Saturday, June 16, 2007

Georgia dumped Vitech....isn't this the same company that STRS contracted with for 60+ million dollars?

"She called the March contract "tainted with fraud" and said Vitech claimed in its original proposal that it had developed a similar working system."
"My folks and state employees in general have had double-digit percentage increases over the last few years," said Callahan. "So more and more money is going into the system and we have less benefits, less ease of use and less utility today than we had before. And we have just thrown $7 million down a rat hole."
Local State wants out of $9.4 million contract
The Associated Press
2007-05-25 08:49:14.0
ATLANTA - Georgia is scrapping a $9.4 million contract for an online employee benefits program that remains incomplete after several delays.
The state wants back the $7.2 million it already has spent on the project, which was scheduled to be completed last year by New York-based Vitech Systems Group Inc. But Vitech says it won't return the money.
The state sent a letter to Vitech on Thursday ending the contract, and state officials are considering finding another company to finish the system, State Community Health Commissioner Rhonda Medows told The Atlanta Journal-Constitution. For now, the project is on hold, while the state agency prepares for October open enrollment for government employees, she said.
"We have an incomplete system that is unsatisfactory," said Medows, who was appointed a year after Vitech's contract was approved. "I will not implement a system that I believe will fail."
She called the March contract "tainted with fraud" and said Vitech claimed in its original proposal that it had developed a similar working system.
Vitech officials denied the allegations. The company is not recognizing the contract cancellation despite Thursday's letter, said James Vitiello, Vitech's vice president.
Medows said the state will pursue "whatever legal avenues are available" if Vitech does not return the money.
Tim Callahan, a spokesman for the Professional Association of Georgia Educators, said state employees want to believe state money is "being spent well and wisely."
"My folks and state employees in general have had double-digit percentage increases over the last few years," said Callahan. "So more and more money is going into the system and we have less benefits, less ease of use and less utility today than we had before. And we have just thrown $7 million down a rat hole."
The system Vitech was hired to design would handle enrollments, eligibility and billing for the State Health Benefit Plan, which provides insurance to 670,894 employees, retirees and their dependents. Vitech was hired in November 2004 to create the paperless system.
This is the second time the state has dumped a contract dealing with the State Health Benenfit Plan. In 2003, the state canceled a portion of a $350 million contract with a Texas company hired to administer state health benefits.
The state said Affiliated Computer Services Inc. missed a critical deadline for setting up an enrollment system for employees and their families.
Information from: The Atlanta Journal-Constitution,

Did you go to the meeting ONLY for mashed potatoes? RTA or MIA??

From John Curry, June 16, 2007
Did you go to the meeting ONLY for mashed potatoes? RTA or MIA??
I just received this below from a fellow CORE member! This person really put their finger on the pulse (or lack of pulse) of many county RTA's in Ohio. I think some at ORTA like it this way! John
Well it all comes down to this, there ALWAYS seems to be questions but no answers which is ridiculous or doesn't anyone else care? I'm disgusted at all the apathy! The retirement group here is a 'let's do lunch' bunch don't bother me with anything but entertainment. How to take care of your cat was one subject. I don't own a cat. I went once to a meeting to hand out information at the STRS board election time and could just lay information on a table. Others were there to speak and I wasn't allowed to speak in absentia, but Dennis won anyway.

- An unnamed CORE member -

Some STRS members' social security numbers included in theft?

"The latest files discovered to be missing include 2,685 records of school district and local government names and bank account information; 159,708 records of Medicaid providers and their bank account information - the state is assuming it includes all providers; and the names and account numbers of 1,031 state employees who are teachers in the State Teachers Retirement System, the governor's office said."
Posted on Sat, Jun. 16, 2007
Akron Beacon Journal
Strickland: Additional information was on storage device
Matt Reed
Associated Press
COLUMBUS, Ohio - Information about thousands of teachers, vendors, school districts and local governments that conduct electronic transactions with the state are on a backup computer storage device stolen from the car of a state agency intern, Gov. Ted Strickland said Saturday.
Strickland announced the device was missing on Friday. It also included the names and Social Security numbers of all 64,000 state employees.
Strickland again said that he has no reason to believe the information - which can be used to steal from people by taking their identity - has been compromised because accessing it requires special equipment and expertise. He also has issued an executive order to change the procedures for handling state data.
The latest files discovered to be missing include 2,685 records of school district and local government names and bank account information; 159,708 records of Medicaid providers and their bank account information - the state is assuming it includes all providers; and the names and account numbers of 1,031 state employees who are teachers in the State Teachers Retirement System, the governor's office said.
Strickland outlined the latest details at a Statehouse news conference on Saturday.
His staff also confirmed the storage device also held information on 53,797 participants enrolled in the state's pharmacy benefits management program, as well as names and Social Security numbers of about 75,532 dependents - a finding the governor's office first warned of in a statement late Friday.
"Obviously, I feel badly this has happened, on a human level. As an executive, I'm trying to be transparent and we're looking for ways to mitigate any harm. I remain hopeful there will be no breach of private information," Strickland said.
The device - listed in a police report from suburban Hilliard as being worth $15 - was reported stolen along with a $200 radar detector, out of the car of 22-year-old Jared Ilovar, a college senior making $10.50 an hour in his state job. Ilovar is an intern with the Office of Management and Budget assigned to work on the state's $158 million payroll and accounting system. Telephone and e-mail messages seeking comment were left for Ilovar.
Strickland said he was not allowed to specifically describe the computer device, or other details surrounding the theft, under direction from law enforcement investigating the theft.
Strickland said Ilovar mistakenly left the device in a vehicle parked outside an apartment when it was supposed to be taken into his home as part of a protocol in place since 2002. The police report indicates the device was stolen between Sunday night and early Monday morning.
The police report listed the device as a computer tape, but officials said it is more accurately described as a storage device. Similar devices, such as an external hard drive, are smaller than a laptop computer and can store large amounts of information that can be encrypted.
Strickland warned that more findings of compromised records will come in the next several days.
Friday morning's revelation came after a data review team scanned computer records using a keyword search program that looked for sensitive information.
The team has also been manually going through computer directories, clicking on each file and sub-file to determine what other information was copied to the device, said State Budget Director Pari Sabety.
That method is how the data team discovered the records that Strickland talked about Saturday afternoon, she said.
"This work is laborious," the governor said. "It will not be completed today and it may not be completed by tomorrow."
Strickland's staff scheduled another press conference for Sunday, the third day in a row the governor will have spoken about the data theft issue.

