Thursday, April 19, 2012

Remarks by Dennis Leone to the STRS Board on April 19, 2012

My name is Dennis Leone, and I have been a retiree since January of 2005.  I also recently served as an elected RETIREE member of this board.
I am here today to talk about the word "fairness."  The STRS Board and OEA have utilized an interesting definition of the word "fairness" in recent years as it pertains to retirees.  I'd like for all of you here today to pretend that you retired in 1980 at age 60.   For 20 years beginning in 1980, you were able to budget paying for things like home insurance and car insurance with something called the 13th check.  Suddenly, when you turned 80 in the year 2000, the STRS Board told you "Sorry, we've decided to stop giving you that benefit, and we are stopping it right now."  There was no phase-out period.  There was no thought of protecting the oldest retirees who had the least -- the STRS members who were really counting on that money.  There was no gradual change like -- over 4 years -- providing 75% of the payment, then a 50% payment, then a 25% payment, then stopping it.  No.  The STRS Board definition of "fairness" was to stop it immediately, and that is precisely what the board did.
Then when you turned 83 in 2003, the STRS Board said "Sorry, we've decided to stop helping you pay for health insurance for your spouse, and we are stopping it right now."  Again, there was no thought about providing a phase-out period over even a few years.  Nothing to protect the oldest retirees who have the least.  No.  The STRS Board definition of "fairness" was to stop it immediately, and that is precisely what the board did.

Now in 2012, you are 92 years old, and the STRS Board is considering a plan to say "Sorry, but we need to completely take away your statutorily guaranteed 3% COLA for one year, then shave 1% off your COLA every year after that."  No phase-out period over a number of years…and nothing to protect the oldest retirees who have the least.   The STRS Board definition of "fairness" for these 3 illustrations has been to stop the benefit for retirees immediately with no gradual phase-in to help mitigate the adverse impact of the change.
Now, with active teachers, however, the definition of "fairness" is something different.  The OEA Way, which the board seems to embrace, is to delay and phase in changes in every way possible.  To be "fair" to active teachers, you need to gradually eliminate the ridiculous 88% benefit.  After all, the teacher who has been working for 33 years, and who could retiree with an 82% benefit right now, certainly needs to be protected in the spirit of fairness so she can get to 35 years and 88%.  Right?  
It's the same with the minimum age 60 requirement. Never mind that the current average age of retirement at STRS is 59.1 years.  The OEA Way and the plan the STRS Board appears to be favoring, is to delay the age 60 requirement for 13 long years in order to be "fair."  Let's think about this for a second.  This means that if a current teacher wants to retire at age 52, this 13-year phase-in will protect an active teacher who is now 39-years-old.  Did you hear what I just said?  You are protecting a 39-year-old current active teacher, but you turn your backs on a retiree who is 79 or 89.  But oh, you might say, the new plan calls for active teachers to receive an immediate 1% contribution rate increase.  And what happens after that?  The additional 1% increases that active teachers will receive are phased-in over a 4-year period, in the spirit of "fairness."
Have you ever thought about how different the decision-making would be on this board if the 11 members were retirees.  Even though you should, I really don't think you will be willing to change anything in the final plan to make it fairer to retirees.  I don't believe that you will say "What a minute, we should do a better job of protecting the oldest retirees who have the least."  No sir.  Not at the expense of active teachers because you certainly do not want the wrath of OEA upon you.
Have you asked for the data to see how the elimination of the COLA for one year -- and a 1% COLA reduction in future years -- will affect retirees?  As a board member you should always ask, specifically, how your decisions will REALLY affect retirees before you vote on them.  I did, every time.   Would you believe me if I told you that over just 10 years, a $40,000 pension recipient from STRS will NOT receive $30,000 because of the plan before you?  How do you expect the oldest retirees to handle that?  Ask for the data.  It's your job as a board member to do so.
I recall in 2003, when I was working as superintendent of schools in Chillicothe, I published a 13-page report about the inappropriate spending practices by the STRS staff and STRS Board.  What was the board's reaction (and I wonder if you will do the same this year)?  The board's reaction then was to say "We know what's best for this pension system and its members, not you Mr. Superintendent."    Do you know what OEA did at that time?  OEA sent out a statewide bulletin that said my findings were "misrepresentations" and urged teachers to dismiss them.  Boy, that was a mistake, as those of you who are STRS historians know.
Then in 2008, when I was on the board, I recall how I was the ONLY board member in the spring, summer, and fall of that year, who said "The STRS staff and board members need to stop telling everyone that pensions are secure, because they are not."  I publicly disagreed, in writing - even though ORTA refused to publish what I wrote - that STRS was using unrealistic payroll growth assumptions and unrealistic stock market return assumptions.  Of course, I am sure you remember what happened with the stock market a few months later.  And what did Patricia Frost-Brooks from OEA do then?  She spoke to the board, accused me of being divisive and urged the board to reject recommendations that I was initiating for improvements.  That was the OEA Way.  I was not falling in line with the majority and "company" position.  I wasn't a team player is what she said that day.
You have an opportunity right now to demonstrate "fairness" in a manner that shows you really care about retirees.  STRS is the State Teachers RETIREMENT System, not the State ACTIVE Teachers System.  The definition of "fairness" should not be and cannot be to always hit retirees immediately at the expense of protecting active teachers and making OEA happy by delaying changes over years and years.  Oh I wish you had retired at age 60 in 1980, then maybe you would better understand what I've said here today.
Thank you.
Larry KehresMount Union Collge
Division III
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