Molly Janczyk re: HPA Proposal Changes for legislation

From Molly Janczyk, December 14, 2009
Subject: HPA Proposal Changes for legislation:

To verify these possible changes, you would have to speak with members of the HPA.

The OEA Representative Assembly met last week. As we know, OEA has NOT supported all the STRS Proposals. Changing some of the proposals relating to actives was seemingly discussed. Thus far, there is NO official release by HPA of any new consensus position. If the possible proposed changes are going to be brought forward, we would expect to see something public by the January STRS Board meeting as it has been said that legislation could be started in the beginning of the year. In any case, the bill will probably be altered many ways before it ever comes to a legislative vote as is the way of politics. To get anything through legislation will, no doubt, take the strong support and consensus of OEA, ORTA and OFT supporting the legislation as their opposition will make passing legislation difficult. Just reality as this is where the power and money and numbers exist. Thus far, it seems nothing more has been added or deleted regarding current retirees beyond the 2% COLA beginning in 2011.

'Possible' Proposal Changes:

1. Retirement Age:

Phase in 35 yrs of service for full retirement over next 10 yrs:

Needed:

-30 yrs until 8/2015
-31 yrs begin 7/2017
-32 yrs begin 7/2019
-33 yrs begin 7/2021
-34 yrs begin 7/2023
-35 yrs begin 8/2023 and beyond

2. FAS: Final Average Salary: Proposal Change: Asks legislation to give STRS authority to determine 3, 4, 5 years FAS depending on funding at the time.

3.COLA: 2011:

-2% for ALL current retirees -NEW retirees wait 36 months and until age 60 before receiving COLA

**Rationale: Delaying retirement and COLA benefit for future retirees helps pay for future retirees pensions and benefits as they will continue to pay into the system and delay withdrawing benefits and COLAS. Decreasing COLA for current retirees saves STRS money immediately.

**At this time, STRS is solvent for approximately 20 years. The changes for actives is to keep it solvent for decades beyond that to ensure pensions and benefits.

**The other areas have thus far remained the same:

STRS Proposals for : Increased Contributions, Defined Benefits and Formulas have no changes mentioned.

Molly J.