AARP: Drug plan advocate AND marketer

AARP is drug plan advocate, marketer

Some see conflict in dual role

Philly.com
By Karl Stark
[Philadelphia] Inquirer Staff Writer
December 20, 2007
Photo: William Novelli, CEO of AARP: More than $2 million in 2006.

When Kim Andrews advises seniors in suburban Delaware County on choosing a Medicare drug plan, she finds that the AARP-branded options are not typically the cheapest. The AARP plans often cost hundreds of dollars more a year than the lowest-priced competitors, according to estimates by the government's Medicare Web site, which Andrews uses.

"They're usually not in my top 10 on a comparison basis. They may be in the top 20," Andrews said. But seniors often "go with the [AARP] name even though it can be much higher."

That kind of loyalty has pushed the AARP-branded plans to the top of the Medicare heap. The group gives its name to the number-one-selling stand-alone Medicare drug plan in the country - the AARP MedicareRX Preferred - and to two of the top five. As the Dec. 31 deadline approaches for Medicare members to change plans or sign up, many seniors are choosing AARP to cut through the clutter of a confounding marketplace.

But AARP's role is not without controversy. The group makes millions from lending its name to Medicare plans. And experts who advise the elderly say that its drug offerings are not usually the bargains that many people expect. "They're not the most expensive, but they are not the cheapest either," said Tiffany Lombardi, who coordinates counseling for CARIE, an advocacy group in Philadelphia for the elderly.

AARP spokesman Anthony Deluise said the group encouraged people to select the best plan for their needs, whether it is AARP-branded or not.

"I'd say we're comparable with other plans," he said, referring to cost. AARP's plans help "set the standard for quality in the industry."

Trust plays a big role in picking a Medicare plan. The array of choices - which include 63 drug plans in Pennsylvania and 57 in New Jersey - overwhelms even many experts.

AARP, which lends its name to three plans run by UnitedHealthcare Services Inc., has risen to the top because of its reputation as a champion of people age 50 and over. "There clearly is a level of trust attached to the brand," said James Dougherty, health insurance practice leader for the survey firm J.D. Power & Associates.

Blue Cross plans have had similar success because of their longevity, while competitors such as Humana Inc., which runs the country's second- and third-largest Medicare drug plans, have enticed members by offering low-cost products. Humana, though, has raised premiums for 2008, betting that seniors will pay up and stay put.

Premiums among the nation's top 10 plans are rising about 21 percent in 2008, and insurers are placing more restrictions on what drugs they will pay for, according to Avalere Health, a consulting firm that tracks the Medicare business.

So it's key to shop around. The same plan that worked this year could cost a lot more in 2008.

While its cachet comes from advocacy, AARP is also an entrepreneurial juggernaut that profits from the Medicare drug benefit it helped pass. The Washington-based nonprofit crossed the $1 billion mark in revenue last year.

AARP gained the most - nearly $430 million - by lending its name to products, including Medicare prescription drug and Medicare Supplement plans. By contrast, the group's dues-paying members brought in $240 million in 2006, records show.

AARP now believes it has the largest collection of branded health-care products for people 50 and older. About 7.8 million people have flocked to AARP-branded Medicare plans, and the group projects that number will nearly double by 2014.

The group expects to collect $4.4 billion over the next seven years from deals announced this year with Aetna Inc. and UnitedHealthcare.

Also gaining is AARP's chief executive officer, William Novelli, a former public relations executive, who was paid more than $2 million in 2006, tax records show. His compensation included a onetime $1.2 million payment for completing five years of service.

With 39 million members, AARP is a potent political force that helped pass the Medicare drug benefit, which began in 2006.

But its dual role as advocate and commercial enterprise worries Judith A. Stein, executive director of the Center for Medicare Advocacy.

Stein has worked with AARP on lawsuits, and shares its outlook on many issues. But she called the Medicare law "a shameful boondoggle" for its generous support of insurers, and said she thought AARP might find it hard to change those subsidies when it was gaining so much from them.

"The privatization of Medicare in general is a very bad thing and a good thing for the companies that are making a huge profit," Stein said. "When one of those companies is benefited by the AARP brand, I think it's a conflict."

Deluise, the AARP spokesman, said the royalty income did not affect the group's advocacy. For example, he noted that some want to deal with rising Medicare doctor fees by cutting them or raising Medicare premiums. But AARP wants the money to come from insurers, he said.

Strong finances, he continued, enable AARP to better serve its members. The group is committing $500 million over the next decade to run a call center called Health Aid to answer anyone's health questions for free. A pilot is to start next year.

AARP is not shy about marketing. It spent $90 million last year to attract members, sell products, and run advocacy ads, annual records show.

Medicare used to be a quiet market where few needed to advertise. Now it can be an endurance test to decide whether to pick Medigap insurance with an added drug benefit, or a Medicare Advantage plan, which typically comes with drug coverage included.

Even many advisers say they cannot choose without help. They often work by running a client's drugs through a public program at www.medicare.gov to identify the cheapest plans. The site estimates total drug costs, including co-pays, and indicates whether key drugs are on a plan's approved list, or formulary.

But the service is not foolproof. The federal Web site can be wrong or slow to update, advisers say. So seniors need to call the plan they prefer.

Customer service is another factor. Medicare gave all three AARP-branded plans four out of five stars for service, although many observers call the government's analysis a work in progress. Many advisers praise AARP's customer service.

The Medicare business has not always gone smoothly for AARP's partner, UnitedHeathcare, which runs the group's Medicare plans and pays AARP for using its name.

In June, the company was one of seven insurers that agreed to stop marketing certain Medicare Advantage plans amid concerns that its sales force was misrepresenting those products to consumers. Those plans had no connection with AARP. Medicare allowed UnitedHealthcare to resume marketing in September after the company reeducated its sales force.

The federal government also fined UnitedHealthcare $200,000 last year for failing to give timely notice of plan changes to members, including some in AARP plans.

Deluise noted that this year UnitedHealthcare's members got their notice of changes on time.

Despite its status as the one of the nation's largest health insurers, UnitedHealthcare is no match for AARP among the Medicare crowd.

The three AARP-branded Medicare drug plans run by UnitedHealthcare cover 4.1 million people, while the two plans sold strictly under UnitedHealthcare's name have just 600,000, company spokeswoman Kathleen Harrington said.

Richard G. Stefanacci, who directs the Center for Medicare Medication Management at the University of the Sciences in Philadelphia, has seen the allure of AARP firsthand.

Stefanacci, a physician who specializes in geriatrics and Medicare policy, showed his parents, who live in New Jersey, how they could save money by picking a regional drug plan. But they chose an AARP product that cost more, because they already were customers.

"It's peace of mind," Stefanacci said. "That's why AARP/United is able to get a premium."

Gene Bishop, a Philadelphia doctor who consults for the Pennsylvania Health Law Project, came to similar conclusions.

