STRS ASSET ALLOCATION: Stocks v Bonds ???

From Mario Iacone, May 30, 2009

Recent research, last week or so, by Rob Arnott, has shown that Bonds have outperformed Stocks in the last 40 Years. This has caused quite a stir on Wall Street. Rob Arnott’s research has been widely discussed on financial media outlets such as CNBC, Bloomberg, Barron’s, Marketwatch, and Barron’s. Use GOOGLE, type Rob Arnott to read and view all the discussion.

STRS MEMBERS should urge STRS Investment Department to research and consider increasing their percentage of Treasury and government bond assets as one means of reducing the effect of huge short term stock market losses on our pension fund.

Stocks Losing the Long Run to Bonds - WSJ.com:

"Two brutal bear-markets for stocks within a decade and a stunning bull run for government bonds is challenging the gospel that stocks will always beat bonds if investors just hold on long enough.

Now, Rob Arnott, a veteran financial analyst and market pundit, has lobbed the academic version of a Molotov cocktail at one of the most sacred tenets of investing....

'For the long-term investor, stocks are supposed to add 5% a year over bonds. They don't,' Arnott, founder of investment consultants Research Affiliates and former editor of the Financial Analysts Journal, wrote in a paper published in the latest Journal of Indexes.

'Indeed,' Arnott contended, 'for 10 years, 20 years, even 40 years, ordinary long-term Treasury bonds have outpaced the broad stock market.'

and later:

"Through the end of April, the 10-year annualized return on the S&P 500 was negative 2.5%, according to Standard & Poor's.

Meanwhile, an index fund tracking long-term U.S. Treasury bonds, Vanguard Long-Term Treasury Fund, gained 7.2% annualized over the same period.

"People fret about our 'lost decade' for stocks, with good reason, but they underestimate the carnage," Arnott wrote.

Arnott's research shows that starting at any point from 1969 through the end of 2008, an investor in 20-year Treasurys who continually rolled over into the nearest bond and reinvested the income would have come out ahead of the S&P 500."

STRS Flashback - 5 years ago TODAY - yes, they did sue to get their bonuses back!

From John Curry, May 29, 2009

Five STRS employees sue to get back their bonuses

Canton Repository, May 29, 2004
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — Five employees have sued the State Teachers Retirement System seeking the bonuses they were denied by the pension board last week.

The employees filed the suit in Franklin County Common Pleas Court late Friday asking for class-action status for 268 noninvestment staff eligible for the $1.8 million in bonuses ranging from $416 to $46,574.

The documents filed by Columbus attorney Michael R. Szolosi Sr. appear to ignore Cassandra Hill, a teacher in the STRS Day Care Center whose bonus was to be $174, even though she appears in the appendix filed with the lawsuit. In fact, the appendix lists investment staff and the bonuses they received even though they are not a party to the suit.

Included among the 268 employees are two deputy executive directors, Robert A. Slater, with a bonus worth $46,573, and Sandra L. Knoesel, $43,324, and the board’s executive assistant, Eileen Boles, $6,427.

Repeated attempts to reach retirement system spokeswoman Laura Ecklar for comment about whether she and others would join the suit were not returned. Her bonus was listed at $15,204.

The suit asks for an unspecified amount of punitive damages and attorney fees. The suit seeks temporary and permanent injunctions to prevent the retirement system from using the money set aside for the bonuses for other purposes.

Reached in Chicago, Executive Director Damon Asbury said he knew some employees were talking about filing a lawsuit.

“This was not unexpected,” he said. “We will turn it over to the attorney general to look at and advise us on our next step.”

Kim Norris, a spokeswoman for Attorney General Jim Petro, said the case “is winnable because of the financial condition of the funds” at the time the bonus plan was in effect.

The bonuses were to be awarded to noninvestment employees for work done in the 2002-03 fiscal year. In the aftermath of media reports about questionable spending at the retirement system, the bonuses were suspended last year. The retirement system board voted 5-4 on May 20 not to pay the bonuses to noninvestment employees and unanimously terminated the program. Bonuses were awarded to investment staff, however.

At the meeting, Asbury and Assistant Attorney General John E. Patterson, who is the board’s attorney, recommended that the bonuses be paid. Both predicted a lawsuit would be filed and that the retirement system would lose if the bonuses were not paid.

Petro, however, instructed his representative on the board to vote against the bonus plan because he said it wasn’t in the best interest of the pension system.

The employees bringing the suit are Thomas P. Scott of Mount Vernon, Marvin L. Moore of Columbus, Donald E. Van Loon Jr. of Delaware, Dwayne T. Lane of Canal Winchester and Carmen Fenton of West Jefferson.

