Saturday, November 14, 2009

Dispatch: BWC, pension funds to benefit

From John Curry, November 14, 2009
After you read today's Dispatch article (below) pay particular attention to what the STRS spokesperson (Laura Ecklar) had to say...."We have a commitment to combat corporate fraud." Actually, Laura, our Ohio Attorney General has the "real" commitment to combat corporate fraud as...that is his job. After reading today's article please take a step back in time to 2008 when another corporate fraud was investigated by the Ohio Attorney General and that "combat" resulted in an out of court settlement (aren't they all?) with PricewaterhouseCoopers for 97.5 million dollars. So...what's my point?
Well.... my point is ....why are we still doing business with a company that we settled out of court with just last year? You don't think we are still doing business with PricewaterhouseCoopers? Well...read the attached document [see bottom of post] from a recent STRS board meeting that shows STRS plans to do $350,000 worth of business with PricewaterhouseCoopers during the 2009-2010 fiscal year. Why?
BWC, pension funds to benefit
3 among plaintiffs in securities case settled for $400M
Saturday, November 14, 2009
By Steve Wartenberg
THE COLUMBUS DISPATCH
Two Ohio pension funds and the Ohio Bureau of Workers' Compensation will benefit from a $400 million settlement announced yesterday in a class-action lawsuit against Marsh & McLennan Co.
The company had been accused of securities-law violations.
"In layman's terms, Marsh received kickbacks from insurance companies in exchange for recommending that Marsh clients purchase policies with those carriers," Attorney General Richard Cordray said yesterday.
When news of these activities was made public, Cordray said, the company's stock plummeted and shareholders suffered significant losses.
The lead plaintiffs in the case included the State Teachers Retirement System of Ohio, Ohio Public Employees Retirement System and Ohio Bureau of Workers' Compensation, as well as the New Jersey Division of Investment.
The three Ohio organizations lost "tens of millions of dollars" through the purchase of stock in the New York-based company, Cordray said.
He added that there are thousands of plaintiffs across the country, and it is too soon to say how much of the $400 million the three Ohio entities will receive.
In a statement, Marsh & McLennan said: "While the company continues to deny all of the claims in these lawsuits, the resolution of these matters puts the litigation arising from the events of 2004 largely behind us and reduces the company's ongoing legal costs."
The settlement was good news for the three Ohio plaintiffs.
"We have a commitment to combat corporate fraud," said Laura Ecklar, spokeswoman for the State Teachers Retirement System fund.
"And when we can influence corporate governance in a good way for the protection of our members, that's something we appreciate doing with the attorney general and our sister systems."
Cordray said his office will continue to "hold Wall Street accountable for actions that harm our investors, retirees, workers and families."
The attorney general's office said the Marsh settlement brings the total it has recovered through securities lawsuits to more than $2 billion.
Marsh is a global professional-services company with about 52,000 employees and annual revenue of $11 billion.
Information from the Associated Press was included in this story.
Ohio Plaintiffs Secure $97.5 Million Payout From PwC in AIG Securities Class Action
Brian Baxter
law.com, 10-07-2008
Prominent international accounting firm PricewaterhouseCoopers has agreed to pay $97.5 million to settle its part in a securities class action filed against American International Group by three Ohio pension funds, according to a statement released on Friday by the Ohio attorney general's office. The settlement is one of the 10 highest ever paid by an accounting firm to settle a securities fraud class action.
"This important settlement represents a tremendous result for investors," Ohio Principal Assistant Attorney General Chris Geidner said in the statement. "We are pleased with this milestone and will continue to vigorously pursue investors' claims against the remaining defendants in the case."
The settlement closes the book on PwC's role in a suit filed against AIG in October 2004. In the suit, New York's Labaton Sucharow and Cleveland's Hahn Loeser & Parks served as co-lead plaintiffs counsel to the Ohio AG's office and three Columbus-based pension funds: the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, and the Ohio Police & Fire Pension Fund.
The three sought damages for shares purchased between October 1999 and April 2005. AIG was forced to restate earnings by nearly $4 billion in 2005 after former New York State Attorney General Eliot Spitzer and the SEC commenced investigations into charges of accounting irregularities, bid-rigging, and improper workers' compensation funds allegedly occurring at the insurance giant.
The investigations led to the ouster of former AIG chairman and CEO Maurice "Hank" Greenberg, as well as several other senior company executives. A spate of class action suits were filed in late 2004 and 2005 against AIG, its reinsurers, Greenberg and numerous former AIG directors and officers. (AIG paid $1.6 billion in February 2006 as part of a global settlement for all state and federal civil actions.)
Represented by Labaton senior partner Thomas Dubbs and Hahn Loeser partner Alan Kopit, plaintiffs alleged that PwC had violated securities laws in connection with its audits of AIG's financial statements during the years at issue. (Dubbs was unavailable for comment and the Hahn Loeser firm declined a request for comment.)
New York-based PricewaterhouseCoopers was represented by litigation partners Antony Ryan and Thomas Rafferty from New York's Cravath, Swaine & Moore. (Neither Ryan nor Rafferty immediately responded to requests for comment.)
"We have decided to settle the case at this stage to avoid the enormous litigation costs that would be incurred if the case continued against the firm, while at the same time eliminating any potential exposure," said a PwC spokeswoman in a statement to The Am Law Daily. "The settlement does not contain an admission of wrongdoing by the firm, and we continue to believe that our work was in accordance with professional standards."
Daniel Kramer, co-chair of the securities litigation and enforcement group at New York's Paul, Weiss, Rifkind, Wharton & Garrison, continues to represent AIG in various civil actions.
The PwC settlement must be approved by U.S. District Court Judge John Sprizzo in Manhattan. PwC continues to serve as AIG's independent auditor.
Click image to enlarge.
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Friday, November 13, 2009

Once again....thank you, AG Cordray!

