Molly Janczyk's notes on CORE meeting and STRS Board meeting 11/16/06

From Molly Janczyk, November 16, 2006:

Glenna Barr, CORE Secretary will report on the CORE meeting.

Items for general dispersion:

1. A major issue comes from Dave Parshall: CORE PRESIDENT

PLEASE direct all issues and concerns directly to him. He is involved in 3 organizations and receives over 150 emails daily. It is very important that you put DAVE in the Subject line and be very specific on the subject matter so it will direct Dave's attention to the matter. Please use formal titles so he knows what the subject is when he is perusing his emails.

For ex.: Subject: DAVE: IMP! STRS Travel Issue or DAVE: CONCERN for Damon/CORE Meetings

Dave needs to be kept in the loop on all issues as they occur so that he is fully aware when entering a meeting. Dave, Tom Mooney, Dennis Leone, John Lazares and M.E. Angeletti will meet monthly as well to ensure complete info to all. I hope a date for a monthly meeting is set such as the second Wed. of every month or some such date prior to meetings.

All should talk BEFORE DAMON/CORE Meetings as well to address concerns, etc.

Please call or email Dave prior to 8pm daily with concerns or comments.

2. Tom Curtis agreed to be our District IX Rep having knowledge of his area and once again attending meetings. Welcome back, Tom. Even Jeff Chapman said he missed you at the monthly meetings. Thank you for taking the last district needing a Rep to complete our District Representative Roster. Tom's computer is back up and he may be contacted by e-mail.

3. Dave Parshall asked Damon about live feed for meetings again being told it is cost prohibitive. Online solutions are not as they seem but CD's are available FREE so all can see the Board Meetings.

DAVE ASKS that ALL request a CD so that Damon can see there is much interest and perhaps will look harder into live feed.

Call /email Joyce Baldwin to get on a list to be sent a monthly CD : BaldwinJ@strsoh.org
614-227-4090

STRS
275 E. Broad St Cols Oh.
43215-3771

As stated Glenna Barr took more detailed minutes to come soon.

~~

HC: Medicare Part B:

Staff recommends returning to 2003 reimbursement amount for Medicare Part B for 2007. Percent at 1.8835% per yr of service up to 30 yrs.
*The premium will be $93.50 ($5 increase over 2006)
*STRS cost = $52.83
*30 yr retiree cost: $40.67 ($14.54 per mo. increase/$174.48 per yr inc.)

New Law: Monthly premiums will be higher for those earning $80,000 or more filing an indiv. tax return ($160,000 per couple filing joint) under a new federal guidelines regulation. 2005 tax returns will be used.

Rationale:

*HC legislation based on annual required contribution (ARC) of 5%
*Continuing to increase Medicare Part B reimbursement could cause the ARC to jump above 5% needed if not rolled back
*Maintaining the 2006 reimbursement amount in 2007 adds $92,000,000 in accrued liability and reduces solvency of HCSF by one year to 2020.
(Based on $9,000,000 addition this past year).

~~

Damon's Report: items of interest generally (full report will come with STRS minutes on line)

-Dems take back Congress; Bush and new leaders to set aside politics: While none could vote for or against Bush's agenda, it is one of the biggest things compromised by these elections.

2 issues of paramount importance are at issue: HC and mandatory Soc. Sec.

-Financial statement audit back on track. Clifton Gunderson auditors on site reviewing investment records with emphasis on real estate and alternative investments. Purpose: to review controls in place to ensure accuracy and reliability of STRS computer systems and reports.

All 5 pension systems report annually re: investment holdings to Office of Budget and Management but Clinfton Gunderson will issue a separate audit opinion on STRS investment info by 11/22.

-Medicare Part D subsidy to continue with federal program in 2007.

-STRS Active Board seat up for election and to be filled 9/1/ 2007. This seat vacated by Mike Billirakis was filled today by the Board temporarily. Billirakis' seat will be up for election in 2007.

Petitions forms can be obtained from STRS by calling 888-285-2192. Petition deadline is 2/23/07.

-Ohio Forum on Public Retirement in planning stages: Scheduled for 1/29-30/07; focus on imp. challenges facing defined benefit plans in coming years. ORSC and legislature have been invited.

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Leone: We never rec'd a report for the $400,000 contracted 2 yrs ago. I question the value when questioning of different persons and items no longer here are to be part of report. Damon stated it was $485,000 and supposedly due Dec. 2006 so will see what value it holds.

Leone: Motion for Proposed Amendment to Board Policy Entitled: "Board Member Travel and Expenses" pgs 17-19 Policy manual)

Dennis wished to present this motion which I will provide below; Ramser wished to defer it to the Jan or Feb retreat as expected much discussion and to give ample time for board review and input.

Lazares: seconded Dennis' motion instead.

There was discussion of when it would be best to address this as Damon stated the ORSC needs to have the proposal 60 days prior to reform . Damon suggested that the charge the staff to redline the current policy with Leone's proposals so the Board could see the old and new items side by side for consideration at the Dec. STRS Board Meeting. Leone was concerned about the lapse of time since Board Member 's computers , fax machines, calls, etc. have been paid for by STRS. Leone stated he had been unaware that Mike Billirakis had a home computer and fax machine (possibly Roadrunner or connection service) paid for by STRS. Hopes no further abuses during these few weeks.

