STRS: Report on January 2013 Board meeting

From STRS, Jan. 18, 2013

January Board News

2012 Member Survey Results Presented

Results of membership surveys conducted in December 2012 show that more than 90% of STRS Ohio members continue to have positive overall impressions of STRS Ohio and most still consider their pension an excellent or good value.

These were just a sample of the findings from the annual membership surveys presented by Dr. Marty Saperstein at the board's January 2013 meeting. Dr. Saperstein's Columbus-based research firm, Saperstein Associates, conducted interviews with 602 randomly selected participants (301 active members and 301 retirees). The surveys averaged about 15 minutes in length.

This year's results also showed the following:

• About half of the active members surveyed indicated they plan to teach longer than they originally thought, and the most common reason cited for this was pension reform legislation.

• A majority of active and retired members have positive overall impressions of the Retirement Board.

• Compared with last year, more retirees feel the pension system is financially sound, but fewer actives feel that way.

• Most members are satisfied with system communications, including email updates. More than half of retirees and two out of three active members have visited the STRS Ohio website.

• 95% of the retiree households have at least one source of income in addition to STRS Ohio. On average, STRS Ohio provides 58% of retirees' income.

Retirements Approved

The Retirement Board approved 183 active members and 340 inactive members for service retirement benefits.

Other STRS Ohio News

STRS Ohio Meets with Constituents to Discuss Defined Contribution and Alternative Retirement Plan Mitigating Rate

At STRS Ohio's request, PricewaterhouseCoopers (PwC) completed a study of the portion of employer contributions necessary to mitigate negative financial impact from offering a defined contribution plan (based on Section 3307.84, Revised Code). This calculation is called the "mitigating rate." Using three different approaches, PwC has recommended a mitigating rate range from 4.85% to 12.57% for the 2013–14 fiscal year. Separately, the Ohio Retirement Study Council has asked its actuarial consultant, Milliman, to calculate the mitigating rate for alternative retirement plan participants.

In December and January, STRS Ohio staff met with the Healthcare and Pension Advocates for STRS (HPA) and the Inter-University Council of Ohio's (IUC) Human Resources Committee to talk about the mitigating rate and its impact on the retirement system's unfunded liability. The groups recognized that STRS Ohio has to reduce the unfunded liability, but the IUC committee requested more information. Staff will continue discussions with these groups.

Enrollment Remains Essentially Unchanged in STRS Ohio Health Care Plans

Following a successful open-enrollment period in November, the STRS Ohio Health Care Program started the new year with essentially the same enrollment levels as before open enrollment. More than 8,300 plan changes were recorded between December 2012 and January 2013. Total enrollment in the STRS Ohio Health Care Program as of Jan 1, 2013, stands at 125,418. The largest number of plan participants are enrolled in the Aetna Medicare PPO (and ESA PPO) plans, with a total of 76,545 enrollees.

Call Center Surveys Reflect High Satisfaction Ratings

Nearly 9,000 callers to the Member Services Center during the first half of the fiscal year chose to remain on the phone and complete a satisfaction survey. More than 96% of the respondents stated they were satisfied or better with their experience, while 82% stated they were extremely pleased with the service. Call volume is up about 5% for the first six months of the fiscal year compared to last year. The average wait time for the preceding 12-month period decreased to 20 seconds compared to 29 seconds last December.

STRS Ohio Receives Actuarial Consulting Proposals

Seven firms, including PricewaterhouseCoopers (PwC), have submitted proposals to provide actuarial consulting services when the current contract with PwC expires in March. Staff anticipates that finalists will make presentations to the board at the time of its March meeting.

Jim N. Reed: An STRS Member Resolution

From Jim N. Reed, January 17, 2013

If you are a retired educator it is time to pay attention to your State Teachers Retirement System. Not by going to an ORTA meeting, following endorsements of the OEA or even assuming the STRS is always working in your best interest.

This spring Dennis Leone's name will appear on the ballot for a retiree seat on the STRS board.