Friday, June 15, 2007

Medications not the same; nor is Caremark reliable

Lois Jeffery to Molly Janczyk, June 15, 2007
Subject: Re:

There is a big difference between over-the-counter Prilosec and prescription ones. The prescription ones do not work the same. It takes longer for the nonprescription ones to work and the prescription ones last longer in the system.

Also Caremark just sent a prescription for something else that they charged for none generic and it was. I called and they corrected it. Got to watch all the time.

Lois Jeffery

John Bos: Hurray for CORE.....Oh yeah, where was ORTA on this issue?

From John Bos, June 15, 2007
Subject: Re: Caremark IS far as STRS is concerned!
They will remain in memory for EVER! Among their fine comments were that they told me that they never knew how many insured STRS had in their coverage. They also told me that it was not their fault that my wife's medicine was not shipped for 2 months.
I do not know much about Catalyst RX, but I will take my chances with either of these over Caremark.
Hurray for CORE! We won a significant battle on this issue. Oh yeah, where was ORTA on this issue?
John Bos

From STRS: June Board News Details Retirement Board Actions and Discussions

"In other action, the board authorized the executive director to negotiate an agreement with either Express Scripts or Catalyst Rx to serve as the pharmacy benefits manager (PBM) for the STRS Ohio-sponsored Aetna, Medical Mutual and Paramount health care plans. If an acceptable contract is developed and approved by the Retirement Board, the chosen vendor will serve as the PBM from Jan. 1, 2008, through Dec. 31, 2010. Currently, Caremark is the PBM for these plans."
From STRS, June 15, 2007
Subject: [News] June Board News Details Retirement Board Actions and Discussions
This week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The June report follows.
RETIREMENT BOARD CHAIR, VICE CHAIR NAMED During its June 2007 meeting, the State Teachers Retirement Board elected Mary Ann Quilter Cervantes as its vice chair for the coming year. She was elected in 2005 to a contributing member seat on the board. According to Board Policies, Jeffrey Chapman, who is currently serving as vice chair, automatically moves into the position of chair. Chapman and Cervantes will assume these leadership positions on Sept. 1, 2007.
RETIREMENT BOARD ADOPTS ANNUAL INVESTMENT PLAN The Retirement Board adopted an Annual Investment Plan for fiscal year
2008 (July 1, 2007-June 30, 2008) following a presentation by members of the system's Investment Department. This plan outlines the staff's investment strategy for the system's various asset classes (fixed income, domestic and international equities, real estate and alternative investments).
After looking at a number of factors, STRS Ohio staff is predicting that the U.S. economy will experience growth during the second half of fiscal year 2008, helped in part by solid consumer spending, an improved international trade situation and a rebound in business spending due to increases in capital equipment expenditures. In addition, inflation will ease slightly in fiscal 2008. Energy costs could remain elevated during the fiscal year, but are not likely to increase dramatically from current levels.
STRS Ohio expects its total fund return to be approximately 7% in fiscal year 2008, which is below the actuarial assumed rate of return of 8%. Given the excellent market returns in each of the last four fiscal years, staff noted that this should not be considered a "bad" year. The equity markets (domestic and international), of which STRS Ohio targets 67% of its investment fund allocation, are unlikely to be extremely positive or negative in fiscal year 2008. Real estate, which comprises about 10% of the portfolio, should record "above normal" returns.
Due in large part to the returns of the past four fiscal years, the period to amortize STRS Ohio's unfunded actuarial accrued liability should improve and be close to 30 years as of June 30, 2007, in spite of expected unfavorable experience with other economic and demographic assumptions. While the projected market return for fiscal year 2008 is only about 7%, the four-year smoothed market-related return used by the actuary should exceed that number, which will further improve the system's funding status.
SEVERAL HEALTH CARE PROGRAM CHANGES APPROVED FOR CALENDAR YEAR 2008 During its June meeting, the Retirement Board continued its discussion about health care program costs and potential changes for calendar year
2008. The board approved the following changes to prescription drug coverage:
• Add coverage for over-the-counter Prilosec at retail for a 28-day supply for a $5 copayment; increase copayments for all other tiers (generic and brand-name) of proton pump inhibitors, such as omeprazole, Nexium, Protonix and Prevacid, to $25/$50/$75 at retail and $65/$125/$190 through mail-service. This change applies only to this class of medications for enrollees in the Aetna and Medical Mutual Plus and Basic Plans and the Paramount health care plans. To obtain the over-the-counter Prilosec 28-day supply for a $5 copayment, enrollees will need a prescription from their physician. NO OTHER PRESCRIPTION DRUG COPAYMENTS WILL BE CHANGED FOR 2008.
• Offer a voluntary pill-splitting program for specified drugs. Program enrollees are prescribed double-strength medications that they split in half to get the lower strength. In return, they pay only half the current copayment amount. This change also applies to enrollees in the Aetna and Medical Mutual Plus and Basic Plans and the Paramount health care plans. Enrollees wishing to participate in this program will need to discuss it with their physician and obtain a prescription specifying the double-strength dosage and pill splitting.
• Increase the Basic Plan's prescription drug maximum annual benefit to $10,000 from $5,000. With this change, a plan enrollee would pay 100% of the full cost of Tier 2 and Tier 3 drugs only after STRS Ohio has paid $10,000 in retail and mail-service prescription costs. The Basic Plan is available through Aetna and Medical Mutual.
In other action, the board authorized the executive director to negotiate an agreement with either Express Scripts or Catalyst Rx to serve as the pharmacy benefits manager (PBM) for the STRS Ohio-sponsored Aetna, Medical Mutual and Paramount health care plans. If an acceptable contract is developed and approved by the Retirement Board, the chosen vendor will serve as the PBM from Jan. 1, 2008, through Dec. 31, 2010. Currently, Caremark is the PBM for these plans.
This recommendation came out of a collaborative project between STRS Ohio, the Ohio Public Employees Retirement System (OPERS) and School Employees Retirement System (SERS). Last fall, the three systems joined together to leverage their collective purchasing power to explore and implement innovative, cost-effective approaches to stretch their respective health care dollars as much as possible. The first venture together was to solicit bids for a PBM that could serve all three systems' health care programs. Currently, the systems cover 350,000 retired public employees and their family members. The board of OPERS and SERS will consider their staffs' recommendations at their respective meetings during the week of June 18, 2007.
In evaluating PBM candidates, the systems were not only looking for the best unit price or discounts on prescription drugs, but also vendors' ability to help support and manage drug use over time. OPERS, SERS and STRS Ohio also sought a vendor that could support the growth in covered lives that may occur in the future from other public sector employers joining the group. Finally, customer service responsibilities will continue to be based in Ohio; experience in meeting the unique needs of older, retired populations has also been preserved.
The Retirement Board will be asked to approve the final PBM selection in August or September.
FISCAL YEAR 2008 BUDGETS ADOPTED The Retirement Board approved the proposed system budgets for fiscal year 2008 (July 1, 2007-June 30, 2008) following discussions held in April and May. In the past, operating budgets were developed to cover all anticipated projects and costs without the need to request midyear increases. As a result, actual spending recorded at each year's end has generally been significantly below budgeted amounts. However, in May the board asked that the proposed budget be adjusted to get closer to actual spending for the current fiscal year, particularly with respect to historical patterns of staff turnover and vacancies. The approved operating budget for fiscal year 2008 now totals $95,998,000, which reflects a 7.2% increase over the current year's operating budget. The approved capital budget for next year totals $2,100,900. Additionally, the system expects to spend $6,387,700 on the project that is under way to replace STRS Ohio's obsolete pension management computer system.
RETIREMENT, INVESTMENT TRANSACTIONS APPROVED The Retirement Board approved the following retirements and investment transactions:
• 420 active members were approved for service retirement; 307 inactive retirements were approved.
• In May, fixed-income purchases totaled $690 million, domestic equity purchases totaled $864 million and real estate purchases totaled $55 million.
HOUSE BILL 240 AFFECTS REEMPLOYMENT OF STATE PENSION SYSTEM RETIREES House Bill 240, sponsored by Rep. Bruce Goodwin (R-Defiance), makes changes to the state's statutes governing public reemployment of state pension system retirees. The bill was introduced on May 29 and applies to OPERS, OP&F, SERS and STRS Ohio. As it pertains to STRS Ohio, there is no restriction on reemployment with the same employer or the opportunity to return to work. Only management and administrative positions are affected by the bill, which imposes a limit on reemployment salaries to no more than 60% of the final average salary (FAS). The reemployment position would terminate at the end of a year, but could be renewed by the employer. The primary involvement for STRS Ohio is verification of the FAS. There is no impact on the funding STRS Ohio receives for reemployment. Staff is working with the other systems and the sponsor to clarify the role of the systems. The bill has been referred to the House Financial Institutions, Real Estate and Securities Committee.
HEALTH CARE LEGISLATION BACK ON TRACK STRS Ohio has received a commitment from Rep. Scott Oelslager (R-Canton) to reintroduce STRS Ohio's health care legislation before the end of June. This legislation is designed to create a dedicated revenue stream for STRS Ohio's Health Care Program through phased-in contribution increases from active members and employers. STRS Ohio staff and the Health Care Advocates have already begun mapping out a number of activities and meetings for this summer to engage members, legislators and employers in dialogue about this important proposal.