Scott, who works in the information technology section at the retirement system according to Asbury, has an annual salary of $98,310. He was scheduled to receive a $15,729 bonus.

The annual salary, job and bonus of the other four are: Moore, a retired computer specialist, $60,560 and $5,632; Van Loon, Web developer, $81,610 and $12,155; Lane, Web developer, $79,420 and $7,433; and Fenton, tax coordinator, $52,150 and $2,033.

The suit accuses the board of acting arbitrarily and in bad faith by giving bonuses to some employees and not others when many of those receiving the money had similar jobs to those who did not. It also said lack of the bonus will affect employee retirement benefits, which are based on the average of the final three years of pay.

The suit also accuses the system and board of arbitrarily setting a lower figure for calculating how much the bonuses should be. The maximum bonus was set at 80 percent instead of 100 percent. The plaintiffs said the retirement system broke its contract with employees because a performance-based incentive plan was in place in 2002-03, which was to be paid in September 2003.

STRS FLASHBACK - 5 years ago TODAY.....was it really about greed?

From John Curry, May 28, 2009

"Here’s what employees ought to do. If they really are dedicated to STRS and not driven by greed, prove it. Do they want the system to escape the scandalous morass of the last year and move forward? Stipulate in their lawsuit that if they win or settle, all the money received — the bonuses, attorney fees and punitive damages — goes into the STRS Health Stabilization Fund for retirees. If employees want to show they deserve the bonuses, then the money shouldn’t matter. Why punish the employer they supposedly love just to prove a point? Or is it really about greed?"

Dr. Paul Kostyu (investigative reporter, Canton Repository)

Note from John...tomorrow, in a 2004 Canton Repository follow-up article, you will find out if they sued or not. Any predictions?

STRS employees should sue

Canton Repository, May 28, 2004
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS -- The noninvestment employees of the State Teachers Retirement System should sue the pension fund. Doing so would tell us something about them.

Last week, the pension board rejected paying bonuses to 268 employees despite the recommendations of Executive Director Damon Asbury and Assistant Attorney General John E. Patterson. Both said the pension fund risked a lawsuit that it would likely lose. The employees should sue.

Asbury said the board had a legal obligation to pay the employees for completing their “stretch goals” in the 2002-2003 fiscal year. It wasn’t a stretch to see that those goals were really little more than what many considered the employees’ regular duties.

Paying the bonuses would perpetuate an STRS culture of entitlement, which flourished under former Executive Director Herbert L. Dyer. His undoing came from publicly proclaiming that the money flowing into STRS from members and investments was the board’s money to spend as it wished.

But the culture enveloped more than employees. The so-called 13th benefit check was sent to retirees for years while investments were good. They depended on the extra monthly payment, which they felt they deserved and had been promised. That entitlement ended when investments soured in the early 2000s. Nobody sued the system.

Health care is another STRS entitlement. The system is not obligated by law to provide health care coverage, but it does. Asbury has said there is no retirement without affordable health care. Sounds like a promise. But the care is no longer affordable for many retirees and their spouses. Nobody sued the system.

The bonus plan for noninvestment employees was abolished last week in the wake of questionable spending at STRS for travel, artwork, expenses and salaries. Surely employees are entitled to just one more bonus. They should sue.

STRS culture fits with an American culture based on greed. That’s the only way to explain why employees would sue. All those eligible for a bonus are the most highly paid STRS employees. We’re not talking about the janitors, secretaries, security guards or any of the hundreds of other dedicated STRS workers.

We’re talking about their bosses, those who rake in high five- and six-figure salaries annually. We’re talking about many bonuses in the neighborhood of $30,000 and $40,000. The irony shouldn’t be lost on anyone that the person eligible for the lowest bonus — less than $200 — is a teacher.

The staff members receive regular compliments from the board about how wonderful they are, how hard they work, how dedicated they are to retirees, actives and the system.

The employees should sue. Let’s see how dedicated they really are. Do they work for a more-than-decent paycheck and the satisfaction of being STRS employees, or are they in it for every dollar they can grab in bonuses, even if they haven't done much to earn them?

Let’s not be too surprised if greed is the answer. We’re living in an era of corporate greed — Enron, Martha Stewart, Tyco and others. It’s a long list.

There was a time when people were satisfied with having a job. There was a time when people took pride in their work. There was a time when “nice job” was a sufficient bonus. Not anymore.

The employees should sue.

