From Molly Janczyk, February 1, 2008
Subject: SB 190: Benefits: Retirees; Actives: 85% rule
Ques. arise re: HB 190 periodically. A revisit to SB 190 following Buck Consultants Research after 5 yrs.: 2005 Another report is not due until 2010
Steve, (Steve Buser: former Investment Appointee to the STRS Board by the State Treasurer) Copying you for accuracy.
(Molly Janczyk to Steve Buser)
Date: Tue, 24 Jan 2006
Subject: RE: 85% rule
SB 190 raised every retiree out there to 2.1% and then included in the SB 190 nearly $1 Billion dollars for enhancements for those retirees, more dollars were set aside to bring them up to 85% of their original purchasing power at retirement.
QUESTION: IS THAT A PERMANENT AMOUNT?
YES. And future COLAs will continue to increase the benefit, as is the case for younger retirees.
Does that mean that some of those older retirees are above 2.1% then?
YES. Of course, every retiree is above his or her 2.1% rule after their first COLA. SB 190 got every retire to at least 2.1% and then gave some a second bump if even the new amount had fallen too far behind inflation.
Your retiree example below earned $1000 at retirement. They were taken to 2.1% by SB 190 and still needed $200 to make it = 85% of their original buying power when they retired compared to today.
YES. If the new 2.1% rule had got them to or beyond 85%, there was no additional increase.
That additional $200 was factored in to SB 190 funds and so that retiree is now above the 2.1%.
Was that a permanent change for always? YES. And future COLAs will continue to increase the benefit for them, as for younger retirees.
That amount of $1700 is permanent for your example, CORRECT___YES___.
SB 190 did this type of scenario for every retiree out there, CORRECT____YES____?
Please respond yes or no and if no , why with the most elemental language.
Thank you for having the patience of JOB with me.
No problem as to patience. This has been a tricky issue for all of us. I am glad that SB 190 tried to do something positive and significant for all groups. However, the complexity of the changes made it hard to sort out everything.
If the above is true, then every retiree out there should knew they rec'd a substantial bump in '99 or 2000 and if they don't recall, verify it with STRS or compare your stubs.
YES. I will even ask STRS staff how hard or expensive it would be to include a summary of the changes in benefit for each retiree in one of the next STRS mailings. If it is too costly, I might vote against this, but if the cost is reasonable, I think it might help with understanding.
Steve Buser to Molly Janczyk, January 24, 2006
Subject: 85% rule
You might already have this example from an earlier email. If not, consider the case of a member who retired many years ago with initial retirement benefit of $1000 per month. Assume that in the years since the member retired, prices have doubled for most goods. That retiree would need twice as much money today, or $2000 per month, just to be in a position equivalent to when he or she retired. Unfortunately, STRS COLAs are relatively new and even when they have been granted, they have not always kept pace with inflation. So let's assume that the current benefit for the retired member is only $1500 per month. $1500 is only 75% of $2000. The retiree would need 85% of $2000, or $1700 per month, to get back to 85% of the original purchasing power of the benefit. Hence, under the 85% rule SB 190 would have increased the benefit by $200 in order to get the benefit from $1500 per month to $1700 per month.
Hope that helps.
At 10:41 AM 01/24/2006, you [Molly] wrote: I know it was addressed, I don't understand it. Could you give an ex. using an older retiree calculation getting them back to 85% and if it didn't gave them what extra amount?
Steve Buser to Molly Janczyk, January 24, 2006
Subject: Re: Steve Buser: SB 190: STRS BOARD: 35 Yr. Incentive plan
The 85% rule is addressed in prior emails. As for the question of 2.1% versus 2.2%, it is my understanding is that ALL members who retired before SB 190 took effect (not sure of the precise date) had their benefit recalculated using the 2.1% rule. Only those who retired after SB 190 took effect got the additional increase up to 2.2%. However, if the new rule of 2.1% for existing retirees did not get a retiree back to at least 85% of the amount he or she needed based on price increases since retirement, then SB 190 provided an additional increase, as discussed in earlier emails.
