From Molly Janczyk, April 19, 2007
This is long and contains a lot of information, dialogue and both CORE and STRS Meetings. If you have questions or concerns, please direct them to the approp. person to clarify before commenting as this is my take on today's meetings and issues should be addressed in entirety before judgments made.
CORE: Disclaimer: I was asked to take CORE notes today as Glenna, the CORE Sec. was unable to attend. Since I am not an officer, I assume, I simply send them vs. obtaining CORE Board approval. Many were absent as well due to family illness, personal Dr. app'ts., out of town, etc.
Present were: Dave Parshall, Pres., Molly J. stood in for ME Angeletti, Kathie Bracy stood in for Chuck Angeletti, CJ Myers, Treas., CORE Trustees: Nancy Boomhower, Betty Bell.
Ryan Holderman usually stands in for Nancy Hamant but is facing his mother's very serious illness. We send our prayers and thoughts to Ryan during this most difficult time.
*It was moved to approve Glenna's minutes from last month but to skip the reading of the minutes.
*CJ Myers reported on the amount of CORE funds and read a note from a Richard _______? who sent a $200 ck to help CORE support the efforts of Leone and Lazares.
*Committee Reports: Dave Parshall has rec'd requests to make the CORE website more user friendly with links to other sites to contact legislators, ORSC, STRS, etc. The website is going to be updated with Leone's recent report and other current info.
*Molly J. reported that we now have email contacts in most every county and are still working to obtain the remaining counties to provide an additional voice on issues, assist retirees who feel they are not being heard and develop a network for common goals, elections, and avenue for concerns.
*CORE Constitution changes were approved and The CORE Constitution will be on the CORE website.
*Spring Rally: Legislative Day: See www.orta.org for details. Dave P. and Nancy Boomhower plan to attend to meet and speak with legislators.
*Medicare Part A: Dave Parshall is concerned about the nearly 8000 STRS retirees who will be without a comparable comprehensive hospital coverage should STRS HC become insolvent. STRS now provides this coverage to all who do not qualify through Soc. Sec. themselves or through a spouse. While Medicare predicts insolvency before STRS HC, he and Gary Russell of STRS HC feel something most likely will be done for the Soc. Sec. recipients by the government should Medicare fail but the STRS retirees who do not qualify for Part A will have no coverage.
((Hopefully, if HCA legislation passes, some resolution can be found. STRS HC is predicted to begin using principal of the HC fund between 2009-2011 IF HCA legislation does not pass. ))
*CORE Newsletter: some members were angry that Leone's report was not published by ORTA and spoke to CORE having a newsletter. We exist solely on member donations for elections, mailings, copies, etc. We cannot afford to produce a newsletter for retirees. We have email trees, Kathie Bracy's blog: www.kathiebracy.blogspot.com, our website for 'publications.' We are now into most every county by email and hope our contacts will share these items with membership.
*CORE Talking Points: membership has asked for points for conversation and discussion with public, RTA's, organizations of CORE's goals, etc.
These points were approved for use:
1. STRS Board Members must follow the ORC: 3307.15 to discharge their duties solely on behalf of membership and exclusively for the purpose of providing benefits to participants.
2. STRS HC Fund needs a steady stream of revenue and CORE supports the HCA's in sponsoring a legislative solution for this crisis.
3. The unfunded liability is 47.2 yrs. The ORSC (Ohio Retired Study Council) who oversees the pension systems demands 30 yrs. STRS projects it to be at 30 yrs by 2009 based on no net actuarial losses. CONCERN: We have lost 2500 contributing teachers in Ohio. If this conntinues, we will not meet this goal in 2009 unless something else fills in the gap for contributing educators.
4. New persons elected or appointed to the STRS Board must be free to make independent decisions apart from any political affiliation.
5. Senate 190 created tiers of retirees: Those who retired before or after this bill. The calculation rate rose from 2.1% to 2.2% per yr retro to '99. CORE works for the weakest among us.
