Minutes of the CORE Meeting Thursday, November 15th, 2007

From Mary Ellen Angeletti, November 16, 2007

CORE met at 11:45 a.m. on Thursday, November 15th, 2007 in the cafeteria room behind the Sublett Room at STRS. Officers present were Dave Parshall, president and Mary Ellen Angeletti, vice president. CORE trustees present were Nancy Boomhower, Chuck Chapman, Nancy Hamant, Betty Bell and Chuck Angeletti. We had a good attendance at today’s meeting which was very reassuring as we had put out the word to membership to try to attend and support Dr. Leone’s motion today. Richard Stearns and Lou DiOrio joined us, and it was the first meeting for Allen County RTA president/CORE member George Doyle.

Dave Parshall opened the meeting with a call to approve the minutes of last month’s meeting. Nancy Hamant moved to approve the minutes, and it was seconded; the motion passed unanimously.

CORE treasurer C.J. Myers was unable to attend the meeting, so Dave Parshall reported the current treasury balance and disbursements.

Committee Reports: Website: Dave reported that there have been no updates made to the CORE website since our last meeting.
Contacts & Regional Reps: Molly Janczyk reported no new information.

Old Business: Orders for new CORE T-shirts and sweatshirts were delivered today by Herm Fisher and the Clinton County CORE group. Everyone applauded them for their efforts and thanked them. Dave Parshall also thanked Jill Fetters for her background work on her own in trying to get a good deal for our CORE shirt orders.

Dave and Mary Ellen reported on their many visits to Ohio House representatives to promote passage of House Bill 315 (health care legislation introduced by Rep. Scott Oelslager). During these visits, they reported hearing no criticisms of STRS from the legislators. The legislators have received a lot of information from the Ohio School Board group (OSBA) which opposes this health care legislation.

Dave and Mary Ellen have presented rebuttals to the negative school board arguments; namely, that the school boards are looking at additional health care funding from the short term perspective of “NO MONEY, NO TAXES.” We need to view the health care funding problem with a long term perspective. If we delay acting now, the funding problem will only become more acute on down the road with an older teaching force who will be earning salaries at the top of the salary scale using lots of accumulated sick leave as they age, which in turn will require the hiring of an extensive substitute teacher force. All of these factors will be more costly to school boards in the future.

If we act now and pass HB 315, that money can be invested and begin to grow for health care for active teachers in the future and for our grandchildren. At this point in the meeting, postcards were passed out for members to send to Speaker of the House Jon Husted and Representative Chris Widener, Chair of the FIRES Committee (the House Committee on Financial Institutions, Real Estate and Securities), where HB 315 now rests. The address is the same for both: The Riffe Center, 77 South High Street, Columbus, OH 43215-6111. These two legislators decide whether HB 315 moves or not. CORE members who could not attend today are STRONGLY urged to send their own postcards to Husted and Widener. We need an avalanche of cards to even get their attention. PLEASE ACT NOW!!!!!!!!

Nancy Hamant reported on the Warren County Retired Teachers Asso. meeting which occurred Nov. 5th. Representative Shannon Jones, co-sponsor of HB 151 (divestiture), was the invited guest speaker. She was a NO SHOW. Representative Michelle Schneider, the newly appointed Majority Whip of the House, came instead. She shocked the RTA meeting by stating that HB 315 was dead in the water and would not get out of committee. For this reason, she advised the audience to just give up on efforts to support HB 315. The reason given for this was that the school boards were against it as well as the negative findings included in the Fordham Foundation study of STRS.

Rep. Schneider said she had read this Fordham study and believed that it was correct, and she as a member of the Ohio Retirement Study Council would be calling STRS to task to answer additional issues which had been mentioned in this study. She said she was pleased that four of the five pension systems had passed the divestiture policy of HB 151. When someone in the audience questioned the fact that this policy abolished the pension systems’ fiduciary responsibility for any losses incurred, she said that was not true. Members of the Warren County Retired Teachers Association were shocked and appalled, and several members informed Rep. Schneider that they read the Fordham Foundation study of STRS, and they pointed out several areas in which Rep. Schneider was incorrect in her analysis. As a result, the membership of the WCRTA intends to work even harder to support HB 315. KUDOS TO THE WARREN COUNTY RETIRED TEACHERS ASSOCIATION!!!

New Business: Dave and Mary Ellen reported on CORE's efforts to support Dennis Leone’s five point motion, which had been tabled at the October STRS meeting and was supposed to be voted on in today's afternoon session. The official CORE Resolution, approved by the CORE officers and trustees, was sent by email to all of the STRS Board members in early November. The CORE Resolution Supporting Dr. Leone’s Motion was also sent via U.S. mail to each STRS Board member and also to John Patterson, attorney representing the Attorney General of Ohio, and to Bill Neville, the STRS internal auditor & attorney. The CORE Resolution was also sent out to all of the CORE membership as a CORE Email Alert on Tuesday, Nov. 13th.

Dave reported on inquiries to STRS for clarification on Medicare coverage, especially as it applies to a surviving spouse. STRS says that surviving spouses DO continue to be eligible for Medicare but they get a new Medicare number and a new Medicare card for claims. They must contact Medicare on the death of their spouse. STRS is checking this information with Medicare to be sure it is correct and will confirm the information with Dave when they make contact with Medicare. If there is a change, CORE will send out this info.

