Friday, August 15, 2008

Minutes of CORE Meeting, August 14th, 2008

The monthly meeting of Concerned Ohio Retired Educators (C.O.R.E.) was held on Thursday, August 14th, 2008 at 11:45 a.m. at the STRS Building in Columbus. Officers present were Dave Parshall, President; Mary Ellen Angeletti, Vice President and C.J. Myers, Treasurer. Trustees present were Nancy Boomhower, Betty Bell, Chuck Angeletti, and Lloyd Knudsen substituting for Chuck Chapman. Glenna Barr, Secretary, and Nancy Hamant, trustee, were absent.
At noon, John Lazares, his wife, and son walked into the small cafeteria meeting room to a cheering packed house decked out with balloons of thanks. Dave Parshall presented John with a plaque of appreciation for his 4 year term on the STRS Board and praised John for his many contributions to the reform of the Board and for his loyalty in representing the interests of active educators as well as retired educators. While John's cake was being cut and served to all in attendance, John addressed the CORE group thanking us for our support during his term on the Board and cautioning us to remain steadfast in our oversight of STRS. Dave presented John with many cards which had been sent by CORE folks who could not attend today's meeting.
Following the honoring of John, Dave Parshall called the meeting to order. He called for approval of the June CORE meeting minutes. Mary Ellen Angeletti made a motion to accept the minutes, Betty Bell seconded the motion, and the vote was unanimous.
C.J. Myers gave the Treasurer's report.
There were no Committee reports.
Under Old Business: A. Dave reminded members that we would be voting on an amended by-law of the CORE Constitution at the September meeting.
B. Dr. Asbury had promised Dave that CORE could receive a copy of newly retired Ohio teachers which our organization could then use as reference for new CORE membership. Dave was going to inquire about this list today. He will report back on this at next month's meeting.
C. Dave referred members to the handout concerning an update on the status of HB 315. The bill remains in the FIRES Committee and seems to be pretty much on hold due to the elections. There will be many changes of legislators as a result of the elections so Dave stated that there will be a need to form a CORE State Legislature Visiting Team after the election in November. Sponsor Scott Oelslager is trying to bring the bill to the table. Ann Hanning, ORTA, agreed with Dave that visits and letters to legislators would once again be needed. The handout shared at today's meeting was prepared by the Health Care Champions.
D. Member Kathie Bracy has requested that she would appreciate receiving copies of speeches given during the Public Participation of the STRS meeting. If we would make an extra copy and give it to Kathie at the noon CORE meeting, then she can post the speech on her blog that very day.
Under New Business: A. Shirlee Zerkel spoke to us concerning problems related to the new Coordination of Benefits. Everyone received a letter from Express Scripts this month explaining this new no co-pay benefit. One problem is that the letter referred to a list of affected drugs which we could call to obtain. However, when members called to obtain the list, Express Scripts said that there was an error in their letter and that there was no list to send out. Instead we were told to call with the name of the medicine to see if it was on the list. Other members volunteered similar experiences. . . some saying that Express Scripts said they had mailed the list but the list never arrived. Shirlee made a speech during Public Participation addressing this problem to which Sandra Knoesel of Member Benefits said that the list was available on the STRS website. Later in the day the list was passed out to all who wanted it. If folks want to obtain this list, go to the STRS website ( and print it or phone STRS to have it mailed.
B. Draft copies of the new CORE brochure were passed out to all in attendance in order to get suggestions, omissions, corrections, and feedback. Errors were found and improvements were suggested. Herm Fisher who will be the new Treasurer beginning next month has established a new post office box in his place of residence, Wilmington, which will appear on the new pamphlets and registration forms. Dave is hopeful that the new brochures will be ready in September at our CORE Annual Membership meeting on Thursday, the 18th.
C. New membership forms will be available for our September meeting which will be held as usual in the small room off of the cafeteria and not in the large Sublett Room as we have done in the past for this meeting. Carole DePaola and Marie Fetters volunteered to work at the registration table in order to get updates on all CORE members. We may ask for additional helpers for the table in order to expedite registration. We ran out of time for discussion and planning for our Annual Membership Meeting on Sept. 18th. We hope to have lots and lots of members attending so our database can be brought up-to-date.
The meeting was adjourned.
The next CORE meeting will be Thursday, September 18th, 2008. It will be our big ANNUAL MEMBERSHIP MEETING.
Respectfully submitted, Mary Ellen Angeletti, Substituting for Secretary Glenna Barr

