Saturday, February 28, 2009

Dr. called it like it is...too bad that still too many just "won't get it!"

From John Curry, February 28, 2009

Saturday, February 28. 2009
Roy: Health insurance executives plunder system
Posted by Bill Roy
Bill Roy Government, Health & Medicine, News, U.S. & World

Are you angry about how Wall Street executives have enriched themselves lately?

Well, don't be. Save your anger for health insurance executives, a greedy group that Congress and the president apparently intend to leave in place in our nation's "reformed" health care system.

According to a report published Feb. 22 in The New York Times, the plutocrats of Wall Street paid themselves an amount over 10 years eerily similar to the amount just one health insurance executive, William W. McGuire, was empowered to collect in just one year, 2006.

By standards of pay for health insurance executives, Wall Street chief executives were prudent and downright circumspect. Yes, that's right. McGuire was set to cash in stock options he held in UnitedHealth Group Inc. in the amount of $1.767 billion in 2006. McGuire's billions are just one small part of the spoils captured by health insurance and pharmaceutical executives from the trillions spent each year for the noble cause of caring for America's sick and disabled.

The Times tells us the chief executives of American International Group, Bear Stearns, Citigroup, Countrywide Financial, Lehman Brothers, Merrill Lynch, and Washington Mutual paid themselves $1.774 billion from 1998-2007, an amount almost exactly equal to the plunder McGuire could have walked off with in 2006 alone.

Of course, there are a thousand side stories about how a handful of men and women on Wall Street and in Minnetonka, Minn., made off with so much money.

For example, McGuire's options "strike-prices" were back dated to the lowest UnitedHealth Group stock price in each of several years.

Also, the chairman of his compensation committee, William Spears, "borrowed" $500,000 from United. And, of course, all concurring directors were generously overpaid.

McGuire "settled" his back-dating problem with the SEC by resigning and walking away with something less than he may have if the extent of his greed had not even embarrassed the editors of The Wall Street Journal, who broke the story of the executive's immense self-enrichment in May 2006.

To realize such money, UnitedHealth Group continues to skimp — underpay claims — and only sometimes gets caught. For example, on Jan. 15 they settled for $350 million a class action by physicians "alleging the insurer used flawed data" in paying for out of network care.

So anyone who is interested in everyone in their family having financial access to health care — which one in six Americans under age 65 do not have — paid special attention to President Barack Obama's address Tuesday night, and came away cautious or disappointed.

Obama is for affordable health insurance for all Americans. Very good, but affordable is much different than universal health insurance.

The president is also for good preventive health services.

Such services can help people live longer and healthier lives, and should be promoted and provided. But we all die eventually, and those who die at 90 may well consume more health services and require longer periods of expensive institutional care than those who do themselves in at an earlier age.

The president is for universal electronic medical records which can make care better, more efficient and less expensive.

What we have not heard is that a universal, versus affordable, health program must be publicly administered to be affordable.

Until then, we know the health insurance industry has both political parties in its pocket, and any reform will consist of throwing more money at an already overpriced system and some legislative nibbling around the edges that likely will do more harm than good and delay real reform.

Real health care reform may or may not be a job Gov. Kathleen Sebelius can do, but we'll never know if she is not appointed secretary of Health and Human Services. For this reason, Obama should get on with it and not leave our governor slowly twisting in the wind.

Dr. Bill Roy is a retired physician and former member of Congress. He has a law degree and lives in Topeka. He may be reached at

Friday, February 27, 2009

Senator Sherrod Brown to Mark Fredrick: Will support HR 235 (WEP)

Senator Sherrod Brown to Mark Fredrick, February 27, 2009
Subject: Reply from Senator Sherrod Brown
Dear Mr. Fredrick:
Thank you for sharing your thoughts on Social Security benefits for public employees.
Employees retiring from agencies that do not withhold Social Security taxes from salaries may find their Social Security benefits reduced based on the pension they receive. This provision, the Windfall Elimination Provision (WEP), was first enacted in 1983 as part of a large reform package designed to prevent the insolvency of the Social Security system.
I share your concern for the unfair burden WEP places on individuals who have earned their Social Security benefits and receive a federal pension. Employees who work hard and follow the rules should not be penalized with lower Social Security benefits because of pension income they have also earned. I cosponsored the Social Security Fairness Act in the 110th Congress, which would repeal this provision.
The Social Security Fairness Act was reintroduced in the House by Rep. Howard Berman on January 7, 2009. Should the bill, H.R. 235, come before the Senate, I will certainly support it.
Thank you again for writing me.
Sherrod Brown