Ramser asked Leone if he was ok with this suggestion. Dennis said though he was concerned with the time element for above reasons, he would be if the Board was approving these items for incorporation into the draft policy.

Puckett said all items #1-8 were fine but #1 under Code of Ethics involved laptops and was a different issue. Damon stated that Gregg of Internet Specialist Dept. would speak to them about pros and cons . ((I am not sure what this means - maybe the use of a personal computer and privacy determining what was STRS and personal and how to separate???????????????).

Puckett had no problem with #1-8 and approving them by tomorrow saying to Ramser that he saw no need to wait till next year. Damon added the redlining so all could see and perhaps add at this pt. for Dec.

The vote on the motion to include items #1-8 was unanimous so all could see the items side by side at Dec. meeting. No one seemed to disagree with any of this items but wanted time to see them and possibly add to them.

Mary Ann Flannagan-Cervantes came up to me during break to specifically address the credit cards. She stated she did possess one and used it one time but sees the importance of giving it back and she did. She wanted to convey this personally. I think MA probably was told this is usual (which it is for business) but we discussed the history issue and the importance of a period to establish controls and ways to properly address expenditures with 100% transparancy and efficiently. She totally agreed.

Leone's Proposed Amendment to Board policy entitled: "Board Member Travel and Expenses":

1. STRS funds will not be utilized to purchase credit cards for board members and board members will not be issued credit cards by STRS.

2. STRS will not permit payments or reimbursements to Board members for long distance calls that are not STRS business.

3. STRS will not pay for overnight stays in Cols.for Board members after Board meetings, absent weather or mechanical car breakdown problems.

4. STRS will not pay for overnight lodging for Board members on te day after conferences end, absent weather or car breakdown problems, or Board members's air flight cancellations.

5. STRS Board members who wish to attend conferences requiring airline transportation are required to secure reservations at least 30 days in advance (something Dennis said we thought was happening only to learn it is not). Board members who choose to secure reservations later than 30 days in advance will be required to pay the difference in cost between the 2 tickets.

6. STRS will not pay any addit'l fees charged by airlines when ticket reservations are changed by Board members for personal reasons-before or after conferences.

7. Board members will not be reimbursed for expenses associated with attending a meeting unless documentation can be provided by the organization inviting the Board member saying the Board member was invited to speak at meeting.

8. Exceptions to above policy amendments will require majority vote of the full STRS Board.

Proposed Amendment to Board Policy Entitled "Code of Ethics."

1. STRS will not pay for or provide computers, home internet connections, home telephones, cell phones, fax lines for Board members. They will be permitted to check out STRS lap top computers immediately prior to 1st day of business associated with Board meetings or approved conferences, assuming that said lap top computer be used only for sTRS related business and not personal use.

Speakers: (paraphrased-I do not write shorthand so best I can do).

1. Bill Leibensperger: I have been asked to state I am the designated spokesperson for HCA's as the Chair of HCA. Consensus is vigorous and I have been directed to clarify we are concerned about focus on personalities. This undermines us to legislators. Personal attacks work against us achieving our goals.

I commend STRS for rollback of Medicare reimbursements to 2003. Historically legislature acts in crisis. HCA's have approved these 2 policies:

*HCA oppose actions which decrease solvency
*HCA oppose actions which increase our liability.

Weight of collective voice helps serve us all.

2. Lloyd Knudsen:

I'd like to give the Board members a view of the benefit recipients.

There is a Queen Bee and there are worker bees. The Queen Bee has to admonish worker bees to be civil and is in charge of the rules on: travel, spending $$$, credit cards. But don't accept gifts from vendors. Several approve.

2 worker bees who are intrusive and always ask questions and raise concerns-are accused of micromanaging.

4 worker bees -appointees- experts - (who is more experienced than the government on how to spend our money?) These should stimulate discussion and encourage questions as this is not intrusive.

2 worker bees are civil and never intrusive.

3. Dave Parshall: as individual/not as CORE Pres.

Over a yr since I addressed the Board. The number of wealthy actives and retirees addressing the Board saying it has been so great, so I want to say the poorer retirees' picture is not so rosy. These statements by those better off is absurb such as the 35 yr superintendent with a 30 yr retired wife complaining that STRS was not going to pay HC for rehires. Such egocentric comments to those who cannot afford to pay for their HC. We are only as strong as our weakest among us.

Questioning contracts is your responsibility and is not micromanaging. We expect oversight. We again have the credit card issue. Damon says STRS may not have to comply with request to see reports on their use. We need a cooling off period with regard to use of credit cards.

Regarding former Board members found guilty of ethics violations: The moment they accepted unethical items, they lost their claim to work they did.