Nancy Hamant addressed important points for us to know in regard to our new STRS prescription drug company in 2008, Express Scripts. We can pay by credit card or check. All prescriptions from 2007 which are still valid will roll over to the new company. Most brand name drugs now have generics, and some will be in a different tier and will cost more so we must check this carefully. If your doctor wants you to have a brand name drug (due to the fact that a member cannot take a generic), he must write DAW (Dispense As Written) as well as DO NOT SUBSTITUTE on your prescription and even then the STRS member will pay the Tier III price of $125. for a 90 day supply. If your doctor writes you a prescription for a brand name drug and a generic exists for the drug, the member will receive the generic. At the present time, Fosamax has no generic but in February of 2008, a generic will be available. Members need to know that STRS is holding Health Care meetings around the state and members are encouraged to attend in order to have questions answered. Phone STRS to obtain information about the location and dates of these meetings.

The death of Jerry Myers, a retired educator and CORE member, and whose wife, Susan, was CORE’s first treasurer was regretfully announced. CORE members who attended the memorial service for Jerry last week shared that donations could be sent to the American Diabetes Association, P.O. Box 11454, Alexandria, Virginia 22312 in Jerry’s name.

Jim N. Reed made a few remarks, encouraging us to be proactive, forceful and strong in our efforts to support HB 315.

Lou DiOrio reminded us that if successful, HB 315 will be our legacy to future educators.

The meeting adjourned with an announcement from Dave that CORE contact with other organizations concerning possible STRS candidates for the STRS Board seat of active educator (John Lazares' seat on the Bd.) would be occurring soon and would be reported at the next CORE meeting on Thursday, December 13th, 2007.

Respectfully submitted by substitute secretary, Mary E. Angeletti

Richland County RTA to STRS Board: Pass Dennis Leone's motion

From the Richland County Retired Teachers Association, November 12, 2007

The members of the Richland County Retired Teachers Association strongly urge the STRS Board to take off the table Dennis Leone's motion as of October 19, 2007, to limit the ability of the STRS Executive Director to establish, on his own, STRS employee compensation and fringe benefits without STRS Board approval, in an open meeting. And to pass this motion during the November STRS Board's meetings.

It is our belief that the STRS Executive Director has clear policy guidelines on the extent of his authority. The STRS Board needs to play the "watchdog" role more effectively and affirm their responsibility in supervising the spending of retirees' money.

(42 RCRTA members' signatures)

November 2007 report from STRS

From STRS, November 16, 2007
This week, the State Teachers Retirement Board held 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 November report follows.

NOVEMBER BOARD NEWS

ANNUAL ACTUARIAL VALUATION REPORT ACCEPTED During its November 2007 meeting, the Retirement Board voted to accept the annual actuarial valuation report of the STRS Ohio pension fund for July 1, 2007, prepared by its actuary, Buck Consultants. The report shows that STRS Ohio made significant advances in the two primary measures of funding progress. The funded ratio -- which is the market-related (smoothed) value of assets compared to liabilities -- increased to 83% from 76.1%. The funding period -- which is the number of years required to pay off the unfunded accrued liability of the system -- declined to 26.1 years from 47.2 years. The improvements in the pension fund's status are due primarily to the double-digit investment returns experienced during the past four years. During the meeting, the board also voted to maintain the 5% annual interest rate on money purchase benefits and reemployed retiree annuities for the 2007-2008 fiscal year (July 1, 2007-June 30, 2008).

BOARD CHOOSES ACTUARIAL FIRM With the recent conclusion of its current contract with Buck Consultants, STRS Ohio issued a request for proposals (RFPs) in October for an actuarial consultant. Of the seven firms who responded, four were chosen to make presentations to an Ad Hoc Actuarial Search Committee composed of the following Retirement Board members: Craig Brooks, Thomas Johnson, Steven Puckett and Conni Ramser. At the November Retirement Board meeting, the ad hoc committee recommended that the board authorize the executive director to negotiate a contract with PricewaterhouseCoopers (PWC) for the period Dec. 1, 2007, through March 31, 2013. In making its recommendation, the committee noted that this firm offers expertise in a number of areas, including pension liability analysis and health care plan design. Further, the firm's software is compatible with STRS Ohio's programs, thus facilitating the transfer and analysis of data between PWC and STRS Ohio's chief actuary. The board concurred with the committee's recommendation and approved a motion authorizing the executive director to negotiate, and subsequent to review by the board of a contract summary, execute a contract with PWC.

BOARD POLICIES DISCUSSION CONTINUES At the October 2007 Retirement Board meeting, considerable discussion focused on existing board policies and several changes were discussed and then tabled for future review. At the November board meeting, the board again turned its attention to the proposed changes. As part of the discussion, Executive Director Damon Asbury stated that the issues of agreeing on the appropriate role of the board and the appropriate role of the staff in governing and administering STRS Ohio has been a recurring point of contention. He noted that the board is struggling with its interpretation of the current board policies and perceived direction they provide and the limitations they place on the executive director; the senior staff has become unsure of what the board's expectations are for their role in the administration and operation of the system.

Reading from prepared remarks at the meeting, Asbury said, in part, "For a number of years, this system has operated under a set of board policies that are designed to reflect the board's values, perspectives and goals and set the parameters under which the executive director can make decisions. The Retirement Board establishes the "Ends" or strategic goals and delegates authority to the executive director to accomplish these goals. This delegation includes giving the executive director the authority to conduct the day-to-day operations of STRS Ohio, contingent on subsequent board approval. This authority is framed within the boundaries of certain board policies, law, prudence and ethics. Further, the board is responsible for evaluating the executive director based on the fulfillment of these board policies."