They need to do so soon, before tort reform kicks in and limits the amount they can recover. It’s hard to see how employees could collect punitive damages. There was no purposeful intent to harm them. They’ll ask for damages any way — attorney fees, too. They’re entitled.

Here’s what employees ought to do. If they really are dedicated to STRS and not driven by greed, prove it. Do they want the system to escape the scandalous morass of the last year and move forward? Stipulate in their lawsuit that if they win or settle, all the money received — the bonuses, attorney fees and punitive damages — goes into the STRS Health Stabilization Fund for retirees. If employees want to show they deserve the bonuses, then the money shouldn’t matter. Why punish the employer they supposedly love just to prove a point? Or is it really about greed?

Employees should sue so we can find out.

I got a big bonus at the board’s meeting last week for doing my job. Several retirees, whom I’d never met before but who had been reading my stories about STRS, shook my hand.

“Thank you,” they said.

Hard choices can protect pensions

Middletownjournal.com, May 26, 2009

When alarms were ringing in 2007 about the sustainability of Ohio’s five public employee pension funds, nobody listened.

That year, despite newspaper stories around the state and expert reports calling for fundamental change, nothing significant happened. The boards that manage the pensions, and the legislators who make the rules for them, looked at a rising stock market and decided things would work out.

Welcome to 2009, when that logic no longer applies.

After a steep stock market dive, the value of the investments controlled by the funds has crashed, losing a combined $63.6 billion. The threat today is whether the funds will be able to pay their obligations going forward.

Hard decisions about benefits and required contributions that were put off before have to be faced now. The stock market crisis is forcing changes that should be obvious to everybody.

By any measure, public or private, Ohio’s pension programs for teachers, school support staff, police and firefighters, government workers and state troopers are tremendously generous.

Workers commonly retire in their 50s (or, for firefighters, as early as age 48) with the pension fund often doling out two-thirds of their salary for life (or, for teachers with 35 years, 88 percent of their final average pay).

In many cases, these retirees served the public in difficult or physically demanding jobs. A firefighter certainly leaves the job having experienced more wear and tear than an office worker. In other cases — teachers, for instance — the generous retirement is seen as a part of the bargain that promises quality people secure retirements in exchange for enduring challenges and stress that many people won’t put up with.

People in these jobs don’t want to have their benefits reduced. Yet, without change, the entire system is at risk.

Among the ideas the funds are considering:

Raising retirement ages. Even relatively small alterations, like raising the minimum age for firefighters by four years to 52, could make a big difference. Some funds — the teachers’ plan — don’t even have a minimum age.

Raising contribution rates. Employers (using tax dollars) already pay high percentages toward retirement — between 14 and 26.5 percent of each worker’s pay. With state and local governments hurting, they can’t be asked to pay more. But in some plans, it would be reasonable to ask employees to kick in more.

Reducing benefits. Moves like calculating employees’ final pay as an average of the last five years worked instead of the last three years, could really cut costs and wouldn’t profoundly hurt workers. Some plans also are considering recommending a lower cost-of-living raise each year — perhaps 2 percent instead of 3 percent.

Revising health care plans. None of the plans has to offer health insurance to their members, but they traditionally have provided it. Some already have made cuts in these benefits. More may be on the way, especially if national health care changes aren’t adopted.

By phasing in any new rules, workers who are close to retirement should be able to plan and prepare accordingly.

But even if the pension boards propose these sorts of changes, legislators will have to enact them. They haven’t exactly flocked to the front of the line to make these fixes.

For the past two years, the police and fire pension fund, for instance, proposed good changes, but could not find a lawmaker to sponsor them. Elected officials don’t like to anger police officers, firefighters and teachers.

The moment calls for political courage. The opportunity is here not just for tweaks and polishing, but for overhauling the pension plans in ways that would secure retirement for people who perform some of our most important public services.

Fix it now and they won’t have to wonder if the money really will be there when they retire.

Note, if you click on the link below you can add your own comments.

John

http://www.middletownjournal.com/opinion/editorials/hard-choices-can-protect-pensions-133856.html?showComments=true&postingId=136523

STRS 2010 healthcare premiums & thanks for the screwing!

From John Curry, May 27, 2009

Let's do a little math.

For 2009, the STRS healthcare premiums (monthly) for retirees of pre-65 age with Medical Mutual Plus plan are:

$207

STRS now wants to raise that premium next year (2010) to a projected $233.

