Saturday, December 24, 2005

Tom Curtis to all: Selecting Board Members

Hello STRS Members,

I have read a few emails in regards to comments I made in one of my emails this month. I expected and wanted this to occur. In that email, I merely stated my opinion of who I believe should and who should not be considered for election to the active teacher seats on the STRS board. I have attached that email of 12/03/05 for your review, if you choose to do so. [Also posted in this blog on December 3, 2005. KB]

I made these comments based upon my experiences after attending the majority of the STRS board meetings for nearly the past 3 years. As most of you would know, I have also been actively involved with CORE since it’s inception in October of 2003.

During this time period, I have found a very small percentage of the STRS membership attends these meetings. Consequently, most truly have no idea the amount of work and knowledge it takes to be an adequate STRS board member. Most STRS members simply expect others to do the work, as I was guilty of prior to March 2003.

Recently elected members have stated that they had no idea of the amount of work that was involved. Had they attended board meetings prior to their election, they most assuredly would have been more aware of the inherent responsibility that would be placed on them. This should be a mandate for those who obtain petitions and a high consideration by those voting for board members. It is my opinion that an internship should be part of the election process. One candidate this past spring played this point down and indicated this made no difference. This was probably because that person never attended any STRS board meetings, as other candidates had done. Had each candidate done so, some might have declined to run, knowing just how demanding of their time a board position would be. Some may assume this is just a glorified position when asked to run. My experience is that it is a lot of hard work and a continual need for time to read and understand the multifaceted operation of a $60 billion dollar enterprise. Further, most board members are asked to spend 3-6 days per month at the STRS in meetings or away on training. This is not a job for those that cannot devote a huge amount of time to such for 4 years. It is my experience that classroom teachers do not have that kind of free time. Further, the learning curve without any experience in the business or financial world is huge.

In my email, I indicated that I realized my comments would be controversial. One responded in a manner that I found very uncharacteristic of that person, but that was because of his/her strong disagreement with my statements. That person in turn offered an aspect that I had not considered, but felt strongly in agreement with as soon as I read their response. He/she indicated active teachers should be the only ones making decisions about requested disability retirements, not people far removed, or never having been in the classroom. I strongly support that thought and thus see the need for classroom teachers to be on the board. In my opinion, for a classroom teacher to be on the STRS board, he/she will need a large portion of time to devote to that position, if they take that position seriously.

Again, my comments were mine alone and do not represent another person(s) or group of people, such as CORE. I usually state in my emails that my comments are my opinion, which I believe allows for my freedom of speech.

What I have to say is put forth for other STRS members to read, consider and respond to. Lord knows we need some open discussion about the reform of the STRS. The feeling of uncompromising authority by past and some present STRS board members and Staff does not really foster such. They tend to rule by administrative fiat. It would seem that they believe they know what is best for us.

Some board members state that they make their decisions based upon 3307.15, yet I find no general agreement amongst the board as to what 3307.15 truly means to them. There has obviously been much latitude in the interpretation of such, or some of our past board members would be facing far more then a few ethics charges. I feel it is imperative that a legal interpretation is in order, one that is agreed upon by all board members. It should then be much clearer to board members when considering, making and voting for various motions, just who the motion truly benefits. This should be a high priority topic for discussion during the Board’s February retreat.

I personally find that many on the board and the executive staff have little to no concern for input from those of us that regularly attend the board meetings. I am sure they would disagree with this statement, but my own experience would prove otherwise. It would seem that because the former board chairman labeled us as "malcontents", we should be given little regard. Some board members seem to be arrogant, highly influenced by the staff and feel we have little knowledge worthy of consideration. Otherwise they would respond to our emails and requests for more correspondence during our 3-minute presentations.

The STRS management has told this malcontent that we do not represent the majority, according to STRS surveys. I have been present during the presentation of and have read many great ideas and proposals made to the STRS executive staff by members. To date, none have been seriously considered in my opinion and we are only told that they are good ideas, but just would not work at the STRS. This type of attitude by the STRS staff and board is unacceptable. Until we get board members that have enough background experience and knowledge to step up and say something different, such as John Lazares, Dennis Leone and Steve Buser have done, it will continue to operate as usual and the membership’s input will continue to be ignored. That is truly sad.

It is my experience that when tough questions are asked, quite often most board members will not respond at all (Brown, Fisher, Flannagan, Meyers and Puckett), or respond in a manner that rarely communicates any information that they can be held accountable for (Billirakis & Ramser). Nobody wants to be wrong or have to be held accountable.

Yes, I have been labeled a malcontent and because of such, I guess I do not deserve a response from these people who are supposed to represent me on the board and I really have no recourse, do I?

Whether the readers of my emails agree, or disagree with my comments, it is my intention to generate some healthy and constructive discussion about many very important issues and topics concerning the STRS. I believe discussion is healthy, whereas many of the leaders of the various educational organizations that claim to support us do not desire such. They work in a vacuum of their own making and desire no outside interference from malcontents.

I am a technologist. I learned, practiced and taught principals of technology my entire life. This method will generally provide results that will continue to be current and up-to-date, as each time the process is completed it is reviewed and determined if it can be improved. This is a concept that many leaders in this country fail to place in practice. You don’t think it works, then ask yourself why Honda and Toyota can make it work? I believe they now produce more cars in this country then do any one of the other car manufacturers. They employ the same people the other manufacturers employ, they simply listen to the people that work for them. They make the technological process work, as it will nearly every time it is properly applied.

You might ask yourself, just what do our board members, staff and leaders of the organizations that supposedly represent us fear? I wish I could answer that. We have tried various ways of presenting new ideas, but most have been ignored. I am especially concerned, when the educated leaders of these various organizations tell me that I should forget the past and move forward, without any concern for any restitution of the funds wasted. That is a load of crap!

In closing, I am sure you all can agree on my last statement for today. If the funds wasted and misspent by the leadership of all of these organizations were their money, they would never say anything so utterly ridiculous, as forget about it and let’s move on.

Merry Christmas and goodnight,

Tom Curtis

It's Christmas time in the city -- and this blogger is busy! Blogging on hold for now.

Merry Christmas, Happy New Year, Happy Holidays to all. If you happen to be in Stark County on Christmas Eve, come over to St. Paul's Ev. Lutheran Church in Alliance (S. Union & Beech St.) to hear your blogger play Christmas carols on the harp at 6:40 p.m. or 10:40 p.m. (services are at 7:00 and 11:00). Will blog as I can in the next few days. Enjoy your Christmas weekend. KB

Friday, December 23, 2005

Tom Mooney to Molly: Candidates Brackett and Fredrick

From: Tom Mooney
Subject: Fw: Fredrick and Brackett
Date: Thu, 22 Dec 2005

Here are their resumes.

By the way, I saw an email recently suggesting that classroom teachers who aren't financial or investment experts should not be on the board. I'm not suggesting that's CORE's position. But, here's our point of view on that.