Modeling the needs of a typical patient - a diabetic with asthma and high blood pressure - Bishop ran seven common drugs through the Medicare Web site to estimate drug costs. The cheapest AARP plan was 33d, she found.

AARP "never has come up as the best financial option for consumers," said Juanita Way, Apprise coordinator at the Albert Einstein Medical Center, who has counseled more than 150 Medicare members this year. "It comes up on the list but never in the top three in terms of costs."

Way said she had never received any service complaints about AARP plans. And many people choose it anyway, because "AARP has a reputation," she said.

"But the cost can be $500 to $700 more a year. That's an important factor especially for someone who is low-income."

AARP All Over The advocacy group not only puts its name on two of the five most popular Medicare drug plans, but also on a host of other insurance and health plans. The AARP Privileges program also gives discounts on travel-related and consumer products.

Here are some of the products that carry the AARP name:

AARP Dental Insurance.

AARP Vision Discounts.

AARP Long-Term-Care Insurance.

AARP Pharmacy Services.

AARP Credit Card Services.

AARP Motorcycle Insurance.

AARP Life Insurance Program.

SOURCE: AARP

Last-minute Shopping

Open enrollment for Medicare health and prescription drug plans ends Dec. 31. Besides using the federal government's Web site to evaluate plans, senior citizens can get help through the following organizations:

Apprise runs a counseling program in Pennsylvania at 1-800-783-7067.

The State Health Insurance Assistance Program in New Jersey is at 1-800-792-8820.

The Medicare Rights Center in New York offers counseling at 1-800-333-4114.

Contact staff writer Karl Stark at 215-854-5363 or kstark@phillynews.com.

New evidence shows risks in taking Zetia

Hidden Data: Merck, Schering-Plough & Zetia

December 21st, 2007
By Ed Silverman

New evidence shows the drugmakers conducted several studies of the popular cholesterol med that raise questions about its risks to the liver, but the results were never published, The New York Times reports. Partial results, alluded to in documents on the FDA web site, raise questions about whether Zetia can cause liver damage when used long term with statins. Most people who use Zetia take it along with Lipitor, Crestor or Zocor, or in a single pill, Vytorin, that combines Zetia with Zocor.

The discovery of the unpublished research comes as Merck and Schering are already under criticism for not yet releasing data from an important Zetia study, called Enhance, that they completed early last year, the Times notes. The Enhance data may also contain important info about Zetia’s liver risks. At least some patients were dropped from the Enhance study after testing revealed that they had elevated liver enzymes, a Schering-Plough spokesman confirmed this week. But a full report on that trial, including the number of patients who had liver problems, will not be available until March.

Doctors say that by failing to disclose promptly all their research, Merck and Schering-Plough may be leaving the public with a misleadingly favorable view of Zetia’s safety and benefits. “You don’t want to have data missing,” Bruce Psaty, a professor of medicine and epidemiology at the University of Washington, tells the paper. “When there have been adverse effects, when the benefits don’t look impressive, those are the trials that historically don’t make it to press.”

Before the drug was approved in 2002, one FDA reviewer said it should not be cleared for use with statins because the combo had caused liver damage in animals. And in the last two years, scattered case reports of severe liver damage in patients taking Zetia in combination with statins have appeared in medical journals. In the US, the product label for Zetia contains only mild warnings about the drug’s potential for liver damage. But since 2005 in Australia and Canada, regulators have issued a series of warnings about Zetia’s potential to cause hepatitis, pancreatitis and depression.

“We keep telling people we want to practice evidence-based medicine, and what we keep finding out is that much of the evidence is obscured,” Harlan Krumholz, a cardiologist at Yale, tells the paper. “There is important evidence, but it’s not in public view. It’s hidden from investigators.”

UPDATE: Here is a Public Citizen newsletter [Try this link if the previous one doesn't work] from December 2004 warning against the use of Zetia.

Here’s the rest of the story.

More comments on 'OEA: In the spirit of open communication'

December 21, 2007

Dennis Leone: I wish to know which motions or policies have been recommended in the past 3 -4 months at Board meetings that “undermine trust and confidence.” Please tell me.
12/20/07

Comments from others:

• Kathie Bracy: I would like to know, too. Also, whose trust and confidence were undermined. Let's get this out in the open!!
• Good luck, you two! You are not going to get them to respond. . . I would bet money on it.
• I believe we are all waiting for that answer. Please tell us all in the 'Spirit of Open Communication.'

• A lump of coal for those who make charges and don't back them up!! This is more like the spirit of Bah! Humbug! than it is the spirit of open communication! Gutless and cowardly, I would say. (KBB)

• You read my mind, Kathie! Who indeed? Certainly not membership wishing for oversight and transparency. Staff works for and because of membership and has been doing a pretty darn good job by all accounts. So, who exactly is undermined???????

Seems since the changeover of Board members and more in depth oversight, STRS has soared and membership has been gaining trust. So, as Kathie says, WHOSE trust and confidence is being disturbed, here. Let's have some names and documentation for this statement. Research. No staff I have met (and I am frequently seeking staff for various items) behaves with me like they are undermined and the only comments I have ever heard are: "We want STRS restored to its former place of trust and respect." Of course, this doesn't happen in front of a microphone but it happens to me at STRS!

Instead of showing any feelings of being undermined, they are beyond helpful with the most agreeable and cooperative demeanors on all levels with few exceptions. Even Neville gave me all the answers documented that I asked him for a bit back. Russell and Slater and Mitchell are most responsive having lost that more reserved stance from long ago. The Staff is beyond helpful and they sure seem natural and eager to be of assistance.

Interesting, isn't it? Who is it that feels what motions undermined them and lost their trust? Let's think hard.........well, guess it is not that hard.

[If you need background information, scroll down and read letters, etc., dating from 12/13/07.]

Molly Janczyk: Questions for STRS Board

From Molly Janczyk, December 21, 2007

I forgot to add that in my conversation with John Patterson, the word micromanaging never came up.....only 'at the discretion of the Board.' I feel OEA's attempts to 'constantly control the Board's decisions' with direct and pointed attempts to undermine individuals (my opinion) are indeed 'micromanaging the Board' instead of stating their position and letting the Board make up their own minds. Why don't you let the Board alone to do its job instead of inserting yourselves into their debate-my take?
Molly J.

My thoughts based on the AG Office: Patterson statements:

*Leone's motion is clearly NOT against current policy.

*Changing policies have been only positive in providing direction as evidenced by renewed trust and success. It was not stated that change of policy was inappropriate. It was stated that there is a difference of time commitment between Exec. Session and open forum and considering the advisability of making such public opening debate. For me , open debate is a good thing.

*Leone's motion CAN be reintroduced and approved.

*AG states AG makes 'recommendations' on representation -required, permissable or not.

