Buck Consultants and SB 190
From Molly Janczyk, February 1, 2008
Subject: Buck: SB 190
Buck did a 5 yr research of SB 190 in 2005. It has not been 5 yrs since then when a new report is due, I believe. A new consulting firm would be directed to do one if one is to be done.
I am not stating a position just what I recall. I do a thorough ques. and ans. re: the report down to yes or no ques. and ans. which I also sent out just now.
According to the report and STRS and Stephen Buser who ordered the research:
ALL: Both actives and ALL retirees benefited from the bill pretty equitably in dollars spent.
Retirees benefited by upping the percent of FAS from 2.1% to 2.2% retro to '99. The older retirees rec'd a increase in their pensions to meet 85% of inflation. (The wording may not be exact on that but they got an increase to meet inflation).
The 35 yr rule became an incentive for actives and it was found thus far (2005) to have saved STRS money by keeping educators in active status longer and not withdrawing pensions but paying into the system. Also, if actives worked for 35 yrs. they were closer to Medicare with STRS not fully responsible for their HC in retirement as many years cutting expenses to STRS.
The unfunded liability was upped due to this bill at the time but has now dropped below 30 yrs ago again. Unfunded liability was examined if the bill in total was eliminated which would have plunged the liability in 2005 back down close to 30 yrs; if only the retiree portion was eliminated and if only the active 35 yr. rule was eliminated. Both the latter scenarios did not drop liability in what was considered significant as either portion: for the retiree enhancement or the active enhancement were basically equitable within a range.
It was determined that the bill did not cost STRS and indeed saved money. The savings were not overly significant as it had only been a bill for 5 yrs and a new study in 2010 would be more significant.
All agreed at the time (Board members) that it would not be fair to anyone to eliminate one part or the other: retiree enhancements or active enhancements because one group would be targeted and not the other who also rec'd benefit. My enhancement was = to about $146 per month and I sure wouldn't want to lose it. To target only one group would certainly cause the other grp. to be targeted as well.
It is a choice to work 35 yrs. It is a choice most retirees could not make due to being retired before the bill. Just as salaries have skyrocketed since my active days, so due benefits change to entice quality educators in a more expensive world with families to support. Is it fair? When I started working I made $6900 annually. Now, is much different. The world changes, salaries change, perks are added. I wanted to be part of the '98 buyout but missed it by one year. After the fact, I was included in a lifetime benefit increase of 0.1% to my pension.
ALL careers increase perks and salaries , etc. Salaries soar, incentives to stay increase. I think that is life. Others find it grossly unfair.
To change SB 190 in totality or to target one grp. is unfair to me and would cost me either way. Did I benefit as much as a 35 yr. career educator now does? NO! Would we have stayed if we had known of the 35 yr. rule? Of course, many of us would. Opportunity missed due to a changing policy. That will always happen and today's benefactors will feel the same about tomorrow's changes and salary increases missed by them.
I am copying STRS, OEA, Buser for accuracy.
From Nancy Hamant, February 1, 2008
CORE members have consistently requested that actuarial data be run and provided regarding the impact of SB 190 that approved of the 35 year -- 88% calculation of pension benefits for those retiring after 1999. It is unconscionable that Buck Associates did not include this data! Why was it not calculated and included in the presentation? How can the Board make any decisions without this important piece of information? It is as if this is "highly secret" -- and to be withheld from the membership!
Nancy Hamant
Subject: Buck: SB 190
Buck did a 5 yr research of SB 190 in 2005. It has not been 5 yrs since then when a new report is due, I believe. A new consulting firm would be directed to do one if one is to be done.
I am not stating a position just what I recall. I do a thorough ques. and ans. re: the report down to yes or no ques. and ans. which I also sent out just now.
According to the report and STRS and Stephen Buser who ordered the research:
ALL: Both actives and ALL retirees benefited from the bill pretty equitably in dollars spent.
Retirees benefited by upping the percent of FAS from 2.1% to 2.2% retro to '99. The older retirees rec'd a increase in their pensions to meet 85% of inflation. (The wording may not be exact on that but they got an increase to meet inflation).
The 35 yr rule became an incentive for actives and it was found thus far (2005) to have saved STRS money by keeping educators in active status longer and not withdrawing pensions but paying into the system. Also, if actives worked for 35 yrs. they were closer to Medicare with STRS not fully responsible for their HC in retirement as many years cutting expenses to STRS.
The unfunded liability was upped due to this bill at the time but has now dropped below 30 yrs ago again. Unfunded liability was examined if the bill in total was eliminated which would have plunged the liability in 2005 back down close to 30 yrs; if only the retiree portion was eliminated and if only the active 35 yr. rule was eliminated. Both the latter scenarios did not drop liability in what was considered significant as either portion: for the retiree enhancement or the active enhancement were basically equitable within a range.
It was determined that the bill did not cost STRS and indeed saved money. The savings were not overly significant as it had only been a bill for 5 yrs and a new study in 2010 would be more significant.
All agreed at the time (Board members) that it would not be fair to anyone to eliminate one part or the other: retiree enhancements or active enhancements because one group would be targeted and not the other who also rec'd benefit. My enhancement was = to about $146 per month and I sure wouldn't want to lose it. To target only one group would certainly cause the other grp. to be targeted as well.
It is a choice to work 35 yrs. It is a choice most retirees could not make due to being retired before the bill. Just as salaries have skyrocketed since my active days, so due benefits change to entice quality educators in a more expensive world with families to support. Is it fair? When I started working I made $6900 annually. Now, is much different. The world changes, salaries change, perks are added. I wanted to be part of the '98 buyout but missed it by one year. After the fact, I was included in a lifetime benefit increase of 0.1% to my pension.
ALL careers increase perks and salaries , etc. Salaries soar, incentives to stay increase. I think that is life. Others find it grossly unfair.
To change SB 190 in totality or to target one grp. is unfair to me and would cost me either way. Did I benefit as much as a 35 yr. career educator now does? NO! Would we have stayed if we had known of the 35 yr. rule? Of course, many of us would. Opportunity missed due to a changing policy. That will always happen and today's benefactors will feel the same about tomorrow's changes and salary increases missed by them.
I am copying STRS, OEA, Buser for accuracy.
From Nancy Hamant, February 1, 2008
CORE members have consistently requested that actuarial data be run and provided regarding the impact of SB 190 that approved of the 35 year -- 88% calculation of pension benefits for those retiring after 1999. It is unconscionable that Buck Associates did not include this data! Why was it not calculated and included in the presentation? How can the Board make any decisions without this important piece of information? It is as if this is "highly secret" -- and to be withheld from the membership!
Nancy Hamant
posted by Kathie Bracy at 3:25 PM
<< Home