That is a 12.5% increase

Now...let's see how the retiree's spouse gets "nailed" should the retiree's spouse wish to be insured through STRS and stay with the Medical Mutual Plus plan:

Currently, the monthly premium for a pre-65 year old spouse of a 30 year retiree with a Medical Mutual Plus plan is $760 per month. STRS is projecting that the 2010 rate for this same coverage will go from an already high of $760 per month to a "projected" $931 per month.

That increase is a 20% increase!

Mr. Greg Nickell can calculate his healthcare figures and the methods of setting premium rates any way he wants but there is still no fairness between a 12.5% increase for premiums for a retiree and a 20% increase for premiums for his/her spouse!

For many STRS retirees and their spouses, bankruptcy due to medical bills is just one step away from a serious medical illness. And yet, STRS is talking about taking away some or all of our COLA? Give me a break!

I can only say how lucky my spouse and I are with no serious health problems AND we are now both covered by a health plan (80/20 PPO-similar to STRS's Plus plan) for less than $200 total per month thanks to our current employers.

We are not (yet) in this situation to have to take insurance from STRS but THERE ARE MANY OUT THERE WHO CAN'T WORK AT "ANOTHER JOB" JUST TO HAVE AFFORDABLE AND ADEQUATE HEALTHCARE. STRS, WHY PUNISH MY FELLOW RETIREES WHEN MANY OF THEM ARE ILL AND HAVE TO TAKE YOUR INSURANCE WITH AN UNFAIR (AND ESPECIALLY UNEQUAL) RATE INCREASE? YOU DIDN'T DO THE SAME WITH THE BASIC PLAN, DID YOU?

There are only about 30,000 retirees who do have to insure their spouses.....STRS, thanks for the continued screwing of my fellow retired educators! I (and they) should have driven a dump truck for the county of my residence and paid into OPERS as I could have retired at the same date of retirement that I did ( in 2000) and would be paying $80 total monthly premiums (spouse + myself) for the same Medical Mutual 80/20 PPO health insurance program that you will want well over $1,100 per month for next year.

John Curry

STRS FLASHBACK- 5 years ago today - the Ohio Senate passes the Ohio Pension Reform Bill (Senate Bill 133) and sends it to the Governor

From John Curry, May 27, 2009

This article does not mention that Dr. Leone and some CORE members were asked to attend the signing of the bill. Dr. Leone's investigative reporting of the misspending, mismanagement, and entitlement culture at STRS (along with CORE members letters to the legislators) led to the writing and passage of this bill. Thanks Dennis and CORE members!

Writing to your legislator can make a difference!

John

After heated exchanges, Senate sends pension reform bill to Taft

Canton Repository, May 2007, 2004
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — Senate Democrats charged that Republicans are playing politics with the governing boards of Ohio’s five public pension systems. But they failed Wednesday to convince any Republicans to vote against a reform bill approved in the House on Tuesday.

The Senate went along with House changes to the Senate bill, which now goes to Gov. Bob Taft.

The bill:

• Changes the makeup of pension boards.

• Establishes ethics policies.

• Requires the registration of lobbyists.

• Sets a 10-year rotation of audits of each system.

• Requires financial disclosures, licensing and training.

• Sets standards for removal or suspension of board members.

• Gives permission to the attorney general to sue board members.

• Requires the reporting of business done with Ohio banks and brokerages.

Orest Holubec, a spokesman for Taft, said the governor “looks forward” to signing the bill, but he didn’t know how soon that would be.

Taft wanted the legislation by the end of 2003, but bickering between House and Senate Republicans delayed it.

The bill sprang from media reports last year about questionable spending by the pension funds on travel, artwork, bonuses and other expenses.

It comes on the heels of a report from the Ohio Ethics Commission that alleged criminal wrongdoing at the Ohio Police & Fire Pension Fund. That’s been sent to the Franklin County prosecutor.

The ethics commission also is continuing its investigation of the State Teachers Retirement System. That report is expected within the next few months.

The hour-long debate Wednesday on the reform bill came close to name-calling when state Sen. Lynn R. Wachtmann, R-Napoleon, called a question from Sen. Robert Hagan, D-Youngstown, “really stupid.”

That drew a rebuke from Senate President Doug White, R-Manchester.

“I will allow honest debate,” he said, “but I don’t want to hear any more judging as I just heard.”

Wachtmann never apologized.

Minutes later, White interrupted Sen. C.J. Prentiss, D-Cleveland, and warned her “to be careful” when she began questioning the motives of House Republicans when they dealt with pension reform Tuesday.

“You can judge their action, but not their heart,” he said.

Democrats focused their ire on a provision of the bill that removes the attorney general and auditor from the boards and replaces them with appointees with expertise in investments. The board members would be appointed by the governor and jointly by the House speaker and Senate president.