I believe it's essential that teachers, active and retired, elected by their constituency, govern their retirement system, with the help and advice of experts, including those appointed to the board. Obviously, technical expertise is needed, but equally important are good judgment, integrity, and ties to the constituency they represent. It's very important that a majority of the board have walked in our shoes and will rely on the STRS when they retire. And, for us, it is important for a candidate to have a record of serving and representing teachers. That's how we know we can trust them. I don;t think it was lack of technical expertise that caused the board to go astray in the past.

I would like to set up a time for you and other CORE members as well as John and Dennis, to meet John Brackett and Mark Fredrick. How about around the Jan. Board meeting?

Happy Holidays to you and yours.


Thursday, December 22, 2005

Study: Medicare misses drug discounts - from Suddenly Senior

Yes, this IS STRS related. Many of our retirees are on Medicare. It is shameful that the majority of legislators in the federal government haven't seen fit to take bids for Medicare Rx whereas they do allow competitive bidding for Rx used by vets. The pharmaceutical manufacturers are smiling all the way to the bank with many of our federal legislators along for the ride in their back pockets on this issue.
John, a Proud CORE member
December 22, 2005
The new Part D plans can't negotiate the kind of deals with drug companies that the program might get as a whole, according to the report.
By STEPHEN NOHLGREN, Times Staff Writer Published December 22, 2005
Medicare is losing out on deep discounts by turning its new drug benefit over to private insurance companies instead of negotiating directly with the drug industry, a study released Wednesday suggests.
The study, by Families USA, examined what the U.S. Department of Veterans Affairs pays for 20 common drugs vs. what new Medicare Part D drug plans will pay, beginning Jan. 1.
VA prices beat the private plan prices for 19 of the 20 drugs, and VA discounts were often two or three times deeper, the study says.
For example, in November the VA paid $497.16 for a year's supply of cholesterol-lowering Lipitor, compared with $717.84, the cheapest price that any private plans in the study could negotiate.
Medicare, with 43-million beneficiaries, could wield at least as much negotiating clout as the VA, which treats about 5-million vets, says the report.
"It is very likely that (Medicare) beneficiaries - and taxpayers who subsidize the Medicare drug benefit - are paying significantly more than they would" if Medicare would use its bargaining power, the study says.
The VA analogy is nothing new. Families USA - a Washington-based advocacy group - and others raised it repeatedly and unsuccessfully while opposing the Medicare Modernization Act of 2003, which created Part D and prohibited direct government negotiations.
What's new are the specific numbers, which are now available because the private plans must list their costs with Medicare. Other examples include Fosamax for osteoporosis: $493.32 versus $709.68. And Protonix for acid reflux: $253.32 versus $1,080.
The private plans, which were located in Ohio, Maryland, Delaware and the District of Columbia, beat the VA only on Nexium, also an acid reflux medicine. One plan's yearly price was $836.28, compared to the VA's $968.40.
Medicare spokesman Peter Ashkenaz called the study "a tired old ideological argument." Families USA "wants government price controls and a one-size-fits-all benefit," he said, and that wouldn't work well for Medicare.
Among other things, the VA often limits which drugs a vet can use, Ashkenaz said, whereas Medicare plans must cover at least two options for every major category of drugs. Vets must use VA pharmacies, whereas Part D plans work through most major chains.
"For example, in Georgia there are nine VA pharmacies, compared to 1,833 local pharmacies," Ashkenaz said.
He also noted a 2000 study by the Government Accounting Office that predicted that if Medicare followed the VA example and squeezed too hard on prices, the drug industry would try to recoup that loss by raising prices to private-sector groups like hospitals, employer health plans and union retirement plans.
That's what happened in the 1990s, when the federal government required the drug industry to give state Medicaid programs a minimum 15 percent discount off the average wholesale price, the GAO reported.
Having Medicare mimic the VA "would be unacceptable to beneficiaries and political suicide to any politicians," said Phil Blando of the Pharmaceutical Care Management Association, trade group for drug insurance plans.
Part D drug plans, which are designed to supplement traditional Medicare's Parts A and B, will receive about $700 a year from the government for every beneficiary who joins. They also collect premiums, deductibles and co-payments from the beneficiaries. They then negotiate discounts from manufacturers and pharmacies.
In general, the more people who join their plan, the better they can negotiate. Like other drug management plans, they create efficiencies by steering people to lower-cost generics and certain brands. But competition is stiff. Florida, for example, has 43 Part D plans, run by 19 companies.
On average, Part D drug plans have knocked 31 percent off the retail cost of drugs, the insurance plan trade group estimated Wednesday, and 45 percent for people who order three-month supplies through the mail.
Price reductions are critical for beneficiaries. Most Medicare plans have a so-called "doughnut hole," where coverage stops for a while and people pay the whole bill out of their own pocket. If the drug plan can negotiate a 30 percent discount, that savings is passed on to the consumer.
VA and Department of Defense discounts average about 60 percent off the average wholesale price, according to a Congressional Budget Office study in June.
Medicare should shoot for similar discounts, said David Lemmon of Families USA.
"People ought to ask themselves, "Why do we have a plan set up to prevent a Medicare pool with 42-million beneficiaries negotiating a cheaper price?' In the end, that's what the pharmaceutical industry opposed for so long.
"Why do we have dozens of plans and dozens of negotiating pools all over the country?"

Editorial: Benefits Storm Brewing

Toledo Blade, December 22, 2005

IT MAY well surprise people living outside Ohio that local and state governments elsewhere around the country haven't been setting aside the billions of dollars that will be needed to fund health-care benefits promised retired public employees over the past half-century.

Due to Ohio's foresight many years ago in setting up trust funds for teachers and other public workers, paying for those benefits here likely won't be the problem now forecast for states like Michigan. The state Up North uses a pay-as-you-go system that effectively has put off the day of reckoning for what may be a $30 billion bill.

About 30 of the 50 states pay for public-employee retirees' health care in the same fashion.

Just when the day of reckoning will arrive will become glaringly apparent over the next two years as a new national accounting standard takes effect that requires government entities to figure out, total up, and report what they expect to owe for retiree benefits in coming years.

The New York Times, in a report titled "The Next Retirement Time Bomb," quoted one consulting firm as estimating the national total at $1 trillion (with a T).

"This is a huge liability," another independent consultant exclaimed. "If anybody understands it, they'll freak out."

If this doomsday scenario plays out as expected, it could well mirror the steady trend among private businesses, which are citing cost in sharply reducing or eliminating health-care benefits for retirees and even current employees.

Officials of Delphi, the auto parts giant, is trying to use bankruptcy proceedings as a lever to cast off its union contracts, which cover retiree benefits as well as wages of current workers. Whether government can similarly get away with reneging on its promises is another question, but no less urgent.

The cost of health care has risen so far and so fast - 10 years of double-digit increases - that it threatens to outstrip the capacity of government at all levels to pay for it, just as it does for private business.

