Subject: Collective Embarrassment - An OPERS LE (law enforcement) retiree says Laura ia "blowing smoke."
Date: Thu, 6 Aug 2009 13:29:28 -0700
Sent: Thursday, August 06, 2009 10:07 AM
From: John CurrySent: Thursday, August 06, 2009 1:50 AMSubject: Fw: Collective Embarrassment----- Original Message -----From: Dennis LeoneTo John Curry and Sharon Dyke
Sent: Wednesday, August 05, 2009 7:41 PMSubject: Collective Embarrassment
Yes, this is the company-line STRS response to everyone who expresses concern about the COLA. It is rather amazing to read the next-to-the-last paragraph about the concern that STRS says it now has for the future, given that I repeatedly (and publicly) begged the board and the staff last September, October, November, December and January to stop implying to the STRS membership that everything was fine and that pensions were secure. My pleas were ignored, then the bubble burst in February – after we had lost $30 billion in assets (which was 40% of everything STRS has). It was plainly naïve and stupid that the staff and my fellow board members were unable to see how bad things were getting and what a public relations nightmare the staff bonus checks were becoming. They really thought they knew better. They fought against suspending the bonus checks and they fought freezing salaries, because – the majority said – we need to attract the “best and the brightest” and we need to provide “an incentive for staff to perform at the highest level.” While bonuses finally were suspended and while wages were finally frozen (only after much ugliness), staff still resists having a hiring freeze, there still is no board support for having STRS staff members pay more for THEIR health insurance, and the board even rejected my motion to place a moratorium on board member out-of-state travel. The whole matter is rather sad. Collectively, OEA, OFT, and ORTA have been an embarrassment on STRS issues. They really haven’t helped one bit in these issues. They’d rather look the other way and not make waves. Ultimately, retirees lose.
The board members will be one big happy family in the months ahead, patting each other on the back, with little dissension. Board members will smile at each other and express how nice it is work collaboratively and without friction. There will be a euphoric high for all. OEA will be happy, OFT will be happy, ORTA will be happy, and the STRS staff will be happy. CORE and knowledgeable STRS members will be unhappy. As was the case for Herb Dyer, the board will become a rubber stamp for the executive director. Board members will not be suspicious of staff recommendations, and probing questions will no longer be asked. In part, this will be because – due to the board members’ lack of experience in management and governance – they really don’t know what questions to ask or what to be suspicious about. On multiple occasions in the immediate past, I have warned executive director Mike Nehf about concluding – in the future – that the likes of Myers, Ramser, and Meuser have the pulse of the STRS membership. They are out-of-touch with the membership and with reality. It is a scary situation, very similar to when we had the regime of Hazel Sidaway, Jack Chapman, and Eugene Norris running the board. OEA is “in charge” once again.
STRS Retiree Board Member
From John Curry
Sent: Thursday, August 06, 2009 12:13 AM
To: Sharon Dyke
Subject: Re: Response to E-Mail
This is a new one on me. I am not sure that this is a form letter. I have copied Dennis and Dave on this one.
----- Original Message -----
From Sharon Dyke
To: John Curry
Sent: Wednesday, August 05, 2009 5:35 PM
Subject: Fw: Response to E-Mail
Is this the same letter that everyone gets when they contact Laura Ecklar.
----- Original Message -----
From: Ecklar, Laura
Sent: Wednesday, August 05, 2009 4:11 PM
Subject: Response to E-Mail
Dear Ms. Dyke,
Our executive director, Michael Nehf, has asked that I respond to your recent e-mail regarding the COLA. We understand the concern you and your husband have about the future of the COLA and appreciate you expressing your position with us. Please note that in the board’s discussions to date, the complete elimination of the COLA has not been discussed; only a reduction in it and/or a delayed start date (e.g., begin COLA payments at age 65).
As you have probably read in our STRS Ohio communications to members, the Retirement Board faces a significant challenge. Its focus is on strengthening the solvency of the pension fund in a reasonable amount of time, while also allowing additional employer contributions to go to the Health Care Stabilization Fund and extend the life of the STRS Ohio Health Care Program for retired and disabled teachers.
The Retirement Board is reviewing a number of options affecting future pension plan design and/or contributions. STRS Ohio, along with pension plans around the country, has been severely impacted by the historic downturn in the markets and the accompanying recession. But before the economic downturn, STRS Ohio was already being impacted by other economic and demographic factors. For example, while the life expectancy of STRS Ohio members has increased over time, age and service requirements have not changed since 1976, resulting in pension benefits being paid for longer periods of time. Additionally, there has been steady growth in the benefit formula (including the enhanced 35-year benefit) over the years. Finally, improvements to already granted retiree benefits, such as ad hoc increases to various groups of retirees in 1984, 1988, 1990, 1997 and 1999, as well as supplemental payments (often called 13th checks) from 1980 through 2000, have increased the system’s liabilities over time.
Looking long term, the board knows that the reduced level of investment assets, coupled with future expected investment earnings and current contributions levels, will result in a funding shortfall. Unless changes are made, STRS Ohio will eventually be unable to pay members’ projected benefits.
In looking at its options, the board has said “everything is on the table.” Changes under consideration that would impact current and future teachers include:
• Increasing contributions;
• Instituting a minimum retirement age of 60;
• Increasing the number of years used to calculate final average salary to five from three;
• Changing the formula for calculating pensions that has the enhanced benefit for 35 years of service; and
• Changing the COLA.
A change to the COLA would also affect current retirees; however, a change in the COLA going forward has a much greater monetary impact on future retirees than current retirees because current retirees have already been receiving an annual COLA throughout retirement. Those increases would not be taken away. A change in the COLA would affect only future COLA payments.
STRS Ohio staff has been presenting sample scenarios to the board at its monthly meetings that are designed to give some sense of the cumulative effect various combinations of benefit and contribution changes can have on reducing the liabilities of the pension fund and also possibly allow additional contributions to go toward the health care fund.
Please understand that the board and STRS Ohio staff know there are no easy solutions to the funding challenge STRS Ohio faces. For probably the first time in its 89-year history, STRS Ohio is talking about reducing benefits. Future retirees could end up paying more in contributions for a longer period of time for a smaller pension benefit; current retirees’ pensions won’t change, but future COLAs could be reduced. However, if no changes are made, there is a very real probability that there will be no defined benefit pension plan for Ohio’s public educators within 30 years.
We will continue to share the board’s discussions with our members via our newsletters, e-mail news service and Web site. In addition, once future changes are more defined, STRS Ohio will be holding meetings around the state to provide additional information to active and retired educators. Again, we appreciate you sharing your position with us; it will be shared with the board.
Director, Communication Services