Shirlee Zerkel re: STRS Health Care Discussion 2/20/09

From Shirlee Zerkel, February 27, 2009
Subject: We, the retirees are going to pay!
The upper level staff have been working on this health care material for some time -- but they did not see the need to do something about their own benefits, and bonuses spent on the investment staff! THAT SHOULD ALL WORK INTO THE PICTURE TOO.
I can not see Scenario 1 or 3 being good for the system or retirees at all, but number 2 has many negatives.
Why is it always the retirees who suffer the most. We are the reason they have jobs. It is the taxpayer in each school district and our hard earned dollars, they are spending, but we always get the first cuts.
Some things as I interpret them:
The '09 changes that will hurt are elimination of open enrollment for new entrants. Does that mean if you did not opt for STRS insurance when you retired that you can no longer get in?
I also wonder what retiree who retires when he/she is 52 with 30 years is going to do for insurance for 10 years?
Does the Rx column on page 4 mean that a retiree pays shipping on their medication they order or just pay for the stamp to re-order?
On page 4, It looks like all who do not use STRS insurance and are Medicare age will not receive a reimbursement. Many will take a hit here! (ARE THEY TRYING TO FORCE US TO STAY SO THEY CAN USE OUR PREMIUM MONEY, WE GET NO BENEFITS FROM IT unless we have really major illnesses. THAT'S FOR SURE!)
Also on page 4 and in 2010 concerning eligibility many retirees could get whacked here as well, if they have bought teaching time and it counted for where they fall on the pension and healthcare charts. For example, I worked in private schools also and bought that time. Am I going to lose it and have to pay a higher premium for my STRS insurance.
Under Subsidy on page 4, I see bigger premiums for us anyway you look at their choices.
On page 5, I see they still plan to offer the Medicare Advantage plan in 2010. Also, they plan to DOUBLE the DEDUCTIBLE for those on the plus plan. and increase the out of pocket. (NICE move)
Nice copays added for ER and inpatient stays.
Too bad for us when we need X-rays/scans in a hurry for now all such tests need a precert.
On page 6, it looks like in 2010, we will also have a drug deductible of$150 and no out of pocket limit.
It also appears to me that they are going to limit what retail pharmacies we can go to!
Rx changes are not good for retiree needs.
Page 7 and year 2011, penalties for late enrollment for members.
Page 7 and year 2012 retirees can't get STRS insurance till you are 62.
Page 7 and year 2012 STRS willnot cover RX for those on Medicare. We would have to buy a Medicare D policy from another source. Those retiees who get to stay will see another increase in Rx costs.
In 2013 on page 8, oh, look, the part that STRS pays for the retirees' health plan goes down and our premiums go up. The subsidies will also be figured on a different base.
And in 2014, Members on Medicare will be kicked out of the STRS Health Care Plan. What will the retirees who only have Medicare B and depend on STRS for their Part A coverage? Will they be left up a creek without a paddle?
Now let's see: I am 67 and on Medicare. We cost the STRS the least of any retirees, but in about 3 short years, I will have to purchase my own Rx coverage. Oh, but if I decide to leave the STRS insurance family in 2010, I must give up my reimbursement for Medicare B. Is that supposed to be an incentive to stay with STRS insurance. It doesn't strike me that way when I read their overall plan. Then in 5 years, I will be kicked out of the STRS health plan altogether.
Maybe I should just leave at the beginning of 2010, and save myself some money and get better health care coverage with a supplement by AARP that pays 100% of costs that Medicare does not cover. It even pays the Medicare Deductibles.
Don't you think that all of the STRS staff should take a cut in bennies as well. Don't tell me that is not right for they work hard and have families to feed. Well we do to and that is our money they are using. What is good enough for us should be good enough for them? I am not blaming all of the STRS staff-only the administration and Board members, who have not been good stewards of the retirees money. We have had two board members that have warned of this downturn and other problems, but no one else would listen and some are still not listening. Tim, Mary, Mark, and Conni, WHY?
Shirlee Zerkel

RH Jones re: Laura, the days of "sugar coated" news releases are just about over, aren't they?

From RH Jones, February 27, 2009
Subject: Re: Laura, the days of "sugar coated" news releases are just about over, aren't they?
John & all:
As a Life Member of both, I call on my ORTA & OEA-R to cut back on expensive meetings around the state and to spend some of the saved dues money on hiring an independent agency to study which group of professional investors, in-house or those hired outside the STRS, serves us most effectively while, at the same time, serves us for the least expense. Whatever happens with the resulting conclusions of this comprehensive study, these two retired teacher unions then need to strongly request that the STRS board hire the best of this recommendation.
Also, as an OEA Life Member Builder, I call on my OEA to back change that will make our STRS do better for educators. The in-house hired auditor firms are beholden to those who hired them: STRS Management. How can their conclusions be trusted? That is why I ask you to back the hiring of an auditing firm that would represent educator interests, not that of the employees. It is our money; we need firms that are beholden to us.
Maximizing investment income and keeping it secure will benefit us all, including the STRS employees. We will not, and should not, tolerate the tremendous losses of the year 2000 and then once again starting in October 2008 through the present. It is hard to accept some the STRS board members helping to pat the backs of investment employees and then allowing them to have huge bonuses and raises in pay. The power is now, once again, in the hands of unions. We need to start, once again, acting responsibly toward the membership, especially those who have retired. Currently, we would not be in this mess, had our unions monitored our STRS.
Neglecting the monitoring of the OSBA was another mistake. Public School Board Members (PSBM) are, and were, our employers. Most PSBMs follow the OSBA's wishes like sheep. Enlightened PSBMs have been, for whatever reason, too busy with other things, and have set back and let ultra-conservatives dominate, running amok, hurting public school children, as well as their active and retired educators. And also, for too many years, we union members have not taken our time or money to endorse friendly PSBMs running for both the state and the local school boards. The ultra conservatives have been aggressively lining their own pockets and of their families and friends at the expense of the public's children and their public educators.
Union focus should be on the hard facts of life: running around the state, running up expense bills, talking to one another does not do the job. Spending dues money on backing enlightened candidates of public office and monitoring what happens with our money in our STRS will serve the children, the tax-paying public and us. We know who our friends are; let us now back them 100%.
RHJones, a proud union member since 1950

FLASHBACK....Oct. 2005 - 3 years and counting...and counting.....and counting........and counting......