The potential consequences - higher taxes, fewer government services, or both - demand a solution or, at least, an early estimate of the problem.

Undoubtedly, government employees will be required to share more of their health-care costs, and public employee unions will be forced to end their demands for more and better benefits.

The realization that little thought has been given to dealing with these costs is as troubling as the awareness that swept over many Americans when Hurricane Katrina revealed a lack of planning for natural disasters. But there can be no doubt that there is a storm of epic proportions on the public policy horizon.

2005 STRS/CORE Memorable Moment: "On the Outside, Looking In"


My personal choice for the 2005 STRS/CORE Memorable Moment was the day on which this photo was snapped at the STRS building. It was the day Dr. Leone was sworn in as an STRS Board member. For the first time in years, the OEA is now on the outside looking in as they have lost their majority on the STRS Board. This was a year in which the OEA's largest local affiliate, the Columbus Education Assn., turned their backs on on big brother by ignoring the OEA endorsed candidates and endorsed the OFT candidates -- who subsequently won seats on the STRS Board. Kudos to the CEA -- a local which really understood what had happened at 275 East Broad Street. For the OEA: What goes around CAME AROUND. They still haven't heeded their wake up call, but I'm sure they felt the tremors just a few blocks down the street!
John, a Proud CORE member

News release from STRS on sale of Key Tower: STRS Ohio Profits $80.8 Million on Its Key Center Investment

Dec. 22, 2005

State Teachers Retirement System of Ohio (STRS Ohio) has sold its 50% interest in Cleveland's Key Center for a total profit over the life of the investment of $80.8 million. STRS Ohio has owned a 50% share in the 57-story Key Tower and adjacent properties (982-space parking garage and 400-room Marriott Hotel) since December 1996. STRS Ohio's partnership arrangement with the building's other owner, the Richard E. Jacobs Group, called for the pension system to receive its original capital investment of $71 million plus a preferred annual rate of return of 11.5%.

Over the nine-year period that STRS Ohio was invested in the properties prior to today's sale, it received $3.2 million of its original capital investment plus net income of $59.1 million. With the sale of the Key Center investment to Wells Real Estate Investment Trust Inc. on Dec. 22, 2005, for approximately $312 million, STRS Ohio now receives $67.8 million, which is the balance of its capital investment, plus an additional $21.7 million to reach the preferred return. STRS Ohio's actual rate of return was 12.0% during the life of the partnership. With this sale, STRS Ohio is completely divested from the investment.

Approximately 8% of STRS Ohio's $59 billion investment portfolio resides in real estate. About 80% of the system's real estate holdings are managed internally. STRS Ohio's sale of the Key Center investment will help reduce the system's overweight allocation in office holdings.

Wednesday, December 21, 2005

Article: Retired teachers' medical benefits fund dwindling (NH), December 21, 2005

CONCORD, N.H. --The state's retired teachers are worried about the future of their health benefits.

Working teachers contribute 5 percent of their pay to the retirement fund managed by the New Hampshire Retirement System. About 2,500 retired teachers currently receive medical benefit payments from a specially-created account.

But without an overhaul of its funding system, that account run dry by 2012, according to New Hampshire Retired Educators Association. Moreover teachers would have to retire by 2008 to qualify for those benefits.

The funding problem started about five years ago, when the account took a hit because of a drop in the stock market. It forced the system to pay some $10 million in benefits out of the account's principal. Complicating the matter, there currently is no backup system in place to supplement the fund with money from other sources, said Rick Trombly, a lobbyist for NEA-NH, the state's teachers union.

A state panel looked at the problem earlier this year but held off on making recommendations, pending further study.

Article: Ohio Jury Finds Medco Defrauded Retired Teachers

Source: National Community Pharmacists Association

Wednesday December 21, 5:21 pm ET

"A court of law has clearly stated that PBMs cannot place their own corporate interests above those of the plan's beneficiaries."

NCPA Applauds Verdict

ALEXANDRIA, Va., Dec. 21 /PRNewswire/ -- The National Community Pharmacists Association (NCPA) today applauded the verdict of an Ohio jury, when it decided that the giant pharmacy benefit manager (PBM) Medco Health Solutions Inc. should pay $7.8 million to the State Teachers Retirement System of Ohio (STRS Ohio) for breaching its fiduciary duty and for fraud.

The STRS Ohio board sued Medco in 2003 in the Court of Common Pleas in Hamilton County, Ohio, alleging that the company overcharged the retirement plan on generic drugs and inappropriately kept manufacturer rebates for itself instead of passing them on to the plan. According to the Attorney General of Ohio, this is the first time that a U.S. jury has recognized that a company managing pharmacy benefits has a legal duty to act in the best interest of retirees and pensioners.

"This should be a huge wake-up call to the giant PBMs," said NCPA Executive Vice President and CEO Bruce Roberts, RPh. "A court of law has clearly stated that PBMs cannot place their own corporate interests above those of the plan's beneficiaries. PBM self-dealing has been exposed for what it is: a true threat to our country's health care system."

The jury did not reach a verdict on punitive damages. This issue will be considered in a future trial.

Despite Medco's claims that it would act to obtain the lowest possible drug prices for Ohio's retired school teachers, Medco allegedly engaged in a series of activities that produced the opposite results. These allegations included:

     * Withholding secret drug manufacturer rebates

* Charging hidden fees and accepting and retaining secret profits

* Switching patients to a Medco mail-order pharmacy claiming this would
lower drug costs, and then charging more for generic drugs than they
would cost at retail pharmacies

* Accepting payments from drug manufacturers to promote more expensive
brand name drugs over less expensive generic equivalents

* Manipulating the committee (through secret payments) that determined
what drugs were listed on the formulary -- the listing of drugs
available to patients

* Acting as a commissioned sales agent for Merck & Co.

In April 2004, Medco settled a case brought by 20 state attorneys general concerning allegations of fraud. A lawsuit by the U.S. Attorney is ongoing, as well as lawsuits and investigations in a number of states into the business practices of Medco and other PBMs. This sends a clear message that PBM operations need some form of government oversight to stem this pattern of activity.

"This pattern of abusive practices that Medco and the other two giant PBMs engage in is a blight on health care and is not in the best interest of patients or their employers. It must be stopped," said Roberts. "We commend the Attorney General of Ohio, Jim Petro, for exposing the massive fraud that Medco has been perpetuating across the health care delivery system. This verdict is another important step in shining a much needed light on the deceptive practices of the giant PBMs."

The National Community Pharmacists Association, founded in 1898, represents the nation's community pharmacists, including the owners of more than 24,000 pharmacies. The nation's independent pharmacies, independent pharmacy franchises, and independent chains represent an $84 billion marketplace, dispensing nearly half of the nation's retail prescription medicines.