Asbury pointed out that there are many limitations and checks and balances on the retirement system's operations. He said, "The board should also consider that, in addition to the checks and balances placed on the staff in policy, STRS Ohio is regulated by a comprehensive statutory structure. Ohio Revised Code Section 3307.04 provides that all acts taken pursuant to the board's delegation of authority to staff are taken subject to subsequent board approval. The ORC further provides that the system must employ an internal auditor. Additionally, the Auditor of State, or a firm appointed by the Auditor, is required to conduct an annual audit of the system's financial statements. The Ohio Attorney General is your statutory legal adviser and is given the express authority to sue board members if they breach their fiduciary duty. In addition to the other oversight they provide, the Ohio Ethics Commission and the Ohio Retirement Study Council have roles in the drafting and adoption of STRS Ohio's travel and ethics policies. The ORSC also annually reviews the proposed operating and capital budgets; in addition, Sub. Senate Bill 133 requires STRS Ohio to undergo a fiduciary audit every five years under the direction of the ORSC. By law, the Treasurer of State serves as custodian of STRS Ohio assets, and STRS Ohio's administrative rules are submitted to the Joint Committee on Agency Rule Review. In short, the staff does not act with unfettered authority. Numerous oversight and regulatory bodies ensure that STRS Ohio is operated prudently."

At the conclusion of his remarks, Asbury respectfully suggested that the board address any proposed changes to board policies at the January Planning Retreat (which is a public meeting), where they could be discussed within the broader context of a discussion of board governance and delegation to the executive director.

Following considerable discussion at the board table, the board approved the following additions to board policies:

....• In the event that retirees are employed at STRS Ohio, the executive director will ensure that said new employees begin their employment at STRS Ohio without the transfer of sick leave from a prior employer.

....• The awarding of severance checks, severance payments or severance benefits to STRS Ohio employees will not occur absent a formal approval by the State Teachers Retirement Board, by majority vote, in public session.

Other proposed changes and additions were deferred for further discussion at either the December board meeting or the Planning Retreat. The retreat will also include a more in-depth discussion of the severance policy.

INTERNATIONAL INVESTMENT PROGRAM RECEIVES HIGH MARKS Russell Investment Group, the board's investment consultant, presented a review of STRS Ohio's international investment program during the November meeting. Russell's evaluation of the STRS Ohio international investment team and the portfolios was compared to the "best in breed" of external investment managers.

STRS Ohio's international equity investments total nearly $20 billion, with about half of those assets managed internally. Among its key findings, Russell noted STRS Ohio's internal management of these funds is very cost effective relative to external management and that staff is well educated and experienced. The review also concluded that the international investment program is well diversified with appropriate goals and risk targets. As one way to enhance the overall program, Russell encouraged more information sharing and interaction between internal and external managers.

RETIREMENT, INVESTMENT TRANSACTIONS APPROVED The Retirement Board approved the following retirements and investment transactions:
....• 217 active members were approved for service retirement; 85 inactive retirements were approved.

....• In October, fixed-income purchases totaled $1.2 billion, domestic equity purchases totaled $2.1 billion and real estate purchases totaled $159 million.

ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR DAMON ASBURY

STRS OHIO INVESTMENT PERFORMANCE RANKS WELL AMONG PEERS At the Nov. 14, 2007, Ohio Retirement Study Council meeting, Evaluation Associates presented its semiannual Investment Performance Review of Ohio's five public pension plans as of June 30, 2007. STRS Ohio had the highest absolute return of the Ohio funds for the one-, three- and five-year periods. STRS Ohio also had the highest relative outperformance over the five years, was tied with SERS for the highest one-year relative return, and placed second for the three-year period. STRS Ohio's 10-year return exceeded the actuarial return by .58% (the highest of any fund); STRS Ohio also outperformed its benchmark by .39% over the 10-year period (also the highest of any fund). STRS Ohio ranked above the median among plans within the Mellon All Public Plan Universe for the one-, three- and five-year periods.

PUBLIC SECTOR HEALTH CARE ROUNDTABLE MEETS The Public Sector Health Care Roundtable, of which STRS Ohio is a charter member, held its third annual conference in late October. The big question on everyone's mind is how and when true health care reform will take place nationally. The consensus of those closely connected to the debate is that it won't likely be a "Big Bang" change wrought by the appearance of a visionary leader showing up to overhaul the entire system, regardless of who is elected the next president. More feasible is continued incremental reform. The challenge is to get good incremental reform, defined as providing available, affordable and adequate health care. The Roundtable board will be meeting in early winter to set policy for health care issues with an eye toward 2009. Medicare solvency will likely be the primary focus.

GPO/WEP HEARING HELD IN WASHINGTON On Nov. 7, 2007, the Senate Finance Subcommittee on Social Security, Pensions and Family Policy held a hearing on the impacts of the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). While one of the witnesses, Lawrence Thompson of the Urban Institute, promoted mandatory coverage of state and local employees as the way to pay for reform of GPO and WEP, there didn't seem to be any momentum on the committee for the idea. The Coalition to Preserve Retirement Security presented written testimony in opposition to mandatory coverage. The consensus agreement of all the witnesses and Chairman John Kerry was the existing formula is irrational, unfair and doesn't work. However, fixing it due to the cost is still a major challenge. Sen. Kerry indicated the Senate will be taking up a series of tax issues this winter and that may be a place to address some of the arbitrary inequities of GPO and WEP.

PUBLIC MEETING NOTICE

[Released by STRS, November 7, 2007]

The State Teachers Retirement Board and Committee meetings currently scheduled at the STRS Ohio offices, 275 East Broad Street, Columbus, Ohio 43215, are as follows:

Thursday, November 15, 2007

9 a.m....Ad Hoc Actuarial Search Committee
............(May include an executive session)

Noon....Retirement Board Meeting Called to Order

Friday, November 16, 2007

9 a.m....Resumption of the Retirement Board Meeting, followed by

............Executive Director Consultant Search Committee
............(May include an executive session)

The Ad Hoc Actuarial Search Committee [meeting] will begin at 9 a.m. on Thursday, Nov. 15. The Retirement Board meeting will come to order at noon on Thursday and is expected to enter executive session under authority of Division (G)(5) of Section 121.22 of the Ohio Revised Code for the purpose of discussing matters required to be kept confidential by federal law or state statutes. The Executive Director's Report is scheduled to begin at 1 p.m., followed by public participation, routine matters and any other issues requiring attention.