“There’s too much politics in it,” said Sen. Dan Brady, D-Cleveland.

Earlier in the day, the Ohio Retirement Study Council approved the Senate bill on a split vote. The council also awarded a contract to Independent Fiduciary Services of Washington, D.C., to do performance audits of the teachers’ and police funds. The audit will cost the systems a total of $758,000.

Bill No.: S.B. 133

What it does: Improves oversight of Ohio’s five public pension systems after a year of controversy over spending and investment decisions.

Updated status: Ohio Retirement Study Council approved, 6-1, Wednesday; Ohio Senate concurred with House changes, 22-11. The bill goes to Gov. Bob Taft for his signature, and becomes law in 90 days.

America's looming retirement crisis

May 27, 2009

Thanks to John Bos for this excellent article on "America's looming retirement crisis":

http://articles.moneycentral.msn.com/Investing/Extra/america-s-looming-retirement-crisis.aspx

Inflation hits elderly harder

From RH Jones, May 27, 2009

To all:

Especially insidious for OH STRS retired members 62 and older, the U.S. Labor Dept. Bureau of Labor Statistics indicates that over a 25-yrs. period from Dec. 1982 to Dec. 2007 inflation for the elderly rose 3.3% -- This 3.3%, of course, compounds. Our 3% COLA does not.

For all the American elderly, our HC/rx, housing, and transportation costs are the main cause of these rapid increases. Insurance in homeowner, and long-term-care, has also skyrocketed. One can, therefore, conclude that cutting the retired educator COLA should not be an option to be considered by the STRS board.

RHJones, a retired teacher STRS member

STRS Flashback - 6 years ago - Leone to the Ohio Retirement Study Council re: the STRS board, "They just don't understand how wrong it is."

From John Curry, May 26, 2009

Council members also listened to Dennis Leone, the superintendent of Chillicothe City Schools, whose investigation of the retirement system led to the disclosures about spending. While teachers are being affected by the retirement system board’s decisions, he said, so are Ohio’s taxpayers. He noted that matching contributions to the retirement system come from school boards that use taxpayers’ dollars.

~ ~ ~

“That’s 944 employers who contributed $1.2 billion,” he said. “That’s taxpayer’s dollars.”

Leone said he closed three schools and laid off 45 employees “and I don’t get a bonus.”

Public retirement system painting an ‘ugly picture’

Canton Repository, June 12, 2003
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — Lawmakers who oversee Ohio’s five public retirement systems were hot Wednesday over revelations that the state’s teachers retirement system spent nearly $15 million on bonuses and artwork at a time when the system is struggling and member benefits are being cut.

Herbert Dyer, executive director of the retirement system, said Wednesday that the money spent on bonuses and art “belongs to the board,” not the teachers who contributed to the system and can be spent “as the board sees fit.”

That wasn’t good enough for Rep. Michelle G. Schneider, R-Cincinnati, Sen. Kirk Schuring, R-Jackson Township, and Rep. John Boccieri, D-New Middletown, who are members of the Ohio Retirement Study Council.

Using investment returns on bonuses, artwork, subsidized child care, travel to Hawaii and Alaska, among other places, and other expenses of the retirement system board, Schneider said, was “wrong. It’s shocking. It’s a distorted perspective on whose money this really is.”

The system gave out nearly $1 million last year to 65 employees not associated with managing its financial portfolio. Thirteen got bonuses of more than $20,000, seven more than $30,000 and one topped $50,000. The investment staff received more than $13 million in bonuses even as the system’s portfolio lost $12.3 billion during the past three years.

Dyer told council members that upcoming changes to health-care benefits will cost retirees and their families more so that part of the system remains solvent.

Dyer would not apologize, however, for the spending spree, saying the staff deserved the raises. He said its effort was “superior if it was better work than average.”

He said the investment managers deserved bonuses because they kept the portfolio from losing more than it did.

“We didn’t lose the money by misplacing it,” Dyer said.

“I am most disturbed by the increases to employees,” said Schneider, who also questioned spending $869,000 on artwork.

“I collect artwork,” she said, “but I don’t do it with other people’s money.”

“Good artwork is expensive,” Dyer responded. “It’s what artists expect for their work. It was designed specifically to complement the decor (of the system’s building).”

At one point, Boccieri said to Dyer, “The more I listen to your testimony, the more agitated I get.”

Schuring, who was not present for Dyer’s testimony because he was attending another meeting, said later that he is convinced there has to be more oversight of the state’s retirement systems. He said the council is ill-prepared to provide oversight because overseeing spending is not part of its responsibility.