Kathie Bracy to Conni Ramser: What is the Board's policy on addenda? Interesting response

Let me ponder for a moment. Five clearly stated questions asked and (my interpretation) zero questions answered? Am I missing something here? John (Curry)
Perhaps I caught her at a bad time, between her illness and her trip to Texas; and perhaps I posed too many questions in one letter. I shall try again after the holidays. KB
From Conni Ramser
December 21, 2005
Dr. Leone was well within his role as a board member to bring forth an item of business. He did so. The board did not pass his item of business and chose to approve the settlement according to the terms presented by the attorney. Now that the board has decided, I support the board in its decision.
Happy Holidays! (That includes Merry Christmas!) I'm headed to Texas to see my family.

From: Kathie Bracy
Sent: Wednesday, December 21, 2005
Subject: Board policy on addenda

Dear Ms. Ramser,

I'm sorry to hear you've been down with the flu. How well I (not fondly) remember many such episodes during my teaching years; I hope you recover quickly.

In reference to your December 11 comment to Tom Curtis where you said "The issue was about settling the PBI lawsuit according to the terms presented by the attorneys. Dr. Leone's motion was not part of the attorney's recommendation," a few questions have come to my mind:

1. If a Board member disagrees with an attorney's recommendation, why doesn't he/she have the right to propose an addendum?

2. Is this a blanket policy (no right to propose an addendum), to apply at all times? If so, what recourse does a Board member have if he/she believes an attorney's recommendation is wrong and not in compliance with ORC 3307.15, other than voting against it?

3. Exactly what is the Board's policy on addenda?

4. Do you believe the attorney's recommendation complied with ORC 3307.15?

5. Do you believe the outcome of the lawsuit complies with ORC 3307.15?

Thank you.

Kathie Bracy

John Curry: 2005 Cane and Coal nominations; Paul Kostyu flashback: 2003 Cane and Coal

December 20, 2005
From John Curry:

Do you have any Cane and Coal nominations for 2005? I do:

Cane: Dennis Leone and John Lazares for representing those "non-entitled" STRS stakeholders (both retired and active) each month at 275 East Broad St.

Coal: Damon Asbury's answers which really aren't.

Cane: To the award winning investigative reporter, Paul Kostyu, who steadfastly has kept an eye on the deeds and misdeeds of STRS and reports to the public.

Cane: Kathie Bracy for her excellent website of STRS commentary. (Thanks, John! KB)

Coal: Governor Taft for his ethics convictions.

Cane: The OFT for defeating the OEA candidates for STRS Board.

Cane: The OEA's Columbus Education Assn. for backing the OFT STRS Board candidates instead of the OEA candidates.

Coal: For OEA's Gary Allen not extending his hand to Dennis Leone in an effort to work for the benefit of all teacher retirees. More coal for Gary not explaining why he felt Dennis's motives were unclear!

Coal: To the OEA members who staged a bum rush at the STRS's public speaker podium for a "once only" appearance in front of the Board to tell the Board how pleased they were with the current excellent health benefits that are currently offered by STRS. Their OEA logistically engineered speeches forgot about the premiums and spouses, didn't they?

Cane: The appearance of David Freel-Ohio Ethics Commission- for speaking to CORE members at the Palace.

Coal: To current and former STRS Board members and associates who are still knowingly awaiting their subpoenas to appear before the Franklin County Municipal Court on ethics violation charges.

Coal: To STRS former Executive Director Herbert Dyer who was convicted of an ethics violation for work performed during his tenure at STRS.

Cane: To Stan Chesley who managed to get at least a paper settlement with Medco -- we still haven't received the money yet and won't for quite a while -- if ever.

Coal: To Jim Petro who likes to take the credit for what Stan did so as to pad his vita for the governor's seat.

Cane: To all of the STRS retirees who caused Dennis Leone to win the STRS retiree seat on the STRS Board.

Coal: To some on the STRS board to which Robert's Rules of Order might as well be placed on rolls and perforated every four inches.

Cane: To all the new CORE members statewide who have finally "seen the light."

Cane: For those among the ORTA leadership who recognize reform when they see it.

Coal: For those among the ORTA leadership who haven't yet realized that they've been "taken to the cleaners" by admiration of former STRS leadership.

As far as Damon -- How about a little cane and lots of coal!

Nominations from Kathie Bracy:

Cane: John Curry for his monumental efforts as a one-man communication center and information clearing house. Without him (and all of you who write in), I would have no blog to share with you.

Canes: For John Lazares and Paul Boyer, who both knocked themselves out to get to Dennis Leone's swearing-in on Sept. 15, showing up in wheelchairs! More canes: to John for keeping up his attendance (and fight) at all the Board meetings while on crutches and still in great pain, and to Paul for keeping up the fight with his fireball letters to those who "deserve" them (the "coal" people).

Cane: The CORE of the CORE and many others for their constant perseverance in "keeping their feet to the fire."

A TRUCKLOAD OF CANES: For Dennis Leone, who started it all, refusing, with John Lazares, to compromise his unflagging determination to see that ORC 3307.15 dictates every action by the STRS Board; a battle that should never have had to be waged in the first place.

Canton Repository, December 19, 2003 (Flashback)

Here’s short list of who has been naughty and nice

By PAUL E. KOSTYU Copley Columbus Bureau chief

COLUMBUS -- It’s a well-kept Christmas secret that journalists help Santa Claus. Really, I’m not making this up.

Sure, kids write to the jolly elf to tell him what they want and whether they have been naughty or nice. And he pretty much takes them at their word. But who keeps an eye on the adults?

Claus has subscriptions to every newspaper. A staff of elves, many of whom got rotated out of the toy department, peruse headlines and stories about the good and bad. The Internet has made this much easier, but Claus doesn’t believe in downsizing.

In fact, he may be the only employer who is adding jobs. Instead of taking a trade mission to Japan and Taiwan next year, Gov. Bob Taft might want to consider a North Pole jaunt to get some of those Claus jobs in Ohio.

Claus pays particular attention to journalists in state capitals because he needs an honest assessment of what politicians and lobbyists are up to. He’s worried Ohio lawmakers will require him to put a goofy-looking red, white and blue Ohio Bicentennial license plate on his sleigh.

Thus, he has come to depend on this annual column about who deserves candy canes and lumps of high-sulfur Ohio coal. He also knows he might as well pack plenty of coal.

Cane: Taft for threatening to veto concealed-weapon legislation so that more access can be granted to permit holders’ records. Anyone who defends the right of access to information deserves a whole bag of candy canes.

Coal: Taft for signing a bioterrorism bill that restricts access to information. Make that a big bag of coal.

Cane: Rep. Scott Oelslager, R-Plain Township, for taking a deliberate and reasoned approach to tort reform, despite pressure and criticism from Taft, fellow Republicans and lobbyists.

Coal: Akron-based FirstEnergy for starting the massive blackout that affected most of Ohio, the Northeastern United States and a good chunk of Canada.

Coal: Taft for staying well-lit in a part of Canada that had lights, while Ohioans suffered in the dark.

