STRS sliding backwards once again?

From Dennis Leone, January 15, 2011

About 2000, without any warning whatsoever to retirees, the STRS Board suddenly eliminated the 13th check and dropped health insurance for spouses of retirees. Current retirees still receive a subsidy for health insurance, but the entire Health Care Stabilization Fund will die sometime between 2017 and 2019.

That will mean, for example, that retirees with a spouse will need to fork up the full cost for a family insurance plan......which currently is over $1,300 PER MONTH. By 2017, it likely will be over $2,000 per month. The sudden elimination of those two things for retirees and the plan to reduce retirees’ COLA immediately in 2011 make an OEA-desired 2015 phase-in for increased active contributions extremely insulting to retirees. In fact, it is an outrage.

The 88%/35-yr rule was adopted by the Board in 1999 and went into effect the following year, in 2000. Those retiring in 1999 and before – while all received a cash boost to make everyone feel better about the board’s 1999 action – are receiving 77% (not 88%) if they worked 35 years.

So, the bottom line is that if the 88%/35-yr rule is eliminated in 2011, there were 12 years of the “haves” and “have nots” – those retiring before 2000, and those retiring in 2000 and after. (The year 2000 is year 1, and 2011 is year 12.) Any way one tries to twist the data associated with this, it has been a 12-year, $1 billion hit on the STRS pension fund.

It should never, NEVER have happened. It happened at a time when over 300 non-investment STRS employees also were getting giant bonus checks every year, just for coming to work and doing their jobs. It happened at a time when the STRS Board also was insulting retirees by spending pension money on parties, booze, multiple trips to Honolulu, and expensive sculptures – while OEA consciously and deliberately looked the other way. There wasn't enough money for spousal health insurance and a 13th check, but there was obviously plenty of money for these things and for future fat, 88% pensions.

It’s a major STRS/OEA embarrassment when one really thinks about it. The current STRS Board is displaying many of the same characteristics that the STRS Board displayed in the early 2000s. Protecting current retirees is No. 2 in importance. Protecting the STRS staff, minimizing the impact on active teachers, and making OEA happy, collectively, are No. 1 in importance today.

Dennis Leone
STRS Board Member between 2005 and 2009