Friday's agenda will begin at 9 a.m. with a report from the Finance Department, followed by a report from the Investment Department. A meeting of the Executive Director Consultant Search Committee will follow the Retirement Board meeting.

Summary of Dennis Leone's motion tabled by STRS Board 10/19/07; to be reconsidered 11/15/07

Motion by STRS Board Member Dennis Leone that was tabled by the STRS Board on October 19 – to be reconsidered on November 15

1. In the event that retirees are employed at STRS, the executive director will ensure that said new employees begin their employment at STRS with zero days of sick leave.

2. Payment by STRS of private/personal legal fees of STRS employees will not occur.

3. The awarding of severance checks, severance payments, or severance benefits to current or former STRS employees will not occur absent a formal approval by the STRS Board, by majority vote, in public session.

4. Remove, from existing Board policy, the language authorizing the executive director “to act for the Board in all matters related to employment and compensation of personnel,” and substitute language stipulating that the executive director is authorized to act for the board “provided that such actions are consistent with Board-adopted policies.”

5. Remove, from existing Board policy – language stipulating that the executive director is “authorized to established all further policies, make all decisions, take all actions, and develop all activities as long as they are consistent with a reasonable interpretation of the Board’s policies,” and substitute language stating that the executive director “is authorized to implement decisions that are consistent with Board policies.” (This change also is needed because other existing Board policy clearly states that the executive director “may not establish compensation or benefits that are not within Board-approved salary schedules or benefit provisions.” A policy containing the words “all further policies” cannot be allowed to supersede this policy.)

Bill Leibensperger's speech to STRS Board, November 15, 2007

Public Comment
November STRS Board Meeting

Good afternoon, President Chapman, Dr. Asbury, Board members, staff and guests. I am Bill Leibensperger, an active teacher in my 31st year in the system. I address you today in my capacity as spokesperson for the Health Care Advocates for STRS.

As you know, HCA is a coalition of the STRS stakeholder organizations. Through one or more of our member organizations, HCA represents all of the 400,000+ members of STRS.

Since HB 315 was introduced back in September, the bill has been assigned to the House's Financial Institutions, Real Estate and Securities Committee, known as the FIRES Committee. Our grassroots campaign is actively underway, and I want to thank the Board, the STRS staff and the HC Champions for your steadfast support of this healthcare funding initiative.

The STRS/HCA legislative team has been making the rounds and meeting with FIRES Committee members. In these meetings we've been hearing much of what we expected from our opposition, but we've also recently heard that Legislators are being told that STRS' need for increased contributions is the result of mismanagement at STRS. This news is alarming, not only because it sets up one more roadblock to accomplishing this legislation, but also because of the absence of facts to support such a charge.

There are several outside sources advancing this notion of STRS mismanagement - The Fordham Institute, chief among them. But HCA is concerned that one of the contributing factors to this ongoing specter of mismanagement surrounding STRS is a persistent focus on past ills by some of our own internal ranks. Such a focus damages the System's credibility and undermines our legislative efforts, not to mention that it is misguided and misdirected.

All of us who have been directly involved with STRS over the past 5-10 years know what our shred history is. We also know that the current STRS leadership and current Board have brought much needed and improved accountability to STRS. Today, STRS is a well-managed pension system and there is plenty of empirical evidence to prove it. Stirring up issues that suggest otherwise does our retirees and future retirees no good.

The fact of the matter is that when it comes to healthcare, STRS needs increased contributions because of a failed national healthcare policy and out-of-control escalation in health care costs, not because of any local, homegrown issues. To suggest otherwise is simply wrong.

No one in this room, or associated with STRS knows better than HCA what this System has been through; and no one knows better how truly changed, for the better, this System is. We may disagree over particular issues, but no one can accurately argue that this system is mismanaged.

HCA has faith in the STRS leadership and staff. We've worked closely with them for the past five years and we know them to be individuals of integrity and worthy of our trust. HCA will not break trust with the STRS staff over an occasional disagreement, for we know that these highly-skilled, talented professionals have the best interest of the System at heart, and that they are well-intentioned and working diligently on behalf of all of us - active teachers and retirees, educators and employers.

HCA expects today's Board to be more active, communicative and involved than Boards of the past - it's good business in today's environment of heightened public scrutiny. While we support the Board's critical role in providing oversight and appropriate checks and balances, we would not support Board action predicated on entrenching overly restrictive management policies.

We do not agree that each and every time the Board's oversight uncovers differences between STRS management and members of the Board, that strict reform measures must naturally follow. Personnel issues are not necessarily policy issues; and personnel issues should be dealt with in executive session - not center stage.

HCA believes that overly restrictive management policies suggest problems that do not exist and ultimately would be unsustainable over the long term. We would therefore urge you to reject motions put before you that are reactive and will neither translate into lasting improvements in management nor accurately reflect the strength of the system.

HCA believes that characterizing what could be genuine and legitimate differences between STRS management and the Board, or among Board members themselves, as evidence of ongoing mismanagement at STRS is hurtful to individuals, damaging to our organizational credibility and undermining of our HB 315 campaign.

HCA's purpose today is threefold:
.....1. To debunk rumors that HB 315 is needed due to mismanagement;
.....2. To stress the importance of rejecting overly restrictive management policies that suggest that fallacy; and
.....3. To express the need for this Board to provide a unified posture to the public. These three points seem to us inseparable in achieving our shared goal of providing a health care program for current and future retirees.