FLASHBACK -- 4 Years Ago -- Herbie gets the raspberries and Gary can't follow Dennis's logic!

From John Curry, June 15, 2007
Subject: FLASHBACK -- 4 Years Ago -- Herbie gets the raspberries and Gary can't follow Dennis's logic!

My what a difference 3 years make. Herbie hit the bricks and Gary ate some crow! John
"Meanwhile, the Ohio Education Association came to the defense of Dyer and the STRS. The teacher union’s president, Gary L. Allen, sent an e-mail message to his executive committee, district leaders, advisory council, local presidents and STRS board members questioning the motives of Dennis Leone, the Chillicothe City Schools superintendent who is largely responsible for calling attention to the STRS spending spree."
“Mr. Leone’s motives for his decision to broadcast his claims far and wide are unclear,” Allen wrote. “Much of his logic is difficult to follow.”
Allen suggested that Leone’s effort were “destructive.”
New leadership urged for state retirement system
Canton Repository, June 13, 2003
Copley Columbus Bureau chief
CHILLICOTHE — A lawmaker who helps oversee Ohio’s five retirement systems called Thursday for the resignation of the executive director of the State Teachers Retirement System, while another said the system’s books need to be audited.
Sen. Kirk Schuring, R-Jackson Township, said it is time for Herbert Dyer to go, following revelations this week that the system has spent more than $15 million on staff bonuses, artwork and travel in three years while the system’s investments plummeted by $12.3 billion during that same time.
Schuring said Dyer has lost the confidence of the STRS members and new leadership is needed. In his fifth year on the Ohio Retirement Study Council, Schuring is its former chairman.
Rep. John Boccieri, D-New Middletown and a council member, said Dyer does not understand that the money spent by the STRS board “is not the board’s money or his money.” Boccieri, whose parents are STRS members, wants an audit of the system’s books, but he said calling for Dyer’s resignation “is a bit premature.”
State Auditor Betty Montgomery said in an e-mail Thursday she was concerned about “what we are being required to do in our state retirement systems” and that her office will “raise serious questions” about STRS policies.
Meanwhile, the Ohio Education Association came to the defense of Dyer and the STRS. The teacher union’s president, Gary L. Allen, sent an e-mail message to his executive committee, district leaders, advisory council, local presidents and STRS board members questioning the motives of Dennis Leone, the Chillicothe City Schools superintendent who is largely responsible for calling attention to the STRS spending spree.
“Mr. Leone’s motives for his decision to broadcast his claims far and wide are unclear,” Allen wrote. “Much of his logic is difficult to follow.”
Allen suggested that Leone’s effort were “destructive.”
While Allen was sending his message to OEA leaders, the union’s rank and file were lining up behind the superintendent who has become a hero to many.
Leone, lawmakers and news media reported getting numerous calls and e-mail messages backing his efforts and calling for action. All 120 e-mail messages Leone received from administrators, teachers and retirees thanked him, asked how they could help or encouraged him to continue. A couple suggested a class action lawsuit.
Allen said there was no relationship between his criticism of Leone and the fact that a current STRS board member is a former OEA president.
Michael Billirakis is a past president of OEA and Dawn Leibensperger, the wife of an OEA employee, was active in his election bid. Leibensperger is an OEA president in Dublin, in central Ohio.
Billirakis billed STRS $9,923 over three years for expenses, including trips to San Francisco, Boston (twice), Atlanta, Tacoma, Wash., and Anchorage, Alaska. He was one of the lowest spending board members. The top spender is Hazel Sidaway of Plain Township, who spent $54,216, which included 25 trips requiring airfare.
Allen said the past spending habits of Dyer and the board are “old news” and it is time for the system to move forward. He said, however, changes should be made in how bonuses are awarded to employees.
Schuring said he has heard repeatedly from constituents who have been in touch with Dyer.
“I am appalled with the kind of response my constituents have gotten from him,” he said. “He is a brash, arrogant and condescending man.
“We need a new leader who takes these matters seriously and not be part of any plan to spend money unwisely.”
Sen. Lynn R. Wachtmann, R-Napoleon and chairman of the council, wrote to a constituent in February that STRS did not move fast enough to prevent cuts in the health-care benefits of retirees. Wachtmann said earlier this week that he wants more hearings on the STRS spending and its health-care program.
Sen. Jim Jordan, R-Urbana but not on the study council, also writing to a constituent, said on May 28 that “Mr. Leone raises a number of valid issues pointing (to) mismanagement and inefficient use of funds by STRS.”
Leone said his motive is clear: “To get the board to change its spending practices and respond to its members.”
“This year there was a long and ugly teacher strike in the Eastern Local School District south of Chillicothe that the OEA rightfully supported,” Leone said. “What would have the reaction been from OEA and teachers if they found out the Eastern school board was spending like the STRS board? There would have been outrage if the board was flying to Hawaii, giving principals bonuses and purchasing polished stones for the superintendent’s office.”
You can reach Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail:

