Saturday, June 26, 2010

Some quotable pension benefits quotes

From John Curry, June 26, 2010
“Both the United States and Colorado Constitutions bar reductions in pension benefits once the right to those pension vests. And that is exactly what the legislature did here,” said Stephen M. Pincus, one of the attorneys for the retirees.
“This lawsuit is about the state complying with its own Constitution,” said plaintiff Gary R. Justus, a retired Denver Public Schools math teacher. “The General Assembly is trying to correct its past mistakes on the backs of the retirees. We can’t go back and restart our careers.”

Friday, June 25, 2010

Pros and Cons of the Double Dip

From John Curry, June 25, 2010
From Dennis Leone, June 25, 2010
Subject: Re: Fw: Double dip.....another view
For the record, I agree with all that Bob Buerkle has written below. Also for the record, his #3 -- regarding rehired retirees NOT having STRS health insurance -- WAS adopted by the STRS Board (my motion) on a split vote in 2008.
Dennis Leone
From Bob Buerkle, June 25, 2010
Subject: Re: Fw: CORE member Mary Jordan re. Nehf to newspapers.........
Please forward Mary Jordan and Kathie Bracy (for her blog) my explanation of how re-employed retirees are cost neutral to STRS. Actually, it is a funding enhancement for STRS.
Here's how.
1. STRS collects a total of 24% of earnings from the combination of employer and employee contributions. Since 7/1/2005 STRS only gives the re-employed retiree 5% of the 14% from the employer contributions. STRS keeps 1% for the Health Care Stabilization Fund and 8% to pay down the unfunded liability of the system. The unfunded debt has been created by improved benefit formulas over the decades, but, to a much greater extent, the 2008-2009 investment losses of around 35 billion. So the 8% that STRS gets to keep without any benefit to be provided to the re-employed retiree can be used to pay down STRS Debt.
2. Most full-time re-employed retirees earn less than they once did before they retired but they still make 70 to 90% more than a beginning teacher. This means that the total STRS contributions would be nearly double those of a beginning teacher. Remember also that re-employed retirees do not receive a defined benefit pension based on their re-employment time. They can convert their account value to an IRA or they can let the STRS get over on them with a terrible Money Purchase payout. This is free money for STRS. If it was not a good deal for them they would have complained long and hard to prevent the practice years ago.
3. As long as a re-employed retiree is working for a school district that provides health care for their employees, STRS is not their primary health care provider. This saves STRS around $8000 or more per re-employed retiree.
4. Anyone who retires one day and begins again the next day, like Ravenna Superintendent, Tim Calfee, forfeits their first two months of Pension Benefits. In Calfee's case his gift would benefit STRS by about a $16,000 for breaking the two month waiting rule.
All of this being said, I'm sure many young education graduates are being hurt by the rehiring of retirees. The total number being affected is relatively small though because 70% of the STRS re-employed are only working part time. Maybe they are teaching one or two classes and there really is no need to hire a full time beginning teacher in those positions.
Hope this clarifies why, at the very least, hiring retirees is better than cost neutral for STRS.
Bob Buerkle
From Mary Jordan, June 24, 2010
Subject: Re: Nehf to newspapers.........
If an employee wanted to retire, he would actually retire and no longer be in an educational position. To retire then rehire means the person is receiving a retirement check up to ten or more years than he otherwise would have. How can Nehf say that is not having a negative effect on the STRS retirement funds, especially when the ones doing it the most are retiring from often six digit salaries therefore giving them a MUCH higher retirement check than most all teachers receive.
Mary Jordan
From John Curry, June 24, 2010
Subject: Nehf to newspapers.........
STRS Ohio Responds to Newspaper Articles About Reemployed Retirees
On June 20, Ohio’s major daily newspapers ran a series of stories about reemployed retirees — educators who continue teaching after retirement. STRS Ohio provided much of the data used in these articles and had many conversations with reporters to try to put this information in context. Following publication of these articles, STRS Ohio responded with a letter to the editor of each newspaper. A copy of this letter appears below.
To the Editor:
In response to your articles about reemployed retirees, we at STRS Ohio agree that pension reform is needed and educators must work longer. In the past, as the Ohio Legislature has made changes to the rules governing reemployed retirees, STRS Ohio has made adjustments to help ensure that reemployed retirees do not negatively impact the pension fund or the separate health care fund. These past reforms include no longer providing primary health care coverage to rehired retirees, and also making the payout after a second retirement cost neutral to the system. Reemployed retirees and their employers also pay the same amount in contributions as do non-retirees. More recently, our Retirement Board took the responsible step as system fiduciaries and adopted a plan in September 2009 that proposes a number of changes to pension plan design for Ohio’s public educators. One of the plan’s major components increases the service required for retirement to 35 years. We look forward to our proposed pension plan changes being included in future legislation and will continue to work with the Ohio Retirement Study Council, other legislators and all stakeholder groups to bring about changes that will help ensure the sustainability of STRS Ohio for Ohio taxpayers who have chosen public education as their career.
Michael J. Nehf, Executive Director
State Teachers Retirement System of Ohio
275 E. Broad St.
Columbus, OH 43215-3771
(614) 227-4005

Need more evidence that OPERS planned ahead and STRS didn't?