6. Public Speak: CORE members regularly speak during the Public Speak portion of the Board Meeting. This portion of the meeting needs protected. CORE is working to preserve this first amendment right. Any CORE member is encouraged to address the Board.
*CORE meets bi - monthly with Damon Asbury, Exec Direc of STRS, regarding concerns of retirees. Send these concerns to : Dave Parshall for consideration: DParshall@insight.rr.com.
*Will STRS Day Care EVER be cost neutral? We are told we will be neutral 'soon'. Where does that stand with util, building costs that members still pay? Is this included in tuition as well or do members pay for those items?
*STRS employees are still paid annually for unused sick and vacation time and given Service Awards of $125-$1000 for simply working at STRS. Yet pensioners are being hit hard and 13th checks were eliminated.
*Support for Lazares and Leone is vital to keep focus on YOUR pension fund.
*All are encouraged to attend CORE meetings during lunchtime in the STRS Sublett Rm., 2nd flr. adjacent to rear of the cafeteria.
*Dave Parshall was asked as Pres. of CORE and agreed to speak of behalf of CORE to recognized Dennis Leone for his recent Education Leaders's award.
*Dave Parshall as CORE Pres. has written a letter Marc Dann regarding what is thought to be sunshine law violations which was presented to the Trustees for consideration and was approved. This addresses STRS meeting behind closed doors on items such as Damon Asbury's contract extension, etc. which seem to be public information.
*Jim McGreevy brought us more petitions for :
"RIGHT FOR OHIO, Education Amendment" and we turned in returned ones to him. This amendment will guarantee accountability with reports, identify cost of quality education and require the state to pay more, reduce number of new local property levies, cut property taxes for senior and disabled homeowners, protect state funding for school facilities, local safety and services and colleges and universities.
for more info and for petition info.
*Next CORE /STRS Board meeting is Thurs. 5/17/07 as best as can be determined.
STRS Board Meeting:
HC: Premiums could increase 10-15% 2008 based on 3 months claims costs of
2007. This could be reduced slightly if plan design changes are made and enrollees share more of the costs to keep costs down and attract healthier participants to STRS HC.
Staff will present a framework for developing options for the May Board meeting. Staff requests plan design approval in June and approval of the 2008 HC plan in August at the Board Meetings.
1. Manage the STRS HC Program mindful of the 2007 Guiding Principles: "Maintain or improve the solvency of the HCSF (Health Care Stabilization Fund) in working toward a 30 yr funding period.
2. Consider only those plan design enhancements that maintain the annual required contribution (ARC) at or below 5% for STRS HC in compliance with the HC Strategic Plan. This applies to medical and RX benefits and Part B based on Strategic Plan objective" "Make necessary changes to STRS HC, including an aggressive cost management program, in working toward 30 yr funding period.
3. Continue the 2004 member premium contribution strategy in 2008 which provides 2.5% premium subsidy to benefit recipients for each year of service between 15 and 30 yrs. This was a key assumption in developing the legislative initiative's target to maintain the actuarial determined annual contribution rate (ARC) w/in the 5% requested to create a dedicated stream of revenue for HC. Educators with less than 15 yrs and all spouses receive no premium subsidy and have access to HC at 100% of the premium cost.
4. Facilitate understanding of the legislative initiative by sustaining current plan design while the initiative is under way.
5. Continue the current benefit structure until the program costs require using principal from the STRS HCSF , now projected to be between 2009 and
2011 IF legislation initiative is not successful.
Staff seeks long term solvency by taking actions that maintain or reduce the ARC below 5%. If premium costs become significantly larger before 2011, there is limited ability to mitigate rising premiums through incremental cost saving measures or plan design changes. For Ex., if a recipient 's Plus Plan deductible was raised from $500 to $1000, the monthly premium would only change by about $5 monthly. A substantial reduction of benefits would have to occur before the monthly premium would be impacted significantly. Reason: STRS pays out over $1.5 MILLION PER DAY as a self insured system for HC claims for individuals enrolled in the program.