Cane: Sen. Robert Hagan, D-Youngstown, for his persistence in getting Ohio’s Best Rx, a broad prescription drug plan, enacted.

Cane: Taft and Rep. John Hagan, R-Marlboro Township, for seeing the wisdom in offering Best Rx as a drug plan better than the Golden Buckeye Card plan, which took forever to get going.

Coal: Former Consumers’ Counsel Robert Tongren for ordering an expensive report at taxpayer expense, then ignoring it before destroying the public record, all the while going along with a plan to allow additional costs on consumers’ bills.

Coal: The State Teachers Retirement System and the Ohio Police and Fire Pension Fund for their extravagant spending. A $100 million building and not a single chimney for Santa to make his delivery.

Coal: Former STRS Executive Director Herb Dyer for instilling a culture of entitlement and arrogance.

Cane: Interim STRS Executive Director Damon Asbury for making changes in that culture, cutting expenses and helping to restore confidence in the system.

Cane: Chillicothe Superintendent Dennis Leone and others for bringing the excesses at STRS to light and remaining vigilant about what’s happening at the fund.

Coal: The rabid critics of STRS who ignore the reasons the STRS headquarters and its expensive artwork are not going to be sold and the day care center shouldn’t be closed. Get over it and move on; there are other issues to focus on.

Cane: Lawmakers who saw a need for pension fund reform and acted quickly.

Coal: Lawmakers who screwed up pension fund reform by trying to give the state treasurer superpowers over appointments, and for requiring a Buy Ohio provision.

Cane: Rep. John Boccieri, D-New Middletown, for honoring his commitment to his country when his Air Force unit was called up to serve in Iraq.

Cane: Sen. Kirk Schuring, R-Jackson Township, for trying to move up the date when a prescription drug repository could begin operating in an effort to save money and help the needy.

Coal: Rep. Mary Cirelli, D-Canton, for voting against the new start date and then trying to explain that vote by saying she thought the Legislature was in session for another week, which makes no sense at all. Go figure.

Claus actually gets a longer list than this. He said it’s OK to share the rest next week.

Hamant to Asbury and Knoesel: an equitable punitive award from Medco

December 20, 2005
Dr. Asbury and Ms. Knoesel:
As Legislative Chair of Warren County RTA, I am writing to congratulate STRS on the recent Jury Award of $7.8 million in the Merck Medco case regarding misappropriation of drug rebates due to STRS. The legal team advised by Stanley Chesley has represented Ohio's educators well in this important case.
Warren County is very hopeful that further deliberation will provide ample "Punitive" damages to set an example for ALL PBMs in the nation. I believe early press releases about the case indicated that as much as $50 million in rebates were withheld by Merck Medco. Punitive damages should be at least $50 million to be equitable!
Dr. Asbury you have indicated in an email that the award settlements will be deposited in the Health Care Stabilization Fund. As you recall, Warren County has long advocated for that to happen.
Also, Warren County continues to support STRS to become its own PBM. Warren County feels that Caremark (formerly AdvancePCS) is likely following similar business practices as those of Merck Medco. It is difficult to have "faith" in the contractual negotiations/agreements of Caremark when over 20 states are in the process of suing Caremark (AdvancePCS).
Again, Warren County RTA is pleased with Merck Medco Jury Award and looks with anticipation to an equitable punitive award.
Nancy B. Hamant, Legislative Chair
Warren County RTA

Third time's the charm - Conni Ramser responds to Tom Curtis. Maybe.

If you've lost track of what this is all about, look up the December 12 post on this subject. At the top of this page, type "Ramser" in the white box and click on "Search This Blog" (or hit the Enter key) to find it quickly. KB

From: Conni Ramser
To: Tom Curtis
Sent: December 19, 2005
Subject: Re: 121905 Curtis Resp To Ramser Resp, Motion Issues, 3rd Request


The flu that is going around isn't fun. Trust me on that from first hand experience. As far as Dr. Leone's motion, I have answered about my motivation. I can't speculate on his. I know you don't like my answer because you keep asking the same question. I keep giving you the same answer because it is the only answer I have. Have a pleasant holiday season.


Tuesday, December 20, 2005

The Medco/STRS decision in more detail: Mixed Courtroom Decision at Medco

By Melissa Davis, Senior Writer

Some people think a courtroom setback could end up dealing a serious blow to Medco (MHS:NYSE) and its pharmacy benefit management peers.

On Monday, an Ohio jury ordered Medco to pay $7.8 million for allegedly defrauding and violating its legal duties to the state's teacher retirement system. To be fair, the sum represents just a fraction of the huge damage award -- totaling more than $300 million -- that the state had been seeking from the company. The jury was unable to reach a verdict on punitive damages, so the state must now fight for the award in a future trial.

In the meantime, Medco general counsel David Machlowitz says that "the evidence supported complete vindication" of the company and that Medco will appeal the jury's decision. Still, Ohio Attorney General Jim Petro sees plenty of reason to celebrate right now.

"The verdict is the first time a U.S. jury has recognized that a company managing pharmacy benefits has a legal duty to act in the best interest of retirees and pensioners," states a press release issued Tuesday by Petro's office. "And it is likely to have repercussions for the entire ... PBM industry."

Notably, Petro says, the jury found that Medco owed a fiduciary duty to the teacher's retirement system. The jury determined that Medco had breached that duty, he says, and committed "constructive fraud" as well.

But Stephanie Kanwit, special counsel for the PBM trade group Pharmaceutical Care Management Association, claims that companies like Medco are not fiduciaries at all.

Petro's "use of the word 'fiduciary' is totally out of context and inappropriate," Kanwit insists. "This doesn't change a thing. It's just a contract dispute between Ohio and Medco about who owed money to whom."

By definition, fiduciaries hold the legal power to make financial decisions for others. Industry critics argue that PBMs -- which arrange drug rebates and formulary lists -- qualify as fiduciaries and should, therefore, be required to act in the best interests of their clients.

Maine has passed a law that designates PBMs as fiduciaries, and other states have considered following suit. In the meantime, former Maine Senator Sharon Treat -- who sponsored her state's law -- views this week's jury decision as an important next step in reforming the PBM industry.

"It's very encouraging that a jury has found that PBMs have a fiduciary duty" to their clients, says Treat, who now serves as executive director of the National Legislative Association on Prescription Drug Prices. "It is important that this be recognized and that PBMs start acting accordingly. ... I think that their basic business model -- which depends on a variety of side deals -- is going to have to change."

PBMs have been accused of looking out for themselves, rather than their clients, and saving their customers less money than they should. The three biggest players -- Medco, Caremark (CMX:NYSE) and Express Scripts (ESRX:Nasdaq) -- all face government investigations. They have denied any wrongdoing.

Meanwhile, all three stocks have hit new record highs over the past month. However, short-sellers have recently begun placing bigger and bigger bets that the stocks are set to fall.