August Board News from STRS

From STRS, August 15, 2008
Subject: News] August 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 August report follows.
During its August meeting, the State Teachers Retirement Board passed a resolution recognizing the dedicated service of John Lazares, whose four-year term on the board ends on Aug. 31. The resolution noted that his fair and thoughtful approach in analyzing issues and his openness to new ideas made him a valued contributor to board discussions; further, during his board tenure, he never wavered in his focus on the issues of most importance to members.
Final figures for fiscal year 2008 (July 1, 2007-June 30, 2008) show that total operating expenditures for STRS Ohio were $4.6 million less than budgeted. Less-than-expected expenditures for associate salaries and related fringe benefits, custodial banking fees and outsourced computer programming fees contributed to the majority of the savings. Operating expenditures for fiscal year 2008 totaled about $91.4 million.
Each year, eligible associates in STRS Ohio's Investment Department participate in a Performance-Based Incentive (PBI) program. This program enables these associates to receive an additional percentage of their base salary through a PBI payment, depending on both total investment fund performance and their individual goals over the previous fiscal year. STRS Ohio associates internally manage a significant portion of the system's investment assets - about 80% - versus using outside money managers. Third-party studies have shown that this practice is extremely cost-effective for STRS Ohio. Just as an example, internal management saved STRS Ohio about $100 million in fees in calendar year 2007 alone.
During its August meeting, the Retirement Board reviewed the investment fund's performance for fiscal year 2008 (July 1, 2007-June 30, 2008). As shown below, the total fund return was -5.44% versus the benchmark return of -5.79%. All asset classes exceeded their benchmarks in fiscal year 2008 except domestic equities. The net value added after deducting all direct investment costs (including earned PBI payments and external manager costs) was 24 basis points or an estimated $215 million for the year and more than $2.5 billion during the five-year period from July 1, 2003. This represents the additional value brought to the fund through active management by STRS Ohio associates and external managers, above and beyond the passive indexing of system assets.
When investing in the capital markets, negative absolute return years are expected. However, over the long term, the positive returns should offset the negative ones. As an example, STRS Ohio's total fund annual compound return over the past five fiscal years is approximately 11.4%. Looking longer term, the total fund annual compound return over the past 15 fiscal years is 8.5%, compared to the current board goal of 8%.
In calculating this year's PBI payments, two program criteria came into play. Under the PBI program, eligible associates have as one of their goals that the STRS Ohio total fund return will exceed its benchmark by 40 net basis points. Since this was not achieved in fiscal year 2008, no associate will earn a maximum payment. In addition, all PBI payments earned are reduced by 20% as the total fund had a negative absolute return. This reduction totals $1.5 million. At its meeting in September, the Retirement Board will be asked to approve a PBI payment of $6 million for 87 Investment Department associates. This payment will be $3.4 million less than the budgeted amount of $9.4 million and $2.2 million less than the amount paid for fiscal year 2007 performance.
The information below can be viewed as a chart at the following link:

STRS Ohio Return: +3.97%
Benchmark Return: +2.90%
Relative Return: +1.07%

STRS Ohio Return: +6.82%
Benchmark Return: +6.22%
Relative Return: +0.60%

STRS Ohio Return: -15.60%
Benchmark Return: -12.69%
Relative Return: -2.91%

STRS Ohio Return: -9.10%
Benchmark Return: -10.00%
Relative Return: +0.90%

STRS Ohio Return: +18.92%
Benchmark Return: +5.50%
Relative Return: +13.42%

STRS Ohio Return: +9.34%
Benchmark Return: +9.34%*
Relative Return: 0.00%

STRS Ohio Return: -5.44%
Benchmark Return: -5.79%
Relative Return: +0.35%

Less Costs to Arrive at Net of Fees: -0.11% Total Fund, Net of Fees: +0.24%

*No benchmark exists for this asset category; actual returns are used.