*AG stated legal issues are CASE BY CASE just as Leone's motion requests

*I feel any legal issue is a public forum issue unless determined by the Exec. Direc. and STRS Board not to be so as to consider and or disallow inappropriate incidents. Membership has the right to know how its staff is operating and would demand the same of any staff working for them. It is right and fair to anyone to have the capability to respond to charges in open forum.

*I would NOT want ONE individual deciding legal options and feel case by case Board decisions are in order. There can be NO set rule on this as there are endless numbers of circumstances and all could never be listed. Why would anyone want to have their future determined by ONE person-esp. not knowing who that person will be.

*The only standard can be: "If an employee acted according to their job description with no illegal issues, the Board can decide on outside legal fees considering the AG's recommendation."
(Pretty much what Leone has presented).

It is not appropriate, prudent or intelligent us of our money to make unconditional statements regarding paying staff outside legal fees.

*It is not appropriate, prudent or in my opinion intelligent to make one person the final answer in all legal determinations. I find that foolhardy opening the door to much bigger potential problems.

Neville's statement is pertinent to case by case: "Unless otherwise determined by law, no associate legal fees will be paid without Board approval. No employee doing their job should fear this statement and I just have to add: Why all this fuss? How many law suits are we expecting regarding staff? I would think none! They seem hardworking and conscientious. Too much ado about nothing. We did our job and never worried about such.

Molly J.

From Molly Janczyk, December 21, 2007
Subject: CORE Officers; STRS; Organizations: Mark and Conni: Suspected STRS Board Tampering: Complaint:* Ques. to the Board

I spoke with John Patterson from the AG office.

He stated he would clarify public statements and does not wish to become involved in the politics of this motion. I told him I was taking notes to clear up questions and that I would add his disclaimer.

I am copying him for accuracy.

1. The Board could have voted to approve Leone's motion: There is nothing illegal about it. It is the discretion of the Board. They can still vote to do so. There is nothing inappropriate and it is at their discretion.

2. Legal fees for associates are case by case: It is up to the Board and Exec. Direc. to determine depending on the relationship between them whether it is decided that the Exec. Direc. has the authority to approve/disapprove: -If someone has done something illegal, they cannot be defended by the AG or STRS Legal team. -If someone has worked within the legal parameters of their job, STRS could decide to represent them based on they type of case. It is permissible and at times appropriately required and at times disallowed: illegal instances.

3. Patterson's statement was due to a concern that he said was really a time commitment: As long as discussion is in Exec. Session, no one can question a decision. One it is to be voted upon in public session, the door is opened for questioning the vote and why. Once that door is open, it cannot be reclosed and takes more time to address as it becomes open for questions and debate. It was merely a caution regarding this area as being reluctant to give up Exec. Session. He stated several times the difference was really a time commitment.

The AG makes recommendations to STRS in this area of legal backing. Patterson did accompany staff to court who were called for testimony in the former STRS Board members ethics violation charges. He could not represent Sidaway due to her charges.

((To me: If cases have to be decided individually, I would not want to operate under a standard policy disallowing case by case discussion and deliberation. I cannot believe this is a major problem at STRS at any rate)).
Mark Meuser to Molly Janczyk, December 21, 2007
Subject: RE: Mark and Conni: Suspected STRS Board Tampering: Complaint:* Ques. to the Board

Molly,

Below is the response I e-mailed you earlier. I don't know why it didn't go through. Sorry about that.

Even with Mr. Neville's restatement, the basic problem with the motion is its attempt to vest the Board with the authority to determine whether employees are eligible for legal fees. According to state statute, this falls under the purview of the Attorney General. I think it is important to note that public employees who are denied legal fees have the right to sue their employers for those legal fees, even if they choose their own attorneys. The motion in question also represents a change in Board Policy. According to Mr. Patterson of the Attorney General's office, if the Board is unhappy with a decision of the Executive Director, it can censure the Executive Director. Because even that did not occur, changing Board Policy is neither advisable nor necessary.

Mark

From Molly Janczyk, December 16, 2007
Subject: RE: Mark and Conni: Suspected STRS Board Tampering: Complaint:* Ques. to the Board

Conni, Are you saying this issue is still under consideration? If so, that is good. Thank you for your response.

Molly

From Conni Ramser, December 16, 2007
Subject: RE: Mark and Conni: Suspected STRS Board Tampering: Complaint:* Ques. to the Board

Molly,

After Mr. Neville's comments, there were other questions/suggestions raised. I asked that all ideas be put into writing so that it could all be considered and the best resolution sought.

Conni

From Molly Janczyk, December 15, 2007
Subject: Subject: Mark and Conni: Suspected STRS Board Tampering: Complaint:* Ques. to the Board

Mark and Conni,

This is a new day for Board members open to much more scrutiny and oversight by membership. We expect nothing less of our STRS Board members due to the history and misdeeds of former OEA Board members.

I am concerned about your recent voting and position on the problem of paying for legal fees for STRS Board members. I cannot imagine why you voted against Neville's, STRS Legal Counsel, statement answering what a proper policy should read on this matter except just to vote against Leone and attempts for oversight.

You both promised to be independent thinkers and decision makers and not party liners which never seems to occur in serious matters. Yet, it seems you rarely raise or debate issues from an independent view and research directly from sources. This is what got us into trouble before and it seems we are headed under this Board to that end again: Do not question, micromanage (same thing), etc. Rely on Staff to tell you what is going on.

As Mooney said, about blindly listening to those expected to support STRS asking: "What do you expect them to say?" It is not ethical if one disagrees nor due diligence to not speak up if an issue is felt to be wrong simply because it is the affiliation's wish. It is certainly not why you were elected or compliant with your oath.

Please present me with your well formed points on my questions so I can better understand how you could vote no on Neville's statement which Leone responded to with the words: "SO MOVED!" What on earth can you find objectionable except to a personality or to pressure.

Mooney said he was often the loudest in the room! He had spunk and spirit. I hope some of it comes to you on behalf of membership independent of anyone's thinking but your own, truly!

Please advise me on your thoughts.

Respectfully,

Molly J.

From Molly Janczyk, December 15, 2007
Subject: Suspected STRS Board Tampering: Complaint:* Ques. to the Board

OEA Pres. and VP:

Concerned STRS members have discussed reasons for changes in some STRS Board members voting patterns. NO CORE member has a concern over a well thought out individual decision based on conscience and ORC:3307.15. But when obvious and sudden turnarounds appear, one questions why the change of heart? At this point, I am a party of one issuing this complaint of what I feel may be possible tampering with STRS Board members. I have not yet asked for support but am acting due to comments after the last Board member and overt behaviors questioned by membership.

Bill Leibensperger, OEA VP and Gary Allen, former OEA Pres. told me the reason OEA did not step in regarding past misuse by its 5 OEA STRS Board members convicted of Ethics charges was because OEA's legal team dictated NO interference from OEA regarding their votes and decisions.