From John Curry, June 25, 2010
This 2004 Blade article might just shed a little more light on the situation!
"In general, current and near retirees would feel the least of the benefit pinch, while those hired recently would have to plan to pay more for health coverage when they retire in the future. OPERS officials say the plan was set up that way in the interest of fairness, because current and near retirees have less time to 'plan and save and adapt' to higher costs."
Toledo Blade
Article published August 9, 2004
OPERS recognizes a problem
Howls of protest can be expected from some quarters, but the Ohio Public Employees Retirement System is to be commended for taking steps to reform the pension fund’s beleaguered medical insurance benefit structure before it is overwhelmed by rising health-care costs.
OPERS is the pension fund for most state, county, municipal, and township employees, excluding schools, police, and fire. It has some 370,000 active members and about 140,000 retirees, a major part of Ohio’s workforce.
With health-care spending rising at double-digit levels for at least five years, and with its retiree ranks expected to double in number in 20 years, OPERS decided it could not afford to provide retiree health benefits indefinitely at current levels.
Those benefits are extremely generous, even though OPERS is not required by state law to provide them. Currently, a worker with as little as 10 years’ service can retire and receive health insurance fully paid by the state fund. It’s a benefit that most private-sector workers can only dream about, but it won’t last for long.
OPERS is considering changes, beginning in 2007, under which retirees with fewer years of service would pay substantially more for their insurance than those with greater longevity.
The proposal has different provisions for three groups in question: current retirees and those eligible to retire before Jan. 1, 2007; those eligible to retire after Jan. 1, 2007, and recent and future hires, specifically those who came to their jobs on or after Jan. 1, 2003.
In general, current and near retirees would feel the least of the benefit pinch, while those hired recently would have to plan to pay more for health coverage when they retire in the future. OPERS officials say the plan was set up that way in the interest of fairness, because current and near retirees have less time to “plan and save and adapt” to higher costs.
Coverage for spouses of retirees would cost more for everyone although the increase would be phased in over five years. To help pay for the changes, contributions by state and local governments will be increased, and employees will contribute 1.5 percent more of their salaries, from 8.5 percent to 10 percent, over three years.
Although complaints about the fairness of the plan inevitably will arise, it appears that OPERS has made every effort to make it equitable. Explanatory hearings, including one in Toledo, were conducted across the state in July.

The Beacon Journal addresses pension reform issues

From John Curry, June 23, 2010
"There is no need to abandon the defined-benefit approach, which at this scale can be operated more efficiently and effectively. Public employees should be alert to the frustrations in the private sector, many workers having to give up such pensions, their 401(k) plans hit hard by the Wall Street calamity. What private workers should keep in mind is that public employees do not participate in Social Security."
Double trouble
State lawmakers should end the practice of 'double dipping' in Ohio. Then, they should really repair the state's pension systems
Akron Beacon Journal (editorial), June 22, 2010
Here, in Ohio, the pay of school superintendents fits into that classic frame: The scandal isn't what is illegal. Rather, the trouble stems from conduct fully compliant with the law. Superintendents made the point in the series of articles published the past two days by the state's eight largest newspapers examining the Ohio's publicly funded pension systems. School officials stressed that the law allows superintendents to retire, start collecting their pension benefits and then return to running a school district — often with a larger pay package.
They're correct. All of it is legal.
And disturbing.
The concern isn't so much the money, at least within the larger context of the state's ailing pension programs. This practice of ''double dipping'' amounts to a tiny fraction of the overall financial problem. The difficulty is the perception. Most Ohioans do not reside in this realm, where you retire at nearly full pay and then jump back into the job and receive something akin to your same salary. The reporting revealed that once retired, superintendents return, in effect, as independent contractors, able to negotiate additional items, such as car allowances, travel money and overtime for working holidays.
Superintendents aren't alone. Other state employees double dip. The 27 percent of superintendents in the state's 614 school districts who collect both pension and pay checks do provide a glaring example. Proponents argue that a limited pool of talent makes the deals necessary. They ask: Why not hold onto proven, experienced performers? The response comes in the form of a question: Why not groom more effectively emerging leaders, even in an era of squeezing management layers to curb expenses?
This version of double dipping invites morale problems, beyond the frustration of managers at lower levels. Teachers aren't in position to strike such deals. Most important, the public may have reason to seethe. Yes, some superintendents are popular. Yet what are voters to think when a levy request appears on the ballot as the superintendent collects a taxpayer-driven pension, salary and perks?
All of this smacks of the wayward thinking about CEO compensation seeping into the public sector — the indispensable man or woman paid what the market supposedly requires.
The late Thomas Moyer rightly warned as chief justice of the Ohio Supreme Court that judges should resist double dipping or risk an erosion of public confidence in the courts. State lawmakers would do well to end the opportunity for double dipping, or narrow substantially the window. They should recall the Brookings Institution finding that the state ranks ninth in money poured into school administration and 47th in dollars directed to the classroom.
Again, lawmakers should keep the practice in perspective. Eliminate double dipping, and the state's five pension systems still will face severe financial pressure. In this case, Ohio isn't alone. Other states face even greater challenges. Many already have acted. Illinois has raised its retirement to age 67 and capped public pensions at $106,800 a year. Some states now require employees to work more years to gain pensions. New Jersey will not provide pension credit unless an employee works at least 32 hours per week. Colorado trimmed its annual pension increase from 3.5 percent to 2 percent.
In Ohio, the pension systems have proposed adjustments, three looking to increase the contributions from employers and employees, or taxpayers, ultimately. The Ohio Public Employees Retirement System has not proposed a contribution increase. In other ways, it has outlined an approach followed, more or less, by the other systems. The smart path involves small yet significant changes that steadily accumulate savings over the years. It makes sense, among other things, to raise the retirement age, alter the benefit formula, reset the cost-of-living adjustment and calculate based on the five highest calendar years of earning (instead of the current three).
What shouldn't be missed is the expensive presence of health-care coverage in these systems. The hope is, health-care reform will yield overall savings. Yet that hardly eases the tough choices facing the Statehouse and the pension programs. Simply, control these costs, or face insolvency.
The remedy can be achieved steadily and gradually. There is no need to abandon the defined-benefit approach, which at this scale can be operated more efficiently and effectively. Public employees should be alert to the frustrations in the private sector, many workers having to give up such pensions, their 401(k) plans hit hard by the Wall Street calamity. What private workers should keep in mind is that public employees do not participate in Social Security.
Put another way, don't judge public pensions as a whole by the presence of double-dippers. Insist on repairs to the excesses, and adjustments to hard realities, ensuring solvency over time.