Given that SB 190 reduced some benefit gaps but did not provide full parity, it my hope that the board will be able to reconsider the issue of equity, along with differences in contribution rates that members have paid over time, to see if the over all pattern of changes to benefits that STRS have provided over time, including but not limited to SB 190, has been equitable across groups. However, to head off potential speculation, I do not know anyone who is thinking in terms of taking back benefits for anyone. I think the hope is that if we identify a group of members that are not get their fair share we can make some type of favorable adjustment - if and when we get the broader financial picture for STRS under better control.
At 11:08 PM 01/23/2006, [Molly] wrote:
1. What does the provision for older retirees increasing their benefit to at least 85% of original purchasing power mean?
2. How specifically did it help all retirees who retired '98 and earlier back to 70's, 80's and 90's ? Did it raise all to 2.1% and '99 and beyond to 2.2%?
Steve Buser to Molly Janczyk, January 23, 2006
Subject: Re: Steve Buser: SB190: STRS BOARD: 35 Yr. Incentive plan
I think you have done a pretty good job summarizing a highly complex issue. You might want to add a qualifier noting that, at the risk of muddying the water even further, there were couple of other enhancements to benefits that also added to the cost of SB 190 .
First, there was a provision for older retirees that increased their benefit to at least 85% of their original purchasing power. Note that when some older members retired there was not COLA and/or COLAs did not always keep pace with inflation. For actives, in addition to the specific rule for 35 years, SB 190 also increased the incremental rate from 2.2% per year to 2.5% for year 31, 2.6% for year 32, and so on. Of course, these incremental increase probably also deserve part of the credit for the changing pattern of retirements - along with increasing HC costs, as you mention. As a result, I am not sure if it is even possible to provide air tight precise answers, or even clear estimates, of the various component effects of SB 190.
One of the few conclusions I have heard that I regard as reasonably reliable is that when SB 190 was considered, STRS thought the net long term cost would be roughly $2.3 billion. That estimate appears to be holding up for SB 190 as a whole. STRS also thought that the amount of the total benefit would be shared roughly 50-50 by members who had already retired and members who had not yet retired (along with future teachers who had not even been hired yet). This split also appear to be at least close to what was expected.
With the benefit of hindsight, I think SB was too aggressive in total. If STRS had limited the increases to, say, half of the actual amount in SB 190, STRS would have been in a better position to weather the financial storm of 2000-01. Given that we cannot go back in time, I would prefer to try to increase investment returns, beyond the current target rate of 8%. In addition, rather than scale back benefits to any group, I would like to encourage staff to try to figure out ways of measuring the relative effects of things like SB 190 across various groups of members. If we can identify groups that got far less than there fair share of the $2.3 billion increase in benefits, or who are currently receiving far less than their fair share in terms of total pension benefit for any reason
(not necessarily SB 190), then I would favor making adjustments as needed to at least blunt the inequities. Based on my reading of your latter points below, I think you and I are in agreement on this point.
As for the specific quote you asked about, "I thought you were quoted as saying if the 35 yr incentive was to make money for STRS, actives would have to pay much more into system.", I do not recall saying it. Unfortunately, as you have not doubt noted, I tend to talk a lot. So who knows what I might have said. But if I did say it, I would not want to try to defend it. In fact, subject to various ambiguities, including your observations about HC premiums, I would still bet (although not very much money) that STRS is saving a modest amount from the incentive program. Yet "modest amount" is the key word. The absolute costs are large as are the absolute savings. But the difference, while difficult to measure with any precision, is likely to be small.
One way to think about the incentive program is to note that Social Security also has an incentive program. In fact, SS increases the pension benefit by 6 to 7% for every year a potential retiree delays retirement. Over a 5 year period, the incentive amounts to an increase of roughly 40% in the pension benefit! Yet SS still thinks it save more by not having to pay anything for the 5 years. Of course, the Feds might even be more confused than we are on this issue.
P.S. As an STRS member myself, and on behalf of other STRS members, I want to thank you for trying to sort this out for others and for your reporting efforts more generally.
