Saturday, June 24, 2006
Friday, June 23, 2006
Dayton Channel 7 interviews Dennis; to do series on STRS
Sent: Wednesday, June 21, 2006 8:10 PM
Subject: Re: Channel 7 Dayton
Hi John -- Sorry about that.. I was interviewed today for a long time Channel 7. As they were leaving, I asked to confirm if the report was due to be on at 6:00 p.m. tonight. They said their bosses have decided to do a longer series of STRS changes and updates in about 10 days. In other words, they plan to interview others as well. The reporter, Jim Otte, is definitely a supporter of ours.
From John Bos, June 21, 2006 6:31 PM
Subject: Channel 7 Dayton
Was not on the 6 pm news. Any information would be GREATLY appreciated!!!!!
From a Florida newspaper: Teachers' budgets get tighter
St. Petersburg Times Online
June 21, 2006
Why do teachers salaries remain at the bottom of the pay scale?
Many of my friends, some who have never attended college, have seen the fruits of their labors fulfilled. They have managed to support and provide for their families. Others who went on to college have been very successful and now also enjoy the fruits of their labors in their retirement. It is wonderful to see them traveling and enjoying places that they always dreamed of visiting, after a lifetime of hard work.
Most teachers, on the other hand, started out on a tight budget, remained on a tight budget and retired on an even tighter budget! Now they can only dream about all the places their friends enjoy. Doctors, lawyers, accountants and other professionals never had to go on strike nor stand outside on street corners trying to get a lousy 2 percent raise.
Flashback 2003: Hazel's $4100 farewell party you and I paid for (but weren't invited to)
~ John - a Proud CORE member
Copley Columbus Bureau chief
That was the food tab for a three-hour, invitation-only party Thursday evening at the State Teachers Retirement System for Hazel A. Sidaway, a Canton teacher who is leaving the pension board.
Twelve hours later and just feet away from where the party was held on the sixth floor of the pension board’s headquarters, Chairwoman Deborah Scott of Cincinnati publicly chastised STRS Executive Director Herbert L. Dyer for excessive spending, particularly on staff bonuses and travel.
Scott attended the buffet dinner with 60 retirement system officials, former and current board members and staff, their spouses and guests. They dined on beef, fish, potatoes, salad and dessert prepared by Michael Jones Personal Chef Services, a Columbus caterer.
The retirement system is paying for the meal.
“That’s outrageous. It’s unbelievable,” said Rep. Michelle G. Schneider, R-Cincinnati. “They have built their own little fiefdom and it’s out of control. That aggravates me.”
“That is entirely too much money,” agreed Sen. Kirk Schuring, R-Jackson Township, when he heard about the cost of the dinner.
Damon Asbury, deputy director for administration, said retirement system executives personally covered the $110 tab for the wine served with the meal and an open bar, with more than 20 bottles of whiskey, vodka and other spirits, proceeding the dinner. They also paid for a $129 wall mirror as a gift for Sidaway, and board members split the cost of a $310 bracelet with an STRS charm attached to it.
Sidaway attended her last retirement system meeting last week after 17 years on the board. She’ll retire Monday from her Canton City Schools teaching position; that makes her ineligible to continue to serve as a teacher representative on the STRS board.
Schuring and other lawmakers, teachers and retirees have been calling for Dyer’s resignation ever since news reports revealed millions of dollars have been spent on bonuses, artwork, travel and subsidized child care.
Sidaway spent the most on travel of all board members, $54,217 in the last three years. The retirement party is “another reflection of the posh, opulent behavior of the board,” Schuring said. “It’s a culture created by the director. It’s a culture so deeply embedded that they’re oblivious to the real world.”
Representatives of Ohio Auditor Betty Montgomery and State Superintendent of Schools Susan Tave Zelman, who are members of the STRS board, attended the party and then criticized Dyer on Friday at the board meeting.
“The department thought it was proper to attend the retirement event for a fellow board member,” said J.C. Benton, a spokesman for the Department of Education. “But Steve (Puckett) stands by his comments to the board (on Friday).”
Joe Case, a spokesman for Montgomery, said the dinner was not something the board voted on. He said Mary Beth Foley, Montgomery’s representative, told STRS staff that she would not attend if the dinner was “champagne and lobster.”
Foley was assured it wasn’t extravagant, but wasn’t told of the cost. Case said Foley questioned whether she should go because of the issues raised about STRS spending. She went as a “professional courtesy” after Sidaway personally invited her.
Case said Foley’s attendance did not change Montgomery’s view that “everything needs to be subject to close scrutiny. The administration and the board need to be looking at expenses like this. They need to be sensitive in these hard economic times on where pensioners’ money is spent.”
Attempts to reach Scott for comment were unsuccessful.
Thursday, June 22, 2006
Sen. Fedor pushing charter school accountability in legislature
June 22, 2006
COLUMBUS, Ohio -- A top critic at the Statehouse is pushing a reform plan to track public dollars and prevent waste with charter schools.
Critics of charter and community schools are trying to keep up the pressure at the Statehouse. They have alleged that public money is being spent in private, and there’s too much secrecy.