Thank you for your time and consideration.

Jim N. Reed's speech to STRS Board, November 15, 2007

Ladies and Gentlemen,

Within this Boardroom I believe some unacceptable decision making has made a debacle of the basic principles of the Rules of Law known as Separation of Powers and its subsequent product, the Balance of Power. As though retirees have not had to swallow enough retirement system embarrassment and damage in the past ten years, we are currently witness to a Board-Executive Director assault on one of the most elementary and crucial tenets of policy making and its administration.

What is clearly written as STRS Board Policy has been effectively annulled by this Administration and voting members of this Board. By tabling Dr. Leone's motion with Mr. Lazares' second, this Board questions its own viability to conduct business in the best interest of more than 400,000 stakeholders and to carry out its legal responsibilities as designated in ORC 3307.15.

I would strongly encourage this Board to re-examine, reconsider and unanimously support the five issues as proposed in Dr. Leone's original motion from last month. It behooves you to do so in the spirit of the Rule of Law and in the moral and ethical obligation you have to provide a performance compatible with your oath of office.

By the accounting of the Board's own records, this administration has apparently usurped authority from the elected and appointed representatives of active and retired educators. Consequently, as constituents we have been adversely affected by this legislative submission. This appears to be a blatant trampling of a basic right owned by members of this retirement system, the right to have our pension funds protected and expended for our benefit. Your tabling and argumentative position on these issues indicates contempt for the process that protects the career investments 400,000 educators have in their retirement system.

We cannot any longer afford, figuratively or literally, to have our caretakers shirk their duty by a shameful negligence to adhere completely to ORC 3307.15 and to comply with the basic Rule of Law principles. In our struggle to return trust, confidence and security to STRS Ohio it is mandatory that there be a Board rejection of "business as usual." The decade-old entitlement philosophy must go. Retirees, prospective and current, may not survive a dejà vu all over again!

In 2008 Your Ohio STRS Ohio Health Care Plan Options booklet suggests there are "Other steps you can take to manage your health include reducing stress levels…"

I would suggest reducing stress and health care options amount to a kind of oxymoron. Included among other booklet promises is, "We provide you and your family (spouse) access to quality health care coverage…but spouses pay the full cost of the health care premium." (A Non Medicare spouse premium can be over $8000, and even a Medicare-age spouse over $3600 annually.) Stress level reduction is challenged with annual premiums for many families going from less than $500 to nearly $10,000 within the last ten years!

With the prominent practice of paying bonuses to staffers in insurance companies' Cancellation Departments for all the "rescissions" they can produce and to hard working claims rejection specialists, the average retiree is continually living, or dying, on the edge.

It appears the lifespan of the Health Care Promise heard by hundreds of thousands was nearly DOA. From 1974 through the 1990s the affordable, second-to-none health care package gave many educators the hope of a secure retirement. A lack of foresight and a shameful and abusive mismanagement of pension funds provided only a false positive for those who followed into retirement in the new millennium.

If I sound quite sensitive to the dilemma of my profession's retiree health care status, it's because I am, but I'm certainly not alone. As a stakeholder, I'm sensitive to being misinformed, misguided and sacrificed by past caretakers, and I'm sensitive to any arrogant, frivolous or unsubstantiated expenditure of current funds by the present Board and/or Executive Director.

This sensitivity allows for no tolerance for fiscal misconduct, regardless of the amount. It has no tolerance for entitlement. It expects total transparency, especially when it is being maligned as micromanagement. Hundreds of thousands of retirees should expect no less and demand sincerity and execution of another promise in the recently mailed STRS health care booklet, "We focus on you and your family's unique needs after you have finished your teaching career."

Chuck Chapman's speech to STRS Board, November 15, 2007

I am Chuck Chapman, life member of OEA and ORTA with thirty-two years of teaching service. I am Legislative Chair for Medina County RTA.

We are still waiting for the child care center to be cost neutral. We would like to see it make a profit rather than be cost neutral. Our country is full of child care centers. They are a necessity today. They operate child care centers in the black. Why can't we, as intelligent, educated professionals, operate a child care center in the black?

With Dr. Asbury leaving, it does not seem necessary to me to engage in a wide search for a replacement. We have among us and on the board a person who could and would do the job. Dr. Leone has dedicated the last several years of his life to help keep STRS healthy and stable and to protect our health care. With the great staff we have, I am sure that Dr. Leone would do a great job. He would help restore our faith in STRS. The savings for a lot of us would be substantial. We could stop making this trip to Columbus on a monthly basis.

I urge you today to support Dr. Leone's motion to help control spending. We do not need any more severance pay and paid health care for temporary staff when we retirees are making cuts and are paying more for their health care. The next cost for generic medicine will be $65.00. That is miles from the $5.00 I paid when I first retired in 1983. We need to give some thought about a sliding scale for health care. Those who have retired before I did are just not making it the way things are being done.

I am 77, with poor health. I can no longer work, even at Wal-Mart. The increases are making that 1983 check look pretty small. Especially since when I retired, neither my wife nor I paid for health care. We have lived a prudent life, but could not anticipate the changes that are happening.

I have confidence in our Board to be fiscally responsible and to do all they can to keep the system operating, and to try to take better care of us old, feeble educators.

Paul Boyer's speech to STRS Board November 15, 2007

Good morning, Dr. Asbury, Board members, retired teachers and guests. As you know, I am Paul Boyer of Lima, Allen County, 18 years of teaching, retired in 1985, speaking for myself and the Allen County Retired Teachers Association.