Proposed changes would improve the cost-effective utilization of the HC program benefits.
((STRS is in a maintain mode for benefits at this point)).
Guiding Principles include: Allocating HC resources for voluntary program realistically allocating costs between active and retired members and employers; provide cost effective HC focused on quality outcome and services meeting pension requirements, member satisfaction and confidence; recognize longevity of Ohio service credit; provide support for member's active participation in their own HC using health resources efficiently; contract with high value , cost effective vendors; apply sound business principles managing HC with continuous operational improvement; non private data to evaluate program soliciting member input; maintain or improve solvency of HCSF with working toward 30 yr funding period.
Charts were given on where HC money goes for all 5 pension systems with medical claims, admin. fees, RX admin. fees, RX claims, disease management fees, premium payments, Part B reimbursement (except SERS which is allocated in pension funding).
OPERS HC Preservation Plan includes 3 tiers for HC: enhanced, standard and basic. They divided their recipients into 3 grps; prior to 2007, service credit prior to 2003, no service credit prior to 2003. Graded monthly allowance
(GMA) dependent on years of service and the Group the person falls into for dental, HC, vision with balance into a HCSA (HC Savings Account) Estab. targeted solvency range of 15-25 yr and dropped that to 18 yrs in
2005. Enrollee deduc., co pay, coinsurance adjusted to maintain enrollee cost share between 10-20%.
STRS is in best position for long term solvency with its HC legis. initiative if it passes. I was told today that most individual legislators know a problem exists and something needs to happen with many of the new legislators seeing this need.
The ORSC (Ohio Retirement Study Council) which oversees the pension systems will be presented the STRS Board approved report showing STRS is on tract to return to a 30 yr funding period within 2-3 years ASSUMING there are no net actuarial losses. The ORSC must, by law, be presented a plan from any system not funded at 30 or less years. The report is posted on the STRS website:
Actual experience rarely in sync to assumptions. Some assumptions will be met or exceeded and others will fall short. For ex., payroll growth has not been at expected level but investment returns for the last 3 yrs have far exceeded the assumption of 8% and gains were 14% meaning some of those gains were deferred to 2007, 2008, 2009 because of smoothing. So 'smoothing' of gains and losses over 4 yrs. are recognized evenly over the current and subsequent 3 yrs.: 25% per year. Calculations are done every year and roll forward. A review of all assumptions is planned in 2008 as it is typical to review all actuarial assumptions every 5 yrs.
There is no assumption specifically for the number of active members in the future per se. Contributions and earnings on investments fund a member's retirement. If membership does not increase, payroll growth is less likely to inc. 4.5% and this affects funding liability.
In 2/06, the STRS Board took a prudent step to protect future liabilities deciding to consider pension benefit improvements ONLY when funding period is less than 30 yrs and funding ratio exceeds 85%. So, 13th cks, compound COLAS and enhanced pension formulas cannot be considered at this time.
Also, IF the HC legislation initiative is passed, the 1% deferred from employer contributions can be put back into the pension fund further accelerating the speed of funding reduction.
STRS returns up; expenditures down.
Internal management of investments continues to save STRS money. STRS saved $93.6 million thru internal management of investment assets.
Reports on STRS Website:
1. 2006 Comprehensive Annual financial Report
2. Results of the fiduciary performance audit
Caremark merger with CVS will not affect coverage
We fall into a mid package range for investment staff bonus plans for investment returns. We pay more to our investment staff due to higher returns on their investments. STRS recommended adding more investment staff as we do most of our investing ithrough in house staff which will further increase costs and benefits for the investment dept.
INDIV SEEMINGLY EXCESSIVE HC COSTS: Much discussion ensued as Leone asked about total transparency regarding the travel policy and misc. expenditures. For ex., lunch was provided for the Board at today's meeting and Leone wanted to know if Board members should pay in light of the new policies on expenditures. Damon stated an on site working lunch (they meet now in Exec Session) during lunch is permissible vs. off site high cost meals.
