Friday, May 18, 2012

Educators and Retired Educators and the unkindly push to transform our pensions into a Defined Contribution model


From John Curry, May 18, 2012
So, you don't believe that some of our Ohio politicians are thinking about changing your Defined Benefits pension to a Defined Contribution model?
You'd better take a look at this scanned page from the office of Representative John Adams (R-Sidney), ALEC's Ohio go-to politician, requesting legislation that was introduced into the Utah legislature which was designed to change their DB pensions to DC pensions. Here is the source of this document that was obtained from the office of Rep. Adams using the Freedom of Information Act. After reading it I think you will find the smoking gun connection!
John
Click image TWICE to enlarge.
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Report on May 2012 STRS board meeting

From STRS, May 18, 2012
May Board News
Ohio Senate Passes Pension Reform Legislation; STRS Ohio Hopeful That House of Representatives Will Take Action
Executive Director Michael Nehf reported at the May Retirement Board meeting that the Ohio Senate passed STRS Ohio’s long-awaited pension reform bill (Sub. Senate Bill 342) on May 16 by a 31–2 vote, paving the way for the House to hopefully take similar action yet this year. Retirement Board Chair Jim McGreevy expressed appreciation to the Senate and to the bill’s co-sponsors, Senate President Tom Niehaus (R-New Richmond) and Senate Minority Leader Eric Kearney (D-Cincinnati) for taking action on pension reform. McGreevy also complimented STRS Ohio stakeholders for their work in support of the bill.
On May 8, the co-sponsors introduced four pension reform bills that were assigned to the Senate Insurance, Commerce and Labor Committee. In testimony that afternoon, Nehf told Committee members that the changes represent “the first time in STRS Ohio’s history that benefit reductions were being sought,” and that the changes are “necessary to preserve the pension fund and for the plan to meet its funding obligations.” The executive director’s complete testimony is available on the STRS Ohio website. Additional testimony from STRS Ohio constituents in support of the bill acknowledged that the pension reform changes are necessary to strengthen the financial condition of the retirement system. The Committee passed the bill on May 15 in an 11–1 vote.
STRS Ohio first addressed pension reform in 2009, when the Retirement Board approved a plan to modify benefits in September of that year. In response to constituent and Statehouse input, the board amended its proposal in October 2010 and January 2011. The reform package went through one more revision in April 2012 following additional review and study by the Retirement Board — steps that were vital in creating a clear picture of the system’s financial condition. The plan’s components include:
• Increasing age and service requirements for retirement.
• Lowering the benefit formula.
• Increasing the number of years in the final average salary calculation.
• Increasing the member contribution rate.
• Lowering the cost-of-living adjustment (COLA) for current and future retirees; freezing the COLA for one year for current retirees; and deferring the COLA until 60 months after the date of retirement for new retirees.
The bill also includes provisions that the Retirement Board approved at a special meeting on May 15. These provisions would give the Retirement Board authority in the future to adjust member contribution rates, the COLA, and age and service requirements without legislative approval — on the condition that these adjustments would not materially impair the fiscal integrity of the retirement system or are necessary to preserve the fiscal integrity of the retirement system.
All of the changes in STRS Ohio’s proposed plan require legislative action by the Ohio General Assembly and the governor, as all the plan components require changes in existing statute. Now, with the action taken by the Ohio Senate, STRS Ohio will turn its attention to the House of Representatives. STRS Ohio will continue to use our newsletters, website, eUPDATE email news service and face-to-face meetings to keep members informed about the progress of the legislation and any changes going forward.
Retirement Board Approves Changes to Regional Health Care Plans
At its May meeting, the Retirement Board approved health care program changes that will affect benefit recipients enrolled in the AultCare and Paramount regional plans beginning January 2013. These changes are in response to changes the board approved in April to its national plans (Medical Mutual, Aetna and Express Scripts). Enrollment in the regional plans is about 6% of the total STRS Ohio health care enrollment.
Highlights of the approved 2013 regional plan changes include:
• Changing AultCare deductibles, out-of-pocket maximums and copayments for emergency room and urgent care to levels similar to the Medical Mutual Plus Plan and Aetna Medicare Plan (PPO).
• Eliminating one of two Medicare Paramount plans that has only eight enrollees.
• Applying the Express Scripts pharmacy changes (approved by the board in April) to the AultCare and Paramount plans.
Additional 2013 plan information will be provided in the July issue of STRS Ohio News for Benefit Recipients and in open-enrollment materials. There are no changes to the 2013 Kaiser plans. In June, Member Benefits staff is expected to present final 2013 health care premiums for board consideration.
Retirements Approved
The Retirement Board approved 92 active members and 83 inactive members for retirement.
Other STRS Ohio News
STRS Ohio Received Nearly $190 Million Through Retiree Drug Subsidy Program
Since 2006, STRS Ohio has received federal subsidies through its participation in the Retiree Drug Subsidy (RDS) Program available through the Centers for Medicare & Medicaid Services (CMS). These subsidies, totaling nearly $190 million, are based on Medicare enrollees’ prescription drug claims incurred between Jan. 1, 2006, and Dec. 31, 2010. The subsidy money is deposited in the Health Care Stabilization Fund.