Dr. Albert J. Kolibash Jr. was appointed to STRS Ohio's Medical Review Board. He currently serves as associate professor of Internal Medicine and director of Cardiovascular Fellowship Training in the Division of Cardiovascular Medicine at The Ohio State University.
The Retirement Board approved 2,570 active members and 175 inactive members for service retirement benefits.
OPERS SEEKS CHANGES TO SERVICE CREDIT PURCHASE COSTS House Bill 600 was recently introduced by Rep. Lynn Wachtmann (R-Napoleon). This bill would increase the cost of common types of purchasable service credit with the Ohio Public Employees Retirement System (OPERS) to 100% of the liability created by the purchase. The bill changes the cost calculation for the following categories:
• Service by an elected official
• Periods of waived service
• Pregnancy leaves of absence
• Comparable public service
• Leaves of absence
The bill does not change the cost calculation for restoration of previously withdrawn service or credit purchased for military service. H.B. 600 also restricts the ability of a survivor to purchase credit following a member's death. A surviving spouse of a member who dies one year after the effective date of the legislation would only be able to complete a purchase that the member had initiated before death. If passed as introduced, the changes proposed in H.B. 600 would be effective Jan. 1, 2010. In addition, current cost calculations would be grandfathered for all purchases that were initiated before Jan. 1, 2010. Members would be able to initiate a payroll deduction before Jan. 1, 2010, and maintain the lower cost calculation as long as the payroll deduction remains active.
The legislation, pertaining solely to OPERS at this time, follows a report to the Ohio Retirement Study Council (ORSC) in 2007 by its consulting actuary, Milliman, Inc., that the five retirement systems were subsidizing service credit purchases by as much as 80%, which ultimately had a significant impact on the respective unfunded actuarial liabilities. It is likely that the ORSC staff will recommend including STRS Ohio in H.B. 600 when the council reviews the legislation; however, the bill is not expected to move until after the November general election.
HEALTH CARE REMAINS A TOPIC IN OHIO AND WASHINGTON Rep. Scott Oelslager (R-North Canton) continues his interested party meetings on House Bill 315. Two meetings with the sponsor, STRS Ohio staff, and representatives of the Health Care Advocates, the Ohio School Boards Association and the Ohio Association of School Business Officials have been held this summer and another is scheduled this August. Rep. Oelslager's goal is to find areas of common agreement and identify stumbling blocks to move this health care funding legislation forward.
At the federal level, passage of legislation to block a scheduled cut in Medicare fees paid to doctors also includes language to encourage doctors to write electronic prescriptions. Initially, physicians who make the change to e-prescribing will receive higher Medicare payments beginning in 2009. In later years, doctors who fail to adopt the change will see their Medicare payments reduced. One challenge at present is that only 31% of independent drugstores have the capability to receive electronic prescriptions. Seventy percent of all pharmacies can receive digital prescriptions. Currently, only about 40,000 U.S. doctors prepare their prescriptions digitally. By 2012 doctors will be required to e-prescribe.