At 12:22 PM 01/23/2006, [Molly] wrote: Dear Steve, Here is my attempt to clarify SB190 based on your email below and attendees present at the presentation on this Friday. Thank you for your patience in helping me understand this and for enduring my frustration on this matter. Any STRS Board Member: Please correct/add anything in error or missing.
1. SB 190 costs $2.3 Billion to implement. This included nearly $1 Billion for enhancements for the older retirees who retired on a formula of less than 2.1% by increasing their benefit formula up to 2.1%. For new retirees and actives , it increased their benefit formula to 2.2% rather than 2.1% with the basis being they paid more into the system. There is not parity for some who may have paid 9.3% and still receive the 2.1% as SB 190 passed in 2000 but was retroactive to 1999. For ex., Some who retired in the 90's probably paid 9.3% in contributions but receive the 2.1%.
The remaining cost of the bill went to the 35 yr. enhancement for actives. Had the bill never been implemented, STRS would receive the savings regardless and without the costs for those working for 35 yrs.
However, Buser is saying the bill has shown that more are waiting to retire due to the bill and it is based on those numbers how much the bill saves the system. The critical number is: THOSE WHO ARE WORKING LONGER BECAUSE OF SB190 and not because they would have anyway. To date, the study shows more are waiting to retire. This takes into account: salaries, actives paying into the system and not withdrawing pensions from it as well as STRS not paying for their HC.
The question is: Would they wait anyway because a wrench was thrown in since the passage of the bill being the soaring health care costs to retirees. Which is keeping actives in the system: Delay of paying retiree health costs and keeping their own less expensive health care or the 35 yr. enhancement. I think it is reasonable to assume BOTH.
The choice for healthy individuals is work 5 more yrs and receive better pensions to help offset HC costs or retire and go back to work with STRS HC costs. I would pick the first had it been available and I had known what was to come. But many of us did not know. Is it sour grapes or reality that we did not have this choice. For me, both. However, I do realize changes and improvements occur or we'd all be stuck back in the early ages of education. The ones who retired decades ago don't make the same pensions as newer retirees but made less and paid less into. This is not the problem for me. The only problem for me is: Does it help or hurt the system and is it equitable, NOT EQUAL, but equitable: if it helps, did it also help retirees, etc. If it helps, it helps all. If it hurts, it hurts all.
To date, the savings of $300 Million seem insignificant, however, since that is the number the former OEA dominated Board Members lavished on themselves including the palace, cars, gas, dinners, play, drinks, parties, luxury hotel rooms and trips, etc. This amount would not pay for 1 month of HC at $1.2 Million per day.
Buser does not feel the study gives a breakdown of the 35 yr enhancement as it has been mixed with other future savings and expenses and not precise to the 35 yr incentive.
2. Unfunded Liability: All areas of SB 190, including the enhancements for older retirees and newer retirees has cost $500 Million to date and will cost $500 Million to continue for the lifetime of those retirees who benefited. That affected the unfunded liability and then the increased benefits for 35 yr retirees affected the unfunded liability.
This bill was presented in a time a very low unfunded liability and high market gains as a way to give back to membership. Then the market fell and together with the costs of SB 190 as well as other areas the unfunded liability shot up. From other attendees at Friday's meeting and handouts:
If SB 190 HAD NEVER been implemented which included the enhancements to all retirees and incentive for actives, the unfunded liability would be 37.7 yrs. now.
If SB 190 were stopped AND THAT MEANS THE INCREASED FORMULA ENHANCEMENT FOR RETIREES UP TO 2.1% and 2.2% as well were reversed, the unfunded liability would drop to 39 yrs.
The entire bill was factored in.
The question was:
Does the 35 yr enhancement cost or save the system. It seems it earned $300,000 Million to date. Will it continue to earn or cost?
The answer is: It depends on who in the future would have worked for 35 yrs anyway with STRS receiving the benefits anyway and how many will go 35 yrs. strictly because of the incentive?
The study has no crystal ball and how can that be measured for the future as it tangles with high retirees HC costs.
Do we want yet another study and how could it be measured?
If it doesn't cost us, then ......we would be putting a price on trying to determine former board members motives and future STRS membership motivations. Is it worth it?