From John Curry, February 27, 2009

Oct. 19, 2005
Columbus Dispatch
By Barnet D. Wolf
The State Teachers Retirement System of Ohio will face fierce opposition from school boards if it seeks legislation that would force school boards and teachers to pay more money for retiree health care.
"We will go public and start a war no one wants to fight," vowed John M. Brandt, executive director of the Ohio School Boards Association.
STRS and an affiliated group have scheduled meetings for teachers and other active members in 13 cities through Nov. 17 to explain a proposal for a "possible legislative initiative" that increases member and employer contributions.
The plan being discussed by STRS would raise employer and member maximum contribution levels by 0.5 percent each year for five years, eventually capping the support at 16.5 percent for employers and 12.5 percent for members.
Active members now pay 10 percent of their salary to STRS, while their employers -- school boards, colleges and others -- contribute 14 percent.
Those amounts are the maximum levels permitted under law, which went into effect nearly three decades ago.
Brandt called the proposed increases "shocking" and unneeded.
The matter of retiree health-care costs has loomed over discussions about Ohio's large public-employee pension funds for several years.
Most of the retirement systems are at their maximum contribution levels. One exception is the state's largest fund, the $67 billion Ohio Public Employees Retirement System, but even it will raise contribution levels in phases, starting next year, that will put the fund at its cap in 2008.
By law, the systems must pay for pension obligations first, because they are guaranteed by the state. Any money remaining can go for health benefits.
When the stock market slumped from 2000 to 2002, the systems had fewer dollars to underwrite health insurance. At the same time, health-care costs have increased by more than 10 percent per year.
Retirees were left to pay significantly more for health-care coverage.
But they're not alone.
Private-sector employers and employees also have seen health-care costs skyrocket, and costs are expected to rise 8 percent next year, according to a survey by Towers Perrin, a professional-services firm.
The health-care-coverage bill for companies and their workers is expected to average $8,424 next year. Employees will pay an average $155 per person more next year. The employers' tab will rise $442.
Towers Perrin said workers in the private sector are paying 64 percent more in health-care costs now than five years ago; employers are paying 78 percent more.
The General Assembly could face some tough decisions about the future of STRS and the state's other retirement systems, which will be watching the pension fund's initiative.
Teachers' meetings are slated to start Tuesday in Athens, followed the next day with one in Columbus. The final session is Nov. 17 in Cleveland.
The meetings are being promoted by STRS and the Health Care Advocates for STRS, which includes the Ohio Education Association, the Ohio Federation of Teachers, Ohio Retired Teachers Association and American Association of University Professors.
Ecklar said the meetings also were set up to inform active members about the health-care costs they're likely to face when they retire.
"A lot of our teachers are not paying much for the health-care coverage they receive, and our research shows they don't have much knowledge about what they are going to pay" at retirement, she said.

Thursday, February 26, 2009

RH Jones: Stress shortens life span

From RH Jones, February 26, 2009
Stress cuts years off life
To all:
Stress, and the worry that accompanies it, have been shown to be (by various health studies) a major cause of a shortening of one’s life span. Most certainly, having exorbitant health care (HC) costs, and prescription (Rx) costs, may be a major cause of the shortening life span for retired Ohio educators, particularly men and women who a expected to be the family provider.
A 30 year career as a professional educator in the classroom, or in administration, is a major reason to be stressed out -- that’s why I retired. But, for Ohio STRS retirees to be stressed about HC/Rx, and to have worry where they will get the money, has been a shameful exploitation. Teachers are those very folks who taught you and me to read this!
Therefore, the time is here for the rebirth of the Ohio HB 315 to increase the employer/employee contribution to our STRS. The Supplemental Federal Stimulus Package has arrived. Our Ohio legislators need to quickly pass the HB 315. It is the moral thing to do. Cutting into retired educators' funding has been going on long enough. It is time to=2 0end the disgraceful and shameless exploitation of the elderly retired educators.
Everyone knows who has been using us. I shall not make a long list of their names. They have the funding now to correct past mistakes. If they do not, what can they expect when they too reach old age? They need to set an example of resourcefulness.
And will the failure to do the right thing for today’s retired educators stress their consciences? And, in their future elderly life, will this stress be a cause of shortening of their life span as well? I wonder.
The opinion of an old retired 6th grade teacher,

Click image to enlarge.

Laura, the days of "sugar coated" news releases are just about over, aren't they?

From John Curry, February 26, 2009
“We’re not seeing eight percent return right now, and it may be awhile before that occurs. That’s why they need to take this look now,“ [Laura]Ecklar said.
Let's see now...for how many months now has Dr. Leone said this very same thing? Of course, many didn't listen to Dr. Leone then..... did they? John
State Retirement Accounts Take Hit

By Patrick Preston
Investigative, Political Reporter

CENTRAL OHIO—With the stock market dropping nearly half its value in the past 16 months, the Ohio Public Employees Retirement System, or OPERS, has seen its assets lose a third of their value, dropping from a peak of $84 billion down to less than $56 billion.
Why have OPERS’ 900,000 members not been impacted?
OPERS CEO Chris DeRose explained the pension’s risk is spread out.
As hundreds of thousands of public employees contribute 10 percent of their pretax income throughout their career, they don’t all retire at the same time so the payouts are spread out over decades.
As a result, the good investment years balance out the bad years, allowing for an eight percent annual return.
“While currently the markets are in a down turn—and certainly our assets have declined—and that’s of concern, the previous five years we made eight percent, nine percent, 12 percent, 14 percent and then in 2003 we made 23 percent,“ Derose said.
The State Teachers Retirement System of Ohio, or STRS, has had its portfolio diminish 31 percent in value since last June: declining from $72.6 billion to roughly $50 billion.
STRS’ 450,000 members won’t seen any immediate changes, but spokesperson Laura Ecklar said the unprecedented drop prompted the STRS governing board last week to order a re-evaluation of future pension obligations in case changes need to be made.
“We’re not seeing eight percent return right now, and it may be awhile before that occurs. That’s why they need to take this look now,“ Ecklar said.