Shirlee Zerkel's speech to STRS Board, August 14, 2008

August 14, 2008
Good afternoon STRS Board Staff and Members:
I am Shirlee Zerkel of Lima, OH. I have 27 years of service and retired in 2002. First as a representative of the Allen County Retired Teachers, I would like to welcome Mr. Nehf to the directorship of STRS. We are pleased to read in the Newsletter that you want to develop initiatives that will allow continued health care for retirees. We are also pleased that you intend to implement operating improvements and efficiencies for cost control. We welcome your willingness to communicate with the membership.
Next, the Allen County teachers and I would like to thank John Lazares for bringing much needed reform to STRS. We are appreciative of the fact that ORC 3307.15 was foremost in your mind as you asked questions and made Board decisions. Thank you for being open and honest in your communication with the membership. We wish you well in your retirement.
In this next issue, I speak for myself. These are my own opinions and are also the opinions of some other members with whom I have shared my views. I want to thank the STRS staff for finally implementing a program that co-ordinates with Medicare B for drugs and supplies. I spoke to the Board and staff concerning this issue in September 2004. Finally, 4 years later, this issue being addressed. I spoke then that many retail pharmacies were coordinating with Medicare B and that our retirees should have the same benefits, but I was told by the Benefits Department for well over a year that it was not possible. I was also told that the staff would work on it. Three years later, we now have a plan. The new plan so far has the following problem. We can not get a list of covered drugs and supplies for that zero co-pay plan.
The problem is that a long letter with both Express Scripts and STRS's was received in July by all retirees who are over 65. It explained the new plan. In two places the letter states that we can call the toll free number at Express Scripts for a list of eligible drugs/supplies. Several of us have called for the list. My first call to Express Scripts was July 29; I spoke to Kim who told me a list would be sent and I should receive it in 7 to 10 days. I received no list.
Early August, after speaking with another retiree who requested the same list and she was told that no list was available, I called again. I also was told that no list existed. Yesterday, August 13, I called the toll free number several times. First, Nicole told me that a new mailing went out a few days ago with the complete list both retail and mail order. I called 5 more times yesterday and received 5 answers-all differing with each other in some aspect or other. Some told me the list had been sent, some said there was no list and that they would check by individual prescription, others told they could order that list and have it sent to me. Why can't we get the list that the letter stated was available to us? We retirees need that list so we can get the correct prescription when we go to our doctors. STRS Benefits Department was contacted by some other retirees and still no answers! When will that list be available so that we, the retirees, can be careful consumers of our health care dollars.
Finally, I want to say welcome to our new Board member, Tim Myers. You have a big job ahead of you and I encourage you to keep the ORC 3307.15 foremost in your mind in all Board decisions. I also challenge you to be a communicative and open with the membership as John Lazares has been.
Thank you for your time,
Shirlee Zerkel

Thursday, August 14, 2008

Dave Parshall's speech to STRS Board, August 14, 2008

Board Members, Mr. Nehf, and members of STRS:
I am David Parshall, a 32 year STRS retiree. I speak to you today as a retiree and as President of C.O.R.E. First, on behalf of C.O.R.E., I wish to welcome our new Executive Director, Mr. Nehf, to the STRS family. We hope to form a great working relationship with you, and to reinstate the periodic meetings between the Executive Director and C.O.R.E. In the past, these meetings with Dr. Asbury resolved a lot of issues and avoided misunderstandings.
While today is Mr. Nehf's first official board meeting, it also marks John Lazares' final roll call as a STRS board member. As sad as this occasion is for us, it is at the same time an opportunity for us to recognize all of the many achievements that John has had such a vital role in bringing about at STRS. The confidence of STRS members in their pension system has come a long way in the last several years. Persons who were never heard in the past found a voice, and vital improvements in the operations of their pension came to fruition. John, there are more people than you can ever fully realize who hold you in the highest possible esteem, and love you for caring so deeply about all of us. We will miss you. We hope that the new board will continue to work in an open manner in the best interest of all retirees and not just various political constituencies.
This brings me to an issue I need to address. There is a crisis building across the country regarding transparency in public pension systems. One of our members curled up one night with the July issue of Forbes magazine and found an article entitled "The Other Real Estate Crises" by Stephane Fitch. Due to the private equity investment downturn, there is a national epidemic of self-censorship with public pensions in 13 states. What is most disturbing is that in 11 of these states the operational staffs of these pension funds worked with their legislators to have legislation passed so that their pension funds would not have to publicly disclose losses from their equity investments. They felt the need to protect the various equity fund manipulators rather than to protect their own pension system and its members. The article also pointed out that in spite of the fact that many of the funds themselves no longer require such secrecy as trade secrets, the movement is moving on to other states. This kind of action by STRS would be a big step backwards in the progress made to date toward real accountability. C.O.R.E. will be monitoring the situation as this crisis widens. Our only purpose now is to help make the board aware of what is happening in other states. I am sure that Mr. Mitchell is on top of this situation, and we have confidence in his leadership.
Thanks for your attention.