Some of us in CORE fear this is not so behind the scenes. Opinions I have heard among some members witnessing the last Board meeting are that STRS Board member(s) have been pressured as to how to vote by OEA Officers. We feel certain OEA Board members issue pressure which is probably not unusual unless threats are issued of some sort? This is pure speculation at this point based on virtual overnight pattern changes of voting for Leone's motions. Again, the concern is not due to a presented reasoned thoughtful decision based on input but what appears to attendees to be coercion with no other apparant reason.

1. I have asked 2 Board members, Tai and Craig Brooks, for their input on why they could not vote for STRS Legal Counsel's statement as to how and when legal fees should be paid by STRS for staff. No response yet.

2. NOW, I wish to ask Ramser, Meuser, Cervantes and Chapman the same question. What did you feel was not appropriate with Neville's statement as to how policy on this issue should read? What were your specific reasoned specific points to vote no on this statement presented by Neville and put in motion by Leone?

3. Puckett left prior to vote. I would ask him the same question however as to his approval or not of Neville's statement.

I intend to research this issue. I issue a complaint of possible tampering for research by Neville, STRS Board Counsel. I understand in advance OEA will state this was not done and they would never do such. I personally do not believe that for an instant.

I now present a complaint of possible tampering due to observable behavior of some Board members not consistent with past voting patterns. If it can be shown that this decision and turn around was due to a change of conscience and reasoned points which can be articulated by themselves (not OEA ghost writers-though I feel that will be the case), fine.

To the STRS Board Members:

1. What do you not support in STRS Legal Counsel's statement responding to how the problem before the Board can be corrected regarding paying of staff legal fees: Neville: (STRS Board minutes): "Unless otherwise requested by law, NO payment of Associate legal fees should be paid without Board approval."

2. What do you find redeeming about Patterson's suggestion that this issue could be looked at during the Exec. Direc.'s evaluation which would be AFTER THE FACT OF PAYING FEES?

3. Do you realize without a policy, a staff member could go to the highest charging attorney and submit fees without STRS Board approval? How do you feel about this?

4. Do you realize that without policy corrected, the Exec. Direc. can approve such payment? All confirmed by STRS legal counsel Thurs. 12/13/07. How do you respond?

STRS Board members: You all took an oath to act solely on behalf of membership for its benefit with prudence. If any of you have conceded to pressure, it is your duty to come forth and change your vote if you did not vote your conscience but succumbed to the my alleged attempts of OEA to change your vote.

This is not legal or ethical. OEA may present their opinion publically and you take that into consideration.

CORE never instructs Board members as to how to vote! It is NOT what we elected our Board members to do! We speak in support of our Board members and how we as membership feel. THEY act according to their conscience and for retirees alone. We feel their hard fought battles to stand for membership are evidence of such against overwhelming odds.

It seems obvious to many of us that there is an automatic block of votes against anything put into motion by Leone and Lazares without supported documentation or substance: Why would anyone call seeing a large vendor contract before signing off on it micromanaging? Why would one approve of large spending by the Exec. Direc. for unknown bills until after the fact? Why would anyone approve of loose spending habits of membership money calling questions micromanaging when membership clearly asks for oversight and praises improved corrections on this matters monthly to you.

In fact, the ONLY organization that does so (micromanaging mantra) is: OEA. I don't hear from other organizations ever saying this. Some don't like our in your face tactics but I don't get disagreement on points such as this.

We do speak up and to the persons directly. We don't follow old protocol of only speaking through an organization officer. If membership has concerns, Board members are public seats and the public has a right to go directly to the person being asked. Board members have a duty to respond to those members' concerns.

WHY THE ISSUE OVER LEGAL FEES? My assumption is fear and history. Board members remembering history of lack of legal backing and staff fearing some nebulous circumstance where they would not be covered. If legal, ethical and moral, should be no problem. What is the concern? You should not be covered in a classroom or office if you did not fulfill these areas.

Thank you, Dr. Leone, John Lazares and Tom Johnson for voting to approve the obvious based on STRS' OWN LEGAL COUNSEL STATEMENT OF PROPER WORDING! What is there to oppose?

I will push for answers and if I do not get them, I will address you publicly at a Board meeting. It is your choice. I have no problem and no fear about approaching any of you as you stand for me, not me for you. You are a servant of a public pension system. I will have answers for membership who ask and cannot themselves attend.

I present this complaint to all STRS Board Members, Neville, and Asbury. I will keep copy for further action with the Ethic Comm., Attorney General, Gov. and our legal counsel as to how to proceed should satisfactory responses not be issued. I do not respond well to no response. I do not use continued efforts for you to respond as a tactic. I will come straight to you as Neville, Russell, Bill L., etc. well know. If I am not granted a response, I will call a meeting with you and appropriate staff and officers of organizations. I am a member shareholder and have the right to question decisions on my money.

If an organization has approached a Board member as to how to vote, it is unconscionable and unethical and possible illegal. I intend to take this to resolution. Don't threaten me. I stated alleged and possible and intend to research the matter of 'appearances' at this point. If asked under oath, one best be prepared for truth is all I want.

I am a member of OEA/NEA and I do not want my organizations tainted by anyone. I was a proud member in my career but recent events make me ashamed.

Sincerely in the interests of membership but currently speaking as an alarmed individual with a long history of watching behavior patterns,

Molly Janczyk
STRS Retiree
CORE OEA/NEA Lifetime
CEA Lifetime

Molly Janczyk: A response to Bill Leibensperger

From Molly Janczyk, December 19, 2007
Subject: Re: OEA: In the spirit of open communication

Bill,

As Kathie responded, I too, do not agree with anonymous letters feeling there is not an avenue for response just like John Lazares and Dennis Leone stated publicly at an STRS Meeting regarding an anonymous letter sent to Board members regarding a CORE member. I do understand that some feel they do not want to be public fearing retaliation of some sort though it is not true as pensions cannot be disturbed. Many still feel comfortable speaking through others, I have found, but we must be uniform in our consideration of anonymous writers in general.

POINT to Bill: My emails are blocked at OEA because as Gary Allen told me in front of you at OEA, it was thought that I could somehow get into your system which is totally outlandish with my simple email skills. But, since I had sources, he thought I perhaps had some way of infiltrating which is what he told me at the meeting we all attended. He told me it would be no time soon that I would be able to connect with OEA central directly.

POINT: The anger is deep. Profoundly. Many felt betrayed at the CORE of their being losing assets, homes, cutting meds, denying themselves treatments while OEA Board members lived high and never warning them of catastrophic changes on the horizon allowing them to retire being told all was fine and they never needed to worry about HC in their STRS Consults.

POINT: The money abused by the OEA former Board members could never have paid for HC , we know. But, it added insult to injury, literally! Addressing retirees with smirks and slams and non responsiveness provided another layer of separation. OEA created its own disenfranchise.