The top critic is Toledo state Sen. Teresa Fedor, who is a former public-classroom teacher. She has introduced a bill in the legislature to require more public accountability by all charter schools.
At this time, the schools themselves undergo regular audits by the state auditor much like traditional public schools.
Under the bill, the sponsors of those charter schools and the companies that operate them would also undergo that same audit process.
Fedor said that’s the only way to find out exactly where public money is going. Charter schools, especially ones run by large management corporations, said they already have enough accountability measures in place.
Fedor said she is hoping to get some hearings on her plan, saying her overall goal is to protect public tax dollars.
Wednesday, June 21, 2006
Politicos suddenly dumping free $$$
Wednesday, June 21, 2006
THE COLUMBUS DISPATCH
With the potential taint of the state investment and ethics scandals looming over Ohio politics, some state Republicans are scrambling to give up campaign cash from the two people most recently charged in the investigation.
U.S. Sens. Mike DeWine and George V. Voinovich and state Auditor Betty D. Montgomery all said yesterday they are donating to charity or another source contributions received from brokers Michael W. Lewis and Daniel P. O’Neil and their wives.
Lewis and O’Neil have been indicted on federal charges related to allegations that they conspired to bribe the former chief financial officer of the Ohio Bureau of Workers’ Compensation in exchange for getting lucrative bureau business.
Both men have pleaded not guilty to the charges, but with Democrats arguing that Republicans have presided over a "culture of corruption" in Ohio and Washington, some officeholders aren’t waiting for the outcome of the case to act.
Many GOP candidates and officeholders already have surrendered contributions from Thomas W. Noe, the rarecoin dealer at the heart of the state scandals.
Voinovich is donating $9,000 he received from the brokers and their wives since 1994 to an undetermined charity, and DeWine is donating the $3,000 he received in 2004 to charity as well, spokesmen said.
Voinovich considers both brokers friends and had O’Neil manage his personal financial portfolio after leaving the governor’s office, spokesman Chris Paulitz said. O’Neil only executed trades without providing investment advice, he said.
"The senator is disappointed but determined to allow the justice system to take its course," Paulitz said. "While the senator believes they are innocent until proven guilty, he will send their modest campaign contributions since 1994 to a charity."
A spokesman for DeWine, who is locked in a fight for re-election with Democratic U.S. Rep. Sherrod Brown, declined to respond to a statement yesterday from the Democratic Senate Campaign Committee calling on DeWine to donate the "tainted funds" to charity and saying "you can tell a lot about someone by the company he keeps."
Montgomery, who is running for attorney general this year, gave the $1,000 she took from O’Neil and his wife last year to an escrow fund at the bureau yesterday, a spokesman said.
Lewis and O’Neil, who are both from the Cleveland area, contributed money in the 1990s to Democrats Thomas Ferguson, the former state auditor, and former state Rep. Patrick A. Sweeney of Cleveland.
Republican gubernatorial candidate J. Kenneth Blackwell, who took $200 from Lewis in 1994 and ’95 when he was state treasurer, sees no need to return the contributions and expects the brokers to be prosecuted to the fullest extent of the law, spokesman Carlo Lo-Paro said.
The Ohio Republican Party, which took $3,500 in contributions from both Lewis and O’Neil in 1998, also plans to keep that money because Chairman Robert T. Bennett thinks it’s irrelevant to the problems at the bureau, spokesman John McClelland said.
According to a four-count federal indictment unsealed Monday, Lewis and O’Neil conspired starting in 1998 with Terrence W. Gasper, the bureau’s former chief financial officer, to allow Gasper and his guests to use an oceanfront Florida condominium for free in exchange for bureau business.
Milt Freudenheim: Drug Prices Up Sharply This Year
Drug Prices Up Sharply This Year
By MILT FREUDENHEIM
June 21, 2006
Prices of the most widely used prescription drugs rose sharply in this year's first quarter, just as the new Medicare drug coverage program was going into effect, according to separate studies issued yesterday by two large consumer advocacy groups.
AARP, which represents older Americans, said prices charged by drug makers for brand-name pharmaceuticals jumped 3.9 percent, four times the general inflation rate during the first three months of this year and the largest quarterly price increase in six years.
Price increases for some of the most popular brand-name drugs were much steeper; the sleeping pill Ambien was up 13.3 percent, and the best-selling cholesterol drug, Lipitor, was up 4.7 to 6.5 percent, depending on dosage.
Over all, AARP said, higher prices mean that the cost of providing brand-name drugs to the typical older American, who takes four prescription medicines daily, rose by nearly $240 on average over the
12-month period that ended on March 31.
"When the manufacturers' wholesale prices increase, it gets passed through the system, regardless of who the final purchaser is," said John Rother, the policy director of AARP. Although the drug industry's main trade association challenged the accuracy of the AARP survey, a separate study, by Families USA, a patient advocacy group, found similar inflation rates among brand-name drug prices. While the higher prices have a general impact on the drug-taking public, consumer advocates said the higher prices have special implications for Medicare, which Congress barred from negotiating prices with drug makers when lawmakers devised the new so-called Part D drug program.
Commercial insurers, which are offering the drug insurance plans under Medicare's auspices, do have negotiating power. And they say that by switching to generic drugs, consumers can avoid most of the price increases.