If STRS ever gets ahead again, retirees want compounded COLAS and 13th cks.
At $400 per ck for 100,000 retirees, 13th ck costs $40,000,000 annually.
Compounded COLAS x's 100,000 at $30,000 pension average = $900 for simple and then $27 addt'l for the next year. At $30 per retiree x's 100,000 = $3,000,000 for one year.
I thought you were quoted as saying if the 35 yr incentive was to make money for STRS , actives would have to pay much more into system. Is this what you said?
Of course, if contributions are increased, actives would pay much more into system and make this entire incentive more equitable and it seems they are willing.
I hope this is a fair summary and takes all factors into consideration.
COMMENTS AND CORRECTIONS WELCOME! WE WANT TO UNDERSTAND! I have no wish to forward anything but facts and statements based on facts.
Steve Buser to Molly Janczyk, January 22, 2006
Subject: Re: Damon: STRS BOARD::35 Yr. incentive plan: two questions
1. The 35 year rule save a lot of money for STRS ONLY for members who would otherwise retire early. For members who would work until 35 years even without the incentive, STRS would have gotten the savings without having to pay an incentive for it. Hence. for there is no gain, only cost. Based on the results for the first few years, it looks like members are delaying retirement in sufficient numbers for the savings from these members to exceed the costs for members who would have worked 35 years anyway without the incentive. As for confusion on this and other points, I am in the same boat as you. I was expecting a clearer answers. Unfortunately the actuary apparently interpreted the assignment differently than I did.
2. The effect on the unfunded liability is proportionate to the savings in #1). I.e. there would appear to be a net reduction, or improvement, in the unfunded liability as a result of the 35 year rule, as distinct from the total effect of SB 190 which was negative. Unfortunately the report did not isolate the effect of the 35 year rule, so I cannot even estimate the magnitude. But I assume it is relatively small given that the total effect of SB 190 is negative on the unfunded liability and the funding period.
3. Yes. SB 190 actually provided older retirees with a number of benefits. It retroactively increased the benefit formula for anyone who had retired based on a rule of less than 2.1% times years of service times FAS. However, as you note, for new retirees the rule is 2.2% rather than 2.1%. So SB 190 did not establish parity. In addition, SB 190 increased the benefit for any retiree whose benefit had fallen to less than 85% of its original purchasing power by virtue of the absence of COLAs and limits on COLAs for a number of years. Thus, while SB 190 narrowed some gaps in the benefit structure for older versus younger retirees, it did not eliminate gaps. On the other hand, younger retirees and current actives contribute to STRS at higher rates. Hence, some will say that at least part of the difference in benefit structure is appropriate based on differences in contributions.
4. As noted above, the gain from the 35 year rule is significant ONLY for those who would otherwise have retired earlier. Given the offsetting effect of losses from members who would have worked 35 years anyway, I do not think the net effect would be "dramatic". Nevertheless, the net effect is favorable rather than unfavorable as many have assumed.
5. With respect to 13th checks, I will have to double check. However, I think the cumulative effect of the various rounds of 13th checks amounted to $100s of millions. So I'm not sure I would agree that the effect has been small. - That does not mean 13th checks are bad. The checks help members in the amount of the payments. I am all for such help as long as the effort does not place at greater risk the pensions of actives, or the funding of HC. Unfortunately, that is why I cannot support 13th checks currently.
6. As for the other items on your list, I agree that there are many things that were not considered in the actuarial report. I too would like to see more careful and more detailed analysis of such issues. I think the Board and Damon agree that we need to develop an in house capability for analyzing such issues. We currently use an external actuary who is not based in Columbus. As a result, communication appears to be lacking.
At 08:09 PM 01/22/2006, [Molly] wrote: Dear Steve, I am confused. This is general and I simply want to know:
1. Does the 35 yr incentive save us money or does it cost us money? It sounds like you are saying it saves tons.
2. Has the 35 yr incentive affected the unfunded liability? What is the effect?
I realize retirees and actives benefited from the raise in % per yr to 2.2% That was equitable IF IT AFFECTED ALL RETIREES? Did older retirees get an increase?