In 2003 his investigative reporting fully disclosed years of STRS mismanagement. This prompted him to run and earn a successful term.

He runs again because of his concern with the recently passed pension "reform" for STRS.

Leone is concerned about the pension's solvency. A provision gives the Board legal authority to make major financial decisions without General Assembly approval. Experience has demonstrated this can be a recipe for empowerment and entitlement that can endanger the security of retirees.

He challenges COLA reductions for retirees, especially the eldest. (OEA, ORTA and current STRS retiree representatives on the STRS Board approved the COLA cutback.) Why was the reduction not "phased in" as were active educator "reforms?"

The Health Care Stabilization Fund may be targeted for elimination. It could disappear as did the 13th check and the spousal premium subsidy for health care insurance (while health care benefits were reduced and premiums increased).

During Leone's first term he unsuccessfully encouraged the Board to prepare an emergency contingency plan in case of a national financial collapse. The subsequent stock market failure cost STRS tens of billions in assets.

Leone has warned that current Board policy is flawed. Interest rates for assets and active teacher contributions have been seriously overstated.

Leone believes the Board should always legislate based on the question,"How will this action impact retirees, and will it affect retirees adversely?

For more information refer to www.kathiebracy.blogspot.com

A retiree is suddenly forced to use mail order for her prescriptions instead of being allowed to continue using her local pharmacy

A letter to John Curry from a retiree, 1/14/2013

(forwarded to Dennis Leone)

I believe that Dennis Leone must be elected to the STRS board. I will let everyone who needs to know the solid reason for his election. Now, I have another concern. I don't know exactly who I should contact or who would listen to me. I am diabetic. I did not wake up one day and said, "I think I will be diabetic today." I test my blood four times a day. I went to renew my prescription at my local pharmacy and was told that I could not renew. I HAD to send the prescription in to be mailed to me. They have taken away the right to fill my prescription locally. I am so angry that I am having a hard time being rational and able to think this through. Who do I talk with? Who do I tell that they are totally wrong? I have Aetna Plus. My prescription has been covered by Medicare...now what? I am not alone, but I will not sit back and take it, I will fight. This is not right. Please advise. Thank you so much. God bless your communications with teachers. I appreciate what you do so much.

From Dennis Leone, January 14, 2013

(xxx) -- here is something I can do that might be helpful: I will call Sandra Knoesel or Greg Nickell at STRS for you today and share with her/him your situation. These are the 2 people at STRS who know the most about the STRS health insurance/prescription medication plans. I will ask one of them to call you, at the phone number you provided below. I suspect you may be hearing from one of them today, as both have been responsive in the past when I have asked them to contact a retiree and offer help.

Dennis Leone

Jim N. Reed to the Columbus Dispatch: It's time to re-elect Dennis Leone to the STRS Board

From Jim N. Reed, January 14, 2013

STRS Members' Resolution

As a retired Ohio educator, it's time to resolve to make a positive change at the State Teachers Retirement System. Dennis Leone has decided to re-enter the STRS arena as a board candidate for a retiree seat. He has demonstrated his knowledge of the system and effected much needed reform to a system that has frequently failed retirees.

Recent pension system "reform" has raised questions about board empowerment to institute major changes without General Assembly involvement. Prior experience has proven this entitlement frequently has endangered retiree benefits. Current retiree representation has too often been unwilling to defend retiree benefits. The reduction in COLA for retirees, especially for the very oldest, and the absence of "phase-in" periods for benefit reductions shout to prove the point. Retirees have already lost the 13th check, spousal healthcare subsidy, healthcare coverage and gained healthcare premium increases. These were partially the results of poor decision-making by "empowered" board members.

Flawed revenue assumptions, including projections for annual interest on assets and projected growth of active teacher contributions, are proven. Leone's 2008 stock market emergency contingency suggestions need implemented. For more info: www.kathiebracy.blogspot.com

Jim N. Reed
Baltimore, Ohio

Something odd here? OEA chooses to interview some (but not ALL) the candidates for the two retired seats in the upcoming STRS Board election

Kathie Bracy to Dennis Leone, January 13, 2013
Subject: Interview with OEA

Dr. Leone --

It is my understanding that OEA plans to interview the candidates for the two retired seats on the STRS Board in the upcoming election, but that you are NOT being interviewed. Why is this?