Molly Janczyk: Legislators! We need help!: Read carefully: STRS Health Care Discussion - 2.20.2009

From Molly Janczyk, February 25, 2009
Subject: Legislators! We need help!: Read carefully: STRS Health Care Discussion - 2.20.2009

Is this what educators deserve?
NOW that those of us who retired to : "You will never have to worry about health care" from consults, approach Medicare age and for those who are Medicare age, STRS is seriously considered dropping Medicare coverage pushing us into Traditional Medicare, Medicare Advantage or purchasing Supplemental Medicare coverage.
Traditional Medicare has NO stopgaps meaning you pay 20% of all costs to infinity. 20% of $100,000 is $10,000 and so on. Now, STRS is our supplement and pays 80% of the 20% not covered by Medicare. With the Plus Plan, we pay 20% of the 20% not covered by Medicare. Without a supplemental plan, you can easily go broke fast.
We have a stopgap meaning we can pay no more than $1500 each out of pocket after our $500 deductibles totalling a max of $2000 for medical costs (not including RX's which has a $2000 stop gap for the Plus Plan.
STRS is also considering dropping Medicare age retirees from RX coverage and making us apply for Medicare Part D with its huge donut hole of costs.
AGAIN, the retirees are hit! I do see where finally something is considered that hits equitably where non Medicare retirees would not be able to apply for STRS HC until age 62.
Problem: Retirees got grandfathered for nothing ever! Cervantes was so worried that rehires get grandfathered and that actives are union protected, it seems. But, current retirees got ZIP!
1. DOES THIS MEAN THAT AGAIN WE GET HIT AND KICKED OUT OF MEDICARE NOW ALONG WITH NO RX's????? Or will it be considered to grandfather current retirees who have no ability to raise their pensions and are stuck with simple 3% COLAS?
2. CAN THIS NO MEDICARE BE FOR NEW RETIREES ONLY FOR A CHANGE? Then it allows time for planning or continuing to work when we have always been hit AFTER THE FACT left with little or no options?
We need help staying afloat. We did not create this and have paid a huge price to keep health care going at STRS! Please consider HB315!
Molly Janczyk

Ryan Holderman: STRS Health Care Discussion

From Ryan Holderman, February 24, 2009

Subject: STRS Health Care Discussion - 2.20.2009
Dear One & All:
The information below (and attached as a .pdf file) was excerpted from a report presented to the STRS Board last Friday, February 20, 2009. It is unfortunate that this discussion was scheduled on Friday rather than on Thursday, the day that CORE also meets.
As you can see from the proposals being discussed, our health care program is in great danger. The STRS Board decisions between now and August will impact its survival and our pocket books!
Later, Ryan
PS: You can enlarge the text by percentages by clicking the % button on the tool bar at the top of the opened document.
[Nlote: the 7 page report Ryan referred to above is posted below, one page per post. Please click on each to enlarge. KBB]

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From RH Jones, February 25, 2009


To all:

Since HB 315, the employer/employee increased contribution for retired educator health care (HC)), is not moving well in the Ohio legislature, may

I ask every STRS retired educator whose spouse is a retired person receiving OPERS HC, if you are currently on STRS HC, to change from our STRS HC to OPERS HC? If you qualify, the reason that I ask you to change is that, contrary to some misinformation, OPERS HC is better than what the STRS offers. Here is my reasoning:

  1. Ohio’s Politicians pay into it. Therefore, they will find a way to keep their HC financed.
  2. Ohio STRS employees pay into OPERS. Their loyalty concerning HC could be considered to be with OPERS HC, not with our STRS.
  3. I know of 2-educator couples whose spouses have OPERS. The educators do not use STRS. Both couples are highly intelligent, researched the 2-plans, and came to the conclusion that OPERS HC is the better. *
  4. If your spouse qualifies, for the sake of the health of STRS HC for your fellow educator, who with a spouse has to depend on it, please be advised to go with OPERS HC. It is the right thing to do. Be your brother’s keeper.
  5. Historically, OPERS HC has always paid well.

In conclusion: all those who qualify for OPERS use OPERS HC, not STRS.

RHJones, retired educator

*See John Curry’s 02/23/2009, 9:18 AM e-mail response to the STRS employee, Sandy Knosel, entitled “Taken right off the STRS website…’ a common misperception”

Wednesday, February 25, 2009

Cheer up, STRSers...thanks to our AG Cordray we are, at least, getting some of our monies back!

