Dan MacDonald: A letter to the STRS Board, November 2019

Dear Chair Correthers and Board Members: 

I will not be able to attend the November Board meeting since I will be out of the country. I am Dan MacDonald, Executive Director of Local 279-R, and an STRS retiree. This is my Public Participation addressing 3 areas. 

First, I would like to thank Mr. Greg Nickell and his staff. I needed to refer some of my members this month over sudden medical concerns. One, the IRS alerted STRS and a retiree was being suddenly dropped from Medicare. Second is a recently diagnosed cancer patient, Accredo, Express Scripts and the drug Temozolomide along with an initial billing of close to $800.00. Hopefully these concerns will be gone by my return at the end of the month. It is reassuring to have knowledgeable staff that know the system and can intervene with the retiree with empathy and direction. Third, the son of a deceased STRS retiree needed to contact the Benefits office and was not sure of procedures. 

Second, Cheiron’s presentation last month, at least to me, was subpar compared to other presentations before the board. CEO Greg Kalwarski that was not present. Those of you on the board should remember he stated that STRS OH was “most interesting”, “uniquely appealing,” and that he personally would be leading his team. Over time we will all see if this is true. Apology for not being present, accepted. Mike Noble and Janet Cranna stepped up to the plate. It seemed some slides were presented just to present. When questions were asked, answer weren’t clear and there seemed to be some contradicting between Noble and Cranna, maybe just clarification. Mr. Grinnell had to intervene at one point to clarify. The “Actual Contributions vs. ‘Tread Water’” was an important slide which Mr. Nehf had to clarify. Part of the muddle might have been the introduction of the term “tread water” adding to the confusion. Mr. Stein pointed out that one slide seemed to be information that wasn’t necessarily relevant. The second part of the presentation on Health Care Valuation by Gaelle Gravot and Margaret Tempkin just couldn’t be heard. Cheiron returns in December. I personally hope that the presentation is clearer and with better explanations. 

Third, Mr. Stein in his October’s email “clips and comments” raised concerns that I think the board needs to ignite immediate discussions especially in light of Mr. Nehf’s comments on the consideration of returning to the state legislature to increase employer contribution. In light of Mr. Stein’s remarks below, are we truly going for 100% or more fully funded so that the state can reduce employer contribution? Wouldn’t this mean that retirees would NEVER see a COLA? It is time for the Board to have serious discussions NOW both on active benefits and the COLA. It is time for our STRS lobbyists to report to the board on state legislators’ thinking regarding contributions and legislation. There also should be discussions by the board on pension investments in carbon and private prisons and the board’s investment policy. Stein’s comments follow: 

“The topic addressed in the NCPERS second and third article will have an impact when we get to the point we can have a serious COLA discussion. If the Ohio state government stays as red as it currently is, my guess is that the legislators will prefer a cut to the employer contribution in order to be able to reduce the budget allotted to education. While unions and other employee organizations will not want the reduction to the education budget they will want a reduction in employer contributions in order to have more opportunity to negotiate salary increases from local school districts. These motivations for the active employee and the employer groups would suggest that they would not support a return of COLA. 

“National News considers issues that are relevant in the shorter term. 

“State News is all interesting and useful in the “how are we doing compared to others?” pension area. 

“I’ve been interested in useful discussions on risks associated with pension investments in carbon and private prisons recently. The private prison discussion has similarities to the charter school and some other policy discussions. I think they are almost as impactful to overall governance as gerrymandering and campaign finance since they also involve how public money gets transferred into the pockets of private companies and influential individuals. I’m sure we will continue to have discussions on how much, if any, investment risk a pension fund should accept in order to protect the governance structure that supports its existence. There would also be a timing issue as to when that risk should be accepted and what benefit or compensation the pension system’s beneficiaries would get for accepting that risk.

“When we consider these issues we need to note that different states have different goals for their pension funds. Ohio’s dedication to beneficiaries and participants is a much more clear charge than nearly any other state. State and national Sovereign Wealth funds have broad policy goals built into their missions that affect how they think about these and other issues.

“Best Bob Stein”

Obviously, my letter would have lasted well over 3 minutes. Thanks for reading to the end. Happy Thanksgiving to all. In case you do not know, retirees want their COLA.

Sincerely,

Daniel E. MacDonald, Executive Director, 279-R, STRS Retiree

Dated November 3, 2019