted at only a doubling of premiums.

I take exception with the phrase reining in the costs if it means the STRS board and administration voluntarily cut operating expenses. The system’s own records provided board member Dennis Leone with a financially ugly pattern of spending between 1998 and 2003, and the accounting fiasco was published for anyone to see. Unbelievably, some of the people who are contributing and who have contributed to the pension fund have not read the embarrassing findings.

If reining in costs translates into higher premiums paid by retirees for their own health-care coverage, accompanied by exclusion of spouse and dependent children, then the statement was at least partially correct. Many retirees are fleeing the system’s health-care plan because they can’t afford to be rained on any longer with the escalating premium rates. They are searching for alternate health-care plans, which means this adverse selection only will exacerbate the problem and facilitate a quicker demise of the system.

In the May 21 Dispatch, a political cartoon focused on the rocky road ahead for Medicare recipients, who happen to include retired educators. That system appears to be headed for a dead end in 2018. That’s near the same date health-care Armageddon has been diagnosed for the State Teachers Retirement System’s health-care stabilization fund, without intervention.

Intervention must come from the General Assembly, the system and the constituents and recipients of the current health-care system, both retired and active.

Unfortunately, the first two groups have been notorious for defiant footdragging and poor planning. We must have hope that new leadership in those groups will not be too late to salvage the ailing system.

Also, unfortunately, educators have not admitted partial ownership of the dilemma. Witness the April election of two board members to represent Ohio’s active teachers. The results indicated "winners" for the two seats, but sadly the losers were the 85 percent of my profession who chose indifference by not exercising their right of franchise. Actives and retirees must get on the same page before the final chapter is written.

Yes, some corrective action within the system has resulted, but hardly on a voluntary basis. Yes, there are some signs of recovery. Recently elected board members Dennis Leone and John Lazarus have spearheaded some sorely needed reforms, but much still needs to be done to restore the trust and confidence in a once proud system.

JIM N. REED

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