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Nancy Hamant calls for joint effort among state education organizations to fight Fordham Report

From Nancy Hamant, June 15, 2007
Subject: WCRTA Statement on 6-14-07
To all:
Kathie Bracy requested that I write up WCRTA's statement to the STRS Board yesterday regarding HB 151. It will follow in my email and I will also attach it for your use.
In addition, my concerns about the Fordham Report were confirmed when Damon in his report yesterday afternoon, stated that he did not think that the Fordham Institute or the report would "go away". Damon also said that the report was formally given to the Ohio legislature (representatives and senators) and to members of the media. STRS felt that it was important enough that they issue an immediate statement. I feel that it is of utmost importance that ALL education associations (for example OSBA, college groups, OEA, OFT, CORE, ORTA, the Ohio Coalition) all must get together to fight this report and any future actions by the Fordham Institute and its CEO, Chester Finn. I suggest that ALL the educations get together and develop a response statement to the Fordham Report just as STRS has immediately developed one.
Nancy (Hamant)
Statement presented to STRS Board June 14, 2007
My name is Nancy B. Hamant. I am a 28.6 year STRS member. I am speaking to you on behalf of Warren County retired teachers and our President, Barbara Carvey.
I thank the STRS Board and Dr. Asbury for providing this opportunity for WCRTA members to present their deep concerns about SB HB 151 and also HB 152, as they seem to be tandem bills.
WCRTA appreciates the timely and intensive efforts of STRS staff and Dr. Asbury regarding HB 151 on behalf of STRS members and to avoid mandatory language in HB 151.
WCRTA strongly urges STRS to do everything possible to stop and/or Eliminate HB 151 including filing a lawsuit as to whether the Ohio legislature has the legal authority to pass HB 151 which unfairly targets only the five Ohio pension fund members and does not require sacrifice from all Ohio citizens.
If nothing stops HB 151, all efforts must be made to have the Governor veto HB 151.
If that fails, and STRS must enter into divestiture, WCRTA is requesting that STRS fully document the total impact to the STRS pension fund for each fund divested as follows:
1. Any loss for each fund divested;
2. Total cost of divestiture for each fund;
3. Total administrative cost of divestiture for each fund;
WCRTA requests that the full report of any divestiture resulting from HB 151 be disseminated to all STRS members, each member of Ohio’s legislature and senate, and to ALL Media outlets!
Again, WCRTA urges STRS staff and Dr. Asbury to continue to vigorously fight HB 151 (and HB 152) as the bills’ impact on the STRS pension fund has the potential to be devastating to each STRS member – active or retired.

News from STRS re: HB 152

From STRS, June 15, 2007
Subject: [News] Private Vendor Legislation Impacts STRS Ohio
On April 17, 2007, House Bill 152 was introduced by Rep. Chris Widener (R-Springfield). This bill requires all K-12 employers to offer private vendor defined contribution plans to all new employees and those with less than five years of service credit. This bill is currently scheduled for a vote by the Ohio House of Representatives' Financial Institutions, Real Estate and Securities Committee on Thursday, June 21, 2007.
The State Teachers Retirement Board unanimously passed a motion on June 15, 2007, voicing its opposition to this bill. Its objections are based on the following:
• The potential to lose teachers to private vendor plans would have negative consequences on the system's funding status due to the possible loss in contributions.
• STRS Ohio already offers a Defined Contribution Plan to its new members employed at both the K-12 level and in higher education that is competitive to private vendor plans in both its investment options and its fees. We are not aware of any demand from K-12 educators or employers for additional options from private vendors.
• The addition of private vendor plans will result in an increased administrative burden and additional cost to school districts.
STRS Ohio members wishing to voice their opinion about this bill can obtain information via the following link:

Steve Buser's speech to STRS Board, June 14, 2007

Hello. My name is Steve Buser. I am a retired member of STRS with 30 years of service credit. I would like to speak to you today about a proposal that would tie policy weights for STRS investments to the financial condition of STRS.
In 2005 the STRS Board voted to adjust policy weightings for various categories of STRS investments. The net effect of these changes was to increase the exposure of STRS investments to up and down moves in financial markets.
I was a member of the Board at the time and was an enthusiastic supporter of the change. To borrow a sports analogy, in 2005 STRS was behind in the game in the sense that we were in a weakened financial condition. I felt that we needed to be more aggressive in our play calling, and a reasonable increase in market exposure offered the best chance to improve our financial condition.
STRS was rewarded for the change. Following the vote, financial markets were generally favorable, and talented staff members at STRS were able to leverage the favorable market conditions into even greater returns on STRS investments. As a result, it is my current understanding that STRS would now easily meet or exceed the requirement for a 30 year funding period if that rule were applied to the current market value of STRS assets rather than to a smoothed measure of past values.
By virtue of the improved financial condition, I would like to suggest that the STRS Board now consider scaling back on the degree of market exposure. To continue the sporting analogy, now that we have pulled even or ahead in the game, perhaps it is time for a more conservative game plan. If STRS had made such an adjustment at the end of the 1990s, when STRS financial strength had gotten exceptionally strong, perhaps some of the pain suffered by our members would have been lessened following the steep market decline of 2001-02.
The downside of the proposed change is that if STRS were to reduce the exposure to market risk, we could no longer expect to benefit from strong financial markets in the future to the degree we have done so in the recent past. However, STRS financial condition would be better protected in the event of another market downturn. In essence, when the task was to recover from a weakened financial condition, the market was a potential ally. However, if the new task is to maintain the existing financial security, the market has increasingly become a potential threat.
Thank You

DIVESTMENT & this may explain why ORSC suddenly made the "nasty company" list disappear!