Thursday, June 24, 2010

Dr. Leone re: Retire/Rehire

From John Curry, June 24, 2010
From Dennis Leone, June 24, 2010
Subject: Re: Comments re.................... PD editorial re. Double > Dipping...."just because it's legal doesn't mean it's right!"
.......and, another REAL problem with the retiree/rehire issue is the fact that many supts and principal simply immediately rehire Mrs. Smith to teach 3rd grade because they don't want to be bothered with resume screening, interviews, etc. THIS is destructive to the future of our profession. Many quality new education graduates will give up when one job after another goes to retiree. And with all of the layoffs of teachers early in their career, it makes it even more of a sin to rehire a retiree when these good teachers are available.
Dennis Leone
From ???, June 24, 2010
Subject: Re: PD editorial re. Double Dipping...."just because it's legal doesn't mean it's right!"
Dear John:
Wow, what a strong denunciation! The bad thing about it is that it paints all retirees with a broad brush. The general public will get the very false impression that all retired teachers are getting those huge pensions. It does a disservice to the thousands of retirees living on pensions below $30,000 and those paying huge monthly health care premiums!
From John Curry, June 24, 2010
Public pension double dipping is an invitation to cronyism: editorial
Cleveland Plain Dealer, June 24, 2010
Ohio's cancerous practice of "double dipping" can best be summed up in the Shaker Heights school board's "retire-rehire" of its six-figure school superintendent, Mark Freeman.
It was a textbook example of cronyism.
Freeman was earning $149,675 when he "retired" from the job 10 years ago. The school board immediately rehired him without publicizing the opening, or interviewing other candidates. His first day back, Freeman got a raise, increasing his salary to $156,546.
He still holds the position today, despite an insider deal so rank it rattled even Ohio's notoriously do-nothing legislators in 2003 to require school districts to perform candidate searches before rehiring the "retired." Other safeguards against blatant favoritism now include job postings, public hearings and a public vote to hold school board members more accountable for their stewardship.
Poorly monitored and cloaked in secrecy, double dipping in Ohio has turned into little more than an enrichment scheme -- and a bait-and-switch in which promising younger public employees who are denied promotions and the taxpayers who subsidize Ohio's public employee pensions are the big losers.
The practice allows highly paid workers to "retire" long enough to claim a pension that would typically be unavailable to a private-sector worker of the same age -- then be re-hired within days, often in the same position, but now earning a pay check and a pension.
Proponents claim the practice saves taxpayers money by securing the best and brightest minds at bargain prices. The numbers suggest otherwise. A joint newspaper analysis of the practice among Ohio school administrators, written principally by Dennis J. Willard of The Akron Beacon Journal and Patrick O'Donnell of The Plain Dealer, found that most double-dipping school superintendents make more money than they did prior to "retiring."
The analysis -- conducted by the state's eight largest newspapers -- noted that one in four superintendents in Ohio's 614 school districts are double dippers.
Their contracts include perks that put them in an elite group of the highest paid public employees in the state. When school districts rehire the retired, they usually pay both the employee and employer contributions to the retirees' annuities in the pension system. That is essentially a 10 percent pay increase, a bonus most taxpayers -- who contribute $4.1 billion a year to subsidize public employee pensions -- do not enjoy.
Worse, all five state pension systems (Public Employees; Teachers; School Employees; Police and Fire; and Highway Patrol) want lawmakers to shake down taxpayers even more to maintain benefits for retirees.
This outrageous gaming of the system must stop. Pension funds must re-examine policies that allow employees to retire at relatively young ages with relatively hefty portions of their pensions intact, just so they can exploit the double-dipper gravy train.
School systems need to adopt a cost-effective strategy that encourages new blood and new ideas. The Ohio Department of Education asserts there are thousands of qualified candidates to run school districts.
Worst of all, Ohioans who help cover the benefits of nearly 400,000 public retirees are kept in the dark about key issues such as how much money a retiree receives and how well the pension systems monitor abuses. That's according to an accompanying story by Rick Armon of The Akron Beacon Journal.
At least 21 states, including New York and Illinois, consider retiree benefits a matter of public record. It's time Ohio legislators demanded that same transparency here.
Double dippers remain defensive, arguing they've broken no law. But, as we learn in school, just because it's legal doesn't mean it's right.