From John Curry, November 13, 2009
"The Public Employees Retirement System of Ohio, the State Teachers Retirement System of Ohio and the Ohio Bureau of Workers’ Compensation, together with the State of New Jersey Department of Treasury, Division of Investments, have served as lead plaintiffs representing shareholders in the case."
http://www.ohioattorneygeneral.gov/Briefing-Room/News-Releases/November-2009/$400-Million-Settlement-in-Marsh---McLennan-Case

News Release from the Ohio Attorney General's Office
November 13, 2009

$400 Million Settlement in Marsh & McLennan Case

(COLUMBUS, Ohio) – Ohio Attorney General Richard Cordray today announced a $400 million settlement in the class action securities lawsuit against Marsh & McLennan Companies, Inc., Marsh Inc., and former company executives Jeffrey Greenberg and Roger Egan (collectively “Marsh”). The settlement agreement negotiated by Attorney General Cordray and the New Jersey Attorney General on behalf of the lead plaintiffs holds Marsh accountable for its wrongdoing and requires Marsh to compensate investors for their injuries.

“Through violations of securities laws, Marsh harmed the investments and retirement benefits of workers in Ohio and across the country. This massive fraud was built on unethical and illegal practices and violated the best interests of clients and shareholders alike,” said Attorney General Cordray. “By serving as counsel to the lead plaintiff in the case, we were able to make sure that Marsh is held accountable and that workers, families and investors, including many in Ohio, are compensated for their losses.”

The Public Employees Retirement System of Ohio, the State Teachers Retirement System of Ohio and the Ohio Bureau of Workers’ Compensation, together with the State of New Jersey Department of Treasury, Division of Investments, have served as lead plaintiffs representing shareholders in the case.

Marsh is one of the world’s largest providers of insurance brokerage and consulting services. In the lawsuit against Marsh, the lead plaintiffs sought redress for investors who were harmed by Marsh’s failure to disclose a scheme that generated substantial earnings from illegal, anticompetitive arrangements with insurance carriers. The alleged scheme involved steering business to certain insurance carriers in exchange for kickbacks known as “contingent commissions.” According to the complaint, in some instances Marsh even generated fake bids to shield participating insurance carriers from competition. The alleged scheme violated numerous laws.

Marsh never revealed this scheme to the investing public, despite the huge role contingent commissions played in the company’s earnings. Marsh’s improper business practices came to light in October 2004 after an investigation revealed an industry-wide scandal involving price-fixing and improper bid manipulation activities. Within days of that news, Marsh & McLennan Companies lost $9 billion in market capital as its stock price collapsed. Shareholders, including many in Ohio, suffered tremendously.

The Ohio public pension funds and the Bureau of Workers Compensation noted their important role in remediating harm to investors:

“The OPERS Board of Trustees has been an active participant in securities litigation cases on behalf of our members and retirees,” said Ken Thomas, board chair. “This includes seeking compensation for unlawful behavior. We intend to continue an aggressive posture to protect the retirement dollars of active and retired public workers in the state of Ohio.”

“BWC and its Board of Directors are entrusted to protect, administer and maintain the funds needed to care for injured workers,” said BWC Administrator Marsha Ryan. “We joined this lawsuit, as a co-lead plaintiff, to send the message that we will go after those who act to harm Ohio’s workers’ compensation funds. This settlement allows us to recoup some of the losses incurred due to the wrongful acts of others.”

Attorney General Cordray, representing the Ohio Funds, has pursued an aggressive strategy of holding accountable those Wall Street companies and executives who harm Ohio investors, retirees, workers and families through violations of securities laws. At $400 million, the Marsh settlement is one of the top 25 recoveries for shareholders in lawsuits of this nature in American history.

The Marsh settlement brings the amount recovered by Attorney General Cordray in securities litigation to more than $2 billion. Recent settlements include $284.5 million with secondary defendants in a case involving AIG; $475 million with Merrill Lynch; and the cancelling of $922 million in improperly granted stock options to corporate executives at UnitedHealth.

“We are standing up for investors, retirees, workers and families,” said Attorney General Cordray. “We won’t allow Wall Street companies and executives to get away with illegal practices that injure hard-earned investments and retirement benefits.”

Attorney General Cordray continues to represent the Ohio Funds in several major securities cases, including class action securities lawsuits against AIG, Bank of America, Fannie Mae and Freddie Mac.

Attorney General Cordray has drawn on the expertise of the law firm Grant & Eisenhofer, which served as lead counsel to the Ohio Funds in the Marsh litigation. The settlement is pending final approval in the U.S. District Court for the Southern District of New York.

To read the full Preliminary Approval Order and Stipulation and Agreement of Settlement in the Marsh case, as well as additional summaries of securities litigation undertaken by Attorney General Cordray’s office, go to www.ohioattorneygeneral.gov/SecuritiesLitigationBriefing.