4. Paul Boyer: -Every Board member has the rt. to ask questions until they get an answer. No one is above the others . -If you don't recognize the value of a dollar to us: resign! -Can't introduce items not on agenda , even by the Chair, such as Exec. Direc.'s contract behind closed doors secret to membership. -Our $$$$ is to be spent for our benefit! -Don't cut Medicare for 2007. -We won't work for some of you in the future if issues not addressed.

5. Glenna Barr: HC is on all our minds. I'm concerned with Medicare returning to 2003 reimbursement with our costs rising and our plights worsening and RX's increasing. I am concerned about Board appointment today and recommend Tom Hall as we need experience and expertise. Travel: go to conferences here with Ohio experts and have mini conferences here; request info; Contingency Plan: if another crisis, what is the plan? Be the best informed and Be the best you can be! We expect no less.

6. Betsy Cook: I came 2 hrs to STRS. Elected Board members should rep us. Some not repping me! Have you cut childcare out? Looked for ways to consolidate space in this blding? Damon allowed $100,000 spending before Board approval; Travel documents and contracts need oversight; renew contracts not on agenda behind members' backs for Exec Direc. This is not oversight. I wonder if we will have HC yet childcare still receiving subsidy.

2 Board members are always in minority who want to cut spending. Listen to Lazares and Leone.

7. Tom Curtis:

Management hires the best. Does this justify $315,000 to hire staff. Don't we all want the best? I have been very involved in last 3 Board elections and the organizations,
(OEA, OFT, ?) have had little concern for qualifications of the candidates.

Voters have spoken (nationally) . Two sit on this Board with the courage to bring problems to light when the organizations did not. CORE , Lazares and Leone did more than all combined yet none listen except to the Exec. Direc. when he should be listening to us.

~~

Board members interview candidates for Board vacancy by Billirakis.

3 Candidates. John Lazares interviewed as laison for the Board Elections with the same 3 questions for all. Candidates were kept out of hearing range during other candidates' answers.

Questions for all: Do you have an opening statement?
1. What do you see as the major potential external issue confronting STRS over the next year and beyond?
2. What do you see as the major potential internal issue confronting STRS over the next year and beyond?
3. Why are you the best candidate?
*Mary Ann Cervantes questioned all 3 about their committment and distance to STRS. IF one candidate is asked a ques. all had to ans same ques.

Candidate #1: Tim Daugherty: Open: Most critical interview for me. Nervous; excited.
(Lazares: We're not as bad as we sound).

1. Ans.: HC for STRS and for nation. As a politician said position on HC is unsustainable. Need to address issues as not mandated.
2. Ans.: Perception. Perceived reality more imp. than reality itself (quote by ?) The perception we put out is imp. My retirement is a concern and hence my involement. We make decisions on hard data-objectively.
3. I am best candidate because I communicate well. I have a counseling background, set goals, am a leader among peers. If you decide someone is better than fine; I am better off too. I can think logically and am a chess player. You need to see pieces and put in best position while enemy counters your best position.

*Up to task; travel 3 hrs.

Candidate #2: Prof. Tom Hall:

1. 3 major issues/problems to address over next year: -if legislators agree on 5%, will school boards agree with universities, schools in trouble financially. How willing to contribute. -how much will HC cost in 20-30 yrs.? This is and unknown to be addressed as it is potential problem if more than expected -stocks/bond market performance for future: top financial minds (Greenspan and Schuller) disagree on concerns for future. (Schuller predicted the 2000 crash.) One has to consider future affects: for ex. the '29 crash took until '54 to return to regain loss. Point: how to address increased risk.

2. -how to continue to keep eye on costs and continue to provide high quality benefits; tendency for administrative bloat. So how to meet needs in high quality fashion and keep costs contained.
-35 yr rule: we have not really seen the affect long term and it has the potential to bust us down the road looking to all the new retirees to come in future years. It changes the economic incentive and we don't know if the revenue will support it longterm. Problem: only healthiest can receive benefits and this is what I see with my peers. If longevity runs in family and healthy tend to benefit; otherwise, not. Suggest forecasts faulty at best on this issue. No idea how much it costs and the costs could be underestimated.

3. I am the best qualified and am acknowledged for my expertise as financial economist. Qualifications matter-a lot. I am speaking as Tom Hall who has a vested interest in STRS and want expertise on Board. Also, I fulfill repping universities, colleges needing repped on Board.

*I am committed and understand the time needed for preparation. I live 105 mi. away.

Candidate #3: Tai Hayden:

Thankful for opportunity to be here.

1. The Board and the System need to be open and honest to build back the trust. We need to work with legislators to secure pension benefits and money for HC. We need to share info for a stable and secure system according to members' wishes.
2. Pension security and affordable HC. Improving financial responsibility and using funds wisely for all members. Solvency for HC and prudent decisions.
3. I have contact with active educators with 20+ yrs to go and am in position to work with them. I have pension training and some treasurer training. I have the committment and energy to work thru issues.
*I am committed and have the support of my district. I want there to be a secure retirement with HC when I retire. I live in Cols. so no need for lodging.

Tai Hayden was seated after a first round vote with a clear majority result. She was sworn in and seated on the spot.

The entire Board and all attending were most congenial and cooperative with deference to all concerns and issues.