“How are we going to stop these things from happening again?” he said. “It might take legislative action. They have to be fiscally prudent and fiscally conservative. Bonuses and increases in staff are not needed.”

Council members also listened to Dennis Leone, the superintendent of Chillicothe City Schools, whose investigation of the retirement system led to the disclosures about spending. While teachers are being affected by the retirement system board’s decisions, he said, so are Ohio’s taxpayers. He noted that matching contributions to the retirement system come from school boards that use taxpayers’ dollars.

“That’s 944 employers who contributed $1.2 billion,” he said. “That’s taxpayer’s dollars.”

Leone said he closed three schools and laid off 45 employees “and I don’t get a bonus.”

Since 1998, the retirement system increased the number of its employees by 42 percent to 707.

He said the retirement system board “just doesn’t get it. They just don’t understand how it looks. They just don’t understand how wrong it is.”

Dyer insisted that the money to employees, which included a $41,000 bonus for himself, was needed “for getting (and keeping) a good staff.” He said it was necessary for board members to travel to meet “face to face” with fellow board members from other state systems to learn how to run the retirement system effectively and efficiently.

Leone said after the meeting that Dyer “danced all around” council members’ questions. He said the system’s spending “is completely foreign to me.”

A Sampling of STRS Bonuses

The State Teachers Retirement System gave out nearly $1 million in bonuses last year to 65 employees ranging from the executive director to the director of the employee day-care center. The bonuses do not include more than $13 million in bonuses given to the managers of the system’s investment portfolio.

Thirteen noninvestment employees got bonuses of more than $20,000, seven more than $30,000 and one topped $50,000.

Here are the positions that topped $30,000:

[Click image to enlarge]
.................................................................
Source: State Teachers Retirement System

STRS Fund Losses: Dennis Leone Did Not Need A Crystal Ball

From Mario Iacone, May 26, 2009

MARCH, 2007

Dennis Leone Urges STRS Board to Prepare for Significant Stock Market Downturn

The following excerpt is taken from.

Ohio Retired Teachers Association (ORTA)
QUARTERLY REPORT*
By Dennis Leone,
STRS Retiree Board Member
March, 2007

Dr. Leone did not have a crystal ball where he could see the Crash of 2008.

Dr. Leone was just acting prudently and with due diligence for STRS members.

Among a number of items Dennis reported and discussed in his quarterly report was,

………………..Finally, I have an obligation to share with retirees why I disagree with published projections by STRS that our current 47-year unfunded liability is projected to hit the desired 30 years by 2009. Note the charts below:……………………….

………………………….My point is simply this: Absent a continuation of the great investment returns, we will not offset the realities (if they continue) of the other three areas shown above. I am hopeful my fellow board members will be agreeable to approving a contingency plan to minimize the negative impact of a significant stock market downturn………………………

It is in the best interests of STRS members, active and retired, to become involved and campaign to have STRS set up a future investment plan that avoids, reduces, or at least minimizes serious losses.

Not doing so may result in some STRS member writing an article similar to this one in 2011.

Dennis Leone’s entire report, titled as shown above, is available online at Kathie Bracy’s Blog, http://kathiebracy.blogspot.com/2009/05/ohio-retired-teachers-association-orta.html

Thank You.