Posted by Royal Dutch Shell at June 14th, 2007
• What’s New: Fifteen statehouses are weighing bills that would force public pension plans to bail out of companies doing business in Iran.
• What’s at Stake: The nation’s public pension funds hold more than $1 trillion in assets.
• What It Means: The legislative movement has sparked debate over the role local governments should play in guiding U.S. policy and in directing the investment of public pension funds.
In Ohio, Rep. Mandel Pushes for Pullout; White House Opposed
June 14, 2007
COLUMBUS, Ohio — Three years ago, Josh Mandel was fighting insurgents as a Marine in Iraq. Today, as a freshman state legislator here, he’s aiming at another big target: Iran and its nuclear program.
In March, weeks after he was sworn in, Rep. Mandel startled veteran lawmakers when he announced plans for a bill that would force the state’s five public pension funds to divest themselves of stock in foreign companies doing business in Iran. The funds manage over $180 billion in assets, and among the companies targeted were more than a dozen with major investments in Ohio, including Japan’s Honda Motor Co.
“The state should not be investing people’s hard-earned dollars in countries that are sworn to America’s destruction,” says the 29-year-old Republican lawmaker.
A new legislative movement is tapping a wellspring of anxiety over Iran and its perceived threat to U.S. troops in the Middle East and to U.S. allies such as Israel. It has sparked fierce debate over what role local governments should play in guiding U.S. foreign policy and in directing the investments of the nation’s huge public pension funds, which altogether hold more than $1 trillion in assets. (See related article.)
At least 14 other statehouses across the country are considering similar anti-Iran efforts. Last week, Florida Gov. Charlie Crist signed the nation’s first Iran-divestment bill into law, and the California Assembly unanimously passed a bill forcing the state’s two huge public pension funds, with more than $410 billion in assets, to shed their Iran-related assets. That bill is now headed to the state Senate. Texas, Illinois, Michigan and New Jersey, among others, are also weighing divestment legislation.
Some of the bills broadly target all companies active in Iran, while others focus on companies involved only in its energy sector.
Congress is offering unusual support, as both parties search for ways to increase pressure on Iran. Last month, Democratic Sen. Barack Obama and Republican Sen. Sam Brownback, both presidential contenders, introduced legislation to support the local divestment bills and to shield divestment legislation from potential lawsuits challenging the states’ right to enact laws that impact foreign policy.
The effect of the state divestment laws is likely to be mostly symbolic, as legislatures intend to give the funds a year or more to shed the targeted shares. Still, proponents hope divestment will weaken Iran’s economy and destabilize its government. In the 1980s, a divestment campaign led dozens of U.S. companies to cease doing business in South Africa, helping end the apartheid system.
More recently, pressure over Sudan’s handling of the atrocities in Darfur helped push British engine-maker Rolls-Royce PLC and two of Europe’s largest technology companies, Germany’s Siemens AG and Switzerland’s ABB Ltd., to announce they are pulling out of the country.
Big Implications
The effort has big implications for the public pension fund industry. Forcing the sale of tens of billions of dollars in foreign-equity holdings in dozens of blue-chip companies could cost the funds tens of millions of dollars in administrative costs alone. Furthermore, the funds argue that buying and selling assets for political reasons undermines their responsibility to shareholders, and could set a precedent for passing laws targeting investments in China or elsewhere.
“No one is for terrorism,” says Laura Ecklar, a spokeswoman for Ohio’s second-largest fund, the $75 billion State Teachers Retirement System, which has strongly opposed the Mandel bill. “But no matter how noble the cause, pension funds shouldn’t be used to set foreign policy.”
The Bush administration is strongly opposed to the legislation, arguing that it threatens to torpedo the larger diplomatic effort to isolate Tehran. The U.S., Britain, France and Germany — along with China and Russia — have been stepping up economic pressure on Iran to try to persuade it to stop its uranium-enrichment work, which they believe to be part of an effort to develop nuclear weapons. The U.S. also alleges that Iran is supplying Shiite militia groups in Iraq with weapons, which are being used to kill U.S. troops.
While U.S. companies have long been barred from operating in Iran, more than 200 multinationals have investments there, from British-Dutch oil giant Royal Dutch Shell PLC and French telecommunications-equipment company Alcatel SA to Sweden’s electronics company Telefon AB L.M. Ericsson.
Companies targeted by the various Iran bills say they are paying close attention to the effort. But so far, none appear to have backed away from doing business in Iran as a result. Many dispute the efficacy of economic sanctions, and all say their investments are unrelated to Iran’s nuclear program.
Ohio’s effort is driven by Mr. Mandel, who joined the Marines in 2000 after finishing college. He was summoned to Iraq in 2004, where he served for eight months as an intelligence specialist in al Anbar province, one of the roughest areas of the country.
Over 6-feet-tall and rail thin, Mr. Mandel is so young people mistook him for a page when he first arrived in Columbus. Citing his Marine affiliation, Mr. Mandel refuses to comment on Iraq. His campaign platform focused not on the war abroad, but on local issues like attracting jobs to the area and protecting the tax base of local schools.
The legislator says he got the idea for the bill in December, after reading an opinion piece written by Missouri’s Republican state treasurer, Sarah Steelman. One of the movement’s most-outspoken proponents, Ms. Steelman last year launched a “terror-free” public fund in Missouri that filters out shares from companies doing business in Iran, North Korea, Sudan or Syria, countries listed by the U.S. government as sponsors of terrorism. In 2005 she persuaded the state’s retirement system to shed shares in the same companies.
Knowing he would need help battling the pension funds, Mr. Mandel recruited another newly elected Republican, Rep. Shannon Jones, to co-sponsor the bill. “When Josh came to me with this, I said, ‘We’re going to do what?’ It was a crazy idea, but I was taken by it immediately,” says Ms. Jones, a former congressional staff aide and Republican campaign worker from outside Dayton. “I couldn’t get over the fact that my own retirement money is investing in a little bit of terror.”
The two spent more than a month drafting the bill, introducing it in April along with a lengthy written defense to pre-empt potential criticism. While some senior Republicans were leery, the bill attracted 29 co-sponsors out of the state House of Representatives’ 99 members.
But it drew immediate fire from Ohio’s pension funds. Administrators complained that the measure, if passed, would affect shares of more than 170 international companies and require the funds to sell, by one estimate, more than $9 billion in holdings. Administrative costs of divestment alone would top $60 million, they said.
Rallying Forces
Rallying their forces, the funds emailed “action alerts” to thousands of the state’s 1.3 million current and retired state employees, alleging that the bill could gut their retirement and health-care accounts and urging them to call their local representatives. “A delayed response may be devastating,” read one alert sent out in May by the Ohio State Teachers Retirement System.
An even louder outcry arose from Ohio’s industrial belt. The bill, which roped in companies with even small engagements with Iran, affected not only Honda, but DaimlerChrysler AG, Bridgestone Corp., Siemens and ThyssenKrupp AG, all of which have factories in Ohio. The pension funds estimated that the targeted companies employed more than 45,000 workers in the state.
One of the first critics to pull Mr. Mandel aside was Rep. Matt Szollosi, a freshman Democrat. His message: The bill would chill the investment climate in Ohio, a state already hard hit by the loss of manufacturing jobs. “I told him straight out that DaimlerChrysler has a new Jeep plant that straddles my district,” Mr. Szollosi recalls. “They’ve invested up to $2.5 billion in that plant… . The bill as introduced would have had a devastating impact on Ohio from an economic-development standpoint.”
‘Dangerous Precedent’
The Ohio Chamber of Commerce also lobbied lawmakers to oppose the bill. Linda Woggon, who heads the chamber’s governmental-affairs shop, sent a memo in May to members saying the bill would set a “dangerous precedent” by inserting politics into investment decisions and could put “our state’s business climate at risk, especially in today’s global economy.” Most of the state’s major newspapers, including the hometown Columbus Dispatch, editorialized against the bill.
Mr. Mandel’s bill won some significant backers, too. James Woolsey, a former director of the Central Intelligence Agency under President Clinton, flew in to testify in favor of divestiture. Local Jewish groups organized a letter-writing and telephone campaign to push the bill. The powerful lobbying group, the American-Israeli Political Action Committee, also sent in advisers.
Then Ohio House Speaker Jon Husted, a Republican initially wary of the bill, advised Reps. Mandel and Jones how to beat back opposition. He said the bill had to get smaller, and shouldn’t target companies active in Ohio.
So in May, Mr. Mandel and Ms. Jones decided to follow Florida’s lead and only go after companies with investments of more than $20 million in Iran’s energy sector. Many divestiture efforts focus on companies with investments in energy, which accounts for more than a quarter of Iran’s total economic output. The companies include French energy company Total SA, Norway’s Statoil ASA, and Malaysia’s Petronas.
But the authors in Ohio also expanded the bill to include companies investing in Sudan’s oil fields, in a bid to put pressure on the Sudanese government over Darfur.
On May 30, Mr. Mandel brought in some of his most powerful supporters — Iraq war veterans. In Ohio and other states, the carnage in Iraq, fueled in part by Iran-supplied weapons, has given emotional impetus to the divestment movement. At the hearing, the father of an Ohio Marine told lawmakers how his son was killed last year in Iraq by a bomb traced back to Iran.
That day, the narrower bill sailed through the financial institutions committee by a vote of 17 to five. Backers included early critics like Rep. Szollosi, and, unexpectedly, Ohio’s third-largest fund, the $12.5 billion Ohio Police and Fire Pension Fund. The fund had decided to remain neutral on the issue, a move seen as giving tacit support to the bill.
Hundreds of the fund’s 52,000 active and retired members have served in Iraq. “Our members see things a little differently, say, from the teachers or other state employees,” says fund director William Estabrook.
Last week, Speaker Husted postponed a full vote on the measure, and proposed a compromise in which the funds would voluntarily divest themselves from half of their Iran energy-related holdings within six months, and the remainder after that. In exchange, the House would refrain from passing mandatory legislation. Two days later, all five of the state funds agreed to the deal, though Rep. Mandel says he hasn’t decided whether to support the compromise or push for a full vote of his bill.
Legislation in other big states has faced less opposition. Florida’s Iran-divestment bill — enacted into law last week — won the backing of state veterans groups, the local AFL-CIO, and the state teachers union. The law, which also targets Sudan-related investments, takes aim at the shares of 25 companies in the $150 billion Florida Retirement System Fund, the state’s main public pension fund. On the Florida list are Russia’s two huge energy companies, OAO Gazprom and OAO Lukoil.
The fund put up little public opposition to the bill, despite an initial estimate that it could cost the fund up to $22 million in administrative fees.
California’s divestment bill is the handiwork of freshman state Assemblyman Joel Anderson, a Republican from San Diego, who portrays the drive as a matter of simple investment logic. “Any idiot understands that Iran is a dumb place to be parking taxpayer money,” he says.
Like Mr. Mandel, Mr. Anderson originally tried to push through a bill targeting the shares of all foreign companies in Iran. But he also finally settled on legislation focused on Iran’s energy sector. His revised bill, which Gov. Arnold Schwarzenegger supports, could go before the California Senate as soon as September.
Divestment supporters are moving to another challenge. State pension funds invest much of their international holdings in index funds, making it impossible to shed individual company shares. Following Missouri’s lead, Louisiana and other states are now looking to create funds that would bar the shares of companies active in any country listed by the U.S. as sponsors of terrorism.
The Bush administration is taking aim at states’ efforts. Deputy Treasury Secretary Robert Kimmitt blasted the legislation in a speech last month, saying, “Our economic sanctions against Iran are intended to engage, not confront, our allies.”
Mr. Mandel doesn’t buy that there’s a conflict between state measures and the administration’s efforts in Washington. “The federal government is doing what it can,” he says. “And so are we.”
Write to Neil King Jr. at