Thursday, May 17, 2012

Ohio Senate Passes Pension Reform Legislation

From STRS, May 17, 2012
Ohio Senate Passes Pension Reform Legislation; STRS Ohio Hopeful That House of Representatives Will Take Action
The Ohio Senate passed STRS Ohio's long-awaited pension reform bill (Sub. Senate Bill 342) on May 16 by a 31-2 vote, paving the way for the House to hopefully take similar action yet this year. The retirement system's Executive Director Michael Nehf applauded the primary co-sponsors for their diligence in seeing this bill through. "STRS Ohio is pleased that the Senate has taken this important step and passed this much-needed legislation. I want to thank Senate President Tom Niehaus and Senate Minority Leader Eric Kearney for stepping up to co-sponsor the bill and for supporting the Retirement Board's plan to strengthen the financial condition of the State Teachers Retirement System," said Nehf.
In testimony before the Senate Insurance, Commerce and Labor Committee, the executive director told Committee members that the changes represent "the first time in STRS Ohio's history that benefit reductions were being sought," and that the changes are "necessary to preserve the pension fund and for the plan to meet its funding obligations." Mr. Nehf's complete testimony can be viewed here. The Committee passed the bill on May 15 in an 11-1 vote.
STRS Ohio first addressed pension reform in 2009, when the Retirement Board approved a plan to modify benefits in September of that year. In response to constituent and Statehouse input, the board amended its proposal in October 2010 and January 2011. The reform package went through one more revision, in April 2012, following additional review and study by the Retirement Board — steps that were vital in creating a clear picture of the system's financial condition. The plan components include:
• Increasing age and service requirements for retirement
• Lowering the benefit formula
• Increasing the number of years in the final average salary calculation
• Increasing the member contribution rate
• Lowering the cost-of-living adjustment (COLA) for current and future retirees; freezing the COLA for one year for current retirees; and deferring the COLA until 60 months after the date of retirement for new retirees.
The bill also includes provisions that would give the Retirement Board authority to adjust member contribution rates, the COLA and age and service requirements in the future without legislative approval on the condition that these adjustments would not materially impair the fiscal integrity of the retirement system or are necessary to preserve the fiscal integrity of the retirement system.
All of the changes in STRS Ohio's proposed plan require legislative action by the Ohio General Assembly and the governor, as all the plan components require changes in existing statute. Now, with the action taken by the Ohio Senate, STRS Ohio will turn its attention to the House of Representatives.
Legislative leaders are looking for constituent support for these plan changes. A letter, phone call or email is a positive way to show your support and to let your representative know that these changes are necessary and will help preserve the long-term solvency of the retirement system. STRS Ohio will continue to use our newsletters, website, eUPDATE email news service and face-to-face meetings to keep members informed about the progress of the legislation and any changes going forward.

Wednesday, May 16, 2012

The pension hot potato bills rushed through with lightning speed

From John Curry, May 16, 2012
Ohio Senate passes public pension reforms in a rush
Joe Guillen, The Plain Dealer 
Posted: 05/16/2012 8:00 PM
COLUMBUS, Ohio -- A set of public pension reforms that include increased contributions by some public employees passed in a blur through the Ohio Senate Wednesday with bipartisan support.
The reforms also would increase the number of work years it would take for some employees to be eligible for retirement. Other changes include a new formula for determining a retiree’s income and a new set of guidelines for cost-of-living adjustments.