Media Contacts:
Ted Hart: (614)728-4127 cell: (614)743-2286
Holly Hollingsworth: (614)644-0508 cell: (614)353-7576

Mario Iacone: CONTACT LEGISLATORS REGARDING FAIRNESS


From Mario Iacone, November 13, 2009

In the days, weeks, and possibly months to come, the LEGISLATURE will be working on revisions for our Pension Benefits

COLA REDUCTION is one of the items. From all indications, it may even be the one item which may have the most impact on restoring the 30 Year Funding Period.

IT IS IMPORTANT,

that they hear from everyone requesting that any CHANGES made are FAIR TO ALL, actives and retirees.

Legislative Revisions should not be focused on just one or two items, but all the items proposed by STRS to the ORSC.

To obtain, contact information for your State Representative or your State Senator, click on the following link: http://www.legislature.state.oh.us/

Thursday, November 12, 2009

ORSC Meeting Notice and Agenda for November 18, 2009

From ORSC, November 12, 2009
Click to enlarge image and view details
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Molly Janczyk: Conversation with Aristotle Hutras

From Molly Janczyk, November 12, 2009
Subject: Aristotle Hutras: Exec. Direc. ORSC: Pensions, Changing ORSC, Investments
I called Aristotle Hutras yesterday on the same question below: Aristotle is happy to take calls anytime from anyone: "We are here to serve." He was gracious and very openly communicative. He has an Education Degree but has served in Public Policy for his career after starting there as a page as a young man. I am copying Aristotle on this email for accuracy:
Direct number: 228-3574 Direct email: ahutras@ameritech.net
1. Aristotle : Can ORC be changed to reduce current pensions?
Aristotle feels this would be very difficult to reduce or take away pensions retroactively and would be seriously challenged opening the door for lawsuits due to Federal Trust and existing laws.
Aristotle IS checking further on this to be certain. He will get back to me on this question.
2. Should STRS go bankrupt (which no one expects) who pays us our pensions? The state would have a hard time not standing behind that obligation as it was law when the pensions were issued but he is checking on this for a clear answer.
On this issue:
STRS is strong as is OPERS with its investments and investment staff. Those staff members can easily go other places for jobs. I know there is a lot of talk about bonuses but they have done a remarkable job and this is a very difficult climate. Investment geniuses have lost money. For ex., Warren Buffet. The whole country has lost money.
The reason some plans have become unsustainable is because they used money for other things (discretionary payouts) vs. keeping the money in the funds for pensions. This is why STRS is proposing changes as without change, STRS will have to stop paying though that would be 10-20 years down the road. But, you don't want to wait for that to happen. Changes need to be made now to grow funds and meet mandatory 30 yr funding.
He believes in educating people for responsible decisions. Info should be factual. Giving misinformation not factual is not responsible and is a disservice to our readers and listeners. We want folks to have facts at hand or bad decisions and poor statements are made. If this happens with lawmakers, then they can't be responsible for decisions based on bad info. The legislators are seeking solid answers.
He was happy that we are seeking facts and opening communications for good dialogue.
Thank you, Aristotle for a most pleasant conversation and for seeking this definitive answers for concerned retirees.
Molly Janczyk
STRS Retiree

Gary Russell comments.....

Gary Russell to Molly Janczyk, November 12, 2009
Subject: RE: Gary: Reality: ORC: Reduced pensions, changing law, investments, benefits for actives and retirees
Molly,
This is a good summary of our conversation. As we talked about, there are a lot of moving parts to this and a change in one area will have ramifications in another area. In regards to the 8% investment assumption, I wouldn’t describe the current asset allocation as high risk rather it is a higher risk allocation than would be needed for a 7% assumption for example. The level of risk needed for an 8% return is still a prudent level of risk. For example, an 8% assumption doesn’t require STRS Ohio to be 100% invested in the equity market. Also, a 7% return couldn’t be achieved with a risk-free asset allocation, but the allocation could have less risk than is needed for an 8% return.
I hope this helps,
Gary