The surveys measured manufacturers' wholesale prices, which would not necessarily reflect any discounts insurers might be able to negotiate.
But even so, the price increases in the Medicare drug plans since they began were identical in many cases with the jump in wholesale prices, Families USA said.
Some health care economists said the price increases, if they continued, could have a devastating effect on the new Medicare drug program.
"Higher drug prices may lead to higher premiums next year, which may discourage enrollees from joining or staying in the program, and fewer enrollees could drive premiums even higher," said Stephen W. Schondelmeyer, a University of Minnesota economist who specializes in drug industry issues.
Mr. Schondelmeyer said one clear indication of the inflation's impact could be seen among the six million low-income elderly and disabled people who previously received drug coverage through Medicaid but were automatically switched to the Part D program when it began in January.
That shift was a windfall for drug makers, he said. "Medicaid would have paid 25 to 30 percent less under the old system, including rebates from the manufacturers, than the new Medicare Part D program is paying."
Ron Pollock, the executive director of Families USA, offered another way to gauge the federal impact. The federal Department of Veterans Affairs, which is able to negotiate prices with pharmaceutical makers, is paying 46 percent less for the most popular brand-name drugs than the average prices posted by the Medicare plans for the same drugs, Mr. Pollack said.
Peter Ashkenaz, a Medicare spokesman, said enrollees in the Part D program could obtain a broad range of drugs as well as "personalized help in finding less costly drugs." He said many enrollees were in drug plans with "flat co-pays, which protects them from changes in pricing."
The first quarter of the year is typically the time when drug makers make many of their annual price increases. The industry did not comment on this year's increases, other than to question the accuracy of the AARP survey.
The drug industry's trade group, the Pharmaceutical Research and Manufacturers Association, said in a statement that the AARP conclusions were "erroneous," because consumer drug prices had increased less than 2 percent since Jan. 1. The group, though, was citing a federal Bureau of Labor Statistics report that combines prices for brand-name and lower-priced generic drugs, as well as various "medical supplies."
Paul Fitzhenry, a spokesman for Pfizer, which makes Lipitor, pointed the finger at health insurers, which he said were increasing their drug payment charges to members faster than drug makers were raising their prices.
"There has been a huge disconnect between changes to our prices and increases to consumers' out-of-pocket costs for medicines," he said. "Between 2001 and 2005, our compound annual average net price increase was
3.3 percent per year. During that same time, the average co-payment charged by insurers for brand-name pharmaceuticals has increased at an annual rate of 11.1 to 15.5 percent," he said, citing a Kaiser Family Foundation 2005 survey.
Mohit Ghose, a spokesman for the American Association of Health Plans, a insurance trade group, said the insurers were actually reducing drug spending increases by promoting lower-cost generics instead of brand-name drugs.
Mark Green, a spokesman for Sanofi-Aventis, which makes Ambien, said the drug was "priced more competitively than some other products in the sleep category." He added, "We make every effort to price our prices competitively, relative to the value they provide to patients."
Gary Russell responds to Shirlee Zerkel re: Medicare B reimbursement
Subject: Fwd: Medicare Part B reimbursement
Thought that you may be interested in the following information about survivor benefits concerning Medicare B subsidy. I asked Dennis about it yesterday and Gary's answer is in response to Dennis phone call to him. I had called STRS on Monday and again on Tuesday with questions about this issue and received totally different answers from the staff person answering the phone.
Dennis asked me if I knew of anyone to whom this already applied and if that eligible surviving spouse was receiving a subsidy for Medicare B from STRS. Do any of you know anyone?
________ From Gary Russell, June 21, 2006
Good morning Ms. Zerkel,
It has been a while since we e-mailed, I hope you’re doing well. Dr. Leone called yesterday in regards to your questions to our call center about the current and future policies on Medicare Part B reimbursement. I reviewed the audio of the phone calls and apologize for the incorrect information you received. The current policy for the reimbursement of Medicare Part B in regards to spouses is that there is no reimbursement to a spouse based on the relationship as a spouse. However, if the spouse is named the beneficiary on a joint and survivor annuity (which is typically the case), then upon the death of the member the spouse as the beneficiary receiving an STRS Ohio benefit would be eligible for reimbursement. Once the beneficiary became eligible for Medicare and provided proof to STRS Ohio, he or she receives reimbursement based on the member’s years of service credit. The reimbursement is in the same amount the member would have received. The beneficiary is eligible to receive this for life.
At the June Retirement Board meeting, staff recommended that the Medicare reimbursement to recipients receiving beneficiary benefits be limited to only the first five years of being a beneficiary. This would bring the reimbursement in line with the health care premium subsidy which is only provided for the first five years of receiving beneficiary benefits. The change to the Administrative Code which was recommended was not approved by the Board. Instead, Dr. Leone and Mr. Billirakis proposed a grandfather modification and direction was given to staff to draft a rule for the Administrative Code for presentation for the Board to vote on in August. The proposed rule is this:
- Beneficiaries who are receiving a Medicare Part B reimbursement before Jan. 1, 2008 will continue to receive the reimbursement for life provided funds are available.