Bill, you were all there! Your Tim Myers wrote he was there long before Leone! Well, what did he do about the spending abuse? He never answers that question but will have a harder time avoiding it as an OEA STRS Board candidate. He could have been the 'Savior vs. the Crackpot' as he wrote questioning which Leone was.

Instead, Leone and Lazares came along and heard rumors and Leone's report is history. To promote disregarding history is impossible and irresponsible for any leader (Your written remark re: referring to the past). Leone thought OEA and ORTA would stand up-step up and take over and he'd go back to his job. Something he told me way back when before he ever considered taking a Board seat based on our pleas. POINT: OEA, ORTA , never spoke out or picked up the duty to membership to fight for oversight of membership money and every statement of praise for those who turned a blind eye to approaching devastation brought more insult to their injury.

OEA and ORTA turned a blind and deaf ear instead. Praise was heaped upon the abusive OEA Board members who misspent cavalierly relying totally on the market. Jack Chapman: "We were riding the wave!" Again, insult to deep injury of heaping the burden of saving STRS HC onto retirees' backs-retirees who worked their whole lives simply for a secure retirement. OEA said it was not necessary back in the early 90's to support talk of legislation to secure HC even when Endry told you all if something did not happen to provide HC back then , there would be no HC in ten years. So, you were not blindsided in all this. Dyer is reported to have said "I want out of the HC business." Dyer was OEA's top choice rushing to the airport, I am told, to secure him. I believe Dyer intended to spend HC money down and then blame a national problem which indeed there is and proceed to stop HC subsidy.

Suddenly- virtually overnight - there were untenable catastrophic HC increases and retirements were robbed from those who had worked only wishing security in retirement with implied promises of HC second to none. All able bodied had to go back to work to pay for HC while OEA 'ers laughed at us at meetings saying : "You have yours! We want ours!" We were called names: 'malcontents; a few disgruntled retirees,' etc. We'd go away-as OEA and ORTA and STRS thought. We didn't and we won't.

Why the anger? For reasons stated in points above and for very simply: OEA CENTRAL NEVER TOOK RESPONSIBILITY FOR ITS OWN with Allen telling me: "Our legal team would have our heads if we interfered with the Board!" (no one believes that) OEA CENTRAL AND ORTA CENTRAL NEVER SPOKE TO THE BOARD BUT PRAISED IT INSTEAD! Each time, anger built. OEA sent lies and innuendo statewide about the man who blew the whistle and never made any move to welcome either Leone or Lazares to the Board. Deb Scott: "I am NOT happy to see you here!" Lazares' response: "Thanks for the warm welcome , Debbie!"

You OEA-R: NE corner wrote innuendo to cloud whether Leone was a candidate. Easy to find out if he was indeed confused up there. Call STRS! Find out as any responsible writer would do before publishing an article. But that was not the issue: The issue was to confuse and cloud and hope some of it would stick. Back room and meeting comments kept coming back to us.

Again and again: For there to be open communication, both sides have to have the opportunity to speak and respond. When you build trust, both parties don't go around badmouthing and name calling the 'others'. That is what you did.

So, yes ! Have you ever been deeply hurt feeling betrayed by horrible slurs and lies with no chance to respond to all that heard and read it? It is a life changing event when one's integrity is attacked for one who has integrity and built a life around truth and honesty. That does not leave when NO ONE EVER took responsibility or made it right. That act is immoral, unethical and low. These bumps which you doggedly continue catapult us back to those days as we will never forget that taste or feeling for ourselves and for the one who stood up for us!

That is the KEY! We DO take personally the attacks on the 2 men who stood up to all the giants and made the truth known: UNDENIABLE: 100% VERFIED WITH STRS DOCUMENTS AND INVESTIGATIVE REPORTERS ARTICLES. Leone and Kostyu won awards for the research on STRS. Leone has won many awards for work for educators and his research. What other Board member has won or displayed such other than John Lazares who has won awards as well and is a published author. John Lazares felt the need to write an "Ethics Policy" for STRS which is now in its bylaws.

You have so little if any reason to pursue Leone and Lazares. It is YOUR difficulty in communicating with either of them. Leaders recognized for their efforts such as the late Tom Mooney and other organizations I know seem to have no difficulty. Only OEA and ORTA and its affiliates who must always wear their armor and will never do anything but defend past practices and will not speak up for current change have difficulty. It seems impossible for them to let down their guard to have a conversation about change. THAT is what brings ire to the table! You come with attitudes set and dislike in place and showing. This was recently brought up so I will mention it as Leone and Lazares have for 5 years: You will never get over that these 2 superintendents were against the strike years ago as most if not many superintendents were being told to keep schools open. I was one who went out on strike. Different sides of the fence. Didn't make me hate the principal or superintendent for the rest of my life.

Leone and Lazares came with that black mark and then embarrassed OEA and ORTA for not being on guard for membership. OEA and ORTA quickly closed ranks and did everything possible to slander and raise questions about those found problems and the one who broke the story while retirees sung their praises for helping us. THAT IS WHY WE STAND BEHIND THEM AND THAT IS WHY WE WILL CONTINUE! Not because we agree or disagree about a point here or there but because these 2 have the courage to keep fighting for membership and lay open the rules and watch our money.

I doubt you will ever understand and that you even want to with statements like: 'You try to understand but the anger goes so deep.' For you to even say that is unbelievable to membership bearing insult after insult and insult and watching its leaders attacked monthly for doing what you seem to miss: WE WANT THAT LEVEL OF OVERSIGHT! WE FEEL THAT LEGISLATORS DO TOO AND THAT IT LOOKS GOOD FOR STRS TO BE TRANSPARENT! ANY SHOW OF DISSENT COMES FROM YOU AND YOU CONTINUE TO PERPETUATE IT!

STRS has come a long way in restoring trust under Leone and Lazares motions for change. Steve Mitchell and his Staff have been overwhelmingly accurate and disciplined in bringing us back to a secure place. We issue kudos to them and to the wonderful staff at STRS who work with us and for us wanting nothing but STRS restored to its place of respect and trust. They have done so much to bring this about never hesitating to help membership answer questions and understand or assist whenever possible.

STRS DOES NOT DESERVE to be accused of having so much money they can pay for membership HC on their own. Any who issue such a statement have little understanding of finance and loss. My limited experience has taught me a dollar amount alone does not reflect severe loss, huge increases of liability and lowered funding ratio and making up for very low years. If one loses 1/3 of their money such as myself, I must use other resources to make that up taking my debt ratio and ability to pay up many more years than previous to my loss. So if I earn major money back from the market, I now have not only my previous debts but those accumulated to sustain me during the years I was down monetarily. Perhaps, I now how an amount more than I had on paper before the crash but I have more debt too taken on to survive.