Medco rose 1.4% to $57.77 on Tuesday's news of the small jury award.

Split Decision

To be sure, Medco won some legal victories during the recent trial.

In late November, the company notes, the judge threw out several charges due to lack of evidence. Since then, the company adds, the jury has gone on to clear the company of improperly collecting mail-order dispensing fees. The jury also found itself unable to decide whether the company had pocketed drug rebates that belonged to its client instead.

J.P. Morgan analyst Lisa Gill found herself looking on the bright side.

"While all PBM contracts are different, we believe rejection of the mail-order claim and the non-decision on the rebate-sharing claim bode well for other contractual disputes," wrote Gill, who has an overweight rating on Medco's stock. In the meantime, "the amount of the (Medco) award is negligible."

Still, Medco could find itself paying out multimillion-dollar penalties to other -- bigger -- clients as well.

"Medco's wrongdoing against the Ohio state teachers' health plan is applicable to all health plans that have had contracts with Medco," says Linda Cahn, an attorney who is battling Medco in a big class-action lawsuit. And "in the few hours that have passed since the jury's decision, I have already received several calls from large health plans that believe their damages may surpass $100 million, since a relatively small health plan won a $7.8 million damage award" against the company.

Patrick Burns, a spokesman for Taxpayers Against Fraud, foresees a much larger jury award if a federal case against Medco -- which has been building against the company for years -- ultimately winds up in court. For starters, Burns points out that the federal health plan is about 40 times larger than the Ohio plan for teachers. Moreover, he says that the federal complaint involves a lot more charges -- that look easier to prove -- than the Ohio case did.

Burns wonders if Wall Street is paying attention.

"It will be interesting to see if the Wall Street analysts can do simple math and understand relative scale and the differences between the Ohio and federal lawsuits -- which are very, very different," he says. "My bet is that if Medco goes to trial (in the federal case), they will see a verdict north of $1 billion."

John Curry: STRS news release praises wrong guy!

From John Curry, 12/20/05

Petro filed the paperwork (Medco) -- then he farmed the suit out to high profile attorney Stan Chesley of the Cincy area. Petro will give STRS a bill for same. Petro is already using this victory(?) --300 million whittled down to 7.8 million -- as feather in his hat for the upcoming campaign for Governor. Now, while Medco was busy doing STRS -- it was doing STRS right under Petro's nose as he was on the STRS Board and didn't seem to notice it, did he? Of course, STRS won't mention that.

News from STRS: Findings Result in Jury Award

December 20, 2005

Almost two years to the day after Attorney General Jim Petro sued Medco Health Solutions on behalf of the State Teachers Retirement System of Ohio (STRS Ohio), a Hamilton County jury ordered Medco to pay $7.8 million to STRS Ohio. The lawsuit filed in December 2003 accused Medco of breaching its contractual and fiduciary duties while serving as the pharmacy benefits manager for STRS Ohio's Health Care Program. STRS Ohio had uncovered contract abuses during a routine due diligence audit of Medco's performance. After bringing them to the attention of the Attorney General, Petro filed suit in Hamilton County Common Pleas Court. STRS Ohio ended its relationship with Medco in 2001.

"The excellent work of our staff members and the high performance standards they set for all our vendors help ensure that the assets of this system are protected for our members and retirees," noted Damon Asbury, STRS Ohio's executive director.

Based on a jury decision reached on Dec. 19, STRS Ohio will receive $6.9 million for constructive fraud and $915,000 for breach of fiduciary duty. Additional court action may follow on several unresolved issues, including punitive damages.

From an anonymous source: Is this how the OEA is spending teachers money?

Submitted 12/20/05
OEA OFFERS INTERNSHIP (Labor Relations Consultant)

The Ohio Education Association is currently seeking internal and external applicants for the Pre-Entry first 100 qualified individuals who indicate interest will be considered for the program. Those individuals will be forwarded information describing the requirements of the Labor Relations Consultant position, a Self-Assessment Instrument on which they will rate themselves with regard to the miniIntern Program developed to prepare individuals for employment in Labor Relations Consultant positions.
Only the mal competencies for the position, and a Career Planning Kit.
Interns will be selected based upon demonstration of minimal competencies for the job and an assessment of the personality traits required for the job.
Each intern will undergo an intensive individualized training program focused on improving the intern's competency for the job.
Candidates for the Pre-Entry Intern Program must be members of the Association and/or have at least three (3) years of successful employment experience with an education-related employer. All candidates must have obtained a 4-year college degree; must be knowledgeable of computers and computer applications; have a valid driver's license; have an excellent driving record; have a dependable automobile; be knowledgeable of and in tune with the Association's advocate philosophy; and must commit to acceptance of Association employment, if offered, including a commitment to relocate.
Candidates should be prepared to participate in an initial full-time, two (2)-week training period during the summer, followed by additional training on weekends and evenings, ending January 2007. The program will be scheduled to provide the least disruption to full-time work schedules.
Successful interns will be recommended for interview, which may lead to placement in the OEA UniServ Employment Pool.
Persons interested in applying must send a resume and letter of interest to the OEA Pre-Entry Intern Program, 2970 Presidential Drive, Ste. 130, Fairborn, OH 45324. NO PHONE INQUIRIES, PLEASE!
Deadline for receipt of resumes and letters of interest will be the close of business on Friday, February 17, 2006.

Comments on Medco suit

December 20, 2005

Who were our attorneys against Medco? How ridiculous! That is a insulting offer! Curious? Who contributed to those judges election fund? Why did our STRS representatives let that go on for so long? Why wasn't Medco fired right away or were they? They weren't living up to the contract, were they? Was STRS getting money back from this? this would be like putting $300M in the bank and when you returned they wanted to give you $7M in your account.


Monday, December 19, 2005

Article: Jury awards $7.8 million in teachers fund fraud case

300 million dollars whittled to 7.8 million dollars in a few weeks - that's "chump change" for Medco! Will retirees win more with punitive damages? Let's hope so! Medco will appeal any and all on this case. Did STRS have a strong case against Medco? -- John Curry

December 19, 2005
Associated Press

A jury awarded $7.8 million Monday in a lawsuit charging the State Teachers Retirement System was defrauded by its pharmacy benefits manager.

Attorney General Jim Petro filed suit in 2003, alleging that Medco Health Solutions Inc. and parent Merck & Co. overcharged the fund.

"Merck and Medco abused their relationship with STRS and placed corporate interests ahead of their obligations to Ohio's retired teachers," Petro said in a statement. "With this verdict, we've brought them to account for that."

Franklin Lakes, N.J.-based Medco provided pharmacy benefit services for the teachers retirement system until 2001. The plan covered more than 100,000 retirees.

The Hamilton County Common Pleas jury found that Medco was liable for constructive fraud and awarded $6.9 million in damages. The jury also ruled that Medco breached its fiduciary duty to STRS Ohio in the amount of $915,000.