Wednesday, November 11, 2009

Molly Janczyk: Conversation with Gary Russell

From Molly Janczyk, November 11, 2009
Subject: FW: Reality: ORC: Reduced pensions, changing law, investments, benefits for actives and retirees
I just got off the phone with Gary Russell from STRS: Director of Member Services. He was so knowledgeable and profoundly helped me understand many current concerns. 888-227-7877; russellg@strsoh.org
Gary agreed to be included on this email for accuracy and went into great depth to ensure that I understood his comments. He was more than wonderful, approachable and wishing to be interactive and presented multiple sides of the discussion which assisted me greatly in understanding the position of actives and retirees.
1. Can the ORC be changed to allow reductions in current pensions? YES.
BUT, I learned being vested has layers. At 5 years , you are vested but not a current recipient of benefits.
Current recipients of retirement benefits have the greatest protections. Nothing can happen to our benefits short of beyond worse case scenarios. Even then, COLAS could be eliminated to keep current benefits coming. Eliminating COLAS would bring the unfunded liability down to 30 yrs. NOW. For me, that is a no brainer: nothing vs. current benefits. I can adjust the $80 clear a month far easier than no pension check at all. But, again, lots of options would come before this. And this is most likely the worst case scenario.
PLEASE READ THIS CAREFULLY:
We are at infinity for unfunded liability. This means STRS will stop paying IF NO CHANGES are made such as increased contributions, changes in COLAS, increases of ages for retirements, etc. IF legislators do not vote for changes, money will run out.
Without employer increases but with employee increases, we will drop to approx. 45 yrs unfunded liability. (Think of it as a mortgage debit). If no employer or employee contributions are increased, we stay at infinity. Actives are lobbying legislators who depend on their votes. Retirees lobby their legislators who depend on their votes regarding COLAS. Again, if COLAS are eliminated, STRS is immediately at 30 yrs. unfunded liability.
Realistically, employer increases may not happen because taxpayer ARE NOT SYMPATHETIC to public employees who can retire at early 52 with full benefits. Taxpayers are overwhelmingly private employees and have seen their benefits drop or be eliminated altogether, 401K's drastically reduced or eliminated.
Gary said, unless you live in a hole: "Taxpayer outlook toward public benefits is at its lowest ever." They are calling and writing their legislators.
STRS feels eliminating COLAS altogether is a hardship on retirees and is attempting to give legislators several options as you have seen outlined by increasing age for retirement, eliminating the 35 yr rule, and asking for increased contributions.
Actives are calling STRS with these comments:
1. Actives don't feel health care is important feeling they will never benefit from it. Forget the 1% to health care and direct it to pensions as we will never see HC anyway.
"The worst retirees will ever see is better than the best we will ever see for healthcare."
2. We will never have 3% COLAS which retirees had for a long time and variable COLAS before that.
We will only have 1.5% ever IF we even get COLAS.
3. We will always have to pay for our spousal HC premiums and retirees had some years of nearly nothing with graduated increases we will never see IF we even still have HC.
4. Retiring with higher salaries is proportionate to the times when more money is needed as we will be paying for our healthcare or higher costs for it.
5. Current retirees could retire at 52, we will have to go much longer for full benefits.
6. They got 13th cks for a long time and we will never see extra checks.
Retirees write and call not to reduce their benefits but without changes, STRS will stay at infinity and stop paying. STRS cannot pay without changes. Actives will be under these pending changes.
II: Investments: Risks
Current retirees have what they do because of high risk investments. We wouldn't have the benefits we do now if we hadn't had high returns and low risk. Pension systems nationally are similarly dependent if looked at long term and similar in size and need for pay out as STRS. Protections: None
Either cut more benefits NOW then proposed in COLAS, age of retirements, etc. OR keep 8% projections now and cut later if needed. If we stay at infinity (ability to pay pensions), STRS will stop paying eventually. Some feel legislature will save us but again, they answer to taxpayers who do not have sympathy for us. They retire under much reduced benefits of Soc. Sec. and have lost all or much of their investments, pensions, etc.
IF STRS comes upon better times and unfunded liability shrinks much below 30 yrs, STRS will have a choice to :
1. not be so dependent on risk of the market and slowly over time reduce its projection to 7%
OR
2. increase contributions to the Health Care fund
Can't have both low risk or moderate risk and high returns to meet liability-ability to pay pensions long term.
We are at less than 10 yrs for health care funding dependent on 8% returns.
We have benefits now from 8% projections.
IF we lowered the projection now to even 7%, the impact would probably be to further lower or elim. COLAS and/or the 2.2% would have to be lowered so less per month through legislation.
We cannot simply shoot out reductions without serious ramifications.
Question to Gary:
Do you feel it will ever come to lowering current retirees' pensions: "No, but STRS that STRS cannot pay without changes which neither retirees nor actives want and without a projected 8% return."
Molly Janczyk
STRS Retiree

STRS: Top 10 Country Hits


By Popular Demand, STRS's Top 10 Country Hits!