- Any named beneficiary who is eligible for Medicare Part B as of Jan. 1, 2008 will receive the same reimbursement as the retiree upon the death of the retiree. A “named beneficiary” is the beneficiary who is due to receive a continuing benefit upon the death of the retiree.
- Any named beneficiary who is not eligible for Medicare Part B as of Jan. 1, 2008 and all named beneficiaries of members who retire Jan. 1, 2008 or later will only be eligible to receive the Medicare reimbursement during the first five years of being a benefit recipient.
Since your husband who is also your beneficiary is already 65 and eligible for Medicare, he is eligible to receive Medicare reimbursement for life if you should die before he does. If he didn’t turn 65 until Jan. 2008, he would have only been eligible to receive the reimbursement for the first five years of being a benefit recipient.
As noted above, the Board is expected to vote on this proposed rule at the August meeting.
I hope this helps and apologize again for the incorrect information you received.
Director, Member Services
Tom Curtis to Sen. Zurz: Ethical Reform
Judi Peaspanen: Research on the ORC regarding our HC
THIS IS HOW THE ORC (
3307-1-22 Health care services
Pursuant to the provisions of sections 3307.74, 3307.33 and 3307.405 of the Revised Code, the state teachers retirement board establishes the following rule:
(A) Benefit recipients are eligible for health care benefits on the following basis:
(1) The state teachers retirement board hereby waives the single rate monthly conventional premium costs for retirants or other primary benefit recipients whose benefits are based on not less than one and one-half years of credit for Ohio service and who are enrolled in the Ohio retirement systems health care plan or such health maintenance organizations as the board may approve.
THIS IS HOW THE
3307-1-22 Health care services
Pursuant to the provisions of sections 3307.74 and 3307.405 of the Revised Code, the state teachers retirement board establishes the following rule:
(A) the state teachers retirement board shall pay all of the single rate monthly premium costs for retirants, or other primary benefit recipients whose benefits are based on not less than one and one-half years of credit for Ohio service and who are enrolled in the Ohio retirement systems health care plan or such health maintenance organizations as the board may approve.
(B) The retirement board shall continue to enroll all eligible dependents, as determined by the retirement board, who elect such coverage.
Actually in my opinion we should have been vested after 1 1/2 years as stated in 1976. It should not be based on when we retired, but rather on when we met the vested rights of Health Care as stated in the Ohio Revised Code in 1976 through 1997. To take this right away would be taking away property rights we already have as, prohibited by the Ohio Constitution.
“In 1997 STRS changed the accounting system : Health care premiums prior to fiscal 1997 were netted against health are costs. Starting in fiscal 1997, health care premiums are reflected as a revenue (earnings) item.” (1998-99 STRS Annual Report)
In 1998 STRS changed the ORC to read:
Health care services
(A) Benefit recipients are eligible for health care benefits on the following basis:
(1) The state teachers retirement board hereby waives a portion of the single rate monthly conventional premium costs for retirants or other primary benefit recipients whose benefits are based on not less than one and one-half years of credit for Ohio service and who are enrolled in the Ohio retirement systems health care plan or such health maintenance organizations as the board may approve. The portion of the conventional premium to be waived shall be determined by a schedule or formula adopted by the board at least every two years after an assessment of funds available for such purpose.
More changes after 2000.
Cincinnati Post: Another guilty plea in probe of teacher fund
June 21, 2006
By Matt Leingang
COLUMBUS - A former member of the board that oversees Ohio's pension fund for teachers pleaded guilty Tuesday to accepting Cleveland Indians baseball tickets and other gifts from investment clients.
Jack Chapman, 59, the third former official from the State Teachers Retirement System convicted of ethics violations, acknowledged that accepting gifts from companies handling the pension fund's investments conflicted with his duties overseeing the system's finances.
Chapman, a retired Reynoldsburg teacher who resigned from the board in 2004, declined comment as he left Franklin County Municipal Court.
"Mr. Chapman felt that it was best to resolve the case and get on with his life," said his attorney, H. Ritchey Hollenbaugh.
Judge H. William Pollitt fined Chapman $1,278 and ordered him to pay $4,000 to the Ohio Ethics Commission for its investigation. He also was sentenced to three years probation, and a jail term of about a year and a half was suspended.
Prosecutors said Chapman has agreed to cooperate with their probe into whether current or other former retirement system board members and staff accepted similar gifts.
Chapman admitted he was guilty of three counts of conflict of interest for taking the gifts from 1998 to 2003, including a golf outing and a ticket to the Broadway show "Hairspray." The gifts came from Frank Russell Corp./Russell Real Estate Advisors and Salomon Smith Barney, now Citicorp.
Legislators passed ethics reforms after Herb Dyer, the retirement system's executive director, resigned in 2003 amid criticism that the system was spending millions on bonuses, art and travel even as assets plunged. Now, public pension funds must adopt strict ethics and travel policies.
Paul Kostyu: Ex-OEA official, STRS board president sentenced to 3 year probation
Jack H. Chapman pleaded guilty in Franklin County Municipal Court on Tuesday to three charges of conflict of interest.
He’s the second former board member and third State Teachers Retirement System official to be ensnared in an ongoing ethics investigation. Charges against other system officials are expected.