The jury said that Merck was jointly liable for the actions of Medco, its former subsidiary, but did not wrongfully interfere with the contract or business relationship with the state. Medco spokesman Jeff Simek said that under their 2003 spinoff agreement with Merck, Medco would assume any financial responsibility for such cases.

The jury deadlocked on the plaintiffs' request for punitive damages.

"We're very pleased, and we're going to look forward to going back to trial on the punitive damages," said Cincinnati attorney Stan Chesley, who represented the plaintiffs at trial.

Medco said it did not violate its contract with the state and would appeal the jury's decision. The company noted in a statement that the plaintiffs had sought more than $300 million, and that the jury rejected charges Medco breached the contract on mail-order dispensing fees.

"We believe the evidence supported complete vindication," Medco attorney David Machlowitz said in the statement. "Although the award was a fraction of the claim made by the plaintiffs, we believe there are multiple grounds for Medco to successfully reverse this decision on appeal."

Bulletin: Jury finds Medco guilty; awards STRS $7.8 million

From Damon Asbury to STRS Board members
Sent: Monday, December 19, 2005 3:18 PM
Subject: Medco Trial Decision

The jury completed its deliberations this morning in the STRS lawsuit against Medco. The jury found against Medco and the parent company Merck, on breach of fiduciary obligation and awarded STRS Ohio $7.8 million. The jury was apparently hung on this issue of punitive damages.

At this time, Bill Neville is seeking additional detail from our attorneys in this case and we will have additional data for you at that time.


Tom Curtis to Conni Ramser, 3rd request: What was your objection and why did you feel he [Dr. Leone] did not have the right to propose his addendum?

From Tom Curtis
December 19, 2005
Hello Conni, (3rd request for a response)
So, if Dr. Leone did not agree with that motion, which he obviously did not, then he has the right to offer an alternative as an addendum, does he not? So Is it my understanding then, that even though Dr. Leone did not agree with the motion, he was to remain quiet and not rock the boat. Is that correct?
Now I think I fully understand what you and Dr. Brown told the board when you took your positions. You essentially indicated that you would not accept anyone going against what the rest of the board has, in your mind, already decided. Is that correct?
Question unanswered from prior email: Would you please provide me with your thoughts about his motion? What was your objection and why did you feel he did not have the right to propose his addendum?
Tom Curtis

Jim N. Reed to Tom Curtis: ORTA, OEA and STRS are almost sacred to the uninformed and misinformed

Sent: Sunday, December 18, 2005
Subject: You deserve a Great Holiday!

Tom, I am trying to figure out my new computer and I am not a quick-learn when it comes to technology. I'm self-taught and that leads to some problems. What's the old adage about being your own lawyer and having a fool for a client!
I've recently talked to a couple members of the Fairfield County Retired Teachers' Association to get a sense of what information about STRS has been circulated within the group.(The other Jim Reed -Pickerington- was an active member before he went back to some part-time work in the Pickerington District. I've never been a member.)
What I encountered is probably what some other CORE members have learned. ORTA, OEA, and STRS are almost sacred to the uninformed and misinformed. I think we can change that.
As an example, I received a phone call,following the publication of my letter-to-the-editor, from an educator family who was "incensed" after reading about the misspending of STRS funds in the litigation over the '03 bonuses for employees. They wanted to know "what they could do." Good start.
Enjoy the holiday break. You certainly deserve it. May your stocking be filled with supportive e-mails and some new CORE memberships. We know where the coal belongs!
Jim N. Reed

Letter to Editor, Patricia A. Kelley: Charter schools doom public education

Columbus Dispatch, December 19, 2005

I respond to the Dec. 1 Dispatch article "Charter-school operator cuts jobs as growth slows." What have I missed? Why am I paying higher taxes for public-school funding and then learning that every charter school is taking my taxes and teaching whatever it pleases?

White Hat Management admits that it is a profit-making business and then refuses to disclose its profits. To add insult to injury, we now learn that our public-school test scores are as high or higher than those of most charter schools.

Public education is the bedrock of our democracy, and I think we are losing it.



Article: Cleveland school officials wilt under fire over records

Cleveland Plain Dealer, December 14, 2005
Reginald Fields, Plain Dealer Bureau
Columbus -- Three Cleveland school officials offered up a well-prepared explanation for the district's error-riddled attendance data on Tuesday but wilted under a relentless line of questioning from the Ohio House Education Committee chairwoman.

The district was invited to explain to the committee how last school year, of an estimated 519,000 excused absences, all but 620 were reported to the state as "present" -- falsely lifting the district's attendance mark to among the best in the state.

Rep. Arlene Setzer, a suburban Dayton Republican and the committee's chair, blistered the school officials with questions that exposed contradictions in their testimony.

Lisa Marie Ruda, district chief of staff; Adrian Thompson, chief legal counsel; and Larry Johnston, internal audit manager; each testified smoothly, then fumbled for answers under questioning.

The school officials blamed the error on two central office supervisors who are no longer with the district, who directed computer programmers beginning in 2002 to change attendance coding on data sent from the district to the Ohio Department of Education.

They also vehemently defended outgoing Chief Executive Officer Barbara Byrd Bennett -- who did not attend Tuesday's hearing -- saying she had no clue of the false attendance records until The Plain Dealer inquired about it in October.

Ruda said an internal investigation began after The Plain Dealer article appeared. But Setzer pointed out to Johnston that his written testimony said the inquiry began in September.

Johnston offered a confusing answer that Setzer said didn't address her question. Ruda also failed to explain the contradiction. Thompson finally told the chairwoman that the September reference was "a mistake."

Setzer also wondered how the problem could have festered so long without Byrd-Bennett or other top administrators learning of it.

She also questioned why no one raised a red flag within the district over how the school system was showing such marvelous attendance gains while continuing to struggle academically.

The school officials said an internal audit is under way. Though no firm figure is yet known, they told the committee that the corrected attendance data would most likely show that the district did not reach the state's 93 percent attendance mandate, as it has been credited with doing.

The school officials said that this school year, excused absences are being counted as absent.

The Ohio Department of Education is considering new attendance reporting procedures and penalties for districts that submit inaccurate data.

John Curry, Flashback: Mourning World?