This sounds like it did in your explanation.
3. Did every retiree get an increase to 2.2% or just those retroactive to '99 which was my impression? I retired in '99 and was to get 2.1% but got 2.2% instead and a ck to make up for the retro part. What did older retirees get?
4. ARE YOU SAYING THE SYSTEM GAINS DRAMATICALLY FROM THE ENHANCEMENT ALONE?What impact did and will the 35 yr enhancement have on STRS? Please do not tell me the study did not find out because that is beyond the pale! That is the question we wanted answered. How many STRS board members and HOW MANY Consultants does it take to get a simple answer?
Do we gain or do we lose from the 35 yr. incentive ONLY! I know the retiree part to bring up retirees cost just under the figure you stated. WHO ALL BENEFITTED FROM THAT?
13th cks. were a few hundred a year; a grain of sand, now removed, compared to the 35yr incentive far too late for retirees.
WHAT DO RETIREES GET? No compounded COLA No tiny 13th cks No affordable HC IF not single No consideration of all the items we wished looked at last 4 yrs:
-20 yr minimum retirement for ALL NEW RETIREES ; 30 yrs. full retirement
-NO HC for those under 20 yrs.; subsidy only for NEW RETIREES with 20 yrs. NEW ONLY. Those currently with 15 or more to stay as is.
-Sliding scale of ALL costs beginning at 20 yrs. pays most for copays, premiums, RX's, out of pockets or to least for career teachers of 30 yrs or more.
Name one thing that has been done ONLY FOR RETIREES until this year keeping increases at 3% and RX's a bit less facing catastrophic care only in 2007.
I want some definitive answers. The answers are all over the place with attendees interpreting the info. Give it to us straight and easy.
It does or doesn't help the system.
Steve Buser to Molly Janczyk, January 22, 2006
Subject: Re: Damon: STRS BOARD::35 Yr. incentive plan: two questions
I am not Damon, but here is my take on the questions below regarding the effects of the 35 year incentive rule.
First, as a general response, I think that people who listened to the actuarial report on the effects of SB 190 might have differing impressions of the specific effects of the 35 year incentive, per se. In large part this ambiguity is due to the fact that the actuarial report did not focus on the 35 year incentive but instead examined the combined effect of all changes that were made in SB 190.
For example, SB 190 included a retroactive increase in pension benefit for anyone who had retired prior to the bill's enactment and had been paid using a benefit formula less than 2.1 times years of service. This change had nothing to do with the new 35 year rule. Yet, as a result of this aspect of SB 190, the actuary estimates that STRS has already paid out over $500 million in additional retirement benefits to members who had retired prior to SB 190. The amount of enhanced benefits is estimated to approximately double, to roughly $1 billion, over the remaining lives of those receiving the enhanced benefit.
As for the 35 year rule per se, that specific part of SB 190 increased the retirement benefit from 77% of FAS (2.2% times 35 years) to 88% of FAS for anyone retiring after SB 190 with 35 years of service. There is clearly a cost to the STRS system for anyone who would have worked for 35 years even without the incentive. However, there is a substantial savings for STRS for any member who would have retired with only 30 years without the incentive, but now works until 35 years. Note that for 30 years of service, the retirement benefit would have been 66% of FAS (2.2% times 30 years). Thus, if the member continues to work rather than retire and draw a benefit, STRS saves the amount of the potential pension for
5 additional years. If we assume that potential salary increases and retirement COLAs have roughly offsetting effects, the up front savings for STRS is 330% of FAS (5 years times 66% per year). Thus, even if we ignore the fact that STRS would earn additional money by investing the up front savings, the principle alone covers 30 years worth of incentive payments (330% divided by 11%, which is the difference between a 35 year benefit of 88% versus a 35 year benefit of 77% of FAS).