I want to speak specifically of Dr. Leone's motion for language to require enforcement of existing Board policies that are designed to restrict the ability of the STRS executive Director to establish, on his own, STRS employee compensation and fringe benefits without formal Board approval.

When Dr. Leone made his motion in the October Board meeting, rather than allowing it to come to a vote, another Board member, who is not elected but is sitting in as the representative of a state officer, made a substitute motion to table the motion, and this passed, effectively cutting off debate on the motion. This motion to table was not too surprising, as this Board member has not really been very positive in his actions over the past few years.

When are you Board members going to WAKE UP and realize that ORC 3307.15 states: "The Board and other fiduciaries shall discharge their duties with respect to the funds "solely" in the interest of the participants and beneficiaries; for the 'exclusive' purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses to participants and their beneficiaries and defraying reasonable expenses of administering the system." I have reminded you numerous times about this wording and if you do not understand it, then you have no business sitting on this board.

You, the Board members, are the fiduciaries, and I do not see anywhere that the law has given the Executive Director or any other employee the powers of a "fiduciary." In other words, you have absolutely no power to delegate to any employee the right to spend this money without your prior approval. We, the retired teachers, who now have banded together as CORE, have fought this for the last four years or more, and we are getting tired of you Board members allowing OUR money to be spent for items before you have approved them. Furthermore, it is absolutely ridiculous to approve any large expenditure of money to pay for any contract or expenditure by any employee without your having the information on that expenditure in writing before you. You cannot vote on "hearsay;" it must be in writing.

For instance, I refer to the decision to pay the private legal fees of STRS employees and the payment of $93,000 in cash severance pay and free health insurance for laid off employees. Where was the Board's vote on these expenditures and others?

I am sure that all of you Board members knew what your responsibilities would be when you decided to run for election to the Board. Now, how about living up to those responsibilities and vote in favor of Dr. Leone's motion when it comes up again? Remember, we do have the power to see that you are not re-elected to the Board.

STRS and CORE meetings scheduled for November 15, 2007

From Mary Ellen Angeletti, November 8, 2007
Subject: ***CORE ALERT*** Nov. 8, 2007

Please plan to attend the STRS Board Meeting on the 6th floor of the STRS Building, 275 E. Broad St., on Thursday, November 15th and/or Friday, November 16th as detailed below. It is expected that Dennis Leone's motion (attached) will be up for a vote AFTER the 1:00 Public Participation on Thursday, Nov. 15th. It is important to have a packed room of CORE folks to show support for this motion which is included in this email.

The CORE meeting will begin at 11:45 in the small cafeteria room behind the Sublett Rm. on the 2nd floor of STRS. We will be having some very important discussions at the meeting this month, and we hope for good attendance to provide input of ideas and suggestions. PLEASE PLAN TO ATTEND. Plan to leave the STRS meeting room on the 6th floor around 11:30 so that you can get your lunch in the cafeteria and bring it into the small meeting room for the CORE meeting.

To the STRS Board: CORE RESOLUTION SUPPORTING DR. LEONE’S MOTION OF 10-19-2007

CONCERNED OHIO RETIRED EDUCATORS (CORE)

RESOLUTION SUPPORTING DR. LEONE’S MOTION OF 10-19-2007

TO: STRS Board Members

November 2007

On October 19, 2007, Dr. Dennis Leone made a motion (which John Lazares seconded) for language to require the enforcement of existing STRS Board policies that are designed to restrict the ability of the STRS Executive Director to establish—on his own—STRS employee compensation and fringe benefits without formal Board approval. The motion was tabled.

CORE urges the STRS Board to approve the motion at its November meeting for the following reasons:

1. There is a serious conflict of at least five policies of the Executive Director’s authority. Three policies require Board approval and two policies permit the Executive Director to act then request Board approval. There may be legal and/or ethical issues due to the conflicting policies.

2. The five policies in question need to be reviewed as soon as possible by the STRS Internal Auditor and the Attorney General’s Counselor for legal and ethical issues and problems as well as the date of STRS Board approval for each of the policies and the history of how each of the policies was developed. Of concern, is the possibility that Ohio Revised Code has been violated due to the conflicting policies. The STRS Internal Auditor and the Attorney General’s Counselor must present their findings to the STRS Board in a timely fashion along with recommendations to resolve the conflict of the policies and any legal or ethical issues.

3. An Executive Director’s administrative duties are governed by Board policy. It is inconceivable that the STRS Board would be able in good conscience to approve a contract for an Executive Director while there are conflicting Board policies. Therefore, the STRS Board must act quickly to have the legal and ethical questions answered and resolved prior to offering any Executive Director Contract in the future.

CORE again urges the STRS Board to resolve this conflict of policies affecting the Executive Director’s Administrative duties promptly. Such action ensures that STRS administration operates legally, ethically and effectively.

Respectfully,

David Parshall, CORE President
Mary Ellen Angeletti, CORE Vice President

XC: STRS Internal Auditor

.......Attorney General’s Counselor, John Patterson

Giant Eagle offering more $4.00 Rx

Linda Meinelt to John Curry, November 10, 2007
Subject: Giant Eagle Prescriptions

John,

You are probably already aware that Giant Eagle has increased the prescriptions it offers for $4.00.

Above is the link [click here to see the list, which is in PDF format] to the 14 page list. If the link doesn't work, go to www.gianteagle.com and look for the prescription link. It will bring the PDF up.

RH Jones: OEA's active members back HB 315

From RH Jones, November 12, 2007
Subject: OEA's active members back HB 315!