COLA LAW FIRMS suing CO & SD retirement systems for cutting COLAs

From John Curry, June 24, 2010
Some have expressed interest in the law firms that have filed class actions re. the cutting of their COLAs in both Colorado and South Dakota. Here is the information re. the attorneys, the law firms and several links to enable you to keep track of the progress of these class action lawsuits.
Here are links of interest in this matter:

Wednesday, June 23, 2010

Minutes of the June 10, 2010 CORE Meeting

From Marie Fetters, June 23, 2010

The Concerned Ohio Retired Educators (CORE) held an abbreviated meeting on June 10th in the Sublett Room of the STRS Building in Columbus. President Dave Parshall opened the meeting at 12:05 p.m. by welcoming four first-time attendees and greeting the customary attendees.
Mary Ellen Angeletti moved to accept the May minutes. After Carole De Paola seconded the motion, the minutes were approved by the membership. The brief treasurer’s report by Herman Fisher informed all that our treasury was “holding steady.”
President Dave reminded the members to think of position-type questions, concerning retirees and our pension system, to ask candidates. He is requesting that people send potential questions to him before August. The final results will be posted in early fall so that CORE members (and other retirees) will be armed with questions to ask potential representatives. (This will also enable retirees to be more informed about matters pertaining to our retirement when they vote.)
President Parshall proceeded to explain the invitation to Ohio Attorney General Richard Cordray. Thanks to John Curry, Cordray’s office consented to have the attorney general address CORE and answer questions members might have. Dave had invited the STRS Board to join us and be a part of our gathering, but the executive director, Mike Nehf, and the Board decided to host the attorney general at their lunch, prior to our meeting.
Parshall reiterated the need for CORE to keep active at least until legislation is in place, which more than likely will be after January 2011. Dave further encouraged the 39 in attendance to contact state representatives and state senators with concerns and questions in order to find out where these people stand on support for retired educators. (Specific questions, designed by our membership, should be available in late August.)
Wrapping up the meeting quickly so that we could move to the larger room to hear the attorney general, President Dave Parshall thanked John Curry for his excellence in getting information out to CORE members. Parshall again expressed his great appreciation to John for arranging to have Richard Cordray address our group.
Parshall reminded the group that our next meeting is scheduled for August 12th, since there is no STRS Board Meeting in July. The meeting was adjourned at 12:25 p.m.
Respectfully submitted,
Marie M. Fetters
CORE secretery

Mike Nehf responds to the Toledo Blade

Retirement plan must be reformed
In response to your articles about re-employed retirees, we at the State Teachers Retirement System agree that pension reform is needed and educators must work longer (“Set for life: The rising cost of public pensions,” June 21, 22, and 23).
In the past, as the Ohio legislature has made changes to the rules governing re-employed retirees, STRS Ohio has made adjustments to help ensure that re-employed retirees do not negatively affect the pension fund or the separate health-care fund. These past reforms include no longer providing primary health-care coverage to rehired retirees, and making the payout after a second retirement cost neutral to the system. Re-employed retirees and their employers also pay the same amount in contributions as do nonretirees.
More recently, our retirement board took the responsible step as system fiduciaries and adopted a plan in September, 2009, that proposes a number of changes to pension-plan design for Ohio's public educators. One of the plan's major components increases the service required for retirement to 35 years.
We look forward to our proposed pension-plan changes being included in future legislation and will continue to work with the Ohio Retirement Study Council, other legislators, and all stakeholder groups to bring about changes that will help ensure the sustainability of STRS Ohio for Ohio taxpayers who have chosen public education as their career.
Michael J. Nehf
Executive Director
State Teachers Retirement System of Ohio

Tuesday, June 22, 2010

Pardon me, Columbus Dispatch....'retirees will have to shoulder more of their health-care burden'?