10. STRS Sold Me The Tractor, But All I Got Was The Shaft

9. Wake Up LIttle Susie; STRS Is Broke And It's Time To Get a Job

8. STRS Put My Money In The Stock, But They All Ran Away

7. I Lost My Baby When I Lost My 13th Check

6. My Baby Promised Me Love Until She Saw My COLA

5. How Did We Lose So Much So Fast?

4. If You Can't Live Without Your Health Care, Why Aren't You Dead Already?

3. Bye, Bye COLA; Bye, Bye Health Care; Hello Poverty; I Think I'm Gonna Cry

2. Whether I'm Good Or Whether I'm Bad, My PBI Is By My Side

1. The Investment Staff Got the Bonus And I Got The Finger

Rich DeColibus, November 11, 2009

Advice from Molly: Get involved

From Molly Janczyk, November 11, 2009
Subject: Attend STRS Meeting for its Investment Report:Thur. Nov 19 and Fri. Nov 20
STRS Meeting: Thurs and Fri: Nov 19 and 20:
Read the small print below [click here]. The Investment Dept is reporting to the Board on the bulk of Thurs. This is a chance to hear details AND approach Steve Mitchell during breaks at this meeting. You simply walk up to him to ask questions about your concerns. On Fri. long term fiduciary and financial constituency is planned.
Handouts are always available during these meetings. Often, overheads accompany these handouts. The Board typically asks questions of the Investment Dept as well directly to Mitchell or staff.
This is a perfect time to attend the STRS Meeting. You can also sign up to speak to the Board for 3 min. at Public Speak, 1 PM on Thurs.
You can order tapes of the meetings through STRS to hear every word presented but without the handouts for presentation. I imagine you could order those handouts, not sure if they mail them.
I get minutes of monthly meetings with points summarized but not in depth.
Get involved, go to meetings, approach STRS Investment Staff (they are not scary -- I have done so many times), and any STRS Board member, like the Investment Expert Appointees (Craig Brooks and Regina Burch), Exec. Direc., you like. Some of us have done so for years. It is easy and they are receptive.
The Health Care Dept is there and Greg Nickell and Sandy Knoesel are more than receptive to being asked questions. If you have someone in mind with particular needs they will take names and look into concerns.
THIS IS THE WAY TO GET TO SPEAK TO STRS STAFF AND GET DIRECT FEEDBACK vs. emails. Also, calling them is effective. IF they get to know you and you are respectful, THEY DO respond. As you have often seen, I have sent responses from them to you.
We are ALL busy but if you or your group is concerned and wants answers, this is the best way to proceed. You can also schedule meetings with staff. I have done this as have others and have never been turned down. CORE used to do roundtable question and answer meetings regularly with the Investment and Health Care staffs.
Anyone can ask for a sit down. Unending emails tend to lose their effect.
It takes time, effort and advance preparation to do these things, but it is a more satisfying result. Not necessarily by what you want to hear but by hearing more in depth the ins and outs of the departments' planning and reasoning. You can leave presentations for consideration just by going to the STRS Board meetings by passing them out to staff and STRS Board meetings whether you speak or not.
IF you have suggestions, be sure they apply to large pension system investments and apply to continual need for pay outs while earning income. Those needs are not the basic investment needs. We all think we understand investments but be prepared with duty to both current and future retirees for paying out short term and long term promised pensions. Do remember that STRS pays out $1.5 Million daily for health care along with current pensions while trying to sustain returns for long term payouts. You presentation must be detailed and prepared for the needs of STRS. All pension systems rely on risk as stated in research. That is their weakness as they have greater needs for constant payouts while ensuring monies for future retirees is in place. That is why they must realize a certain return. DO I AGREE WITH ALL (NO) THIS AND WISH IT DIFFERENT (YES), but that seems the reality. I think it is important for all to deeply research many pension systems and how they operate. Not one who seems good today but the entire histories of operations and compare them to STRS. Get into the details and use large system investment minds to rework those details. You cannot compare personal returns or group returns that do not have the same needs for payouts as pension systems. Also, we have long relied too heavily on the stock market (unfortunately) and now have to deal with that fact making overnight drastic changes unlikely or untenable.
We cannot just throw out that STRS relies too heavily on the market, needs less risk, and show losses. That bridge has burned. Too little too late. We need in depth and promising solutions. We need sit downs or presentations to the Board for investments that show promise of meeting STRS needs.
GO TO MEETINGS! TALK WITH STAFF AND BOARD MEMBERS! GIVE THEM YOUR PRESENTATION FOR CONSIDERATION! TAKE THEIR PHONE NUMBERS AND TALK TO THEM ABOUT THOSE PROPOSALS! This has been done before by several among us with in depth graphs and numbers presented. However, this time around, STRS did go outside its usual consultants and conferred with other investment consultants as well. The plan is in place. I doubt that anyone out there is going to change it now. BUT, presenting learned proposals for future payouts and earnings in numbers which STRS must deal with, can influence future decisions IF they are indeed within the parameters of what large pension systems need to do .
The choice is yours. Continual emails which are not having an effect or go to meetings and speak with the Staff and Board members yourselves! Give presentations directly to them! Ask for answers to all points. Ask them directly on the spot your most important questions. 'Tell me WHY, this or that will not work.' They are actually VERY approachable! Mitchell, Slater, Knoesel, Nickell, Brooks. You walk up, shake their hands, Mitchell or the rest will smile and be interactive. If they did this with me, they will do this with anyone..........except perhaps, a very few who are continually very hostile in their approach. I have heard directly of 2 names only that invoke that response which is why they do not get answers, I guess.
Molly J.

STRS Board meeting November 18 - 20

From STRS, November 11, 2009
PUBLIC MEETING NOTICE
The State Teachers Retirement Board and Committee meetings currently scheduled at the STRS Ohio offices, 275 East Broad Street, Columbus, Ohio 43215, are as follows:
Wednesday, November 18, 2009
...11 a.m. Disability Review Panel (Executive Session)
.....1 p.m. Ad-Hoc Committee for Retreat Review
Thursday, November 19, 2009
.....9 a.m. Retirement Board Meeting
Friday, November 20, 2009
.....9 a.m. Resumption of the Retirement Board Meeting
The Retirement Board meeting will come to order at 9 a.m. on Thursday, Nov. 19, 2009, and begin with a report from the Human Resource Services Dept., followed by a report from the Investment Dept., Executive Director’s Report and public participation. The balance of the report from the Investment Dept. will follow public participation. The Retirement Board meeting will resume at 9 a.m. on Friday, Nov. 20, and begin with a report from Long-Term Fiduciary and Financial Contingency Planning followed by routine matters, old business, new business or other matters requiring attention.

Jim Conard: Why not STRS staff?