From John Curry, February 25, 2009
General Reinsurance to pay $72M to Ohio
COLUMBUS, Ohio (Legal Newsline) - General Reinsurance Corp. is paying $72 million to settle allegations brought by the State of Ohio, new Attorney General Richard Cordray announced Wednesday.
The company was part of a fraudulent $500 million reinsurance transaction with troubled American International Group, it is alleged. Cordray is the fourth Ohio attorney general to oversee the case, first filed by Marc Dann.
The state's Public Employees Retirement System, Teachers Retirement System and Police and Fire Pension Fund were seeking damages for investors who bought AIG securities from 1999-2005. Four former Gen Re executives and one former AIG executive were convicted of securities fraud with the deal in Feb. 2008.
"When the truth about this fraud and other AIG manipulations was made public, the price of AIG stock declined," Cordray said.
"Investors, including Ohio's pension funds, had been deceived and suffered significant financial losses."
Also representing the Ohio agencies were Labaton Sucharow LLP of New York City and Hahn Loeser & Parks, LLP, which has offices in Cleveland and Columbus.
Cordray said evidence showed each of the five executives conspired to allow AIG to falsely report increases in loss reserves to analysts and investors in its filings with the federal Securities Exchange Commission. The loss reserves are a key indicator of financial health to investors, Cordray added.
Former interim Attorney General Nancy Rogers announced a $97.5 million settlement with PricewaterhouseCoopersLLP as part of the case in October. That company was alleged to have violated securities laws by providing auditing services and unqualified audit opinions on AIG's financial statements.
From Legal Newsline: Reach John O'Brien by e-mail at

Tuesday, February 24, 2009

Molly Janczyk to Mr. Nehf and STRS Board: Where is the solution?

From Molly Janczyk, February 24, 2009
Subject: STILL NO RESPONSE: Nehf, STRS Board: [News] February Board News Details Retirement Board Actions and Discussions

Mr. Nehf and STRS Board:


John Bos and Mike Nehf re: STRS monthly financial statements

From John Bos, February 24, 2009
Subject: Re: Monthly Financial Statements of STRS
Thank You,
John Bos

From Mike Nehf, February 24, 2009
Subject: RE: Monthly Financial Statements of STRS
I’m forwarding your request to my staff.
Mike Nehf
From John Bos, February 23, 2009

Subject: Monthly Financial Statements of STRS
Good Morning Mr. Nehf,
I went to the STRS webpage to seek the Jan.30th fianacial statement for STRS and for the Health Care Stabilization Fund. Unfortunately I do not find the promised information.
Please inform me where it is located on the web site. I still believe it should be included in the electronic newsletter so that all those interested can see the monthly amount.
Thanks for your assistance in educating me on the location or to see that the amount is promptly posted as promised. This is a total waste of your valuable time.
John Bos

John Bos: A thank you to Bob Slater

From John Bos, February 24, 2009
Subject: Re: Monthly Financial Statements of STRS
Mr. Slater,
Thank you for including the STRS financial information in the monthly newsletter. I sincerely appreciate that STRS finally recognizes that we have the right to know about OUR ASSETS!
I would appreciate knowing why this information was not included in the report prior to Jan. 30th, 2009. Many of us have requested this information for a long time. Mr. Myers, an STRS Board Member and neighbor, even told me, "If you want the information, attend the meeting". You certainly understand that this comment was not an appropriate. Laura Ecklar has made it very clear that the financial information would not be released since she said we should only be interested in the "big picture". Since there now is concern about our medical coverage and concern about our retirement benefits, we are looking at the big picture. Unfortunately, Ms. Ecklar is only interested in the view from Broad Street and not the view in the other 87 counties. We are afraid! We have lost much of our investments. We now have lower income due to dividend reductions, lower interest rates, and loss of other employment.
You may also remember that we were told in writing last year that our benefits were "guaranteed". Is this still true?
Thanks for your assistance regarding these questions.
John Bos

From Bob Slater, February 24, 2009
Subject: FW: Monthly Financial Statements of STRS
Mr. Bos:
Mike Nehf asked me to respond to your email about STRS pension and Health Care Stabilization Fund balances on the STRS website.
The information from last week’s board meeting is not yet on the website, but I’m told it will be posted later this afternoon. The financial information you are interested in will be included with the “Approved Administrative Expenses for January” under the “Retirement Board” link.
Unfortunately, I will be out of the office until Thursday, but feel free to contact me directly then if you are not able to find the information or have questions about the information itself.
I hope this is helpful.
Robert A. Slater

Deputy Executive Director & CFO
(614) 227-4009

Special meeting at STRS on March 4 re: investments, financial matters

From STRS, February 24, 2009
March 4, 2009
A special meeting of the State Teachers Retirement Board will be held on Wednesday, March 4, 2009, at the STRS Ohio offices in Columbus, Ohio. The business agenda will begin at 9 a.m. The primary purpose of the meeting is a general educational program focusing on investments and financial matters with the Retirement Board's independent investment advisor, Russell Investment Group. The Board may also consider other matters that require its attention.