“We know the changes are not popular, but they are necessary,” said Senate President Tom Niehaus, a Republican from Clermont County.

While the reforms received little scrutiny in the Senate, the House of Representatives plans to take a slower approach. Speaker William G. Batchelder, a Republican from Medina, wants to review the results of an actuarial study expected this summer before moving forward, a spokesman for Batchelder said Wednesday.

Niehaus said the changes are necessary to ensure the financial stability of the pension funds and to deliver benefits to which the members are entitled. He stressed that the changes were based on recommendations from the funds.

The reforms cover four of the state’s five pension funds. Niehaus said legislation to address the fifth fund, the Ohio Highway Patrol Retirement System, is expected to be taken up next week. The five funds cover nearly 700,000 contributing members and about 400,000 beneficiaries and have combined assets of more than $160 billion.

The bills would increase contribution amounts for members of the State Teachers Retirement System, from 10 percent of members’ salary to 14 percent, and for members of the Ohio Police and Fire Pension Fund, from 10 percent to 12.25 percent. Increases would be phased in gradually over the next several years.

Contributions would not increase for members of the Public Employees Retirement System or the School Employees Retirement System.

The Senate passed four bills, one for each pension fund. The bills were introduced last week and each received only two hearings. But the pension funds recommended many of the recommendations contained in the reforms three years ago.

“I was recently asked, ‘why move forward now after not doing anything for years?’” Niehaus said on the Senate floor. “That is a fair question and, frankly, I am personally embarrassed that we haven’t moved sooner.”

In other business, Senate Democrats were put in the rare position of helping pass a GOP-backed bill. Opponents said the bill, which goes back to the House for concurrence, will lead to higher credit card interest rates.

The bill, which passed the Senate by a 19-14 vote, would allow Ohio-chartered banks and credit unions to avoid an interest-rate cap and charge customers the same interest rates as out-of state banks. Ohio-chartered financial institutions had been prohibited from charging more than a 25 percent annual percentage rate.

Help from Democrats was needed because seven Republicans voted against the bill. Sen. Nina Turner of Cleveland, Sen. Eric Kearney of Cincinnati and Sen. Edna Brown of Toledo were the three Democrats who supported the measure.

Supporters of the bill said eliminating the interest rate cap would help encourage banks to create jobs by expanding their services.

From a retirement system that really cares about its oldest retirees with the lowest pensions

From John Curry, May 16, 2012
The Ohio Highway Patrol Retirement System (from page 4 of the link below). They have COMPASSION. Do you know of a system that could have done this BUT DIDN'T?
I do! THIS is something we all can remind our House of Representatives of this summer by email, letter, phone calls or personal visits. STRS COULD DO THIS IF THEY WISHED. THEY DIDN'T, DID THEY? Of course, some people (and institutions) have the philosophy, "I got mine and the hell with anybody else."
John
2. The annual cost of living adjustment (COLA) applied to eligible retirees will range between 0% - 3%. The percentage rate will be determined by the Board as deemed necessary to comply with the actuarial valuation requirements of ORC 5505.121.
Exceptions are still in place for our oldest retirees who receive limited benefits.
Click image to enlarge.

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Tuesday, May 15, 2012

The Ohio Highway Patrol Troopers organization FIGHTS for its retirees! Who fights for OURS?

From John Curry, May 15, 2012
An excerpt from a May 14, 2012 joint memorandum from OSTA (Ohio State Troopers Association) President Larry Phillips and HPRS (Highway Patrol Retirement System) Executive Director Mark Atkeson to their active and retired members:
The Union has stated clearly that its opposition to the HPRS proposed language for incorporation into the Senate bills is driven by its belief that its members, who have by virtue of their service, acquired "vested" pension rights and by virtue of such rights [are] entitled to protection from alteration of the terms of their retirement as such relate to "cost of living provisions" and the "computation of final average salary".