From John Curry, June 22, 2010
Eight Ohio newspapers recently gave ample press coverage to Ohio's public retirement systems and their operations. Many man (and woman) hours were devoted to ferreting out the facts, collating them and presenting these facts to the public in a well orchestrated coverage of these systems' benefits. I will have to agree with many of your findings but, one statement in particular in your June 22, 2010 editorial, Pension Peril (copied below), demonstrates that you really didn't do your homework on one area of your investigation: teacher retirees having to "shoulder" more of their health-care burden.
If you would have run a comparison of the health care premiums charged to retirees of OPERS vs. STRS you would have found a vast difference. As a retired public school educator (with 30 years of teaching service) my cost for a Medical Mutual 80/20 monthly health premium is currently $1,151 per month for my spouse and myself. Had I spent that same 30 year service in an OPERS classified job, my current health premium (for both my spouse and myself) for the same 80/20 policy through OPERS would be a mere $80 per month or less that 7% of what STRS charges for the same coverage. A significant reason behind this is the lack of planning that STRS did back in 2000 when they graciously (and carelessly) enacted the 88% payout for teachers who taught for 35 years. That same 35 year non-teaching county/state/local government employee can only collect 77% of his (her) final average salary for 35 years of service.
This difference can also be found, if one takes the time to investigate, in the amount of moneys that go into the respective health care funds of each of these state retirement systems. No moneys from either public educators nor non-teaching (OPERS) public servants go toward their respective healthcare funds. Their employer contributions are a different story, a full *7% of the OPERS related employer contributions gets directed into the OPERS health care fund for retirees. And the (STRS) public school employers' contributions toward health care for their retirees? Well, would you believe only a very meager 1% goes toward educators' health care.....that's only 1/7 the amount that OPERS contributes! Why? Well, let's go back to the STRS' 88% payout for 35 years vs. the 77% payout for OPERS. OPERS planned ahead and STRS didn't. STRS retirees are now paying the price for the lack of a former board's and administration's planning and ...they are paying dearly. Mr. Nash, STRS retirees are "shouldering" far more than their fair share of the "burden."
John Curry
A retired public school educator
A member of CORE (Concerned Ohio Retired Educators)
Ohio Retirement System Percentage of Employer Contribution Allocated to Health Care in 2009
PERS 7.00%*
STRS 1.00%
SERS 4.16%**
OP&F 6.75%
HPRS 5.50%
*This amount will be reviewed by the board and may be revised during the first quarter of
**Does not include employer health care surcharge of up to 1.5% of total active member payroll.
Editorial: Pension peril
Double-dipping, rising health-care costs add up to unsustainable system
Columbus Dispatch, June 22, 2010
Public employees who retire to begin collecting their public pension, then are rehired in their old position and collect a public salary on top of their pension, argue that they're not costing the taxpayers anything extra, even when these arrangements result in million-dollar payouts.
But, as Ohio's public pensions slide toward insolvency and the state's budget deficit grows more alarming, the public will be less and less tolerant of this so-called double-dipping.
Defenders of double-dipping argue that if the public employer weren't paying the retiree to do the job, it would be paying somebody else, also at taxpayers' expense, so there's no real difference. This argument has merit, though it should be pointed out that if the retiree is rehired at or above his ending salary, then he probably is being paid much more than a replacement would have received - meaning that taxpayers are, indeed, spending more than they need to.
But the most important aspect of double-dipping is what makes it possible in the first place: the generous early retirement ages afforded by public-employee pensions. Some public employees can retire with full benefits at age 48, while in the private sector, where fewer and fewer employees have pensions, full benefits often are not available until at least age 65.
Not only do these early retirement ages encourage double-dipping and allow most public retirees to draw pensions for many more years than their private-sector counterparts, retiring well before 65 means the retirees need health-care coverage until Medicare kicks in. Although state law doesn't require it, Ohio's public pension plans began offering health-care coverage in the 1970s. Retirees now demand coverage, and its soaring cost is one of several reasons the pension plans are less and less financially sound.
An investigation by Ohio's eight largest newspapers into double-dipping, published Sunday, highlighted some of the most extreme outcomes, involving school-district superintendents. Their relatively high salaries, combined with the perverse incentives of the State Teachers Retirement System, lead many to "retire" early, because it can mean a seven-figure paycheck when they finally stop working.
A superintendent earning $100,000 who retires at age 52 would receive about $64,000 from his pension the first year. He can be rehired in the same job at his last salary and continue to receive raises each year.
No wonder a fourth of Ohio superintendents are collecting pensions along with their paychecks. They're joined by half of the superintendents of educational service centers. Double-dipping instantly increases their incomes by as much as 80 percent.
Teachers, police officers, firefighters and bureaucrats might not rack up numbers quite as high, but the same double-dipping incentives apply.
Taxpayers, many of whom face pay cuts or freezes and diminished retirement prospects in their private-sector jobs, can't be expected to support the current system without change. Managers of the public pension funds should make the necessary changes, however difficult and unpopular, to bring them in line with private-sector plans. Change is needed, not only to ensure continued taxpayer support but to address the growing funding imbalances.
The teachers' system currently has $40 billion in unfunded liabilities and will be looking to taxpayers for at least a partial bailout.
Already, local governments, including school systems, spend $4.1 billion per year to pay for pensions. The Ohio Retirement Study Council would like to see "employer contributions" - taxpayer contributions - raised to the point that they would total $5 billion annually.
That's an unrealistic expectation to have of taxpayers.
Instead, pension managers should require employees to pay more into their retirement, raise the retirement age and, ultimately, shift newly hired public employees to a 401(k)-style retirement system. Retirees also will have to shoulder more of their health-care burden.

Well, Kirk, if you want to protect the retirees then.......

"Vice Chair of the Ohio Retirement Study Council, Stark County Republican Kirk Schuring says he wants to protect retirees, but all options are on the table."
Monday, June 21, 2010
Senator Kirk Schuring says all options are on the table regarding pension fund reform
But fixes won't happen soon
Senator Kirk Schuring, Republican 29th District. Vice Chair, Ohio Retirement Study Council State lawmakers are looking for ways to shore-up Ohio's struggling public pension funds, but it's not going to happen right away. The State Teachers Retirement System is in the worst shape of the 5 public pension funds that provide retirement income to, teachers, school superintendents, public employees, police and firemen. Their groups submitted recommendations to lawmakers to help the funds regain solvency after losses due to the economic downturn. The options include raising the retirement age and increasing contributions. Vice Chair of the Ohio Retirement Study Council, Stark County Republican Kirk Schuring says he wants to protect retirees, but all options are on the table.
Schuring says he doesn't expect any final legislation on fixing the public pension funds until early next year.
From John Curry, July 22, 2010

Let's see...we still own 10.9 million shares of this, don't we?

From John Curry, June 22, 2010
BP's Oil Spill Is Fouling Public Pension Funds
June 22, 2010
Oil spill on the beach Since the BP's (BP) Deepwater Horizon drilling rig exploded over two months ago, killing 11 of its crew and causing a massive oil spill in the Gulf of Mexico, the company's shares have lost 47% of their value. Despite moments of stability -- and even some rebounds -- the stock keeps trending lower as estimates of the cleanup costs keep climbing.
Now, it seems there's another cost to consider, albeit one BP cannot likely be held responsible for. Public pension funds have lost millions as their holdings in BP shares drop in value. According to Bloomberg data, the drop in BP's share price has erased more than $1.4 billion in fund value at 42 state retirement accounts.
This comes at a time when pension funds are still struggling to recover from last year's market losses. Take California Public Employees' Retirement System, or Calpers, the largest U.S. public pension at $210 billion. It held 58.2 million shares of BP on April 20, more than any other state pension, and this stake has shed $284.6 million in value.
A Drop in the Pension Bucket
California State Teachers' Retirement System, comes in second in value lost, at $104.8 million, followed by Florida at $87.8 million and the Texas Teachers Retirement System at $84.5 million, according to Bloomberg data.
While $1.4 billion sounds like a lot, it's a fraction of what public pension funds manage, which at the end of 2009 was more than $2.4 trillion for the top 100 funds, according to the Census Bureau. For example, they lost a total of $165 billion in the nine months that ended March 31, 2009, during the height of the financial meltdown.
BP shares haven't stabilized yet: They fell to a 13-year low on Tuesday in London. With concerns over costs not abating, BP further lost investor confidence when CEO Tony Hayward, who's no longer managing the oil spill crisis, dodged a conference appearance.