Meet Mike Nehf, new Executive Director of STRS

June 2008
STRS Board Selects New Executive Director
From the STRS website
During its June 19, 2008, meeting, the State Teachers Retirement Board voted unanimously to name Michael (Mike) J. Nehf as the ninth executive director of the State Teachers Retirement System of Ohio (STRS Ohio). Nehf is currently the executive director of the Employees' Retirement System of Georgia (ERSGA), where he is responsible for the administration of 11 different benefit plans with total assets of $16 billion. Nehf will succeed Dr. Damon Asbury, who is retiring effective June 30, 2008.
Before joining ERSGA in January 2005, Nehf was the executive director of the Public School Teachers' Pension & Retirement Fund of Chicago for 10 years. He also served as an elected school board member for eight years in Illinois. Other past positions include serving as comptroller for the Municipal Employees' Annuity & Benefit Fund of Chicago, and accounting and finance positions primarily in the life and health insurance sectors.
In announcing the Retirement Board's decision, Jeffrey Chapman, board chair, noted, "Mike brings a wealth of public pension fund experience to STRS Ohio. He is knowledgeable about the challenges facing public retirement systems and he is committed to applying that knowledge to address the issues that are of most importance to our members - namely secure health care and continued pension solvency. His past experience working with public plans, including a teachers' fund, and his demonstrated commitment to defined benefit plans will serve us well.
"As we reflected on what we wanted in our next executive director, my board colleagues and I certainly wanted someone who would continue to maintain the trust and confidence of our members and the strengthened dialogue we have with the members of Ohio's General Assembly. Mike is that individual. He'll be a 'hands on' leader who knows how to build consensus on tough issues, whether he's working with members, legislators, the board or our STRS Ohio associates."
Nehf will take over the leadership of STRS Ohio on July 1. The Ohio Attorney General's Office assisted in developing his contract, which provides for a starting annual salary of $225,000. The three-year contract extends through June 30, 2011.
At ERSGA, Nehf and his staff of more than 100 individuals serve as an overall umbrella agency by administering separate defined benefit (public employees, legislators, judges, public school, military, life insurance); defined contribution (part-time employees); 401(k) and 457 deferred compensation; and state Social Security programs. About $900 million in benefits are paid annually.
Nehf is a certified public accountant (CPA). He received his bachelor's degree in accounting from Western Illinois University and his master of management degree from the J. L. Kellogg Graduate School of Management at Northwestern University. He and his wife, Kathy, have grown children who reside in the Chicago, Rochester, Minn., and Atlanta areas. His wife is a Reading Recovery teacher.
The Retirement Board was assisted in its search for an executive director by the Columbus-based firm, Hudepohl and Associates.

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Wednesday, August 13, 2008

A bunch of radicals? Oh, really, how 'bout Ohio physicians? Those radical physicians!