ORTA and OEA-R are not speaking for us, so they must be against us

From RH Jones, May 15, 2012
Subject: RHJones on: Fw: Unlike ORTA and the OEA, the Troopers look out for their retirees' COLA
All:
Please read John's message. The Ohio Retired Teacher's Association (ORTA), nor Ohio Education Association - Retired (OEA-R) are not fighting for retired teachers' present benefits. This will hurt the membership count in these two retired teacher Associations. How do the officials of both these groups get by without fulfilling their pledge to protect retired teachers benefits? They appear to not care, and that puts us in danger of losing benefits -- a pushover in negotiating for us. This makes it easy for those STRS officials, who wrongly desire to make retired teachers out to be the cause of not meeting the 30-year amortization goal.
We ORTA & OEA-R members should not have to constantly try to get them moving to protect our pension! For once, the ORTA & OEA-R leadership should get themselves moving. They are not speaking for us, so they must be against us.
RHJones

Monday, May 14, 2012

Bill, congratulations.......

John Curry to Bill Leibensperger, May 14, 2012
By the OEA's move to represent educators in Ohio's charter schools the OEA has now "legitimized" the concept of a charter school in the eyes and minds of the public. For 30 years I paid dues into the OEA to, among other things, help ensure that the privatization of education in the State of Ohio would not flourish.
Your organization has now furnished the water and fertilizer for those who wish to nourish the spread of charter schools in this state. Of course, you can always try to, in your own words, "morph the charters into the kinds of schools the union can get behind." Good luck morphing....with charter schools receiving the OEA's acquiescence and the legislators and newspapers (see below) observing the same....... you'll need it. I look at these new dues your organization will now receive from these charter educators as "dirty money" and that the OEA has "sold its soul" in the process. I am sure you won't.
John
By: Jennifer Smith Richards
The Columbus Dispatch - May 14, 2012
ShareThisThe state's largest teachers' union has decided it's willing to organize in charter schools. The decision came after at least a year-long debate.
In its announcement of the policy change, Ohio Education Association President Patricia Frost-Brooks said she believes charter-school teachers could benefit from collective bargaining.
"The new policy is consistent with OEA’s principles, including the belief that all employees have the right to representation and bargaining”, she said in a news release.
A national group that advocates for charter schools and publishes charter data says Ohio has 42 charters with unions. The OEA has yet to organize in one, and the Ohio Federation of Teachers, the state's other large educator union, doesn't have any units in charters, either.
The Ohio Department of Education doesn't track unions in charters. But it might be that the unions that exist in charters actually are in conversion charter schools. In other words, they're holdovers from when the charter school was a traditional, district-run school.

Ohio legislators are a cheap date, aren't they?