[News] February Board News Details Retirement Board Actions and Discussions

From STRS, February 24, 2009

Last week, the State Teachers Retirement Board held its monthly meeting.Following the regularly scheduled meetings, a report titled "Board News" isposted on the STRS Ohio Web site, as well as mailed to a number of members andeducation organization representatives who have requested it. As a member ofSTRS Ohio with an e-mail address on file, you will also receive this report eachmonth. The February report follows.
The current impact of the downturn in global financial markets on STRS Ohio'spension and health care funds dominated the agenda at the Retirement Board'smeeting in February 2009. As noted by STRS Ohio staff during the meeting, thedownturn is much deeper and faster than most economists and investmentprofessionals were projecting even a few months ago. The impact on individuals'personal savings, as well as on institutional investors and pension funds acrossthe country, has been exponential. At STRS Ohio, the preliminary market value ofinvestment assets stands at $49.7 billion as of Jan. 31, 2009; the rate ofreturn for the fiscal year to date (July 1, 2008-Jan. 31, 2009) is -27.7%. Thevalue of the investment assets reflects a drop of $20.7 billion from the closeof fiscal year 2008 on June 30, when assets totaled about $70.4 billion.Unfortunately, most indicators suggest that the eventual market recovery has notyet begun, and when it does, it will be long and gradual.
As part of its discussions with the board in February, staff reiterated thatcurrent retirees' pensions are safe; there are no short-term problems regardingthe cash flow needed to pay current pension benefits when they are due.
However, the next actuarial valuation of pension benefits in October 2009 islikely to show that the reduced level of assets, along with the normallyexpected rate of growth, may not be sufficient to amortize the unfundedliability over a reasonable period of time.
To determine a pension fund's solvency, two common measurements are used:funding period and funded ratio. The funding period is the number of yearsrequired to pay off the pension fund's unfunded actuarial accrued liabilities.(In layman's terms, this would be similar to a home mortgage.) The funded ratiois the market-related (smoothed) value of assets compared to liabilities. In short, it is the percentage of assets STRS Ohio has on hand to pay all benefitsaccrued by STRS Ohio members to date -- even though the liabilities are notpayable all at once.
At the end of fiscal year 2008, STRS Ohio's pension fund had a funding period of28.3 years and a funded ratio of 80.1%. However, the Retirement Board alsoundertook a five-year actuarial experience review that was completed in October2008. This led the board to adopt changes to some actuarial assumptions,including payroll growth and retiree life expectancy. These changes to reflectexpected future experience resulted in the final actuarial valuation for thepension fund showing a funding period of 41.2 years and a funded ratio of 79% asof June 30, 2008.
At the end of fiscal year 2008, defined benefit assets were $66.8 billion, andSTRS Ohio expected to pay future benefits over 41 years by achieving an 8%annual rate of return. However, with assets currently under $50 billion, assumedinvestment returns of 8% going forward leave a shortfall.
Ohio's Health Care Stabilization Fund has been similarly impacted by themarket downturn. Health care costs for the STRS Ohio Health Care Program arepaid out of this fund. Currently, monies for the fund come from premiums chargedto STRS Ohio retirees and their dependents who are enrolled in the program, 1%of payroll from employer contributions and investment earnings on these funds.Each year, the Retirement Board also receives an actuarial valuation report onthis fund. This report tells the board the solvency period of the fund, and thepercentage of contributions (known as annual required contributions or ARC)needed to fund the health care program on a long-term basis.
During calendar year 2008, the health care fund was impacted by investmentlosses, as well as losses generated by changes in actuarial assumptions from thefive-year experience review noted previously. The results of the most recentvaluation, which the board received at the February meeting, showed that thehealth care fund as of Jan. 1, 2009, stood at $2.69 billion, reflecting areduction of $1.34 billion from its starting value of slightly more than $4billion one year earlier. In only one year, the projected life of the STRS OhioHealth Care Program was shortened to nine years from 13 and is now projected tolast until 2018. Further, the annual required contribution (ARC) is now 5.01%(assuming an investment return of 8%), slightly exceeding the 5% contributionincrease that is being requested in the health care legislation proposed by theRetirement Board and supported by the Health Care Advocates for STRS.
STRS Ohio is still seeking an ongoing, dedicated revenue stream for the HealthCare Stabilization Fund. However, for a contribution increase to succeed inmeeting the program's financial needs, the ARC must be lowered. Currently, thefunding shortfall is being covered by withdrawing principal from the Health CareStabilization Fund. Reliance on the principal rapidly depletes the health carefund, leaving only the 1% employer contribution, enrollee premiums and MedicarePart D subsidy to sustain the fund. With the current 1% employer contributionand no program changes, the ARC will increase further in 2010 and every yearthereafter.
Therefore, at the February meeting, staff proposed that, in addition to seekinga contribution increase, the board must also begin looking at long-term changesto coverage, premium subsidies and eligibility for the health care program dueto its deteriorated financial situation. The initial goal is program changesthat achieve a minimum of $83 million in program cuts. This would return the ARCbelow 5% and preserve the principal balance in the health care fund in calendaryear 2010. If additional contributions to the fund are not found, even moresignificant changes will need to occur in future years. By beginning thediscussion now, STRS Ohio can give its members some lead time for retirementplanning.
CONTINGENCY PLANNING PROCESS WILL BEGIN IN MARCHIn recognition of the difficult economic times and its current and potentialimpact on STRS Ohio, the board will implement a Long-Term Fiduciary andFinancial Contingency Planning Process that it approved during the January 2009planning retreat. This process provides a framework for the board to evaluateoptions to restore prudent funding levels for the pension fund over the longterm, as well as ensure the continuation of the health care program.
The contingency planning process provides the transparency and structure thatwill allow the Retirement Board and staff to objectively evaluate the pros andcons of possible changes to plan design or future benefits. The firstdiscussions will be held at the March 2009 board meeting.
At the February meeting, STRS Ohio Executive Director Michael J. Nehf presentedseveral recommendations designed primarily to reduce STRS Ohio's operatingexpenditures. The changes, which were approved by the board, include:
- Implementation of an associate head-count freeze at the current number of 605associates, effective immediately;
- Implementation of a salary freeze for all associates effective immediatelythrough June 30, 2010; and
- Implementation of a standard 40-hour workweek across the organization,effective Jan. 1, 2010. With the latter change, there will be no additionalcompensation provided to associates currently working 37.5 hours per week.The board also ratified the Friday following Thanksgiving as an STRS Ohio paidholiday in accordance with past practice over the last 30 years. With thischange, STRS Ohio's combined total for holidays/floating holidays/personal daysis still comparable to its sister pension systems, the State of Ohio and theTreasurer's Office. Finally, the funding structure of the current associateLong-Term Disability Plan will be changed to partial self-funding, effectiveApril 1, 2009. Estimated savings to STRS Ohio will be approximately $120,000over the next three years.
RETIREMENTS APPROVEDThe Retirement Board approved 111 active members and 106 inactive members forservice retirement benefits.