Chapman, an often outspoken member of the board, was barely audible when he responded to questions from Judge H. William Pollitt. After the hearing, Chapman refused to comment to reporters.
Pollitt sentenced Chapman to 180 days in jail for each charge, but suspended the sentence and put him on probation. He ordered Chapman to pay three fines — $884, $169 and $225 — which represent the cost of the Cleveland Cavaliers and Cleveland Indians tickets he used, the golf outing he took in Washington state and the ticket he used to the Broadway show “Hairspray.”
Chapman also must pay $4,000 to the Ohio Ethics Commission for the cost of its investigation of him. And he must perform 60 hours of community service, 30 in a Franklin County public school and 30 in a senior center or retirement home. Chapman also agreed to assist prosecutors with the continuing investigation.
Chapman’s attorney, H. Ritchey Hollenbaugh, told the judge the former president of the OEA’s Central Ohio District didn’t know he was not to accept the gifts, and the court should consider his years of service as a middle school teacher and his 14 years as a volunteer on the teacher pension board. Hollenbaugh made a similar argument when he defended former Canton City Schools teacher Hazel Sidaway, who was convicted in April on two similar charges.
Though prosecutors did not respond to Hollenbaugh in court, they did afterward.
David Freel, executive director of the Ohio Ethics Commission, said he didn’t accept the professed “naiveté.” Quoting the judge in the Sidaway trial, Freel said, Chapman “would have had to been under a rock” not to know about the ethics standards.
In 2002, Chapman was the retirement board’s top traveler, going on 12 trips and spending $14,684 of teacher pension board money.
In a trip evaluation, Chapman recommended a convention in Anchorage, Alaska, “based solely on the opportunity ... to network with peers.” One of the sessions he attended discussed “the loss of faith in corporate America.”
Reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: firstname.lastname@example.org
TEACHERS RETIREMENT SYSTEM IN COURT
Three officials with the State Teachers Retirement System have pleaded or have been found guilty of violating state ethics laws. Here’s a scorecard.
Name: Herbert L. Dyer
Position: Former executive director
Charges: Four counts of conflict of interest; one of failure to disclose gifts and meals
Result: Pleaded no contest, found guilty in September 2005 of failure to disclose golf outing in New Castle, Wash.
Sentence: Reimburse STRS for outing and meals, $394; pay fine $1,000 ($300 suspended) and court costs.
Name: Hazel Sidaway
Position: Former board president
Charges: Four counts of conflict of interest; three counts of nondisclosure of gifts
Result: One count of conflict of interest dropped; found not guilty of nondisclosure and conflict of interest; found guilty of two counts of conflict of interest on April 14.
Sentence: 180 days in jail (suspended); two years probation; fined $670 for using four Cleveland Indians tickets and two Broadway show tickets; paid court costs ($1,204) and $5,381 to Ohio Ethics Commission for cost of investigation; 200 hours of community service (100 in Canton City Schools and 100 in a nursing home or retirement facility).
Name: Jack H. Chapman
Position: Former board president
Charges: Three counts of conflict of interest
Result: Pleaded guilty, June 20
Sentence: 180 days in jail (suspended); three years probation; fined $884 for using Cleveland Indians and Cavaliers tickets; $169 for a golf outing in New Castle, Wash., and $225 for using a Broadway show ticket; paid court costs and $4,000 to Ohio Ethics Commission for cost of investigation; 60 hours of community service (30 in public schools and 30 in nursing home or senior citizen center).
Tuesday, June 20, 2006
Dayton TV to interview Dennis Leone
Teacher's Retirement System Official Admits Ethics Violations
A 2003 e-mail from Jack Chapman to the SEC: He was concerned about criminals!
Sent: Thursday, May 29, 2003 3:51 PM
Subject: Proxy reform (s7-10-03)
275 East Broad Street Columbus, OH 43215
WHIO: Former Teachers Pension Fund Member Pleads Guilty In Ethics Probe
New "star" added to Ohio flag
Beacon Journal: Third teacher pension fund ex-official convicted in ethics probe
COLUMBUS, Ohio - A former board member of the state pension fund for teachers pleaded guilty Tuesday to accepting Cleveland Indians baseball tickets and other gifts from investment clients.
Jack Chapman, the third former official from the State Teachers Retirement System convicted of ethics violations, acknowledged that accepting the gifts from companies handling the pension fund's investments conflicted with his duties overseeing the system's finances.
Chapman, who resigned in 2004, declined comment as he left Franklin County Municipal Court.
Judge H. William Pollitt fined Chapman $1,278 and ordered him to pay $4,000 to the Ohio Ethics Commission for its investigation. He also was sentenced to three years probation, and a jail term of about a year and a half was suspended.
Chapman admitted to three counts of conflict of interest for taking the gifts from 1998 to 2003, including a golf outing and a ticket to the Broadway show "Hairspray." The gifts came from Frank Russell Corp./Russell Real Estate Advisors and Salomon Smith Barney, now Citicorp.
Another former board member, elementary school teacher Hazel Sidaway, was convicted in May of similar ethics violations, and Herb Dyer, the retirement system's former executive director, was found guilty last fall of improperly accepting gifts.