From John Curry, May 14, 2012
New report details ALEC's "State-Sanctioned Corruption" in Ohio
By On May 14, 2012
Have you heard about ALEC?
The Center for Media and Democracy has just published a must-read report for anyone concerned about the shadowy influence of money on public policy in the Ohio Statehouse. The report is pretty dense, so we will try to provide some context and observations.
Organizations such as People for the American Way, Think Progress, and Common Cause have been doing great work exposing ALEC. Another good, dense, report from earlier this year can be found here. The Daily Kos had information on this organization back in 2011, and other reports from earlier this year were featured in the AFL-CIO web site.
What is ALEC?
ALEC is the American Legislative Exchange Council. The organization describes itself as a “nonpartisan public-private partnership of America’s state legislators, members of the private sector and the general public.” The organization claims to work “to advance the fundamental principles of free-market enterprise, limited government, and federalism at the state level.”
In reality, ALEC is an influential voice for corporate special interests in state legislatures across the country, including Ohio. What happens is that state legislators meet with corporate interests, including executives, lawyers, and lobbyists, to draft “model legislation.” ALEC, with the primary assistance of cooperative legislators, push for the model bills to become law.
The February report on ALEC noted that model legislation focuses on “a wide range of issues, including education, voter suppression, immigration, worker’s rights, consumer rights, health care and prison systems.” In Ohio in the first ten months of 2011, “33 bills were introduced in the Ohio legislature that are identical to or contain elements from 64 different ALEC ‘model’ proposals. Nine of those bills, containing elements from 33 pieces of ALEC legislation, have been signed into law.”
Why should we care?
Conservatives sharing ideas, no matter how bad, unconstitutional, or unpopular, is nothing new. It no secret, for example, the John Kasich and Scott Walker share ideas about union busting, and that is part of what led to S.B. 5. And we noted earlier this month we noted how the plan by some Ohio legislators to defund Planned Parenthood was based on laws in Texas that have been found to be unconstitutional.
Here is the key part: because of various loopholes in campaign and financial disclosure laws, ALEC provides the ability for corporate interests to influence legislators without disclosing their role or contributions.
The recent report from the Center for Media and Democracy contains a nice tick-tock of how easily ALEC model language can be inserted into Ohio law.
ALEC funnels money to legislators primarily through “scholarships” that fund lawmaker travel to meetings. Recently, meetings were held in Cincinnati, New Orleans, and Scottsdale. What is the loophole: because legislators pay a $100 membership fee to ALEC, and the General Assembly pays a $1000 membership fee, Ohio Legislators are not required to disclose the receipt of scholarship funds on their financial disclosure forms.
Go read the reports. We want to emphasize two things:
1. The Thin Line Between Legal and Illegal
Yes. Corporate interests, by donating to ALEC’s “scholarship fund,” are able to pay for travel by Ohio legislators without disclosure.
Here is what is interesting. Last month, an Ohio legislator was charged with felony bribery, along with charges related to campaign finance disclosure and ethics forms disclosure issues ( the ethics form violation is the same misdemeanor that Gov. Taft pled guilty to, receiving only a fine).
The center of the felony allegation is that the Representative received all-expenses-paid trips to Florida and California, plus cash and campaign contributions. According to the indictment, the Representative agreed to introduce legislation and sponsor legislation.
So . . . did the representative do anything really all that different from the legislators who received ALEC scholarships? On the federal level, there is a website that tracks trips paid for by people with an interest in legislation: legistorm.com. Since the Abramoff scandal, when rules were changed to try to cut back on trips paid for by lobbyists, groups started to skirt this rule by having the trips paid for by supposedly independent “educational foundations.”
Please don’t misunderstand us: we are not suggesting that the previously indicted Ohio Legislator didn’t do anything wrong. But if someone would like to explain the practical implications – as opposed to legal technicalities – between the two situations, we will listen. What this points to is a fundamental flaw in the oversight of the role of corporate money, and the ingenuity of people with money to try to provide benefits – legally – to legislators.
2. Ohio Legislators Are Cheap Dates
Captain Renault famously said, “I’m shocked, shocked to find that gambling is going on in here!”
Here is the second thing that struck us. The reporting on ALEC suggests that an Ohio legislator agreed to introduce some ALEC model legislation around the same time as a donation of a few thousand dollars was received by ALEC’s scholarship fund. The amounts shock us. Apparently, significant influence can be obtained for the costs of a few thousand dollars.
When we think of corruption or bribery, we prefer to think of suitcases full of cash or blocks on money stored in a freezer. But apparently the truth is much less exciting. It seems the going rate for special favors or legislation in Ohio is much less – perhaps the costs of a couple of nights in Florida or New Orleans.

Evangelize!

RH Jones: A letter to Ann Hanning and all retired teachers




To Ann Hanning and all retired teachers:


Everyone please read John's message below [follow link above]. It appears to me that Director Ann Hanning, is on the employee payroll of our STRS rather then our ORTA. Is this because our ORTA board also represents the STRS position rather than ours? If the ORTA board would speak for us, Ann Hanning would have to follow their orders that STRS should not cut the COLA (33-!/3 %). Do they not know that our COLA is a law that cannot be changed "after the fact"? Therefore, is it no wonder ORTA has only 30,000 members? They used to have 38,000. Perhaps retired teachers should try to join PERI, rather than ORTA. Yes, our modest simply calculated 3% non-compounding COLA is as the Public Employee Retirees, Inc. says: "for current retirees, no change". It is not the retired teachers fault that the STRS officials failed to meet the amortized 30-year goal. The Concerned Ohio Retired Educators (CORE) let the STRS board know a couple years ago that the 88/35 retirement formula would have a tremendous negative effect on the amortization. Hopefully, at the STRS Columbus headquarters meeting next Tuesday, May 15, at 1:00 pm, the STRS Board will unanimously vote not to reduce the COLA, nor our HC/Rx, or cut anything else for retired teachers. The HC/Rx cuts that retired teachers have already experienced is enough cuttings into the retired teacher pension.
As a proud American/Ohioan, I have faith in our democracy strongly overcoming all financial problems so long as we the people provide a proper funding for the public school education of our young citizens. The people, our public teacher employer, needs to properly fund a proper pension so as to attract the best college trained educators to teach our children. Since today is Mothers Day, I think all mothers, and their children, would concur with that.
RHJones, CORE member