Dennis Leone: Summary of February 19-20, 2009 STRS Board meeting

STRS Update
Board Meeting on February 19-20, 2009
By Dennis Leone
STRS Retiree Board Member
The truth is the truth. A number of important things occurred at the last board meeting. It was announced that total assets at STRS were $49.7 billion as January 30, 2009 (down $30.4 billion since 10-31-07), and our stock return for the first 7 months of fiscal year 2009 has been -27.7%. I should note that when our assets were calculated as $49.7 billion on January 30, 2009, the DOW closed at 8,0001. As of yesterday, February 24, 2009, the DOW stood at 7,114. I state this to illustrate that our total assets likely are now below $47 billion, which means that the total assets at STRS have dropped in excess of 40% in the past 16 months. This is far worse than what STRS experienced in 2000-2002.
What does this mean? Deputy Executive Director Bob Slater announced at the board meeting on 2-20-09 that while pensions of current retirees are secure for the immediate future, the pension obligations of future retirees may not be so secure in the distant future – if the stock market fails to improve. He said it was not possible to offer specific dates, just like it is not possible to predict if the stock market will improve. I will take this a step further, from my perspective: It should go without saying that if the stock market continues to drop significantly, I believe that pension checks of current retirees and future retirees are not secure. I realize that as recently as this past November, official STRS communications said that pensions of current and future retirees were secure. I said at that time that such communications were improper and unrealistic, and I feel that way even more so now – given Mr. Slater’s announcement. It was plainly wrong for STRS communications in the immediate past to portray an “all is fine” picture to the membership.
Mr. Slater’s announcement will result in the board developing contingency plans in the coming months to deal with our potential future financial realities. Contingency plan discussions occurred about 18 months ago, but stalled. Everything will be on the planning table to deal with this matter. It also was announced by the STRS staff that the Health Care Stabilization Fund (HCSF)will run out of gas in 9 years, if not sooner. (The future of this fund assumes an annual positive stock market return of between 5% and 8% for the fund to last another 9 years. I do not believe this will happen. To extend the life of the HCSF, the board will be meeting soon to consider how to cut $83 million in the STRS health insurance plan. A two-hour meeting was held on February 20 to begin discussions on cuts to be considered. As is the case with steps that will be taken to preserve future pensions, everything will be on the table as it pertains to changes that will have to occur to preserve the HCSF.
While the above news is not good, I am pleased to report on the following actions that occurred at the board meeting on February 20, 2009:
1. The board voted 9-0 to implement an immediate base compensation freeze of all STRS employees. I recommended such a freeze in November, but my motion died due to a lack of a second, then was referred to a sub-committee for study. This occurred in November after Executive Director Mike Nehf said he was opposed to STRS staff receiving a wage freeze. At the board meeting on February 20, 2009, however, Mr. Nehf recommended that the board approve the wage freeze, which we did.
2. The board voted 10-0 to institute “head count” freeze – meaning that STRS will not employ more than the current 605 employees, until further notice. This also was recommended by Executive Director Nehf. I would have preferred a staff cut, but there would not have been board support for such.
3. The board voted 7-3 to raise the work week for all STRS employees from 37 ½ hours per week to 40 hours per week, effective January 1, 2010. It deserves noting that Mr. Nehf recommended the change, but his recommendation included a July 1, 2010 start date. Teacher board members Tim Myers, Conni Ramser, Mark Meuser, and Mary Ann Cervantes advanced a substitute motion to delay the start date to July 1, 2010. This substitute motion was defeated 6-4. Voting no on the final motion to institute the change on January 1, 2010 (which was approved 7-3) were teacher board members Myers, Ramser, and Cervantes. Board member Tai Hayden and I would have preferred an even earlier state date for the change, but there would not have been support for it. The change to a 40-hour work week should have occurred years ago, in my opinion.
4. The board voted 9-1 to formalize language from last month to institute a suspension of bonus checks of investment staff on February 1, 2009, and restrict the eligibility of bonuses during future “down” years in the stock market. Teacher board member Mark Meuser – who will be board chair on September 1, 2009 – voted no on the clean-up language. More important, however, was the fact that a board consensus expressed support for the Salary/Benefits Committee to meet within the month to consider additional restrictions in the bonus plan for investment plan. I have said for months that there is a fundamental flaw in the STRS bonus plan for investment staff. Here is why: If we end the fiscal year, for example at $47 billion in assets, then we increase to, let’s say, $48 billion in fiscal year 2010, then the investment staff will receive gigantic bonuses because total assets increased. Never mind that we’d be nowhere close to where we were 6 months ago, or 12 months ago, or 18 months ago. Board member Craig Brooks, who represents the Speaker of the House and the President of the Senate on the board, presented preliminary suggestions that supported my position of investment staff NOT receiving full bonuses when such happens. This will be considered further soon. I appreciated the willingness of Mr. Brooks to step-up-to-the-plate on this matter. The concept was getting nowhere when I was suggesting it previously.
5. The board voted 9-1 to give STRS staff the day after Thanksgiving off in the future as another holiday. I voted no on this due to the fact that the staff received this day off with pay in November, which – in my opinion -- was in violation of page 53 of the Board Policy Manual (which says that no staff benefit improvements can occur with board approval). My fellow board members supported the change because former executive directors Damon Asbury and Herb Dyer also gave staff the day off as well. Their yes vote was continue with past practice. I would have supported the change had it been handled differently in 2008 and had the change been brought to the board for a vote in advance.
I also brought up at the meeting on February 20, 2009 that public statements by teacher board members Tim Myers and Mary Ann Cervantes in the Columbus Dispatch on 1-17-09 were incorrect. Both said in the newspaper article that when the board voted on 1-16-09 to suspend the bonus checks for investment staff (to be effective on 2-1-09), that the board was “breaking a promise.” I publicly read a letter that all investment staff received from the executive director before the fiscal year began (which all board members received a copy of previously) which said the board could modify or terminate the bonus plan in the future for any reason. In other words, the board did NOT break a promise to the staff, period.
The coming months will be challenging, for sure.
Dennis Leone
STRS Retiree Board Member

