RH Jones: The 13th check is NOT a bonus check

Bob Jones to Molly Janczyk, March 11, 2007
Subject: Re: 13th Check Guidelines

Molly,

Jim is wrong. The supplemental (13th ck.) is just what it says: supplemental. It is not a bonus check! The Ohio Retirement Study Council does not make STRS decisions. The STRS board does! The House Committee for School Finance (HCSF) is dominated by a GOP majority that would like to put public education on the back burner and for-profit schools on the front burner. They have controlled the state for over 10-yrs and have dragged Ohio down.

This downward spiral has gone on long enough. Where were they when Honda built a plant in Illinois? Toyota just announced it is building one in Alabama. The GOP is still in the majority in the legislature.They need to get off the backs of public education retirees that, through their teaching, had made this state prosperous. The failed extreme experiment with charter school and the like have drained away billions in tax funds long enough. As a consequence, excellence in public education PreK-16 has suffered. People are leaving the state. The voting public is aware of this and spoke rather loudly at the last election. However, they did not speak loud enough. The new Governor will have a "hard row to hoe" with the composition of the legislature.

Jeff Down of the Associated Press reported today that America spent almost $3-billion this year on medication for their pets. It seems to me that citizens of America, and especially Ohio, would want the retired public school teachers of their children to enjoy good HC/Rx at least better than that which they provide their dogs!

It also has been reported by the Wall Street Journal that inflation is on the rise this quarter. It is up to 0.3%. Our annual simple 0.3% COLA just does not keep us up. Without a compounded COLA, the 13th check was designed to help. The STRS formula that determines the 13th check is fair to all. As a retired teacher, I most certainly do not deserve the "catch up" increase that my superintendent deserves. After all, this is not a communist country. Communism is a failed extreme experiment as well. This is my opinion.

RH Jones, a very proud CORE member

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From Molly Janczyk, March 11, 2007
Subject: : 13th Check Guidelines

These items referred to below were posted on the blog. Jim reads the blog.

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From Jim McGreevy, March 11, 2007
Subject: 13th Check Guidelines

Molly -

I was reading your answers to Duke about when the 13th check could be reinstated.

At several Board meetings it has been stated as policy (and I believe at the urging of the ORSC) that no consideration be given to bonus checks unless and until the funding period (FP) fell below 30 years (as you mentioned) AND the funded ratio (FR) exceeds 90%. The FR is currently a shade over 78%, as I recall. To make matters worse, the Buck Consultants rep at the meeting where this was discussed said that pension funds almost never get to 100% funding, and even 90% funding was difficult to maintain. That person (I don't remember his name) said it was more typical for funds' FR to yo-yo a bit, but if the trend was positive, climbing a few points a year, that should be considered a very positive indication of a healthy fund.

While that kind of progress may satisfy an actuary, it offers little comfort to retirees who might hope for a 13th check. Even if we continue to experience the positive investment returns of the past three years, it seems unlikely we would get to the 90% range in less than six or seven years.

In any event, I would argue that any excess funds STRS generates would be more fairly placed in the HCSF as opposed to a bonus check. Retirees with the highest level of retirement benefits would also get the largest bonuses if the 13th check were reinstated. Would it not be better to lower insurance premiums for all retirees to the maximum extent possible? Proportionally speaking, this approach would be a greater benefit to the most needy benefit recipients. As I understand it the bonus check is, in effect, a regressive benefit that gives the biggest payoff to the "richest" recipients. If HC premiums could be reduced $300, that would be a greater benefit to the poorest recipients, percentage-wise ("progressive").

Of course, all of this is academic at this point in time. We're a long way from hitting the FP and FR targets, and if the health care legislation doesn't pass there may not be a HCSF to move money into when we do reach the "30 Year/ 90%" goal.

- Jim