STRS has earned its way back to unfunded liability around or under 30 yrs as ORSC dictates and increased its funding ration but not enough yet to be able to dedicate more to the HC fund. Also, HC costs have soared so high these past few years that even when or if they do meet the ORSC recommendations for being responsibly able to use more pension money for HC, it would no longer be enough to subsidize HC. This is why a secured revenue is needed and why STRS and HCA have now devised legislation to allow educators to prepay for their own HC.

HB 315 is a well thought out plan for securing HC for its educators with no overwhelming costs for employee or employer. This accompanied by proper funding for education would go a long way to serve Ohio in 1. attracting the best educators vs. driving them from this
2. economically failing state. TWO indicators of how to put Ohio ever into a crippling spiral of no return.

Will all always agree on all issues? No! Do all legislators agree on all issues? Are there never arguments or dissent on how to proceed? It is naive and ignorant to perceive differences and heated debate as breaks in membership over HB 315.

STRS and all HCA and CORE agree that HC is a priority and work collaboratively for its being introduced for debate.

Does that mean no one should ever disagree or stand apart on other issues? That is not exercising prudence and duty but only creating a false front which should raise concern. Debate, dissent is our American way and legislators should view it as healthy and proper: debate hard and listen to one another and vote individually and one's own conscience or you do an injustice to your constituency when you swore to uphold your duty and not be influenced by anyone other than those who depend on you for honesty and integrity. If you cannot do that at any level: you must step down for your presence is not honest.

Most of us can and will do whatever it takes for retirees and so we shake hands and smile but trust...........................................It becomes easier and easier for me because I long ago stopped caring about reactions if I felt I was honest. I understand when I am being ignored and when I am being solicited for help. I have no problem helping if I feel it is right for retirees and view it as an opportunity to show my pure intent.

ACTIONS prove change and intent - not words slung at someone in a hit and run mode with no opportunity for response in an attempt to control: you say micromanaging ; I say control. That is little different than an anonymous letter. One knows who is saying it but still no ability to respond.

I can say, it is creating trouble when someone needs you for a isolated purpose and wishes a united front to present a face publicly while continuing to attack behind the podium. Just doesn't work that way and hasn't been working for you for a long time. A person might wonder why one persists in behavior that antagonizes and creates the very thing they say they want to present. But you keep doing it while calling some of us the guilty ones. I have told you forever, we react. You don't get to throw your platitudes - pointedly and then walk away and think for a second we will not react.

Slow learners, it seems , but we aren't going anywhere and yes, Bill, it goes way deep. Deeper than you will ever understand and you are doing nothing to correct it. Nada. Only making matters worse.

Solution: Meet with the injured parties in a real sense of open communication; make amends; take responsibility for acts done as we all must do in life; you and yours stop making excuses and spending so much time defending the indefensible cause it will never work no matter how you change the words.

In this, OEA and ORTA are forever wrong in the minds of many remembering when life came to a sudden stop, when retirement was yanked from us and we were net with insults and bravado. Charter schools, much legislation and education projects: Thank you OEA and ORTA. But you will never answer this questions above and never have and the screen goes silent and back to the lair.

I think you can figure it out why the hurt goes so deep if you really want to and have, in fact, done so. You don't really want to take that step and that is that about that. You know why it goes so deep..................... I am an eternal optimist though that someday, someone with OEA, down the road will stop the mantra, get off the train and simply make it happen. A wise man. One equal to Leone in 'just wanting to do the right thing': his response in 2003 to a reporter on why he did the research. Is Leone human? Yes! Do ones among us disagree and debate points at times: Yes! Does Leone mind? NEVER! Does he raise his voice! NEVER! How do I know? I am one of them. He simply tells me there is nothing wrong with my ideas being my own. But, I know he trusts me. I know we value each other. We respect each other. So, we can talk, no problem. Mooney had no problem. Others have no problem. Just OEA Central and ORTA Central and those closely affiliated. Think about it and what you would feel and do if it had been you maligned wrongly, stunned, statewide and had your reputation impugned by those who continue to attack you-pointedly and with no doubt as to whom they are speaking.

Thanks boys and girls. Let's not keep pretending, ok?

Sincerely,
Molly J.

A trip back in time and some familiar names

From John Curry, December 21, 2007

Subject: A trip back in time and some familiar names....very familiar! Thank you, Paul Kostyu

Meanwhile, the Ohio Education Assn. came to the defense of Dyer and the STRS. The teacher union’s president, Gary L. Allen, sent an e-mail message to his executive committee, district leaders, advisory council, local presidents and STRS board members questioning the motives of Dennis Leone, the Chillicothe City Schools superintendent who is largely responsible for calling attention to the STRS spending spree.

“Mr. Leone’s motives for his decision to broadcast his claims far and wide are unclear,” Allen wrote. “Much of his logic is difficult to follow.”

Allen suggested that Leone’s effort were “destructive.”

"Allen said there was no relationship between his criticism of Leone and the fact that a current STRS board member is a former OEA president.

Michael Billirakis is a past president of OEA and Dawn Leibensperger, the wife of an OEA employee, was active in his election bid. Leibensperger is an OEA president in Dublin, in central Ohio."

Lawmakers want resignation, audit: Teachers Retirement System director under scrutiny

.

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By PAUL E. KOSTYU, Copley Columbus Bureau
New Philadelphia Times Reporter, June 13, 2003

CHILLICOTHE – One lawmaker who helps oversee the state’s five retirement systems called Thursday for the resignation of the executive director of the State Teachers Retirement System while another said the system’s books need to be audited. Sen. Kirk Schuring, R-Jackson Township, said it’s time for Herbert Dyer to go, following revelations this week that the system has spent over $15 million on staff bonuses, artwork and travel over three years while the system’s investments plummeted by $12.3 billion over that same time.

Schuring said Dyer has lost the confidence of the STRS members and new leadership is needed. In his fifth year on the Ohio Retirement Study Council, Schuring is its former chairman.

Rep. John Boccieri, D-New Middletown and a council member, said Dyer does not understand that the money spent by the STRS board “is not the board’s money or his money.” Boccieri, whose parents are STRS members, wants an audit of the system’s books, but he said calling for Dyer’s resignation “is a bit premature.”

State Auditor Betty Montgomery said in an e-mail Thursday she was concerned about “what we are being required to do in our state retirement systems” and that her office will “raise serious questions” about STRS policies.

Meanwhile, the Ohio Education Assn. came to the defense of Dyer and the STRS. The teacher union’s president, Gary L. Allen, sent an e-mail message to his executive committee, district leaders, advisory council, local presidents and STRS board members questioning the motives of Dennis Leone, the Chillicothe City Schools superintendent who is largely responsible for calling attention to the STRS spending spree.

“Mr. Leone’s motives for his decision to broadcast his claims far and wide are unclear,” Allen wrote. “Much of his logic is difficult to follow.”

Allen suggested that Leone’s effort were “destructive.”

While Allen was sending his message to OEA leaders, the union’s rank and file were lining up behind the superintendent who has become a hero to many.