Kathie Bracy
www.kathiebracy.blogspot.com

From Dennis Leone, January 13, 2013
Subject: Re: Interview with OEA

OEA already “interviewed” Jim McGreevy and Bob Stein a couple of weeks ago. I was offered the same date and time, but I informed OEA in writing that the date and time were in conflict with a teaching assignment I had with Ashland University. I wrote back and said that I would be willing to go to OEA for “interview” on another date and time, but I never received a response.

I also asked why there was such a rush for the interview, anyway, since the deadline for petition signatures is not until 2-22-13. In other words, the decision was made to interview people even though they were not officially on the ballot.

Like I said, OEA never responded to my written request (which I saved) to be interviewed on a different date and time, nor did I get an answer to my question why the interview was set to occur so far in advance of the petition deadline. I do not think it was an accident that OEA chose not to write back to me.

Dennis Leone

Dr. Leone addresses STRS concerns of a teacher looking at retirement

From Kathie Bracy and Dennis Leone, January 13, 2013

Hi (xxx)--

Thank you for writing. I forwarded your concerns to Dennis Leone (former STRS Board member, 2004-2009, currently running again), as he is the best one I know to address them. Here is his response; while there are no good answers, unfortunately, I hope this gives you some insight into what's been going on at STRS:

Kathie –

I have reviewed Mr. (xxx's) email below. He feels the same way many retirees do about a lot of changes that have occurred since 1999 – the 88% benefit enjoyed only by those retiring after 1999, the 13th check disappearing in 2000, health insurance for retiree spouses being taken away completely in 2003, huge annual increases in STRS health insurance costs to members at the same time 600 STRS staff members are getting giant increases in pay and benefits, and – most recently – major cuts in our annual Cost of Living Adjustment (COLA).

Now, as Mr. (xxx) points out, retirees in the future will need to be older before they can retiree, and they will receive no COLA at all for the first 5 years of their retirement. Many retirees have looked into possible litigation since 1999 on the basis of broken promises, but none have been able to get to first base. It is simply because since STRS is a creature of the Ohio Legislature, changes can occur at the pleasure of our elected lawmakers. In fact, it is worse in some states where the state legislature has “borrowed” money from the state pension systems to do other things, only never to pay it back. There have been past years in Ohio when certain legislators wanted to tap STRS funds for their pet projects, but – fortunately – they failed.

I personally believe that the changes affecting future retirees like Mr. (xxx) would not be as severe if the STRS Board had developed contingency plans when stock market returns were so good in the late 1990s and early 2000s. For example, a minimum age 55 for retirement is a regulation nearly all states but Ohio have had for decades. That could have been phased in around the 2000 in Ohio, and STRS would be in much better shape today.

The board and STRS staff were not interested in making pension solvency decisions in years past because, in my opinion, it would have been an unpleasant task. OEA would have fought against any changes anyway. OEA even fought me as an STRS Board member in 2009 when I pushed for restrictions pertaining to when STRS investment staff members can qualify for bonus checks.

Litigation now to stop the new regulations at STRS? It would be a very difficult task. Maybe there is a law firm somewhere with particular expertise in this area. I am not aware of one, and certainly not in Ohio. I worry sometimes about lawyers who act like they can do things legally, but all they end up doing is getting retirees to give them money.

Dennis Leone

It is also my understanding if the new age requirement did not occur in the future (even though a different version should have been implemented 10 years ago), all of us would see our base pensions CUT in the future.

I hope you will read my blog some more to see why six STRS Board members and one Executive Director back in the early 2000s (when many of the policies hurting all of us today were put in place) were found guilty and convicted of ethics violations. We will all pay for their greed for a long time to come.

Kathie Bracy
www.kathiebracy.blogspot.com