To all:

In the OHIO Schools, Nov. 07 edition, the following is reported on page 25: “At its meeting held October 20, the OEA Board of Directors took the following actions: ‘…Passed a motion that the Board of Directors support H.B. 315…’” And on page 12: “LEGISLATIVE UPDATE

Members urged to support retiree health care legislation

… Below are a few of the opponent’s messages and OEA’s responses in support of the proposal:

STRS must take a responsibility for its health care problems, rather than pass the burden on to school districts and employees.

The ‘burden’ of providing health care benefits belongs to employers, employees and retirees. Participants in the health care program are paying for 48 per cent of the program’s costs each year through their premiums, deductibles and other out-of-pocket expenses.

Currently, state law only allows employer contributions to help with health care program expenses. The employer contribution rate has not increased in more than 20 years. For the first time, House Bill 315 requires active educators to contribute toward their future health care coverage.

.Teachers should be required to work longer.

The current average retirement age is 58. If retired teachers could not receive health care benefits until age 60{Note: Should this say 65 when you become eligible for Medicare?}, it would only add a few years of solvency to the health care fund. Additionally requiring teachers to work longer would increase school district salaries and health care costs.

Districts can’t afford it; don’t solve health care on the backs of kids.

Ignoring the issue of retiree health care will not make it go away, and the longer action is delayed, the more it is likely to cost. HB 315 is a reasoned and measured proposal that shares the responsibility for funding retiree health care among all involved. The proposal is phased in over time to mitigate the impact on school budgets. In contrast, opponents have offered no viable solution to this problem.

OEA members are encouraged to contact their legislators and urge them to support HB 315.”

Please forward this message to all your active & retired teacher friends and relatives. The NEOEA, here in N.E. Ohio also strongly backs the HB 315. The OEA has done a GREAT service in publishing the above article.

RHJones, OEA Life Member and a member of the CORE

RH Jones: An appeal to all active & retired educators who reside in Akron

From RH Jones, November 12, 2007

Attention, Akron active/retired educators

An appeal to all active & retired educators who reside in Akron:

As an Akron resident and a registered voter, K. Fluke, PhD, VP & Legislative Chair of the Summit County Retired Teacher Association, is being permitted to speak before the Akron Board of Education (ABE) this coming Thursday, Nov.15 at 7:30 PM. He is only allowed 3-minutes to speak, so he will need you there to talk to board members before and after the meeting.

As you may know, the ABE came out against the HB 315 and had an opposition letter printed in a Beacon editorial. Therefore, Dr. Fluke will sorely need your help, so please do not leave him alone to address this important issue.

As a 30-yr. employee of the ABE, I was disappointed that the board did not realize that without passage of the bill Akron taxpayers more than likely would have to pay more than the modest increase mentioned in HB 315. For without health care (HC) teachers, especially the ones who have health problems will stay on until they can get Medicare at age 65. The older teacher at the top of the pay scale not only is more expensive than younger teachers, bargaining for HC with insurance companies will become more difficult and expensive. It is quite obvious that HC insurance for older active teachers will cost more! And, how about substitute teacher pay and sick leave pay. Is that not a cost factor as well? Please remember that older teachers are generally at the top of the salary scale. Younger teachers are not only healthier; they cost less.

What alternative does the board suggest? Ohio law restricts employees from paying into the STRS retirement fund; HB 315 will correct that. With HB 315, the burden of HC is fairly shared by the board the active & retired educator. The ABE has not come up with a viable solution to problem. The longer HB 315 is delayed the more it will cost the ABE. It has been 30-yrs since the last employer increase; and, this one is very modest 2.5% spread out over 5-yrs.

Robert Hudson Jones, SummitCRTA Legislative Committee Member.

Read this and gasp -- could this happen to us?

From John Curry, November 9, 2007
Subject: Wanna make the stockholders richer? Simple...just drop sick policy holders... THIS IS A TRAVESTY!

Nothing like a private health insurance company offering bonuses to drop sick policy holders, is there? I wonder how much of this is going on with other health insurance companies throughout this country? I have a hunch it wasn't just limited to LA County...what do you think? Of course, this wouldn't happen in Ohio, would it? By the way, this topic was covered in the documentary "Sicko," but...... many people discredit anything connected with that movie, don't they? John

From the Los Angeles Times

Health insurer tied bonuses to dropping sick policyholders

By Lisa Girion
Los Angeles Times Staff Writer
November 9, 2007

One of the state's largest health insurers set goals and paid bonuses based in part on how many individual policyholders were dropped and how much money was saved.

Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.

The revelation that the health plan had cancellation goals and bonuses comes amid a storm of controversy over the industry-wide but long-hidden practice of rescinding coverage after expensive medical treatments have been authorized.

These cancellations have been the recent focus of intense scrutiny by lawmakers, state regulators and consumer advocates. Although these "rescissions" are only a small portion of the companies' overall business, they typically leave sick patients with crushing medical bills and no way to obtain needed treatment.

Most of the state's major insurers have cancellation departments or individuals assigned to review coverage applications. They typically pull a policyholder's records after major medical claims are made to ensure that the client qualified for coverage at the outset.

The companies' internal procedures for reviewing and canceling coverage have not been publicly disclosed. Health Net's disclosures Thursday provided an unprecedented peek at a company's internal operations and marked the first time an insurer had revealed how it linked cancellations to employee performance goals and to its bottom line.

The bonuses were disclosed at an arbitration hearing in a lawsuit brought by Patsy Bates, a Gardena hairdresser whose coverage was rescinded by Health Net in the middle of chemotherapy treatments for breast cancer. She is seeking $6 million in compensation, plus damages.

Insurers maintain that cancellations are necessary to root out fraud and keep premiums affordable. Individual coverage is issued to only the healthiest applicants, who must disclose preexisting conditions.