Thursday, June 14, 2007

RH Jones: Another negative, GOP's HB151

From RH Jones, June 14, 2007
Subject: Another negative, GOP's HB151

To all:
"Telling it like it is": With HB 151 the GOP (Grab Our Pension) politicians gained national news in a front page story in the Wall Street Journal today, 06/14/07. They seem to have used up religion to stay in power; and, now, in desperation they are trying to use patriotism. As you probably know, this is not just a movement in Ohio but a national movement to hurt thousands of businesses, working people, and retired Americans. Ohioans and all of America is waking-up to their unctuous (oily) methods.
Global companies sell, not just in America or Ohio, but worldwide. Are the so called "free enterprise" politicians interfering not only with businesses, but with everyone else's livelihood? I think so. The Beacon tells us today that: "Study says Ohioans behind most of U.S. Ohioans have suffered worse economic times than most Americans since the decade began, according to a report released by an association of Ohio anti-poverty organizations...." "Ohio has lagged behind the national average every month for the last 11 years." (END QUOTE) After 11- years of an inept GOP controlling the Ohio Legislature, and an inept President W. Bush in the Whitehouse, the next election of state, national representatives, and for the presidency, can not come too soon for me. The GOP needs to be put on pension. Please, register to VOTE!
RHJones, proud to be a CORE member

Paul Boyer's speech to STRS Board, June 14, 2007: Another nightmare with Caremark!

Good afternoon, STRS Staff and Board members, Retired teachers and other guests. I am Paul L. Boyer of Lima, Ohio speaking for myself and the retired teachers of Allen County. Normally my speeches are aimed at conditions which have been developed by actions of the Board. I will depart somewhat from that this afternoon.
I would like to point out to you, as you negotiate a new contract with some PBM to supply our medicines, some of the problems I have had with our current supplier, Caremark.
1. I pay all my bills from them by check because my checking account is in my computer and I can pull up a complete report at the end of the year for tax purposes. On at least two or more occasions, they have lost my check and I have had to stop payment and write new ones. Fortunately, because of my long relationship with my bank, they do not charge me for that. The normal charge is $30.00 or more.
2. It usually takes them at least a couple of weeks to process my check through their system and if I get an order in the meantime it shows that I owe money which is already paid by a check I have sent them.
3. My wife and I are both retired teachers and therefore members of the system. More than once they have credited one of our checks to the other person’s account and it usually takes a while to get that straightened out.
4. Now for the clincher. A few months ago I opened as new bottle of medicine and noticed that the pills were a different size and color from before. The next time I took some pills out of the bottle I saw that there were two distinctly different pills in size and color. I immediately called Caremark and was switched to a pharmacist. When I explained the problem, he said “Oh, that should not have happened” He went on to explain that these pills are ordered in very large quantities and placed in large containers, from which they are shot out by air or something into a member’s bottle. He said they always thoroughly clean out all of the pills in a container before putting new ones in, which may or may not come from a different supplier. He said that evidently that container had not been thoroughly cleaned. He did not suggest a replacement at all and I am still using that bottle today.
Now, I have told you of these problems because I think you should take them into consideration as you negotiate a new contract, which I am sure that many of us feel should not go to Caremark
Paul L. Boyer
Retired since 1985
Life member OEA/OEA-R,
Proud to be named
“Core” of CORE
by Dr. Dennis Leone

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Akron Beacon Journal: HB 151 not dead yet

Legislative floor actions in the House of Representatives and Senate from Wednesday, June 13. [I'm posting only HB 151 here; others were also listed. KBB]
HB 151 RETIREMENT SYSTEM INVESTMENTS (Mandel, Jones) - To specify procedures for divesting investments a public investor holds in directly held publicly traded companies conducting specified types of business in the Islamic Republic of Iran and the Republic of the Sudan and to prohibit public investors from investing in such a company and to authorize the Ohio public deferred compensation board, the alternative retirement program, and the Ohio college savings program to offer a terror-free investment option. To Rules & Reference
Next STRS Board meeting: June 14 & 15, 2007
Next CORE meeting: June 14, 2007
.....Core will meet at 11:45 a.m., Thursday, June 14, in the rear cafeteria room behind the Sublett room (second floor of the STRS building). PLEASE PLAN TO ATTEND!
Map/directions to STRS, 275 E. Broad St. Columbus, OH 43215

Wednesday, June 13, 2007

HB 151 and we've a fight on our hands!

From John Curry, June 13, 2007
Despite the Husted mediated deal re. Sudan divestment and all the Ohio retirement systems, scuttlebutt has it that one of the sponsors of HB 151 still wants to ram this legislation down our throats. We have to be vigilant. John

Note: forwarded message attached.

Caremark.... pill pushing or disease awareness?