Mario

Greg Nickell: Answers for Molly Janczyk

From Greg Nickell, May 26, 2009
Dear Ms. Janczyk:
Your questions are not just yes or no answers for someone who starts with STRS Ohio primary coverage at the beginning of the year and then sometime during the year enrolls in Medicare which makes the STRS Ohio coverage secondary.
As Ms. Knoesel correctly responded to you previously, “Medicare will require you to pay its deductible.” When an individual enrolls in Medicare, Medicare does not recognize deductible or coinsurance amounts a person has previously paid during the year through a health care program such as STRS Ohio’s Plus or Basic Plans. Medicare becomes the primary plan and plans like STRS Ohio’s become secondary plans.
As the primary plan, 2009 Medicare has separate deductibles of $1068 for Part A and $135 for Part B that must be met before Medicare will make any payments. Once the Medicare Part A deductible is satisfied, Medicare generally pays 100% for corresponding Part A claims. Similarly, once the Medicare Part B deductible is satisfied, Medicare generally pays 80% for subsequent Part B claims. Medicare does not have an annual out-of-pocket (OOP) limit for Part A or Part B. Medicare also does not have any family limits like the family OOP limits in both the STRS Ohio Plus and Basic Plans. Medicare does not take into consideration whether you have already paid or met any deductible or coinsurance amounts or limits under any other coverage.
The answer to your first question below is: Yes, as it pertains to Medicare. Medicare processes claims without regard to any other coverage like STRS Ohio’s Plus and Basic Plans. This means when Medicare processes claims it will always subtract Medicare’s deductibles and coinsurance amounts before making any payments to the provider of service.
The question is what happens next when a person has STRS Ohio secondary coverage?
For services covered by the 2009 STRS Ohio Plus and Basic Plans administered by Aetna or Medical Mutual, any covered allowed amount not paid by Medicare (including deductibles and coinsurance amounts) is considered for payment by the STRS Ohio plan.
When a person has already met their STRS Ohio plan deductible, for services covered under the STRS Ohio plan, the plan would pay 80% of the remaining balance (including any Medicare deductible or coinsurance) not paid by Medicare until the person reaches their annual out-of-pocket limit. At the point where a person satisfies both their STRS Ohio plan’s annual deductible and out-of-pocket limits, the STRS Ohio plan pays 100% of the allowed amount for all covered services.
The answer for 2009 to your second question below is: Yes, so long as you remain in a self-insured plan under the same administrator, the amount credited toward the STRS Ohio plan deductible and out-of-pocket limits prior to becoming enrolled in Medicare remain in place for the STRS Ohio self-insured plans, i.e. the deductible and coinsurance limits do not start over for the STRS Ohio plan because you become enrolled in Medicare. Once a person in the self-insured plans satisfies their STRS Ohio plan deductible and out-of-pocket limits whether it is before or after enrolling in Medicare, STRS Ohio pays the allowed amount for all covered services at 100% including any covered services where there is a Medicare deductible or coinsurance.
The answer to question three below is: It depends. The vast majority remain in the same self-insured STRS Ohio plan with the same administrator they had before they enrolled in Medicare and their deductible and OOP amounts carry forward. So when the person remains in the same self-insured plan with the same administrator, the answer is yes if they have satisfied their STRS Ohio plan’s annual deductible and OOP limits.
However, when a person ages into Medicare, they can choose a different administrator and/or plan including in some cases fully insured plans in the Cleveland, Canton and Toledo areas. If the person lives in one of the three cities listed above and chooses to enroll in one of the fully-insured plans, or they change from Medical Mutual to Aetna or vise versa, their deductible and OOP amounts do not carry over. Also, if the person changes plans from Plus to Basic, they would have additional deductible and OOP to meet under the STRS Ohio self-insured plan.
In Summary, when an individual enrolls in Medicare, Medicare always charges Medicare’s deductibles and coinsurance amounts regardless of STRS Ohio coverage. Any balances not paid by Medicare which are owed by the individual then are considered for payment under the STRS Ohio plan. If the person has not changed administrators, the amount of deductible and coinsurance they paid prior to enrolling in Medicare carries forward. In these cases, if the person has met their annual deductible and OOP limit, any amounts for services covered under the STRS Ohio plan that the person owed under the Medicare plan will be covered in full by the STRS Ohio plan. Of course, all STRS Ohio plan deductibles and OOP accumulators reset each calendar year.
One final note, STRS Ohio is actively engaged in negotiations with potential plan administrators for the STRS Ohio programs starting in 2010. The above scenarios could change depending upon the outcomes of these discussions.
Greg Nickell
Director of Health Care Services
From Molly Janczyk, May 23, 2009
Subject: PLEASE ANSWER: Medicare Coverage: HC STAFF: NEFH: RETIREES: ORTA
Can someone please tell me what happens NOW in the year a benefit recipient and spouse turns 65 mid year??? I cannot get an answer to this question.
Beginning Jan. 2009, there were new deduc and out of pockets. Scenario: A recipient and spouse have both met deductibles for 2009 and the spouse has met his out of pockets by 5/09. The couple both turn 65 by 6/09.
QUESTION:
1. DOES THIS COUPLE THEN HAVE TO MEET NEW DEDUC AND NEW OUT OF POCKETS FOR MEDICARE???
YES OR NO
2. DO THE DEDUC AND OUT OF POCKETS MET PRIOR TO TURNING 65 TO STRS COUNT FOR THE YEAR AND CONSEQUENTLY NO NEW DEDUC AND OUT OF POCKETS NEED TO BE PAID?
YES OR NO
3. IN THIS SCENARIO, THIS SPOUSE OF THIS COUPLE CONTINUES TO RECEIVE COVERAGE AT 100% BECAUSE OF PAYING OUT OF POCKETS AND DEDUC IN 2009 EVEN THOUGH CHANGING STATUS FROM NON MEDICARE TO MEDICARE STATUS????
YES OR NO
I can't believe I cannot receive an answer when so many Medicare recipients have gone thru this process with STRS. So, I am opening the question to all.
Thank you. Molly J.