Some interesting comments in the Lima News about double dipping.....

SD retirees sue to keep COLA!

From John Curry, June 22, 2010
Former Rapid City judge, three others sue state over retirement benefits law

Andrea J. Cook, Journal staff | Posted: Tuesday, June 15, 2010 2:40 pm
Two retired judges and two retired university professors are suing the State of South Dakota to protect the annual cost of living increase included in their South Dakota Retirement System pensions.
Former judges Merton Tice, Jr., and Marshall Young are joined in the class action lawsuit by retired South Dakota School of Mines & Technology professors Boots Newstrom and Dean Bryson. All are Rapid City residents.
Attorneys for the retirees estimate that they could represent approximately 20,000 public employees or their survivors who first received benefits on or after July 1, 1982, and who retire before June 30, 2010. The suit was filed in Hughes County.
The retirees claim that individuals drawing benefits from the system will lose between $40,264.62 and 477,414.68 in pension benefits over the next 20 years because of a change in state law enacted by the 2010 Legislature.
Under the law, scheduled to take effect on July 1, pension recipients are not going to get the 3.1 percent cost of living increase they have received every year since 1993.
At the request of the retirement systems’ board of trustees, the state legislature passed Senate Bill 20 tying the cost of living increase to the consumer price index and the system’s assets, according to Wade Hubbard, the retirement system’s general counsel.
For the coming fiscal year, benefits will go up by only 2.1 percent. The following year, the annual cost of living raise will fluctuate between 2.1 percent and 3.1 percent, depending upon the financial health of the retirement system and the consumer price index.
The annual combination of members’ contributions and investment revenue must equal 100 percent of the benefits paid out before the cost of living increase returns to 3.1 percent, something the plaintiffs claim is unlikely.
“They have all lived up to their end of the bargain, they've put in their time and their contributions and the state is obligated to provide the benefits at the levels that were promised when they retired,” said Stephen Pincus, a Pittsburgh-based lawyer helping to represent the retirees. “We contend that this is a breach of the contract the retirees had with the state.”
Attorney General Marty Jackley said his office received the lawsuit late Monday. He was reviewing it and planned to have a response within 30 days.
Jackley said his job is to defend the actions of the Legislature when it passed the measure during the last session, and not to get involved with the policy.
“My job as attorney general is to defend Senate Bill 20 in the confines of the law,” he said.
Faced with substantial revenue losses after two years of a faltering economy, the trustees had to make adjustments, Hubbard said. The retirement systems’ funding level had dropped to 80 percent, which is the bottom of what is considered financially sound, he said.
“It's not so much the status of the strength or weakness of the system, we have a good retirement system, one of the best in the country,” said Rapid City lawyer Verne Goodsell, who is assisting in the lawsuit for the plaintiffs. “It’s a unilateral reneging on that promise, that’s the core of this lawsuit.”
In South Dakota, the system's assets have grown by about 20 percent in the 11 months since the state fiscal year began July 1, state investment officer Matt Clark told a legislative committee in Pierre last week. The Retirement System's assets were $6.6 billion as of May 31, up roughly $1 billion from last July.
“This year, so far it looks like we’re having among our best years ever in adding value,” Clark told the Executive Board, which handles administrative issues for the Legislature.
The Retirement System peaked at about $8 billion in assets in 2007, but fell to $7.3 billion in June 2008. In the midst of the recession, it then lost 20.4 percent of value to end last June with assets of $5.6 billion.
“Without a doubt, South Dakota ranked among the best in terms of its pension funding,” said Pincus, citing a Pew Center study. “The state has an interest in making sure its pension funds are solvent and healthy -- and they have the ability to achieve that goal. But taking away benefits to those who are already retired, who did everything they were supposed to and lived up to their end of the deal, it is unconstitutional.”
From 1988 to 1993, South Dakota’s annual improvement rate was set at 3 percent, Pincus said. Starting in 1993, the annual rate went to 3.1 percent.
“State law says that you have to correct if the system’s funding gets too low,” Hubbard said. “The board looked at all the options and found that SB 20 was the fairest to all the members and was the least severe to all members.”
The actions implemented by SB 20 will save the retirement system an estimated $368 million over the next 30 years, Hubbard said. The system’s actuaries say the system needs between $400 million and $500 million to be financially sound. The system pays out approximately $330 million in benefits every year, he said.
“The fund is starting to recover with the economy,” Hubbard said. But, the fund cannot continue to pay out more than it has, he said.
Investment returns are projected to be up 20 percent for the current fiscal year, Hubbard said.
“We have a history of retirees telling us if the system is in trouble they want us to do anything necessary to save it,” Hubbard said.
The legislature did not take all of retirees’ benefits, only 1 percent, he said.
“And, they’re likely, in the future to go up,” Hubbard said.
The plaintiffs have asked for a permanent injunction to prevent the implementation of SB 20. They argue that the state has violated state and federal law by breaching their contracts with the state by changing their benefits.
Contact Andrea Cook at 394-8423 or
Sioux Falls Argus Leader contributed to this report

Monday, June 21, 2010

On June 21 I blogged a record number of articles and letters, some of which were quite lengthy; as a result, some of the posts got pushed off the page. To see all the June 21 posts, please click on "June 20, 2010" here or in the Archives (over to the right). Thanks. Kathie

A reader writes to John Curry re: double dipping......