Leone, lawmakers and news media reported getting numerous calls and e-mail messages backing his efforts and calling for action. All 120 e-mail messages Leone received from administrators, teachers and retirees thanked him, asked how they could help or encouraged him to continue. A couple suggested a class action lawsuit.

Allen said there was no relationship between his criticism of Leone and the fact that a current STRS board member is a former OEA president.

Michael Billirakis is a past president of OEA and Dawn Leibensperger, the wife of an OEA employee, was active in his election bid. Leibensperger is an OEA president in Dublin, in central Ohio.

Billirakis billed STRS $9,923 over three years for expenses, including trips to San Francisco, Boston (twice), Atlanta, Tacoma, Wash. and Anchorage, Alaska. He was one of the lowest spending board members. The top spender is Hazel Sidaway of Plain Township, who spent $54,216, which included 25 trips requiring airfare.

Allen said the past spending habits of Dyer and the board are “old news” and it’s time for the system to move forward. He said, however, changes should be made in how bonuses are awarded to employees.

Schuring said he has heard repeatedly from constituents who have been in touch with Dyer.

“I am appalled with the kind of response my constituents have gotten from him,” he said. “He is a brash, arrogant and condescending man.

“We need a new leader who takes these matters seriously and not be part of any plan to spend money unwisely.”

Sen. Lynn R. Wachtmann, R-Napoleon and chairman of the council, wrote to a constituent in February that STRS did not move fast enough to prevent cuts in the health care benefits of retirees. Wachtmann said earlier this week that he wants more hearings on the STRS spending and its health care program.

Sen. Jim Jordan, R-Urbana but not on the study council, also writing to a constituent, said on May 28 that “Mr. Leone raises a number of valid issues pointing (to) mismanagement and inefficient use of funds by STRS.”

Leone said his motive is clear: “To get the board to change its spending practices and respond to its members.”

“This year there was a long and ugly teacher strike in the Eastern Local School District south of Chillicothe that the OEA rightfully supported,” Leone said. “What would have the reaction been from OEA and teachers if they found out the Eastern school board was spending like the STRS board? There would have been outrage if the board was flying to Hawaii, giving principals bonuses and purchasing polished stones for the superintendent’s office.”

This page was created June 13, 2003

"Gutless and cowardly" responds to Bill Leibensperger's letter of 12/19/07

To Kathie Bracy, December 19, 2007

Not the least bit concerned here. I just spoke the truth and they can't handle the truth. I served my country in uniform for six years while a lot of people in education were dodging the draft! Cowardly and gutless?? I know that I am not! I served my community in uniform for 25 years. Gutless and cowardly?? I think not!

I wonder how many 15 years olds he carried to the side of the road whose bodies were destroyed in a horrific accident and then tried and restrain the grieving parents?? I wonder how many children's bodies he's dug out of the basements of burned out houses. I wonder how many young people he's held in his arms while they were dying and pleading for someone to save them and there isn't anything anyone can do to help them?? Gutless? Hardly!

I wonder how many people he's cut out of cars that were run over by semi-trucks. The people were all dead and it took us four hours to get the semi off of the car and extricate the bodies. I wonder how many parents he has faced and told them their child was dead?? Cowardly? Definitely not!

I have given more to this nation, state, and community than all of the money grubbing phonies at the top of OEA and STRS combined. Cowardly? How many of them have been in the line of hostile fire? Gutless? I have placed my life on the line way too many times and then to get kicked in the teeth by a bunch of garbage like him in the latter years of my life. He uses the words loosely and lightly! I'm smart enough to know that I would never trust anyone like him and the the rest of the OEA ilk to cover my back in a life and death situation! At least I've learned that much in life. I do know how to pick my friends and I do so judiciously.

-----

He used the words cowardly and gutless to try and flush me out. I'm smarter than that! Then he implies and calls into question my mental well-being. Again trying to flush me out and confront me. Still smarter than that! I seriously doubt that my family members would be assigned to protect the President of the United States, and other top world leaders, if there were any questions about the mental health of our family members; myself included!

We have undergone more background checks than all of the top officials at OEA and STRS combined. I doubt I would have been assigned to protect top dignitaries and elected officials in the past if there were questions with respect to my mental health and well being! Oh Well! I don't think I would be entrusted to carry a badge and gun if there were questions with respect to my mental well being!

I love tweaking him and listening to his crying! There are anonymous sources used by the government every day! There are anonymous sources quoted by the military, the media and members of Congress every day. Nobody calls them gutless and cowardly now do they? Only when they get kicked in the teeth and are stinging from it! Let him sweat! Let him squirm! I just tell the truth and as I previously said, "they can't handle the truth!"

I loved the part where he said "there is a new day at OEA." For whom? Nothing has changed at OEA and nothing is going to change at OEA as long as we have the same mental midgets with the same mindsets running things! This is why they have stepped up the attacks against Dennis and John. Reflect on the fact of all of the cheap shots they take at Dennis and John and then he calls me gutless and a coward.

Kathie Bracy/Bill Leibensperger dialogue, 12/19/07

From Kathie Bracy, December 19, 2007
Subject: Re: OEA: In the spirit of open communication

Hi Bill --

I don't know why my e-mails aren't getting through, either. I hit the Reply button each time.

As far as the anonymous communication, I agree that in many cases it is gutless and cowardly, but I know there are other reasons, too. Some people are too shy or scared to sign their names; obviously, this is not the case here. There is one other good reason: to protect innocent people. I know this person is not at all shy about signing his/her own name ordinarily, but where there is good reason to think the safety or well-being of others may be at risk, anonymity is the only responsible way to go.

A lot of issues have been laid out, and a lot of people would like to know your position on them, regardless of *who* brings them up, anonymous or not (remember -- we want to talk issues, not personalities). You do not need to sit idly by. You have a perfect opportunity to enlighten all of us, and I sincerely hope you will.

Best wishes to you and yours in the coming days --

Kathie Bracy

From Bill Leibensperger, December 19, 2007
Subject: Re: OEA: In the spirit of open communication
Molly and Kathie,

I do appreciate being kept in the loop. Kathie, for some reason your e-mail responses to me are not getting to my ohea address. I only see them when Molly forwards them to me on my aol account or on the blog. It appears that you have my address correct, so I'll check on this end to see why they are not coming through. It may be because Molly's address is blocked from OEA because of the spamming of a few years ago.

As I said before, I do truly try to understand the anger that I see in these letters, but it strikes me as so deep...beyond the issues themselves. As for the anonymous communication, I can't really deal with that. Anonymous communications are gutless and cowardly by their very nature. I can't imagine what real things this individual is afraid of. His/her letter contains so many factual errors and logical fallacies that I wouldn't know where to begin addressing them. Plus, as I said, I'm not really interested in a public written debate.