Leone: letter from James Warner re:the fitting of a brace costing $65-70 was approved for a claim of $330 by Med Mut./Medicare. The fitting took only minutes and this retiree was most concerned over this inflated costs as was Dennis.
Greg Nickels of STRS HC made multiple inquiries over this researching costs with the provider, orthotic and prosthetic companies, a wholesale vendor and Medicare. The UCR (usual customary rate) was confirmed for the claim.
Leone wanted to know if something could be done to draw attention or object to Med Mut for allowing such a high payment for such a claim.
Nickels stated that the problem is all claims must be coded to be paid and there are 100 such braces with varying degrees of fitting needed. The approved amount is $393 and while some take less time and effort, others take more time and effort so it evens out. There is nothing in place to differentiate the 100 different braces requiring various amounts of time and effort for fittings. Otherwise, it would involve STRS being the only system trying to bill without codes established nationally and may end of costing more for the paperwork, etc. Also, all claims must be contractually processed. Nickels did try to negotiate the cost down but was refused. Mr. Warner resolved the issue personally and is now satisfied, he said.
Leone felt something must be done as it is not acceptable doing nothing stating this is the tip of the iceberg with national HC costs and of course, Med Mut replied this is the allowed cost and whatever manual says is what we have to live by. STRS is a lead defendant in a couple of law suits and why not lead in this area.
All Board members and Damon and Nickels agree that attention to this is merited and the question is how to approach it. Mary Ann Cervantes pointed out every case cannot be personally separated from codes and processed as this is time and cost prohibitive of the HC staff time needing to do their jobs as well.
Nickels reiterated there has to be a coded claim process but STRS HC does draw attention to the providers that while profits must be made to pay for other items, it is hard to justify a claim cost to a retiree. The problem lies with overcharging for a Tylenol, care and procedures to pay for other HC areas where costs not met. ((For ex., prob. 50% pay for ER care while the costs are inflated to us who can pay to even out for those who cannot pay due to loss of insurance or indigent persons using the ER for their primary HC providers)). The providers want to know what hospitals will charge and the hospitals want to charge as much as possible to cover costs unpaid. Nickels stated there are Level I Trauma Centers having to close down because they are used beyond ability to pay for them. If those who can pay are not overcharged, they close, as losses have to be covered to stay open. This is a very complicated scenario and a national problem.
Johnson: HC unsustainable whether we get HC legislation or not with soaring increases. Thanked Nickels for his time and effort on this case and felt he did all he could. It brings to mind all of our indiv. claims and the outrageous costs for them. We need to use our institutional clout and combine with other systems to break thru cost issues.
Continue to work with other systems to enlarge group and form a coalition to try to benefit retirees in this area as we cannot keep up with HC costs.
Nickels: STRS has engaged with OPERS and others to face this urging hospitals to 'leap frog' (?) and have building transparency trying to reconstruct areas of HC.
Johnson: Providers and Insurance Cp. are adversaries in this area. United HC, in my area, wants to see hospital charges and hospital wants to charge whatever possible.
Jeff Chapman: We can't judicate every case but perhaps we could find some examples to broach this subject.
Puckett: We should pressure them to find a way.
MA Cervantes: We could put time and effort on bigger issues for a bigger impact like RX's vs. small claims to save the most money for retirees with our limited time and resources.
Nickels: We have monthly meetings with Aetna, Med Mut., etc on issues. We tell them they need to address issues and they do listen as we are a large client. It is correct to limit time as we cannot settle ever case for over a 100,000 retirees and get our jobs done.
Damon: It is approp. for retirees to contact us regarding concerns. I think Mr. Warner did the rt. thing.
The discussion went on with the theory of trying to enlarge our numbers by forming coalitions with other systems, etc. in order to effect better results.
Leone stated he will write Mr. Warner on his efforts to inform STRS of overcharging.