From John Curry, June 21, 2010
The Double Dipping prevents younger graduates to secure a position in education. At least 25% of all administrative positions in Ohio are currently being held by the Double Dip Administrators. The title should be "Rehire/Retire". For you see, they already are rehired before the retire. When the double dipping stops for administrators, teachers will be able to advance. This opens the door for the recent college graduate.
Certainly there is a need for special teachers for a few sections of advanced mathematics, science, foreign languages. Most logical residents have no problem with these part time teachers that are filling a need where there are few applicants. Residents have their "BRAIN FULL" of the greedy administrators that are only interested in ME AND MY POCKET and have no concern about others retirement, the students, or the faculty.
The Ohio Legislature needs to address this problem BEFORE they study the issues with the 5 retirement systems. We continue to lose while the BIG CATS get bigger. ENOUGH IS ENOUGH!!!!! I will not vote for a school issue in a district that does not adopt a policy regarding the DOUBLE DIP LOSERS!!!!

DDN editorial staff poses retirement questions.....

From John Curry, June 21, 2010
Editorial: Double-dippers invite voters to rise up
By the Dayton Daily News
June 20, 2010
Ohio can’t have rules that allow select groups of public employees to reap huge financial benefits while contributing to their pension funds’ slide toward insolvency.
The problem is especially worrisome in the State Teachers Retirement System. The argument does not hold up that it’s OK for a school superintendent to make as much as a quarter of a million dollars a year by “double-dipping” because it isn’t hurting anyone.
The practice legitimately infuriates the public — the very voters who are asked to raise their taxes for schools. Taxpayers are appalled that administrators can retire in their early 50s, begin collecting a pension, and stay in their old job at a reduced salary or sometimes earning more than before they retired.
This defies the definition of “retirement.”
Meanwhile, public pension funds are in trouble. The fund managers who represent government employees have actually proposed a bailout requiring taxpayers to kick in even more toward their retirements. Not going to happen.
A decade ago, the legislature changed its rules to make it easier for educators to retire and continue working. The result is lavish rewards for lucky superintendents.
A study by a coalition of Ohio newspapers, including the Dayton Daily News, showed a quarter of Ohio’s 613 school superintendents are double-dipping.
But what’s good for some superintendents is, in the long run, harmful to every educator who hopes to someday draw a pension. The teachers’ fund has $40 billion in unfunded liabilities.
Several factors are precipitating the pension funds’ problems. The big ones are health-care costs and the economy. Pension funds did not initially provide retiree health care; but in good times 40 years ago, health benefits were added. Now exploding costs are eating away at the funds.
That problem has been compounded by huge investment losses stemming from the stock market downturn. The state, facing a multi-billion dollar budget deficit next year, can’t and shouldn’t offer help.
Meanwhile, the sweetheart deal superintendents and some others get is far sweeter than what most teachers can hope for. Some districts don’t permit teachers to double dip. Others penalize them with lost seniority or much lower pay.
Why the double standard if this practice is legitimate and — as some insist — not a financial drag?
You can’t blame the superintendents for taking the deals. They’re jumping at the chance to double dip because they’d be crazy not to.
What they don’t acknowledge, however, is that the practice is becoming so extensive it has to be having negative financial implications. When people have every incentive to retire early — and thus will pay into the system for shorter periods and collect pensions for longer periods — that hurts the plans’ bottom line.
For sure, Ohio’s rules are out of whack. Why would we want people to retire prematurely, make out like a bandit and then stay on the job because they’re making so much double-dipping that they can’t afford to quit? How is that a good thing for the young up-and-comers in teaching and public service?
Shutting down double-dipping won’t make the state pension funds’ problems go away. It’s a small piece of a multi-pronged issue. But a small percentage of people are exploiting rules in a way that could ruin a good thing for the vast majority of government employees. They must be stopped.

Day II of the assault on Ohio's public retirement systems and a question.........