Chapman pleads guilty
Jack Chapman pled guilty to ethics charges this morning at Franklin County Municipal Court and was fined $1200 plus $4,000 restitution to be paid to the Ohio Ethics Commission. He was also ordered to perform 60 hours of community service and was given three years' probation. More to follow as the stories come out. Channels 4 and 6 (Columbus) covered the arraignment, as did journalist Paul Kostyu and others.
Ken Ruth asks questions of Gary Russell re: Compensation for STRS associates
Director, Member Services
Director, Member Services
Paul Kostyu: Another former state teacher pension system board member to plead guilty
Jack H. Chapman of Reynoldsburg, who resigned from the board in June 2004, agreed to plead guilty to three counts of conflict of interest for receiving things of value from 1998 to 2003. They included multiple tickets to Cleveland Indians and Cleveland Cavaliers games ($884), a golf outing in Washington state ($169) and a ticket to the Broadway show “Hairspray” ($225).
The charges, all misdemeanors, are similar to the three that former Canton City Schools teacher Hazel Sidaway was found guilty of in April. Chapman is expected to receive a similar sentence including community service and payment of fines, investigation costs and restitution. He also has promised to cooperate with investigators on related cases.
At least four other board members, Joseph I. Endry of Westerville, Michael N. Billirakis of Pickerington, Eugene E. Norris of Columbus and Deborah Scott of Cincinnati, attended the Broadway show with Chapman and Sidaway. Billirakis has told investigators who his attorney is.
Prosecutors are expected to file more cases against current and former board members as well as staff who served with Sidaway and Chapman and who took advantage not only of the Broadway tickets but other gifts from Frank Russell Corp. and Salomon Smith Barney, now Citicorp. Both companies provided investment advice to the board and have cooperated with investigators.
The two-year statute of limitations for Chapman was to expire Wednesday. Prosecutors contacted Chapman and his Columbus attorney, H. Ritchey Hollenbaugh, last week saying they would be willing to negotiate a plea deal. Hollenbaugh said an agreement was reached Monday. Prosecutors were prepared to file more than three charges had a deal not been reached.
“There won’t be any other charges against him,” Hollenbaugh said.
Hollenbaugh was the attorney for Sidaway as well as Herbert L. Dyer, the former executive director of the State Teachers Retirement System. Dyer was convicted in September 2005 in a plea deal of one count of violating state ethics laws for not paying for golf — the same outing Chapman took.
David E. Freel, executive director of the Ohio Ethics Commission, said the total value of gifts Chapman received was “a couple thousand.”
Paul Nick, the commission’s chief counsel, said the continuing investigation doesn’t appear to reveal “a high level of corruption” at STRS, but was “recklessness” by board members who “compromised their positions.”
Freel said Chapman’s case is not connected to the ongoing investigation into the Bureau of Workers’ Compensation, though other officials have said there are links between that agency’s troubled investments and those at the state’s pension systems.
The ethics commission investigation of STRS began after media reports, including many by Copley Ohio Newspapers, raised questions about travel, bonuses, artwork and other items.
Reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail:
June Board News from STRS
June 20, 2006
Last week, the State Teachers Retirement Board held several committee meetings, as well its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The June report follows.
JUNE BOARD NEWS
RETIREMENT BOARD CHAIR, VICE CHAIR NAMED; BROWN RECOGNIZED FOR SERVICE During its June meeting, the Retirement Board elected Jeff Chapman as its vice chair for the coming year. Chapman joined the board in September 2005 following his election to a retired member seat on the board. According to Board Policies, Conni Ramser, who is currently serving as vice chair, automatically moves into the position of chair. Normally, both Chapman and Ramser would be moving into these leadership positions on Sept. 1, 2006. However, Dr. Robert Brown, the current board chair, has announced his retirement from his teaching position at The Ohio State University, effective June 30, 2006, and thus is resigning from the Retirement Board. As a result, both Ramser's and Chapman's terms in office will begin on July 1.
During the board meeting, a resolution recognizing Brown's service to the board was presented. The board expressed its appreciation for his dedication, wisdom and service to the members and benefit recipients of STRS Ohio.
RETIREMENT BOARD ADOPTS ANNUAL INVESTMENT PLAN The Retirement Board adopted an Annual Investment Plan for fiscal year
2007 (July 1, 2006-June 30, 2007) following a presentation by members of the system's Investment Department. This plan outlines the staff's investment strategy for the various asset classes (fixed income, domestic and international equities, real estate and alternative investments).
After assessing a number of factors, STRS Ohio staff is predicting that the United States' economy will continue to move through its mid-cycle slowdown that began this year during fiscal year 2007. Energy costs could remain elevated during the fiscal year, but are not likely to increase dramatically from current levels. Consequently, growth in core inflation measures (which exclude food and energy costs) should remain around 2%. Personal spending in the United States is expected to slow, but growth in capital equipment investment should remain fairly steady as companies continue to look for ways to improve productivity. STRS Ohio also projects a modest growth of 2.1% in consumer prices. With the recent decline in the worldwide equity markets in late fiscal year 2006, STRS Ohio expects to see its total fund returns for fiscal year 2007 to be in excess of 8%, which is above the required actuarial rate of return of 8%.