Other suits have been settled out of court or through arbitration, out of public view. Until now, none had gone to a public trial.

Health Net had sought to keep the documents secret even after it was forced to produce them for the hearing, arguing that they contained proprietary information and could embarrass the company. But the arbitrator in the case, former Los Angeles County Superior Court Judge Sam Cianchetti, granted a motion by lawyers for The Times, opening the hearing to reporters and making public all documents produced for it.

At a hearing on the motion, the judge said, "This clearly involves very significant public interest, and my view is the arbitration proceedings should not be confidential."

The documents show that in 2002, the company's goal for Barbara Fowler, Health Net's senior analyst in charge of rescission reviews, was 15 cancellations a month. She exceeded that, rescinding 275 policies that year -- a monthly average of 22.9.

More recently, her goals were expressed in financial terms. Her supervisor described 2003 as a "banner year" for Fowler because the company avoided about "$6 million in unnecessary health care expenses" through her rescission of 301 policies -- one more than her performance goal.

In 2005, her goal was to save Health Net at least $6.5 million. Through nearly 300 rescissions, Fowler ended up saving an estimated $7 million, prompting her supervisor to write: "Barbara's successful execution of her job responsibilities have been vital to the profitability" of individual and family policies.

State law forbids insurance companies from tying any compensation for claims reviewers to their claims decisions.

But Health Net's lawyer, William Helvestine, told the arbitrator in his opening argument Thursday that the law did not apply to the insurer in the case because Fowler was an underwriter -- not a claims reviewer.

Helvestine acknowledged that the company tied some of Fowler's compensation to policy cancellations, including Bates'. But he maintained that the bonuses were based on the overall performance of Fowler and the company. He also said that meeting the cancellation target was only a small factor.

The documents showed that Fowler's annual bonuses ranged from $1,654 to $6,310. But Helvestine said that no more than $276 in any year was connected to cancellations.

He said Fowler's supervisor, Mark Ludwig, set goals that were reasonable based on the prior year's experience.

"I think it is insulting to those individuals to make this the focal point of this case," Helvestine said.

Bates' lawyer, William Shernoff, said Health Net's behavior was "reprehensible."

He said the cancellation goals and financial rewards showed that the company canceled policies in bad faith and just to save money. After all, he told the arbitrator, canceling policies was Fowler's primary job.

"For management to set goals in advance to achieve a certain number of rescissions and target savings in the millions of dollars at the expense of seriously ill patients is cruel and reprehensible by any standards of law or decency," Shernoff said.

The company declined requests to make Fowler available to discuss the reviews.

Cianchetti, the arbitrator, earlier ruled the rescission invalid because Health Net had mishandled the way it sent Bates the policy when it issued coverage. At the end of the hearing, it will be up to Cianchetti to determine whether Health Net acted in bad faith and owes Bates any damages.

The disclosures surprised regulators. A spokesman said state Insurance Commissioner Steve Poizner was troubled by the allegations.

"Commissioner Poizner has made it clear he will not tolerate illegal rescissions," spokesman Byron Tucker said. "We are going to take a hard and close look at this case."

In recent months, the state's health and insurance regulators have teamed to develop rules aimed at curbing rescissions and to more closely monitor the industry's cancellation policies.

Other insurers that have rescission operations, including Blue Cross of California and Blue Shield of California, said they had no similar policies linking employee performance reviews to rescission levels. Blue Cross said it conducted audits to ensure that claims reviewers were not given any "carrots" for canceling coverage.

Bates, who filed the suit against Health Net, owns a hair salon in a Gardena mini-mall between a liquor store and a doughnut shop. She said she was left with nearly $200,000 in medical bills and stranded in the midst of chemotherapy when Health Net canceled her coverage in January 2004.

Bates, 51, said the first notice she had that something was awry with her coverage came while she was in the hospital preparing for lump-removal surgery.

She said an administrator came to her room and told her the surgery, scheduled for early the next day, had been canceled because the hospital learned she had insurance problems. Health Net allowed the surgery to go forward only after Bates' daughter authorized the insurance company to charge three months of premiums in advance to her debit card, Bates alleged. Her coverage was canceled after she began post-surgical chemotherapy threatments.

"I've got cancer, and I could die," she said in a recent interview. Health Net "walked away from the agreement. They don't care."

Health Net contended that Bates failed to disclose a heart problem and shaved about 35 pounds off her weight on her application. Had it known her true weight or that she had been screened for a heart condition related to her use of the diet drug combination known as fen-phen, it would not have covered her in the first place, the company said.

"The case was rescinded based on inaccurate information on the individual's application," Health Net spokesman Brad Kieffer said.

Bates said she already had insurance when a broker came by her shop in the summer of 2003, and said she now regretted letting him in the door. She agreed to apply to Health Net when the broker told her he could save her money, Bates said.

She added that she never intended to mislead the company. Bates said the broker filled out the application, asking questions about her medical history as she styled a client's hair in her busy shop and he talked to another client waiting for an appointment at the counter. She maintained that she answered his questions as best she could and did not know whether he asked every question on the application.

Bates' chemotherapy was delayed for four months until it was funded through a program for charity cases. Three years later, she can't afford the tests she needs to determine whether the cancer is gone.

So she is left to worry. She is also left with a catheter embedded in her chest where the chemotherapy drugs were injected into her bloodstream. Bates said she found a physician willing to remove it without charge, but he won't do it without a clear prognosis. That remains uncertain.

Shernoff, Bates' lawyer, claimed that the performance goals for Fowler showed that Health Net was bent on finding any excuse to cancel the coverage of people like Bates to save money.

"I haven't seen this kind of thing for years," Shernoff said. "It doesn't get much worse."

lisa.girion@latimes.com