From John Curry, June 13, 2007
Did YOU receive a newsletter from Caremark touting the benefits of the cholesterol pill Vytorin? If you did, please let me know by dropping me an email the document.
Blurring lines of advice, advertising
June 13, 2007
Caremark, a company that manages prescription drug insurance plans, has accepted payments from a pharmaceutical maker to produce newsletters that appear to promote one of its medications - a practice that has raised questions of conflicts of interest.
Last month, some Long Island prescription plan participants received a Caremark newsletter touting the benefits of the cholesterol pill Vytorin.
Vytorin's manufacturer, Merck/Schering-Plough Pharmaceuticals, paid Caremark to produce the cholesterol newsletter. But those who received the newsletter wouldn't have known that without wading through the small print at the end of it.
The newsletter stated there had been changes to Caremark's drug lists that name medications available for lower co-payments. It also devoted more than a quarter-page to Vytorin - one of Caremark's preferred drugs. Other cholesterol drugs on the list - Lipitor and the generic forms of pravastatin and simvistatin - received only brief mention.
"There is always a potential for a conflict of interest when you see something like this," said Larry Sasich, consultant to the Public Citizen Consumer Group in Washington, D.C., and assistant professor of drug policy at the School of Pharmacy at Lake Erie College of Osteopathic Medicine in Erie, Pa.
"It might lead a patient to ask a doctor about Vytorin rather than what [the drug] they're already on." Sasich said. "It sounds like an ad for Vytorin."
Caremark spokeswoman Carolyn Castel disagreed.
Castel said the payments Caremark has accepted from Merck/Schering-Plough, as well as from other drug companies, have not influenced decisions about which drugs are placed on its preferred list.
However, Castel did not explain why Caremark required outside money to pay for the newsletter; she would not reveal the amount of the Merck/Schering-Plough payment and declined to explain why Vitorin received such prominent display.
"Caremark does not believe that its relationships with pharmaceutical manufacturers create a conflict of interest," said Castel, in an e-mail response to questions from Newsday.
Promoting Vytorin could help Merck/Schering-Plough capture a larger chunk of the $32-billion worldwide cholesterol drug market. Vytorin, approved by the FDA in 2004, had U.S. sales that topped $2 billion in 2006.
The Caremark newsletter also provided information about high cholesterol. It also pointed to a study that found Vytorin - which contains two drugs, Zocor and Zetia - more effective in lowering LDL cholesterol than AstraZeneca's Crestor, a single drug also known as rouvastatin. Crestor is not among the preferred cholesterol drugs listed in the newsletter, and using it would probably mean higher co-payments. Under most Caremark-managed plans, listed drugs have lower co-payments.
AstraZeneca spokesman Christopher Sampson said he was not familiar with the claims in the Caremark newsletter comparing Vytorin with Crestor.
When Merck lost its patent protection for another cholesterol drug, Zocor, in June 2006, cheaper, generic forms of the drug, also known as simvistatin, posed a threat to the company's revenues. To protect itself, Merck entered into a deal with India-based Dr. Reddy's Laboratories Ltd., giving the company its Zocor formula and licensing it to make what it called "an authorized generic" in return for a revenue share.
Dr. Stanley Katz, chief of cardiology at North Shore University Hospital in Manhasset, advises cholesterol patients not to switch from one drug to another simply to get lower co-payments. He urges patients and their doctors to exercise caution when changing cholesterol drugs.
"The bottom line is I don't think there is scientific data proving one statin to be superior to the other," Katz said. Arthur Caplan, director of the Center for Bioethics at the University of Pennsylvania, called the Caremark newsletter and Merck/Schering-Plough's payment for it "ethically odd."
"It's very surprising because part of the credibility of Caremark and any PBM [pharmacy benefits manager] is to be seen as trying to recommend the best drug at the best price," Caplan said. "It may raise an eyebrow or two about is there too close a relationship formed between what is supposed to be a prudent purchaser of drugs and manufacturers."
Skip Irvine, a Merck Schering-Plough spokesman, said the newsletter was an "educational program."
He said, "It's disease awareness. We do that through a number of different channels. We underwrite the cost of the mailing."

A not-so-nice article about our PBM....Caremark. They wouldn't do that, would they?

Caremark And Vytorin: A Conflict Of Interest
June 13th, 2007
By Ed Silverman
Here’s a new twist on formulary preference. Caremark, the big pharmacy benefits manager, is being paid by the Merck/Schering-Plough joint venture to produce newsletters touting Vytorin. But the arrangement isn’t clear without wading through the small print, according to Newsday.
The newsletter states there were changes to Caremark’s formulary for meds with lower co-payments, and devoted more than a quarter-page to Vytorin - one of Caremark’s preferred drugs. Other cholesterol drugs on the list - Lipitor and generic forms of pravastatin and simvistatin - received only brief mention. Hmmm.
Not surprisingly, Caremark spokeswoman Carolyn Castel insisted payments haven’t influenced formulary decisions. But she didn’t explain why Caremark required outside money to pay for the newsletter; she wouldn’t reveal the amount of the payment and declined to explain why Vitorin received prominent display. There’s no “conflict of interest,” she wrote Newsday.
Really? A PBM is supposed to negotiate the best price for a drug on behalf of its clients, not accept additional money to promote one drug instead of another on its formulary. This smells like the same kind of problem that prompted government investigations and lawsuits over allegations of switching and undisclosed rebates.

Read what others have to say…iiiiiRead more »

Could this be happening HERE?
If organizes groups on university campuses to Save Darfur, and these campus groups, with their zealous and altruistic intentions (to save Darfur), get freshman legislators (NOTE THAT BOTH SPONSORS OF HB 151, SHANNON JONES AND JOSH MANDEL, ARE FIRST YEAR, REPUBLICAN LEGISLATORS) to introduce divestment legislation, a highly charged issue, emotionally, and the pro-charter groups are targeting teacher pension groups, putting out "studies" (propaganda?) which "prove" teachers' pensions are ripping off taxpayers while at the same time HB 151 is a hot issue at the Statehouse, is this all a coincidence, or is there a rat to be smelled here? Nothing can be proved here, folks, but why are these questions hitting me now? Maybe I'm spending too much time at my computer these days. KBB
Post date: 6/11/07
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