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Bye, bye, Medicare Advantage programs.... don't let the door hit you on the way out!

From John Curry, February 22, 2009

"Obama's budget request would create "running room for health reform," the official said, by reducing spending on some health programs so the administration would have money to devote to initiatives to expand coverage. The biggest target is bonus payments to insurance companies that run managed-care programs under Medicare, known as Medicare Advantage.

The Bush-era program has attracted nearly a quarter of Medicare beneficiaries to private health insurance plans that cover a package of services such as doctor visits, prescription drugs and eyeglasses. But the government pays the plans 13 percent to 17 percent more than it pays for traditional fee-for-service coverage, according to the Medicare Payment Advisory Commission, which advises Congress on Medicare financing issues.

Officials also are debating whether to permit people as young as 55 to purchase coverage through Medicare. That age group is particularly vulnerable in today's weakened economy, as many have lost jobs or seen insurance premiums rise rapidly. The cost would depend on whether recipients received a discount or were required to pay the full price."

I think many readers still remember the "sales pitch" given to the STRS Board in December by "consultants" that STRS (translated=we) paid to present a "study" of conventional Medicare vs. Medicare Advantage programs. Well, that decision is pretty well determined at this point, isn't it?


Obama's first budget seeks to trim deficit

Washington Post

WASHINGTON — President Barack Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half in the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

In addition to tackling a deficit swollen by the $787 billion stimulus package and other efforts to ease the nation's economic crisis, the budget blueprint will press aggressively for progress on the domestic agenda Obama outlined during the presidential campaign. This would include key changes to environmental policies and a major expansion of health coverage that he hopes to enact later this year.

A summary of Obama's budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete document of several hundred pages to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation's costly and inefficient health care system Monday, when he addresses lawmakers and budget experts at a White House summit on restoring "fiscal responsibility" to Washington.

Even before Congress approved the stimulus package this month, congressional budget analysts forecast that this year's deficit would approach $1.2 trillion — 8.3 percent of the overall economy, the highest since World War II. With the stimulus and other expenses,

Monday, February 23, 2009

CORE's new logo?


Taken right off the STRS website..." a common misperception?"

From John Curry, February 23, 2009
Ms. Knoesel,
The paragraph below was taken from the STRS website today and states the following...and I quote:
"Why do participants in OPERS’ health care program pay less for their health care premiums than STRS Ohio retirees?
This is a common misperception
my emphasis) OPERS is also facing a funding challenge for its health care program. As a result, it implemented a Health Care Preservation Plan in January 2007. This plan divides its membership into three groups, based on when an individual is eligible to retire and/or when they were first hired. The initial health care premium subsidy for each of these groups varies depending on whether the enrollee is a retiree or a dependent and years of service. Annual increases in the subsidy are based on general cost inflation, not medical and drug trends. Further, the percentage of this subsidy decreases over time. So, for example: A 30-year OPERS retiree in 2007 pays a $0 premium that first year. However, that premium could increase to $264 per month in just five years."
A common "misperception?"
Well, let's see now. I retired in 2000 with exactly 30 years of teaching in Ohio's public schools and have yet to reach age 65 to be Medicare eligible. According to STRS's hc insurance table my monthly premium for a Medical Mutual 80/20 PPO for my spouse and myself would be (I'm currently working for a private employer and taking their hc insurance as it is much more affordable) $967 per month (see current STRS table below....$760 for spouse + $207 for myself):
A friend and fellow retiree under the OPERS system who also retired in the same year (2000) also had 30 years service paid into OPERS. His 2009 monthly premiums for hc insurance through OPERS...the same Medical Mutual 80/20 PPO for both himself and his spouse, is (and has been) $80 per month ($0 for him and $80 for his wife). I misperceiving on the dollar amounts that I stated above ($967 vs. $80 for monthly premiums) or was the statement, "This is a common misperception," a misstatement?
John Curry
Larry KehresMount Union Collge
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