From John Curry, August 10, 2008
"Meanwhile, Ohio physicians questioned the insurance organization's motives."
Some people may want to tell that to the good MD who....also happens to be the President of the Ohio State Medical Association... said these words in a downtown Columbus rally in July of this year:
"We can't help but wonder where the industry has been for the past 20 years," said Warren F. Muth, president of the Ohio State Medical Association.
"While physicians and patients have been struggling to maintain access to quality care, health plans have focused on protecting their profits. Are they as serious about reform as they say they are? Only time will tell."
I guess the MD's must be a radical bunch, huh? John
P.S. Don't tell them that the next time you go "under the knife!"
Insurers talk health care Physicians, advocates doubt sincerity of national campaign to discuss reform
Columbus Dispatch, July 23, 2008
By Catherine Candisky and Alan Johnson
With reform seemingly inevitable, the health-insurance industry launched a national campaign yesterday to craft a solution to soaring health-care costs and coverage rates.
America's Health Insurance Plans, the industry's trade group, picked Columbus for the opening salvos because it is at "the epicenter of the presidential race," said the association's chief executive officer, Karen Ignagni. She met with a group of uninsured Ohioans at the Downtown YWCA.
Ignagni said it's a different approach for an industry consistently blamed for putting profits ahead of care by charging high premiums and denying coverage based on pre-existing conditions.
"We plan to have a policy proposal and push for its enactment," she said.
Even the attempt at conciliation included confrontation, however. On the sidewalk near the YWCA, about 200 sign-carrying protesters, many of them members of the Service Employees International Union, cheered, chanted and shook water bottles filled with unpopped popcorn.
When the nation debated health-care reform in 1993, insurers shot down the reform plan led by then-first lady Hillary Clinton, with its catchy "Harry and Louise" ads.
This time around, they plan a massive outreach effort, holding "listening" meetings around the country and airing television ads.
Ignagni heard from a dozen central Ohio residents at the hour-long session. They complained about high premiums and out-of-pocket expenses such as for co-pays, doctor visits and prescription drugs.
"The insurance companies are out to make a profit," said Derek Farmer, a Columbus attorney without health insurance who participated in the discussion.
Afterward, he said his biggest fear is that he or his wife will be involved in some catastrophic event in which health-care costs would bankrupt them.
Barbara Wirebaugh, a mother of three from Bucyrus, said, "I didn't even want to drive down here today." Her family became uninsured last year when her husband lost his job of 28 years.
The association supports coverage for the nation's 43 million uninsured and tax credits for working families to help them buy insurance.
The effort has been met with skepticism.
Addressing the crowd from the bed of a pickup truck, several speakers directed angry comments at insurance officials gathered inside the YWCA.
Linda Skamacha of ACORN, a nationwide grassroots advocacy group, said consumers "will mobilize from the bottom to the top to ask our elected officials, 'Which side are you on?' "
Cathy Levine, co-chairwoman of Ohio Consumers for Health Coverage, said the health-care system "is broken and we've got to fix it now. We've got to take control over health care from the insurance industry."
Another speaker, Chris Conrad, said she lost her job and became one of Ohio's 1.2 million uninsured. She now works at a low-paying job in a nursing facility and struggles with fibromyalgia.
"I feel I have to stay on the job for the health care," she said. "The health-care system in Ohio is failing me."
Meanwhile, Ohio physicians questioned the insurance organization's motives.
"We can't help but wonder where the industry has been for the past 20 years," said Warren F. Muth, president of the Ohio State Medical Association.
"While physicians and patients have been struggling to maintain access to quality care, health plans have focused on protecting their profits. Are they as serious about reform as they say they are? Only time will tell."

CORE meeting Thursday, August 14, 2008

From CORE, July 31, 2008

CORE (Concerned Ohio Retired Educators) will hold its August meeting on Thursday, August 14th at the STRS Building at 275 East Broad Street in Columbus. Parking is free in the STRS parking garage behind the building. We encourage you to also attend the STRS meeting which usually begins around 9:00 a.m. on Thursday in the Board Room on the 6th floor. CORE meeting attendees usually leave the STRS meeting around 11:30 in order to go to the cafeteria on the 2nd floor to get our lunches. We then take our lunches to the small cafeteria room behind the Sublett Room on the 2nd floor of the STRS building where the CORE meeting begins at 11:45.
In response to suggestions from our supporters, CORE is calling for input for agenda items for this August 14th meeting. Please send any items you would like discussed to John Curry no later than August 12. John will send your suggestions to CORE President, Dave Parshall.
This August 14th CORE meeting is a very important one. We will be voting on the new CORE constitutional amendment as well as making final plans for our September annual membership meeting. It will be important for our new trustees to be in attendance as we finalize planning for transition to new CORE officers at the September CORE meeting.

August STRS Board meeting scheduled for August 13, 14, 2008

From STRS, August 6, 2008
The State Teachers Retirement Board and Committee meetings currently scheduled at the STRS Ohio offices, 275 East Broad Street, Columbus, Ohio 43215, are as follows:
Wednesday, August 13, 2008
...10 a.m. Disability Review Panel (Executive Session)
Thursday, August 14, 2008
...8:30 a.m. Ad Hoc Committee for Retreat Review
...10:30 a.m. Retirement Board Meeting
The Retirement Board meeting will come to order at 10:30 a.m. on Thursday, August 14, and begin with a report from the Investment Department. The Executive Director's Report is expected at 1 p.m., followed by public participation, routine matters, old business, new business and any other issues that require the Board's attention.
Larry KehresMount Union Collge
Division III
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