The net effect of the 35 year incentive program (question #1 below) thus depends on the number of members who will retire with 35 years now but who would have retired with fewer years without the incentive. The actuary reported that STRS experience to date indicates that the 35 year incentive appears to have had a significant impact on the pattern of retirements. The estimate of the amount saved from deferred retirements in excess of increased payments for retirees with 35 years is nearly $300 million thus far. Unfortunately, the projection of future amounts appears to have been mixed with other types of future savings and future expenses associated with SB 190. Accordingly I do not think we have a precise estimate of the complete net effect of the 35 year incentive change, per se.
It is my impression that the specific results you have identified for the unfunded liability and for the funding period combine all aspects of SB 190, including the increase in payments for those who retired prior to SB 190. Clearly, the unfunded liability would be smaller and the funding period would be shorter, if SB 190 had not provided retroactive increases in benefits for existing retirees and had not increased benefits for future retirees in addition to the specific 35 year incentive. However, at the time SB 190 was enacted, the financial condition of STRS was much stronger, and benefit enhancements were regarded as a form of "dividends" to members, as were 13th checks for existing retirees.
With the benefit of hindsight, we now know the financial condition was more fragile than STRS and legislators had been assuming. In addition, I think many now wonder if the general pattern of benefit enhancements was appropriate. I.e. the dividend might have been too large for some groups and too small for others. However, if and when we are lucky enough to find ourselves in a similar situation - much lower unfunded liability and a funding period that is small (much lower than 30 years) and shrinking fast, I suspect that STRS might again turn to the legislature and ask permission to offer a dividend to STRS members. My hope is that by then STRS will have a better way to measure the impact of potential changes on different groups of members. To the extent we can identify historical inequities, I hope we can address them. In addition, once the issue of past inequities is properly addressed, I hope we can find ways of avoiding similar inequities in any future enhancements of benefits.
I regret that these observations do not directly answer your specific questions. Unfortunately I am not sure if STRS has more precise answers to provide at this point.
At 12:46 PM 01/22/2006, [Molly] wrote: Thank you, Barb.
DAMON: STRS BOARD: I too wish a compete and clear summary of the report to support or correct any info rec'd from attendees for a full and specific message to be forwarded to membership.
PLEASE ANSWER ALL ITEMS:
Taking into account contributions into the system by those working 35 yrs and actives not withdrawing for 5 add'tl years minus their salaries, does this plan:
1. MONETARILY: -cost the system; if so, how much -earn for the system; if so, how much -is is a wash or neither costs nor earns
2. AFFECT UNFUNDED LIABILITY: -detrimentally and by how many years; for ex., if stopped, my understanding is the unfunded liability would immediately go down to
39 yrs. and if never implemented the unfunded liability would currently be 37 years roughly.
-with rate of return pays for the plan: completely, partially ________%, not at all.
3. Summary: The 35 yr. incentive effect on the pension system is________.
4. OEA would like us to believe that seeking legislation to increase contributions from actives will be DEAD, KILLED (according to Billirakis to CORE and Bill L. in his speech on Thurs to the Board, 1/19/06) if the 35 yr enhancement is changed.
DOES THE STRS BOARD AND ACTIVE MEMBERSHIP AS A WHOLE BELIEVE THIS ? I find it difficult to accept that actives would hurt themselves in retaliation for the STRS doing what is necessary to help all membership; their duty by law: ORC:3307.15.
These are 2 different issues entirely. I am not going to try to stop legislation which would help me because:
* the former OEA dominated STRS Board hurt me by increasing my HC costs to an unaffordable level as a result of soaring costs affecting the system, market drops and the former OEA ACTIVE MEMBERS on the OEA dominated board riding a high market trend and not protecting membership long ago by fighting for secure health care benefits for retirees.
*This former OEA dominated STRS Board knew health care costs would be prohibitive and did nothing to save it for us. STRS and OEA decided in the early 90's NOT to guarantee HC for membership when a legislative proposal was discussed back then and arguing LSD's wouldn't support it. NOW, OEA says they CAN muster support and be prepared for opponents.