SEVERAL HEALTH CARE PROGRAM CHANGES APPROVED FOR 2007 During its June meeting, the Retirement Board continued its discussion about health care program costs and potential changes for calendar year
2007. Included in information provided by staff were the results of recent research done with about 100 benefit recipients who are current enrollees in the Aetna and Medical Mutual Plus and Basic Plans.
The board has been considering several changes to these plans to become more competitive in the marketplace by enhancing some services and lessening the projected increase in monthly premium costs for these plans for 2007. At its June meeting, the board directed staff to implement several plan changes for 2007 to achieve a savings in gross health care costs, estimated at this time to be $16.5 million. This number represents a savings for the Health Care Stabilization Fund through reduced claims payments and for individual plan enrollees, who will experience a lower increase in premiums from those projected earlier this year. In August, the board will review the actual 2007 premiums.
Several of the approved changes enhance the Basic Plan offered through Aetna and Medical Mutual. Right now, about 8,300 STRS Ohio benefit recipients and their family members are enrolled in the Basic Plan, which offers lower monthly premiums in exchange for a higher annual deductible and out-of-pocket maximum for each enrollee. Recent research shows that more benefit recipients are considering the Basic Plan as a viable health plan option for them and their dependents. To make the Basic Plan even more attractive, it will cover preventive services, such as annual physicals, mammograms and colorectal cancer screenings, at
100% in 2007; no deductibles or coinsurance costs will apply. Also, the annual prescription drug benefit for the Basic Plan will increase to $5,000 from $3,100 per enrollee and generic drugs will be exempt from the benefit maximum. In other words, the enrollee pays 100% of the cost of prescriptions for the remainder of the year only after STRS Ohio has paid $5,000 in retail and mail-service prescription drug costs. Further, the enrollee will continue to pay just the copayment for generic drugs, even if the $5,000 maximum is reached.
In addition, two coverage features are being added to both the Plus and Basic Plans. The annual amount for outpatient alcoholism treatment will be increased to $1,000 from $550. Also, coverage for nutritional counseling will be expanded to single conditions that can be impacted by changes in diet. These conditions include diabetes, hypertension, kidney disease and obesity.
In 2007, several changes will also be made to the prescription drug coverage available through the Aetna and Medical Mutual Plus and Basic Plans, as well as through the Paramount plans. To encourage the use of generic drugs, the Tier 2 copayments will increase to $30 from $25 at retail. In addition, mail-service copayments will increase for all tiers, from the current levels of $20/$50/$100 to $25/$75/$125. Even with this change, STRS Ohio members still realize a cost savings when they receive their drugs through mail service. The final change affects the Plus Plan and Paramount plans. Enrollees will see their annual out-of-pocket maximum for their prescription drug benefit increase by $500, to $2,000 from $1,500. Once an enrollee has paid a total of $2,000 out of pocket in retail and mail-service copayments, the enrollee pays nothing for covered drugs for the remainder of the year.
This package of changes should help to mitigate adverse risk, which is having a compounding effect on STRS Ohio Health Care Program premiums. Currently, STRS Ohio is seeing a disproportionate share of individuals enrolling in the health care program who have high medical and prescription drug costs. As a result, annual premiums must increase beyond medical cost trend to cover the additional costs. The changes adopted by the board for 2007 will help attract and retain healthy enrollees by increasing coverage for preventive services and keeping premiums more competitive. While actions taken by the board will reduce premium increases for 2007, individuals who use health care services, especially brand-name prescription drugs, will pay higher out-of-pocket costs.
In other action, the Retirement Board approved STRS Ohio continuing to apply for the Medicare Part D subsidy in 2007. For STRS Ohio benefit recipients, this means that if you are enrolled in an STRS Ohio-sponsored health care plan, you will not need to enroll in a Medicare Part D prescription drug plan for 2007. STRS Ohio will continue to offer prescription drug benefits through its health care plans that are as good as or better than the standard Medicare Part D prescription drug benefits.
FISCAL YEAR 2007 BUDGETS ADOPTED The Retirement Board approved the proposed system budgets for the
2006-2007 fiscal year. The operating budget, which totals $89,558,000, reflects a 4.6% increase from the current year's budget and is 7.1% lower than the peak budget for the 2002-2003 fiscal year. The operating budget total also reflects changes that were approved in May by the Retirement Board to several STRS Ohio associate benefits. The net result of these changes was a cost savings of more than $400,000 for the system. In a related action, the board approved a new procedure that requires all administrative and/or project-based operating expenditures of $100,000 or more to be approved by a formal vote of the board prior to expenditure. The procedure excludes preapproved administrative expenditures pertaining to the salary or benefits of STRS Ohio associates.
RETIREMENT, INVESTMENT TRANSACTIONS APPROVED The Retirement Board approved the following retirements and investment transactions:
- 40 disability retirements were granted.
- 39 active members were approved for service retirement; 54 inactive retirements were approved.
- In May, fixed-income purchases totaled $756.7 million, domestic equity purchases totaled $1.1 billion and real estate purchases totaled $35.9 million.
ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR DAMON ASBURY
STRS OHIO RECEIVES CERTIFICATE OF ACHIEVEMENT RECOGNITION The Government Finance Officers Association has awarded its Certificate of Achievement for Excellence in Financial Reporting to STRS Ohio for the 2005 Comprehensive Annual Financial Report. This is the 16th consecutive year STRS Ohio has received this national recognition.
WORK CONTINUES ON HEALTH CARE INITIATIVE The Legislative Services Commission has begun drafting STRS Ohio's proposal for creating a dedicated revenue stream for the health care program into bill form. There has been no agreement yet by a legislator to sponsor the bill. STRS Ohio staff and representatives from the Health Care Advocates for STRS will continue to meet with legislators either in Columbus or in their districts over the summer.
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Columbus Dispatch: STRS Ex-official accused of taking freebies
The former president of the $60 billion pension fund for retired Ohio teachers was charged yesterday with accepting hundreds of dollars worth of tickets to baseball games and a Broadway show, among other freebies, from brokers doing business with the fund.
Jack H. Chapman, who served on the State Teachers Retirement System board from 1990 to 2004, plans to plead guilty to the three misdemeanor conflict-of-interest charges, prosecutors said.
Chapman, a retired Reynoldsburg teacher, is the third official of the teachers' pension system to face criminal charges in connection with the acceptance of gifts from brokers seeking business with the fund.
Hazel Sidaway, who served on the board with Chapman, was convicted of two ethics violations in April for accepting four free tickets to a Cleveland Indians game in 2001 and two free tickets to a Broadway production of Hairspray in 2003. She was sentenced to two years of probation, 200 hours of community service and more than $6,000 in fines and the cost of the investigation.
Herb Dyer, who resigned under pressure in 2003 as executive director of the pension fund, was found guilty last year of failing to report nearly $400 in free meals and a golf game paid for by a contractor working with the pension system. He was fined $700 and ordered to repay $394 to the pension fund.
The charges against Chapman involve some of the same outings Sidaway took: trips to Cleveland Indians games, a golf outing and Hairspray tickets.
Unlike Sidaway, who maintained her innocence after she was convicted, Chapman is cooperating with prosecutors from the Ohio Ethics Commission and the Columbus city attorney's office, said Paul Nick, chief investigative attorney for the ethics commission.
Chapman is due in the Franklin County Courthouse this morning to be arraigned on three misdemeanor counts for taking gifts from the Frank Russell Corp./Russell Real Estate Advisors and Salomon Smith Barney, which has since been acquired by Citigroup. Each violation is punishable by a maximum of a $1,000 fine and/or six months in jail.
Reached at his Reynoldsburg home yesterday, Chapman, 59, declined to comment and referred questions to his attorney, H. Ritchey Hollenbaugh, who also represented Sidaway and Dyer. Hollenbaugh could not be reached.
Investigators are looking into whether other current or former State Teachers Retirement System board members or officials took freebies from companies hired to advise the system on investments.
That investigation is separate from a broader probe into whether vendors who manipulated Bureau of Workers' Compensation investments did the same with the state's five public pension systems, Nick said.
State Teachers Retirement System spokeswoman Laura Ecklar has said there is no evidence that gifts to pension board members or staff influenced investment decisions.
"This is probably as far up as it gets," Nick said of conflict-of-interest charges against pension fund officials. "We also are looking at senior staff."
Monday, June 19, 2006
Ohio Ethics Commission and City Attorney's Office: Jack Chapman charged
June 19, 2006
JOINT PRESS RELEASE: OHIO ETHICS COMMISSION & COLUMBUS CITY ATTORNEY RICHARD C. PFEIFFER JR.’S OFFICE
For more information, contact:
Ohio Ethics Commission
Columbus City Attorney Richard C. Pfeiffer’s Office
FOR IMMEDIATE RELEASE:
On Monday, June 19, 2006, the Columbus City Attorney Richard C. Pfeiffer Jr.’s Office filed charges alleging violations of the state’s ethics laws against Jack Chapman, former Board member of the State Teacher’s Retirement System (STRS). Chapman resigned from his seat on the Board in June of 2004.
Specifically, Mr. Chapman is charged with three counts of Conflict of Interest for receiving things of value between the years 1998 and 2003 from the Frank Russell Corporation/Russell Real Estate Advisors and Salomon Smith Barney (now Citicorp) at a time when STRS was doing business with Frank Russell and Salomon Smith Barney. Included among these things of value were Indians tickets, a golf outing, and a ticket to the Broadway Show Hairspray. These violations are all misdemeanors of the first degree, punishable by a maximum penalty of a $1,000.00 fine and/or six months in jail.
Mr. Chapman is scheduled for arraignment on June 20, 2006, at the Franklin County Courthouse, 375 South High Street, Columbus, Ohio, in Courtroom 4C at 9:00 a.m. The charges were filed in the Franklin County Municipal Court under case number 2006 CRB 15266. The telephone number for information at the Municipal Court Criminal Division is: (614) 645-8186.
The charges were the result of an investigation conducted by the Ohio Ethics Commission, referred to the Columbus City Attorney’s Office on April 28, 2005. Review of allegations involving other STRS employees and STRS Board of Trustees Members continues.