From: Jim Conard
To: Lynn Wachtmann ; Dan Dodd ; Todd Book ; Kirk Schuring ; Sue Morano ; Keith Faber ; John Curry
Sent: Tuesday, November 10, 2009
Subject: Why Not STRS Staff??
ORSC Board and John Curry,
In quoting from the Oct. 2009 News Letter from STRS Ohio: "Their plan includes an increase in contributions; an increase in final average salary years; a change in eligibility for retirement; a change in the benefit formula; and a reduction in the annual cost of living adjustment".
Nothing is being said about what STRS can cut in the way of staff and benefits. For example, they have 81 investors that make an average salary of $220,000 a year, a staff of almost 600 people and some members who make more than $300,000 a year.
Since everything is on computers these days I believe they could run that organization with 27 investment staff and 100 staff members. Above all, they should be cutting salaries.
I don't believe Mike Neff has the intestinal fortitude to run this organization. We need to get a new director as well as a new board.
Jim Conard, Retired Teacher, Shelby County

Tuesday, November 10, 2009

Nancy Hamant's response to James Nash/Columbus Dispatch re: Medicare Advantage

From Nancy Hamant, November 10, 2009
Mr. Nash:
Many STRS retirees are very apprehensive about STRS moving into Aetna Medicare Advantage Programs starting January 2010. Why -- because many research studies and articles (including one in Consumers Reports) have cited the high administrative costs in Medicare Advantage Programs. Those costs range from 13% up to 18%, whereas, regular Medicare has administrative costs of 5% or less. Also, the Medicare Advantage programs receive subsidies from the federal government via increased monthly premiums paid by those enrolled in Medicare.
It appears that Medicare enrollees are paying profits to private insurers who offer Medicare Advantage programs. Such a convoluted process needs to be cleaned up! So what is needed, is not only a reduction of subsidies to private insurers to guarantee their profits, but in addition, strong regulations to ensure that Medicare enrollees receive adequate and cost-effective services!
Sincerely,
Nancy B. Hamant
Maineville, OH

Response from James Nash, 11/10/09:

Interesting points. Thanks for the information and your thoughts.

Dispatch: Medicare option threatened

Medicare option threatened
Health-care reform package would cut money from Medicare Advantage plans
November 9, 2009
By James Nash
THE COLUMBUS DISPATCH

A little-noticed provision in the House-passed health-care plan would strip billions of dollars out of privately run Medicare plans that emphasize wellness and are increasingly popular among retirees in Ohio and nationally.

About 504,000 Ohioans are enrolled in Medicare Advantage programs, which are run by private companies that contract with the government to offer health plans that cover traditional Medicare benefits as well as supplemental programs such as preventive care.

The plans also are offered to retirees in Ohio's three largest public pension systems: the State Teachers Retirement System, Public Employees Retirement System and School Employees Retirement System.

About 162,000 retired school and government employees are enrolled in Medicare Advantage, say officials at the Public Employees Retirement System and the School Employees Retirement System. The program is being offered to retired teachers for the first time in open enrollment now under way. House Democrats say the health-care package would save $154 billion by eliminating overpayments to private providers of Medicare Advantage plans. The plans cost significantly more per capita than traditional Medicare and do not result in better health care for retirees, the Democrats say.

U.S. Sen. George V. Voinovich, R-Ohio, and many other Republicans disagree.

The health-care package narrowly passed the House Saturday night and now heads to the Senate.

Voinovich said the legislation would cut half of the benefits currently offered as part of Medicare Advantage.

"I support health-care reform that will provide quality, affordable health-care insurance for all Americans, but it should not come at the cost of limiting choice and access to physicians and health services for seniors," he said in a statement.

Democrats have acknowledged that some Medicare Advantage beneficiaries would lose some benefits, but they characterize the changes as minor, such as the loss of free gym memberships.

Medicare Advantage is not universally popular. Many of the 120,000 Public Employees Retirement System retirees who are enrolled have a "love-hate relationship" with the program, said William Winegarner, executive director of Ohio Public Employee Retirees Inc., an advocacy group for retirees.

Retirees appreciate the emphasis on preventive care, improved access to health clinics and services such as a 24-hour nurse hot line, but they don't like the extra paperwork, he said.

"We like it because there is an economy for the pension system," Winegarner said. "We don't like it because of the hassle."

None of the three state pension systems that offer Medicare Advantage has studied the impact of the federal legislation on their members. Spokesmen for each pointed out that the plans would be unchanged in 2010.

"Since the debate in Washington continues, it's not possible to say if changes would be needed in our program," said Richard Baker, a spokesman for the Public Employees Retirement System. "We're watching developments closely. Our intent is to continue providing a clinically focused health-care program to our retirees."

jnash@dispatch.com

"Duke" and Jane Snider: Report on October 28 meeting with Mike Nehf and state representatives

