Nancy Hamant's speech to STRS Board, August 16, 2007

CONCERNED OHIO RETIRED EDUCATORS (CORE)

August 16, 2007

STRS Board Members and Dr. Asbury:

My name is Nancy B. Hamant. I am a 28.6 years STRS member. It is my privilege to present CORE’s position on four issues. CORE requests your action in monitoring those issues and reporting the results to STRS members. First, CORE thanks Mr. Mitchell and staff for an outstanding year 2007.

CORE is deeply concerned about proposed changes to the STRS Health Care fund and the proposed negotiated changes to the STRS Pension Fund and the continued impact of the 1999 changes to benefit calculations to 88% for those retiring with 35 years of service (which have increased by 330%).

Health Care

1. Medicare Advantage Option

a. Nationwide Medicare Advantage has limited benefits, access to doctors and medications. The cost of Medicare Advantage is up to 30% higher than traditional Medicare for the same services. Great caution is needed when considering any Medicare Advantage Plan.

b. Any federal subsidy for Medicare Advantage may be over ridden by Medicare Advantage’s increased costs, thereby further depleting STRS Health Care Fund.

2. PBM Selection

a. PBMs continue to be sued for not disclosing rebates and for steering clients to drugs for which the PBM receives the highest rebates. At the least, the practice is unethical, to CORE members it appears to be illegal price fixing that is a federal trade violation.

b. Select the PBM which has the most honest track record. To do otherwise would revisit the illegal practices of a past PBM—Merck—whose practices cost the STRS health care fund a fortune, albeit a $50 million settlement.

Pension Fund

1. Divestiture—Pending STRS Board Action—Possible Negotiated Settlement

a. Any divestiture has the potential of a dire negative impact on the STRS Pension fund. Especially considering the 585-point drop in the Dow Jones in July as well as 281-points and 387 points so far in August 2007.

b. Full disclosure of any divested funds and the full cost of such divestiture, including losses, gains and administrative costs, need to be provided to all STRS members, immediately upon any divestiture taking place.

2. 1999 Legislative Change to Pension Calculation (88% for 35 years)

a. In STRS Ohio News, it was reported on page 3 that “35-year retirements have increased by 330%” since 2000. These educators are retiring at 88% calculation for pension benefits. Those who retired prior to 1999 are calculated at about 66%.

b. This increase in benefits has to have a major impact on the STRS pension fund. What are the full parameters of that impact?

CORE is requesting that STRS conduct full analyses for the two health care issues and for the two pension fund issues. The research should be conducted to determine the direct impact on not only the total health care stabilization fund and the total pension fund but to determine any effects on individual STRS members, i.e., the effect of Medicare Advantage option on a STRS member for surgery, doctors or medicine versus the effect of using traditional Medicare for the same procedures. CORE is requesting that all the research in the four areas listed be conducted in light of the effect on the funds and on STRS members, not just a reporting of general information gathered from nationwide sources that hold little relationship to the impact on STRS members.

Thank you and CORE looks forward to receiving data from comprehensive studies conducted by STRS in the four areas of concern.