*The former OEA dominated Board DID NOT plan for a rainy day and as most of them personally said to me: "WE WERE RIDING THE MARKET AND THE MONEY SPENT (misused , skimmed funds for perks) WOULDN'T PAY FOR HC" True. But, instead of partying, they COULD have begun to increase premiums back in the 90's in a manner that would have offset the untenable premiums today which have destroyed many retirees. Instead, they rode the wave, rewarded themselves as some of them said they 'deserved such (perks) for all the work they did.' THEY could have worked diligently to find a stream of revenue, NOT relied solely on the market and planned long term and OPERS has done.
*The former OEA dominated Board created this 35 yr enhancement which rewarded THEMSELVES with little thought of long term effects. They are gone except for Mike Billirakis and enjoying this additional perk caring little about current actives facing a pension plan unable to pay for this incentive long term or that if it is continued, caring little about the actives who may have to pay much more than they do to continue this perk.
Some board members wondered WHY the former board created such a slanted, 2 class system. FOR THEMSELVES WAS THE ANSWER to them.
If CURRENT ACTIVES ARE FOOLED BY THE RHETORIC THAT THIS SCRUTINY WOULD NEVER HAPPEN IF OEA WAS DOMINATING THE STRS BOARD: THINK AGAIN!
YOUR PENSION SYSTEM MUST BE SECURE FOR ALL RETIREES AND IT WILL NOT BE IF A PLAN IS IN PLACE WHICH DRAINS IT EITHER MONETARILY OR ITS UNFUNDED LIABILITY OR BOTH!
The problems the former OEA dominated Board brought upon us with short sighted thinking make it mandatory to examine all areas of past practices and no matter who was currently on this board, this would still have been examined for its long tem effects.
It is time to be responsible and consider all retirees, current and the generations to come. WHAT IS IN THE BEST INTEREST OF ALL?
It matters not to me if the plan is saved or eliminated. It matters only how it affects the system for everyone, not just those who will benefit NOW or in a few years BUT THOSE YOUNG EDUCATORS TO COME! WILL IT ENHANCE AND HELP PROTECT THEIR FUTURE RETIREMENT OR CAUSE IT STRAIN?
THAT is the question, the former seemingly short term minded, self serving OEA BOARD MEMBERS DID NOT GUARANTEE! THEY GUARANTEED MORE BENEFITS FOR THEMSELVES.
It is impossible to continue a plan if it benefits only one group of retirees. The law states all membership must be protected. If it rewards one group without harm to others, that is different.
My personal thinking is that a fair and equitable system rewards according to steps, years of service as Soc. Sec. does. For each add'tl year, addit'l % of salary. The 35 yr enhancement does not show that actives would not stay that long if able due to increased HC costs for retirees vs. a better HC plan and costs for actives or actives simply wishing to work longer.
The above is my opinion based on 4 years involvement in STRS matters.
Barbara Garwood to Damon Asbury, January 22, 2006
Subject: two questions
Several months have passed since we have communicated, but I am now back to remind you about a commitment you made to me some months ago. Also, I have a grievous concern and would appreciate your responding to a question on a new topic.
First, let me raise the issue we have discussed in the past. STRS adopted a plan some time ago. It was the plan to raise the percentage of money a retiree would receive if he/she worked 35 years or longer. You told me you would report the results of a study about whether that strategy is saving STRS money. The report was presented to the STRS Board on 1/20. Will you forward the information to me as promised? I would appreciate your summary of the report as well as a full copy of the report sent to me by U.S. mail. My home address is: [xxx].
Second, The STRS Board members recently voted on an item assuming that the full facts were presented to them. However, the minutes indicated that information pertinent to the item were NOT included. That is either deceitful and unethical or sheer incompetence. Any agenda item must presented thoroughly, completely, and impartially. The Board members can then debate the item with full knowledge.
My question, Damon, is why you did not clarify to the Board members that some information was missing before the vote? You are the Executive Director and are intimately involved with setting the agenda AND preparing the paperwork to explain an agenda item. If there is a contract to be considered, you are the responsible party for presenting the FULL contract to the Board members. Again, why did you not explain the agenda item fully at the Board meeting? Why did the Secretary have information to include in the minutes that the Board members did not hear?
I look forward to your response on these two items. I thank you, as always, for your consideration and quick reply.
Barbara Garwood, Ph.D.