Dennis Leone's Testimony September 5, 2012 at the Ohio Statehouse

From Dennis Leone, September 5, 2012

The hearing room today was packed at the Statehouse for the House Sub-Committee on Health, Aging, Retirement and Pensions. I saw 3-4 staff members from STRS in the room. Also present was Andy Douglas, former State Supreme Court Justice, and Aristotle Hutras, former ORSC CEO.

The executive directors of all 5 pension systems were asked to give brief presentations. State Representative Kirk Schuring, Chair of the Sub-Committee, presided. All committee members were present, including State Representative Lynn Wachtmann.

After the 5 presentations, there were 4 in the audience who had signed up to speak: Someone named Darnell Robinson from OFT (who urged passage of Senate Bill 342), a representative of the Ohio Assn of School Business Officials (who urged passed of the bills involving SERS and OPERS), a retired highway patrolman from Toledo (who spoke against any cuts in his COLA) and me. My testimony is attached [posted below].

None of the pension system CEOs and none of the speakers from the audience were asked any questions. In the audience were representatives from both OEA and ORTA, Neither spoke. I had the opportunity to speak with both Schuring and Wachtmann after the meeting. Both said they expect all 5 bills to be passed soon.

Dennis Leone

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September 5, 2012
House Health and Aging Sub-Committee on Retirement and Pensions
State Representative Kirk Schuring, Chair

I wish to address the Sub-Committee today as a State Teachers Retirement System (STRS) retiree and as a former elected retiree member of the STRS Board. I am disagreement with some provisions of proposed Senate Bill 342, as summarized below:

1. The STRS Board is seeking authority pursuant to Section 3307.26(6) and Section 3307.67(E) of proposed SB 342 to make future changes in the contribution rate of active teachers and the Cost of Living Adjustment (COLA) of retirees without a formal stamp of approval by the State Legislature. Specifically, as written, the language would authorize the STRS Board to ONLY reduce to the annual contribution rate of active teachers - while at the same time - lower or increase the annual COLA that retirees receive. While it may not have been the spirit of the STRS Board's plan to put more money in the pockets of active teachers at the expense of retirees, the net effect of the language before you could result in the STRS Board doing just that.

Your first reaction to what I've just said might be that this could never happen politically. I can tell you with first-hand knowledge as a former STRS Board member that these things can happen in the future and have happened in the past due to OEA influence on the STRS Board. When the STRS Board, at the urging of active teachers (some of whom were active teachers sitting on the Board), created the ill-advised and costly 88% benefit, it also was reducing dollars going to health care for retirees at the same time. And 3 years after the 88% benefit went into effect, what did the STRS Board do? It completely eliminated health insurance for spouses of retirees. There are other examples in the past of how the board has taken care of active teachers or given costly benefits to STRS staff members at the expense of retirees. Yes, that was in the past, (and I am a person who can provide specific examples of what has happened if you have any doubts), but believe me when I say that it can happen again in the future.

These 2 sections of proposed SB 342 previously mentioned definitely need to be re-worded so that the language will prohibit the STRS Board in the future from taking action that will put more money in the pockets of active teachers at the expense of retirees.

2. Section 3307.58(1)(b) of proposed SB 342 will provide an overly generous 14-year phase-out, let me repeat that -- a 14-year phase-out -- of the current retirement eligibility criteria. Retirees have NEVER been given a phase-out for ANY reduction in benefits they've had. The elimination of the 13th check wasn't phased-out . The total elimination of health insurance for retirees' spouses wasn't phased out. The upcoming reduction in retirees' COLA will not be phased-out. No sir . All changes that affect retirees always are immediate. There is no regard or grandfathering, none, for the oldest retirees who have the least. Do you realize that there are 30,000 STRS retirees who retired with a Final Average Salary of less than $30,000? No one seems to substantially care about them because they really don't have a voice. They are the least able to object to changes. You don't see OEA today seeking a phase-out of the reductions affecting these oldest retirees, do you? I guarantee you that if there was NOT a slow, gradual 14-year phase-out of the current retirement eligibility criteria in the plan before you, OEA would raise a stink with the STRS Board. I urge you to consider what I have said here today.

Dennis Leone, Former STRS Board Member (2005-2009)
Former Superintendent of Schools in Ohio for 23 years (Liberty Center, Talawanda, Chillicothe).