From Kenneth "Duke" Snider, November 10, 2009
Subject: Danny Bubp---Mike Nehf Meeting Oct. 28, 09
Jane and I want to thank our State Representative Danny Bubp for organizing a meeting October 28, 2009 in his office at Columbus with STRS Executive Director Mr. Mike Nehf, Ms Terri Bierdeman (STRS Director of Governmental Relations), and State Representative Matt Huffman. As most of you know Danny Bubp and Matt Huffman cosponsored H. B. 177.
Danny began the meeting by introducing everyone, and immediately attacked the bonuses and spending going on at STRS. Mr. Nehf responded by acknowledging his awareness of the bad feelings about the bonuses and spending.
Jane and I voiced our thoughts about the past and present concerns at STRS i.e. spending, bonuses, COLA, thirteenth check, STRS employees’ perks, future of the pension system, etc. We acknowledged the fact that Mr. Nehf inherited situations which he will not be able to correct, but there are some which he can. Mr. Nehf stated he was in favor of the COLA and hasn’t forgotten about the thirteenth check.
The reason Jane and I started our discussion as such was to illustrate to Mr. Nehf some background as to why many retirees are angry and do not trust STRS, and it will take time to regain that trust. Mr. Nehf seemed to understand.
Representative Huffman strongly emphasized his objection to the 15%-16% raises given to STRS employees. Mr. Nehf responded by stating the increase was for 2008. Representative Huffman said the salary increase was the same thing as a bonus and was displeased with both.
Mr. Nehf and Ms Bierdeman (who was very sick and said very little) were very polite, and listened to all concerns. Mr. Nehf answered and related in a dignified and polite manner. We were impressed with Mr. Nehf’s empathy and sincerity.
We hope Mr. Nehf deeply understood our message of trust and treating retirees just as STRS employees are treated. We also hope Mr. Nehf makes quality decisions for retirees and active teachers.
We want to thank both Representatives for standing up for retirees and taking time to voice their thoughts and concerns about STRS. Both are troubled as to what has and is happening at STRS. Jane and I also want to express our appreciation to Mr. Nehf and Ms. Bierdeman for taking time to attend the meeting, listening, answering, and responding. We certainly hope they will not let retirees and active teachers down. Mr. Nehf told us he would be happy to attend a meeting in our area.
NEWS FLASH!!!
There will be a meeting with Mr. Nehf, Dec. 07, 2009 at 3:00 p.m. at the Western Brown High School, Mt. Orab, Ohio. RSVP before Dec. 1, 2009. Duke & Jane: 937-446-2404
Jane and I, both retirees, represented ourselves and no organization. We tried to condense the meeting information.
Duke and Jane Snider
Sardinia, Ohio

Monday, November 09, 2009

Molly Janczyk: Letter to Senators Brown and Voinovich

From Molly Janczyk, November 9, 2009
Subject: Senators Brown and Voinovich
Dear Senators,
I am an STRS Retiree. I am certain you know of the devastation current retirees have faced in recent years having the task of saving health care for STRS. Our premiums have increased up to 800% and in 2010 spousal premiums will be a $924 as we pay full subsidy. Our premiums will be $231 totaling $1,155 just for premiums. When I retired in 1999, my subsidy was 0 and my spouse was $33. We receive only simple COLAS based on our first year of retirement and so have no hope of covering such untenable increases. Any of us who are able have had to return to work to pay for health care while others have cut or eliminated meds, treatments and Dr. visits, sold homes, cars, and live a most basic life.
Recently, STRS has spiraled down again having relied so heavily on the stock market. They insist on higher risk investments to earn and reestablish earnings to make up for these declines. Former OFT Pres. Tom Mooney stated in late 2002 and early 2003 that STRS had relied to heavily on the market, never established a revenue for health care funding and now the burden of saving health care was heaped onto the backs of retirees. After the decline in the early 2000's, STRS relied heavily on risk investments to return us to stability. While it worked, it was wonderful. Then another crash.
Having reviewed their investment policies after this recent deep recession, they still insist they must rely on risk investments though they have modified some parts for more risk management. Senators, we simple minded investors know the market goes up and then down. We fear further declines without firm safeguards in place to never return to this kind of loss. We are not investment experts but there are investment experts on the STRS Board and they agree with STRS and consultants. The same consultants who gave advice resulting in this mess. Problem: Now, if STRS does not get 8% returns, they cannot meet their obligations as now the unfunded liability in at infinity.