As you have probably noticed, I will address actual issues. It is a new day here at OEA, and we will not sit idly by when we or our members are attacked. The "hit and run" or "shoot arrows and hide" accusations are without merit. I am always available, as Molly well knows since we are in regular contact by email, and I speak confidently when I say that Pat and Jim are available as well. As a constiuent organization of STRS we have a right, and our members would say an obligation, to lobby on behalf of our members and make public statements that reflect their views. We will continue to do that. HCA will continue to do that, as well.

I continue to plea for honest communication through civil discourse. We can accomplish so much more when working together toward a common goal like HB315 (which, by the way, would not even exist without OEA) than picking on each other over perceived injustices of the past. I won't give up in trying to keep us all focused on what we can do rather than what we haven't.

I wish you all a most joyful holiday season and best wishes in the new year.

Sincerely,

Bill Leibensperger

Senate Joint Resolution 4 would merely earmark some tax sources for education

From: Bob Jones, December 19, 2007
(Also submitted by Conrad Ott)
Subject: Fw: Senate Joint Resolution 4 would merely earmark some tax sources for education

To all:
Thought you might like to read this. It speaks for itself.
RHJones, CORE

Sent: Monday, December 17, 2007
Subject: Fw: Senate Joint Resolution 4 would merely earmark some tax sources for education

From: Ohioeanda
To: ohioeanda@sbcglobal.net
Sent: Wednesday, December 12, 2007
Subject: Senate Joint Resolution 4 would merely earmark some tax sources for education

To: Superintendents, Principals and Treasurers & others
From: William L. Phillis
Re: Senate Joint Resolution 4 would merely earmark some tax sources for education
Date: December 12, 2007

Senate Joint Resolution 4 (SJR 4), introduced on December 4, proposes to amend the Ohio Constitution to require all lottery profits (to be used exclusively for primary and secondary education) and not less than a percentage of revenue from certain taxes to be devoted to funding primary, secondary and higher education as follows:

59.6% of the income tax
71.2% of the sales tax the percentage of revenue from any tax that, as of November 4, 2008, the general assembly has designed by law for distribution to school districts as reimbursed for elimination of the taxation of tangible personal property (CAT, 71.2% and Kilowatt-hour tax, 25.4%)

This amendment proposal would require three-fifths vote of each House to put it on the ballot.

This proposal does not:

• specify how the revenue raised would be divided between K-12 schools and higher education

• lock in any rates of taxation and thus guarantee any specific amount of money for education in the future

• prohibit the legislature from dropping an existing tax, creating a different tax source or altering the rates or scope of any existing tax (The legislature could trump the intent of the amendment by altering the tax structure)

• provide a process to determine the actual cost of a high quality education

• make a connection between the revenue raised and the actual cost of high quality educational opportunities for all

• guarantee every student high quality educational opportunities

This proposal is an attempt to merely earmark some revenue streams for public education.

This amendment does not compete with the school funding amendment crafted by the major statewide education organizations. The two proposals differ completely in that SJR 4 earmarks certain taxes for education and the statewide education organizations’ amendment establishes a process to identify, cost out and fund high quality educational opportunities for all students. The introduction of SJR 4 should serve to arouse a more vigorous effort to collect signatures for the school funding amendment.

The petition drive continues unabated.

Illinois: Pension crisis brings fears about health care

Pension crisis brings fears about health care

By Kate Clements
The News-Gazette, December 19, 2007

SPRINGFIELD – Illinois still has one of the most chronically underfunded state pension systems in the country, but a potentially bigger problem is looming: the health care bills for all those retirees.

According to a 50-state study released by Pew Charitable Trusts on Tuesday, Illinois' unfunded pension liability for state workers, judges, lawmakers, teachers and university employees was $41 billion in 2006, while its projected bill for retiree health care, dental and life insurance benefits was an estimated $48 billion for state workers alone.

"We produced this report because states' fiscal health relies in large part on their ability to wisely manage bills that are coming due, and this one is significant," said Susan Urahn, managing director of the Pew Center on the States.

For the first time, government accounting rules will require states to include estimated actuarial liability for nonpension benefits like health, dental and life insurance in their annual reports starting in 2008. But the analysis of Illinois' liability for those benefits is still being developed, and will not be ready until early next year. As a result, Pew used an estimate from the Civic Committee of the Commercial Club of Chicago in its report.

Susan Hofer, a spokeswoman for the governor's office of management and budget, said neither Pew nor the committee contacted the budget office.

"We think Illinois' liability is much less than the report suggests," she said. "Also, unlike pensions costs, employee health care costs are not guaranteed and are negotiable."

Illinois, like most states, has been providing health care and other nonpension retirement benefits on a pay-as-you-go basis. Those expenses will continue to grow each year, thanks to swiftly rising medical costs, longer life expectancies and increased numbers of retirees from the massive Baby Boomer generation, the Pew report said.

Setting aside enough money to fully fund all that care will not be cheap. According to the report, the median annual contribution needed to do so is about three times what states are currently paying.

Jon Bauman, executive director of Teachers Retirement System of Illinois, said the cost was "certainly a concern," but noted that the new accounting rule doesn't require that any particular amount of funding be set aside.

"It just requires estimating the liability, so that each state knows what their future obligation is going to be," he said. "Different states are dealing with the issue in different ways."

According to Pew, just six states are on track toward full funding of nonpension benefits within 30 years – Arizona, North Dakota, Ohio, Oregon, Utah and Wisconsin. California, Texas, New York, Florida and Illinois were among the more than two dozen states that had not put aside any money for those costs as of June 30, 2006.

Altogether, the Pew report estimated that the states owe a combined $381 billion for health care and other nonpension benefits for state employees, on top of whatever is owed to teachers and other public retirement system participants. Of that amount, 97 percent was unfunded as of the end of 2006. When combined with states' unfunded pension liability, the total owed is $2.73 trillion, according to the report.

"The longer states put off dealing with this bill, the harder it gets to pay," Urahn said.

Overall, states have enough invested to cover 85 percent of their regular pension liabilities, but funding levels vary dramatically from state to state. According to Pew, the pension systems in Oregon and Florida had more than 100 percent of what they needed as of the 2006 budget year, while 20 states were less than 80 percent funded. Illinois' ratio of pension assets to liabilities was a mere 60 percent at the end of the 2006 budget year, one of the worst in the country. By the close of the 2007 budget year on June 30, it was up to 62.6 percent funded, but the total unfunded liability was up from $41 billion to $42 billion.

After two years of reduced pension contributions, state Rep. Bill Black, R-Danville, said it was a good sign that this year's budget included the full recommended amount for the five state retirement systems. But he made no predictions about the future.

"I don't know whether we are going to address pension debt or health care debt," Black said, noting the ongoing gridlock in state government. "We just don't seem to focus on those things. At some point, when it becomes a crisis, they'll have to do it and it won't be easy."

To see the full report, go to www.pewtrusts.org.