Many CORE and non-CORE members may have forgotten the name Stephen Ohlemacher. Stephen was also a pioneer in the investigative reporting at the early stages of the exposure of the misspending, mismanagement, and entitlement mentality at STRS. Within one week of Paul Kostu's initial STRS coverage of the STRS debacle, Ohlemacher inked a Sunday edition (June 8, 2003) front page article entitled, "Teacher pension losses don't stop spending."
Along with this excellent article, a series of photos featuring some of the million dollars plus of artwork at STRS graced that Sunday edition. The photo below features the aluminum tube artwork that hangs in our building- I am sure, if you've visited STRS, you have seen. The name of this piece is, A Whole Morning World. An attempt to justify the purchase of this $300,000 plus expenditure was touted by former Executive Director Herbert Dyer and others at STRS in an effort to pacify their critics. Their claim- it was mandated by the "1% rule- an allowance for 1% of total building costs that could be spent on art work to decorate state buildings. This excuse was quickly exposed as just that- an excuse. The "1% rule" only applies to state buildings, and STRS is not a state owned building- so much for that CYA attempt.
Since this 6/8/03 article appeared, Mr. Ohlemacher inked a few more STRS investigative reports and has moved to New York State. He will be remembered by those of us who value truth over misleading justifications for highly questionable actions by the "old" STRS Board. Should this artwork be renamed, "A Whole Mourning World?"
John, a Proud CORE member

Mo(u)rning World in living color

Photo taken 2/17/05 by Kathie Bracy

John Curry and Steve Mitchell: Sale of Key Tower

From John Curry
To Steve Mitchell
December 19, 2005
Mr. Mitchell, it appears as though your attention has been tweaked. My exact words were, "It seems to me like someone got the steal of the Century on this parcel." I also said, "Maybe some of you out there can shed a little more information." You have now offered your opinion and I thank you for explaining your position.
It is my understanding that the value of this property is in the Billions of dollars and that STRS owns the majority of this property. Was it necessary to sell at this time for this price? You have given your justification for such. I, and others, have their opinions. I do thank you for responding- discourse is the currency for democracy.
John, a Proud CORE member
From: Steve Mitchell
To: Molly Janczyk, John Curry
Sent: Monday, December 19, 2005
Subject: RE: Fw: Sale of Key Tower

Please respond to me your justification for indicating a sale price of $312.5 million for the Key Tower properties is the "steal of the century" for the buyer. Four months ago, there were numerous articles in the papers indicating a sale value of $230-$250 million would be extremely difficult to achieve, with many experts quoted. Several CORE members wrote unflattering emails to STRS Ohio questioning our judgment for attempting to sell the property at $230-$250 million. At that time, I indicated the sale value would be near $300 million. Now that the newspapers say the price is $312 million, you claim it is a terrible price!
Steve Mitchell
PS: The real estate tax data you forwarded is of little use in determining today's market value. I believe they are historic land and building values that have nothing to do with the pending transaction.

Article: Questions arise over state funding for cyber charter schools
December 18, 2005
Associated Press
State lawmakers are looking to revise a funding formula that allows the state's 12 cyber charter schools to pocket more money than their expenses - a formula that has been sore spot with school districts since it was implemented in 2000.

Parents of cyber schoolers do not pay tuition. Rather, the public school district where the student lives pays tuition with state and local tax money through a state formula.

State Rep. Jess Stairs, who chairs the House Education Committee, said he will hold hearings next year to review the equation.

"We have to make sure that people are not making a windfall off the people of Pennsylvania. The districts should be billed on what the actual costs are," Stairs, R-Westmoreland, told the Pittsburgh Tribune-Review for Sunday's edition.

Officials at Pennsylvania's cyber schools said changing the formula will hurt their more than 10,000 students. But public school superintendents counter that the formula hurts their students, too.

Students who attend cyber schools are linked to their classrooms via computer. Cyber schools do not incur costs for transportation and athletics, and do not need to maintain large school buildings.

Operators of cyber schools have said that the fees they receive under the state formula are "many times larger than the cyber school's actual costs," according to Thomas J. Gentzel, executive director of the Pennsylvania Schools Boards Association.

Nick Trombetta, who serves dual roles as chief administrative officer of the Pennsylvania Cyber Charter School in Midland, Beaver County, and superintendent of the Midland Borough School District, doesn't dispute that.

"We create jobs and opportunity," he said.

The Pennsylvania Cyber Charter School expects $30 million in tuition revenue this year for 4,500 students in Pennsylvania and another 3,000 students in Ohio, New Mexico and Arizona, said Trombetta.

The school receives $5,409 to $15,204 per student, based on tuition in the student's home district. That tuition money is helping to finance a $23.5 million performing arts center along Midland's main street.

Such an investment proves "that these folks are making dollars hand over fist," said Tim Allwein, assistant executive director of the Pennsylvania School Boards Association.

The Freedom School District in Beaver County pays between $40,000 and $60,000 a year for students to attend various cyber schools, Superintendent Ronald Sofo said.

"Many of us are sending more money to these schools than what it costs to educate the students," he said. "Local taxpayers should be outraged that local tax dollars are flowing between school districts this way."

But the schools are growing in popularity.

In Lancaster County, the Columbia Borough School District saw cyber school costs increase from $18,000 in 2001-02 to $116,000 last year, said business manager Laura Cowburn.

And in Chester County, Jim Hanak, chief executive officer of the Pennsylvania Leadership Charter School, said he expects enrollment to double next year - to more than 2,400. It opened in September with 340 students.

"We built the better mousetrap," he said.

Sunday, December 18, 2005

Article; Michigan Agenda: GOP vows to revamp educators' benefits

Instead of statewide plan, lawmakers want teachers to contribute locally and districts to pool coverage

Gary Heinlein/The Detroit News

December 18, 2005

LANSING-- Republican lawmakers, intent on slashing the cost of teachers' benefits, vow to continue pushing for an overhaul of pension and medical plans.

"We're not backing off. It's a top priority," House Education Committee Chairman Brian Palmer, R-Romeo, told reporters last week.

Republicans, who hold a legislative majority, want to replace a generous statewide teacher pension program with defined contributions plans. Employers save because they pay less while workers contribute designated amounts.

GOP lawmakers also want to make it easier for school districts to self-insure or pool their health coverage with that of neighboring school districts.

A self-insured employer pays workers' health care claims out-of-pocket, rather than contracting with an insurance company.

Lawmakers passed some of the school benefits bills before adjourning for the holidays. Palmer says negotiations with opponents will continue during the six-week break.

Steeply rising school benefit rates, which superintendents say will eat up the entire increase in state aid they'll receive next year, have prompted the push.

The proposals, however, add fuel to a long battle between the majority party and the state's biggest teacher union. Michigan Education Association leaders suspect the real agenda is to weaken the union -- which mostly supports Democratic candidates -- and its offshoot benefits organization, the Michigan Education Special Services Administration.

"By harming MESSA, you're harming the Michigan Education Association," Gary Fralick, MESSA's spokesman, said recently.

MESSA administers health benefits for 55 percent of all Michigan school employees, who won that coverage through collective bargaining. Other teachers are covered by various insurers.

Earlier this year, Republican lawmakers drew up a package of bills that would have put all teachers into a state insurance pool. In a $300,000 Senate-funded study, consultants concluded that such a setup could save millions. The bills are in limbo because backers can't muster enough votes to pass them.

Drafters of the latest teacher legislation argue that health plans are needlessly costly because boards of education lack the data necessary to insist on less-expensive alternatives. One measure would require providers such as MESSA to release details of benefit claims to school administrators.

Opponents say that would invade school employees' privacy, even if done anonymously

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