Shirlee Zerkel: Questions for Greg Nickell re: the Aetna Medicare Plan

From Shirley Zerkel, November 8, 2009
Subject: Some real concerns about the Aetna Medicare Plan!
Dear Mr. Nickell:
After attending a meeting in Lima sponsored by STRS concerning the Health Care Choices for 2010, I feel I still need more clarification on some concerns. I also went to Aetna's booth at that meeting and was given a booklet entitled "Aetna Medicare Enrollment Information." It had Aetna Medicare in the left top corner and the STRS Ohio in the right top corner. A number that appears to be an ID number is 58 32 305 1-ORSSTRS. Most pages in the booklet have no numbers so I will explain my questions as best I can. Because of the information at the meeting and what is stated in this booklet, I have several major concerns and yet I have to make a decision before November 24. I need some answers very soon.
1. We did not receive a list of vision and hearing screening places. Why?
2. No information was given about where discounts for eyewear or hearing aids. Why?
3. I received a list of Wellness facilities for the Lima area, but people in Columbus did not. Why?
4. On the 5th page that has writing on it, titled Aetna Medicare Plan (PPO) Approved Network Service Area Listing. The following shows a list of approved counties that are included in the Aetna Medicare service area as of January 1, 2010. My county and every county that borders mine is not on that list.
What does that mean for those of us living in that county?
Must we travel over 70 miles for a doctor or approved facilities?
The hospital I usually go to is not on their online list for Allen County; what do I do?
5. How do we retirees know which retail pharmacies are participating Medicare ones. (page 12 as I counted)?
6. Does the $1,500 a year out-of-pocket costs for retirees include the $15 doctor co-pay? (page 13 or 1, as this page has a number).
7. Who decides what is medically necessary? (page 15/3 as this page has a number)
8. Is no cosmetic surgery covered in this policy? (page 17)
9. What is meant by the following definition? (page 17) "Inpatient Hospital Deductible -- the amount of covered inpatient hospital expenses you pay for each hospital confinement is in addition to any other copayments or deductibles under your plan"
10. What is meant by the Emergency Room Deductible -- same description as above on Page 17?
11. Is our Aetna Medicare Plan a Direct Access/Open Access one? Please explain.
12. Does our STRS Aetna Plan require precert for hospitalization and other services such as doctors, etc? (page 19.)
13. The following is on page 19. "If your Aetna plan allows you to go outside the Aetna network of providers, you will have to get that approval yourself. In this case, it is your responsibility to make sure the service is precertified, so be sure to talk to your doctor about it. If you do not get proper authorization for out-of-network services, you may have to pay for the service yourself. You can not request precertification after the service is performed. To precertify services, call the number shown on your Aetna ID card." Please explain what is meant here.
What if a patient were taken to the hospital after an accident and was unable to call to precert. We are not always conscious at such a time?
14. Page 24 states "How Aetna Pays Out-of-Network Providers Some of our plans pay for services from providers who are not in our network. Many plans pay for services based on what is called the "reasonable, " "usual and customary" or "prevailing" charge. Other plans pay based on our standard fees for care received from a network provider or based on a percentage of Medicare's fees. Which one is the STRS plan?
15. "When we pay less than what your provider charges, your provider may require you to pay the difference. This is true even if you have reached your plan's out-of-pocket maximum" Please explain?????
16. Will our STRS plan use the Prevailing Charge Plan or the FEE Schedule Plan?
17. During the question and answer period of the meeting, a question was asked by a retiree in front of me: "What if my long time doctor was in the plan at the beginning of the year or agreed to bill the plan and then six months later, he decided to leave the plan? Can I then leave the STRS Medicare Plan?" Ms. Cole clearly stated that this retiree could. According to my Medicare and You manual from Medicare this is not true. What ever program a person goes with for the coming year is what they will have to stay with for that year. That was clearly confusing to me; please explain.
I am a very confused retiree at this point and a worried one,
Shirlee Zerkel

Here's some things you may want to know about STRS: "Dear STRS....."

From Rich DeColibus, November 9, 2009
Top 10 Questions To Ask STRS
10. Are STRS employees public employees and, therefore, subject to all open records laws?
9. How many (what percent) of our Investment Associates are college graduates from accredited institutions of higher learning?
8. How many (what percent) of our Investment Associates have a significant background (major or minor) in finance and economics?
7. If the PBI program is so good, why is STRS afraid to subject it to a vote of the members (active and retired)? It's our money being paid out.
6. Why isn't STRS the retirement system for STRS employees? Granted, it would require one line of legislation, but who is opposed? Are the people who invest our money afraid to hitch their cart to our horse?

5. STRS has proposed a number of adjustments to benefits, retirement ages, years of service, etc. Is STRS also proposing the same proportional adjustments to its employees as it has proposed for retirees and actives?

4. Does STRS apply the same percent increase of health care premiums for its employees as it applies to the retirees' health care premiums?
3. Do STRS retirees' dependents have to pay the spouse rate for health care, or is there a special reduced rate for dependent children?
2. What percent of the actual cost of the health care premium does STRS pay for its employees and how does that compare to the actual health care premium cost (percentage-wise) it pays for retirees?

1. How much do STRS employees pay for their spouses, if the spouse is not employed by STRS or an STRS retiree?

Tom Curtis: Silence from STRS executive director


From Tom Curtis, November 9, 2009
Subject: 110909 Silence From The STRS Executive Director Michael Nehf
Click images to enlarge.

Mr Nehf,
It is worth noting that it appears you have stopped communicating with your stakeholders, why is that?
You have failed to respond to my most recent questions concerning reductions in operating expenses and questions of many other retirees.
Sir, whether you desire to or not, is it not your ethical responsibility and duty as the Executive Director of the OSTRS to respond to your stakeholders?
Thomas Curtis
STRS Stakeholder, 1998 retiree

Sunday, November 08, 2009

2010 Healthcare Premium Rates, p. 1-2

Click on the images to enlarge them. There are six pages (3 posts).



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2010 Healthcare Premium Rates, p. 3-4

2010 Healthcare Premium Rates, p. 5-6


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Kathie Bracy: Follow-up letter to Mike Nehf

From Kathie Bracy, November 8, 2009
Subject: Fwd: Healthcare coverage for spouses of STRS employees
Dear Mr. Nehf,
Since I have not heard back from you regarding questions I posed on October 30, I am re-sending the e-mail to you (below), in case you didn't receive it.
Thank you.
Respectfully,
Kathie Bracy
From Kathie Bracy, October 30, 2009
Subject: Healthcare coverage for spouses of STRS employees
Dear Mr. Nehf:
How many STRS employees' spouses are covered by the STRS employees' healthcare? What does this cost STRS? Do the STRS employees pay any portion of the spouse's coverage? If so, how much? Thank you.
Respectfully,
Kathie Bracy
Larry KehresMount Union Collge
Division III
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