Retired Lima area administrator to Tim Myers..."we welcome you as a participant"

From John Bos, May 25, 2009

Tim,

I just read that you made a comment that a retired area administrator did not want you to attend the June 9th STRS meeting at Apollo Career Center.

If I am the person that you are quoting, let me set the record straight for you and any other interested party to read.

I BEG YOU TO ATTEND. THIS MEETING IS BEING HELD 6 MILES FROM YOUR HOME. YOUR ARE ELECTED TO REPRESENT THE STRS PARTICIPANTS.

I WANT YOU TO ATTEND AND PRAY THAT YOU WILL RECONSIDER AT BE AT THIS MEETING.

My wife and I need the STRS annunity to survive. We are one step from the Soup Kitchen without STRS. We are facing many issues in Lima, Ohio, and the United States. STRS is just a small spoke in the big wheel. We all are interested in your views regarding potential changes in medical coverage, final average salary, rule of 90 (or any other rule that will change the current retirement formulae), etc.

We will welcome you as a participant. The meeting with have a moderator who is ordained and will not have any relationship to STRS.

Thanks again for reading and answering this email. I am requesting Kathie Bracy to post this message so that there can never be a question regarding my position regarding your attendance on June 9th.

John Bos

Tim, please don't let area educators down by not showing up for the meeting on June 9th!

John Curry to Tim Myers, May 25, 2009
Tim, In reference to your letter (below) to the "District List member," Allen County and area educators (both active and retired) really do expect you to attend (after all......it's only a couple of miles away from your school and you do represent them as a fiduciary on the STRS board) and yes, they want you to attend as they have a few important questions they would like you to address in person. Please do bring Bill Leibensperger along as there are some questions that educators may also like to ask him in person. In fact, here are 7 questions that Dr. Leone has posed that you that, to my knowledge, you have yet to answer. If you have, please furnish those answers. One or more of these questions probably will be asked of you (should you show up) at the Open Meeting at Apollo Career Center. You could choose to answer these via email but, it is always better to answer them "in person" as there would be less chance of misunderstanding and.... follow-up questions would aid in your getting your point(s) across.
John

From Tim Myers, May 21, 2009
The below referenced meeting (click here to view) is incorrect in the list of attendees. Most of the groups listed below have not been invited, nor are they really expected to participate. It was made abundantly clear to me by a former area Administrator that I was not expected (nor did they want me) to attend.
Tim

Will Tim Myers attend the June 9 meeting in Lima at Apollo Career Center?

From Dennis Leone, May 24, 2009

Folks……it is this simple: Tim Myers knows that certain people in attendance on the 9th (Leone and Stoll in particular) will hold his feet to the fire and ask him to explain his public actions and public statements – such as:

1. Why, Tim, did you tell the Elida teachers in writing that their pensions were secure?

2. Why, Tim, did you put in a NW-OEA newsletter that reducing bonuses aversely impacts the BASE SALARIES of investment staff?

3. Why, Tim, didn’t you want stop the FY 2009 bonuses in September after the backlash of paying $6 million in FY 2008 bonuses (which you voted for, Tim) and after STRS lost $12 billion in assets in the preceding 10 months?

4. Why, Tim, did you vote no on the original motions to: (A) Suspend the bonuses; and (B) Establish a $65 billion threshold for assets in order to trigger maximum bonus potential in the future?

5. Why, Tim, after you voted no in January to suspend the bonuses, did you say publicly (and were quoted in the Columbus Dispatch) that the STRS Board was “breaking a promise” by suspending the bonuses? Why did you say this, Tim, when all investment staff received a letters in July of 2008 that the said the bonus plan could be modified or terminated by the board at any time for any reason?

6. Why, Tim, did you allow Leone’s motion on May 15, 2009 (to NOT pay the 7/12ths bonuses for FY 2009) die without a second?

7. Why, Tim, did you recently write to a supt and say that the board might lose 10 times the cost of the 7/12ths bonuses in litigation if the bonuses were NOT paid? Wouldn’t possible litigation be a non-issue, Tim, had you and your fellow board members stopped the bonuses last fall, when you could have?

There is much more………..it’s really not hard to see why Tim Myers might avoid a meeting where he could be asked these questions.

Dennis Leone