Sunday, May 13, 2012

Bob Buerkle: An open letter to all STRS members

From Bob Buerkle, May 13, 2012
Subject: Re: Ohio's retirement systems by the numbers.......guess which system has the lowest funding ratio?
To STRS Retirees and current members,
When I see a chart like this it kind of makes me sick. It is disheartening to see us at infinity but to me that is not the worst part. It is what I know about some of the systems that eats me up inside.
For instance: SERS does not have to reserve very much money for the health care of their members. Why is that? Because they can assess employers for a Health Care surcharge for their retirees of up to about 2% of their total annual payroll. That makes their total employer contributions up to 16% versus our 14%. If STRS were allowed to do the same this would generate another $220,000,000 per year that could be used for Health care. Currently STRS Retirees pay almost exactly half all of the Health care costs themselves. Add $220,000,000 more from employers and the STRS HC Contingency fund would only have to use $30 to $40 Million dollars each year from its $3 Billion dollar reserve. That would be a Health Care Fund that would last for infinity!
STRS has transferred Billions into the HC fund over the past 30 years. Did you know that the current $3 Billion that was removed from the general pension fund for Health Care can never be counted as assets to reduce our unfunded liability? These funds came from us and were supposed to be for our pensions as this is a requirement by law. Funding health care is important but it is not required by law and there is no legal mandate or funding mechanism to provide for it. Unfortunately, we can't even count the $3 Billion as our pension assets because of Government Accountability Standards Bureau Rules (GASB). If we could, we would be out of infinity right now! So who was smarter, the Director and Board of SERS who decided against building up a huge HC reserve when GASB Rules were changed, or the STRS Director and Board who did build up their reserves?
Now let's talk about OPERS which is larger than all 4 other Ohio Pension systems combined. They have never made as much on their investments over the decades as STRS has made. They have had employer holidays in the past but STRS never has, meaning more money has flowed into STRS on a percentage basis than to OPERS over time.
To date OPERS has never had an anti spiking rule like STRS has. You could be a small town elected official like a trustee and make $5000 a year for 19 years, then get a State Job paying $75,000 for 3 years because of the good old buddy system, and qualify for a 30 year (66%) pension of $50,000 a year. In this case you would have paid around $30,000 into the pension plan in your whole 22 year career. Now that's a deal. And if you became director to OPERS for just your last year at $250,000 that would boost your annual pension to $133,300.
OPERS could save all of the systems but they won't. They are so large and their demographics are so much more favorable than all four of the other systems that they could make us all whole again with very little pain. Many states only have one public retirement system for all public employees. It makes for a fairer and level playing field. If Ohio Legislators had the same "skin in the game" that STRS members have they wouldn't be so anxious to take a scalpel to us.
Finally, our STRS employees should only have our plan in which they can be members. Letting them be members of OPERS is like having the fox watch the chicken house. If they were members of our plan would they work harder? Would they be more prudent with the way they spend our money? Would they make sure they lose less of our money in a market downturn because it is now also their money? Would we have an unfunded liability sitting at infinity right now? No way!
Bob Buerkle
Retired CPS Teacher [Cincinnati]
Former CFT Retirement Chair and OFT Retirement Committee Member for over 20 years. Current member of CFT, OFT, AFT, CORE, and Hamilton Co. ORTA

Source: Ohio Retirement Study Council.................................

You don't suppose the 88%/35 years (when all other systems pay 77%) had anything to do with this, do you?

From John Curry, May 13, 2012 
There are five systems that serve 1.8 million Ohioans and invest $163 billion. But STRS, OPF and HPRS don’t have enough funding to pay off all their liabilities over a 30-year period as required by state law. The funding ratio shows what percent of liabilities could be paid off now. The funding period shows how long it would take to pay off the liabilities.
(Click image to enlarge.)
Source: Ohio Retirement Study Council..............................
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