Leone asked when he would see and obtain a copy of the travel policy and how if affects STRS staff in writing. He stated he has asked for 3 months. Damon replied staff is in process of revising and it will be presented ASAP. Leone questioned the policy and whether it would be identical to the new Board policy for itself. Damon said it would say the staff should be mindful and consider the money spent is pension money. Leone said this is not the same with limits set and that he asked if the new policy would pertain to staff.
Damon stated the policy was being revised and would pertain to staff not that it would be identical.
Ramser said she did not feel staff who has to meet with money managers and rep us for business purposes should be held to standards of the Board who travels for inservice.
Damon stated $50 per day with only $25 of it allowed for dinner would not work in NY and Chicago and LA for dinner with business money managers. Leone didn't like the entire amount being used just for dinner which works for Board members. Damon said he thinks it's $60 for staff and it can all be used if in costly places as staff forego breakfast and lunch to use it for dinner. Can't eat with clients on $25 in NY, LA, Chicago. The staff policy will be consistent with other systems.
Ramser and Meuser stated the new policy was only for Board members and that it was brought up but not voted on for staff which is when Damon said staff policy would be revised.
Meuser said he did not agree to make it applicable to staff.
Ramser reiterated staff travels for different reasons repping us and meeting with money managers on business not for inservice.
Puckett wants to see figures of other systems to compare.
Leone wanted to vote on 'Team Building' issue of never again going to ball parks, zoos, King's Is., etc. under the label of team building. MA Cervantes, Puckett and Jeff all wanted to wait until the policy is written and Leone agreed. Mary Ann was concerned that the staff might think team building was frowned upon and wanted wording considered.
All agreed entertainment sites should be eliminated. Damon said nothing like this has occurred since 2003 and staff all pays for its own entertainment. Leone wanted it in writing to ensure it never occurs again.
They discussed how to properly word this to everyone's satisfaction and wanted to see it prior to voting on it.
Leone asked about vendor restrictions when visiting and Damon replied they would be the same as staff.
1. Bill Leibensperger: Re: AOL settlement/ HCA consensus:
Speaking as spokesperson for HCA's:
- to put AOL settlement money into pension fund for benefit of all and prorate amount to HC if possible.
-Commit to long term solvency as when focus short term different groups affected differently but when focus long term, it benefits all with common goals and strength.
-stay above fray as under intense scrutiny
-stay on adopted guiding principles for pension and HC
- benefit enhancements should not be offered until unfunded liability under
2. Dave Parshall spoke on behalf of CORE congratulating Leone on the Educator Learder Award being one of 100 considered as an educator advocate.
3. Bob Buerkle: spoke to 120 day rule for educators asking it not be changed as would adversely affect: educators out of long term sick leave, older educators, maternity leaves, interrupted service leave for veterans by delaying pensions, affecting average salaries and feels it wouldn't change benefit liability. 94% don't retire under this rule anyway.
4. Mark M_________?: Topics: RX costs tiers increase more than yrly COLAS. When are you going to negotiate lower with pharmaceutical companies ? When will you withhold local school income tax from checks vs. end of year lump sums.
5. Jim Reed: transparency must be in Board room; oversight, accountability here to stay. Less tolerance now of secret business with carte blanche decisions for membership. Retirees need to see you work on our behalf and recognize ORC is only benchmark for Board members vs. the disgusting behavior of past convicted Board members. I was speaking to a retiree who accepted their behavior saying he couldn't find fault with their behavior due to behavior of Enron, etc. This is sad for a retiree to say such a thing. Don't take the satisfaction ((of maybe 600 members) too seriously and rest on laurels. Exam policy, alter or abandon it for retirees. You can and must do better.
Leone asked about the 120 day rule; Damon said it was being brought back to Board in May. Leone asked Bill L. if HCA want focus on solvency why haven't they spoken to issues which were not toward solvency. Bill stated he was not aware of any and to let him know of such issues. Bill said we take stands on issues before you which we can all agree upon.