From John Curry, June 21, 2010
.....if retirement systems don't lobby for themselves, who will?
Ohio pension funds' wallets wield power
Five public systems lobby State for influence
Toledo Blade, June 21, 2010
This is the second story in a three-day series that examines the practice of double-dipping in school districts.
COLUMBUS - Ohio's five public pension systems have at their disposal a combined annual budget of more than $2 million to influence those who write laws affecting their bottom line.
But that's a pittance compared to the power the funds can and have unleashed with keyboard strokes or postage stamps that can send e-mails and newsletters to hundreds of thousands of active members and retirees who, in turn, fire off their own e-mails, letters, and phone calls to lawmakers.
State Sen. Jon Husted (R., Kettering) understood that power two years ago when, as speaker of the Ohio House, he threw his support behind a bill to mandate that the retirement systems divest themselves of all investments tied to Iran, which was accused of arming terrorists, and to war-torn Sudan. THE SERIES Sunday: An analysis by Ohio's eight largest newspapers finds that one in four public school superintendents in the state's 614 districts double-dips by retiring, collecting a pension, and going back to work.
Monday: Ohio's five public pension systems can use hundreds of thousands of dollars to influence those who write laws affecting their bottom line.
Tuesday: State taxpayers spend more than $4 billion annually on pensions but have little access to retirement records.
Lawmakers were inundated with e-mail, phone calls, and letters after the pension funds, which typically resist linking investments to political winds, complained that forcing them to sell off such investments could hurt the value of the portfolios that help to underwrite members' benefits.
''The people we're trying to protect, the troops stationed in Iraq and Afghanistan, don't have lobbyists working for them,'' Mr. Husted said. ''Public officials look out for them. The only people we get feedback from are the people out there in the pension funds who were being misinformed about our true intentions. It's one-way communication.''
In the end, a compromise was reached in which the funds agreed to gradually sell off such investments to ease the impact on their portfolios. But Mr. Husted predicted that those e-mails and phone calls will prove to be a precursor to what lawmakers will face when it comes to making the even tougher decisions ahead to ensure the long-term viability of the pension funds. Those proposals include a requirement to work longer to qualify for a pension, reduced benefits and cost-of-living adjustments, and increased contributions from public employers and employees.
A number of associations and nonprofit organizations representing retirees affected by the various pension funds have been created to affect legislation and, in some cases, to elect their own representatives to pension boards.
For example, the Police & Fire Retirees of Ohio's political action committee so far has this year contributed $11,400 to legislative candidates, including $300 to Rep. Todd Book (D., McDermott), who heads the Ohio Retirement Oversight Council, and $550 to council member Rep. Lynn Wachtmann (R., Napoleon).
The State Teachers Retirement System has a budget of $393,188 for its in-house government relations budget, but two associations, the Ohio Retirement Teachers Association and Concerned Ohio Retired Educators Inc., lobby lawmakers and work to influence the system's board.
The Public Employees Retirees of Ohio Inc. and School Employee Retirees of Ohio Inc. also work on issues related to their pension funds. The backlash to the attempt to borrow money from PERS to shore up Ohio's budget also demonstrated how the funds' relationship to labor unions can play to their benefit. The Ohio Civil Service Employees Association, for instance, rallied with PERS to prevent the borrowing.
''Obviously, our ability to communicate electronically with active members interested in political issues is important, and pension issues are a top priority,'' said Sue Taylor, Ohio Federation of Teachers president. ''It seems to me that, for the public employees of the state of Ohio who are responsible for educating the next generation, the citizens of Ohio would want them to have some degree of security.''
So far this year, a legislative and statewide election year, the federation's political action committee has contributed more than $30,000 to Democrats who control the governor's office and the Ohio House, according to reports filed with the secretary of state's office.
The Ohio Education Association's fund has contributed more than $97,000, mostly to Democrats, and the civil service employee group has given nearly $86,000.
Most lobbying is done by the retirement systems' in-house staffers, who draw salaries and pensions like any other system employee. Their combined annual budget of nearly $2.3 million for ''government relations'' includes salaries of officers required to register with the state, regardless of how much of their time is spent lobbying.
The funds routinely inform members and retirees of legislative issues that might affect the funds' bottom lines, which, in turn, might translate into those members contacting their representatives, senators, and governor.
''I am not aware of any concerted effect. That doesn't mean it didn't occur. We would see our role as getting information out to our members,'' said Dan Weiss, the Ohio Highway Patrol Retirement System's executive director. He is the fund's sole registered lobbyist and his $110,000 annual salary represents the fund's only lobbying-related expenditure.
PERS, with assets of $59 billion at the end of 2008, has a ''government relations'' budget of $1.1 million this year, counting in-house salaries. Five staff members are registered as lobbyists with the Legislative Inspector General's Office, although spokesman Julie Graham-Price stressed that no pension fund money is used to wine and dine lawmakers or to contribute to their campaigns.
''Back about five years ago, Senate Bill 133 added many restrictions on what could be offered,'' she said. ''They couldn't offer a Coke to legislators. Everybody has to pay for their own meals.''
Dave Graham, spokesman for the Ohio Police & Fire Pension Fund, said his group pays $80,000 a year to the outside Columbus lobbying firm Government Solutions. ''We're a $10.5 billion fund,'' he said. ''That $80,000 covers the entire government relations budget. They are our eyes and ears over at the Statehouse.''
Mr. Wachtmann, a former state senator, is the longest-serving member of the retirement study council. He has suggested some pension funds should boost their lobbying efforts. ''When you look at the divestiture issue a few years ago, some issues became a firestorm in a hurry,'' he said. ''You need someone who can professionally give you information on something that could cause long-term harm to the health of pension systems.''
Contact Jim Provance at: or 614-221-0496.

Supers get better deal than teachers............

From John Curry, June 20, 2010
Click image to enlarge
As such, they have three advantages — unavailable to teachers and other STRS members — that dramatically improve their financial prospects in retirement:
• Superintendents are much more likely to be rehired full time while collecting retirement benefits.
• As independent contractors, they can negotiate perks and fringe benefits worth tens of thousands of dollars.
• Their salaries — on which retirement benefits are based — average six figures.
School chiefs get better deal than teachers
Superintendents obtain advantages instructors don't to improve financial prospects in retirement, Jun 20, 2010
By David Knox
Beacon Journal staff writer
One out of every four.
That's the number of superintendents drawing state pensions who have been rehired to work full time as chief executives of the state's more than 600 public school districts.
Tim Calfee isn't. He's one of them.
Calfee, superintendent of Ravenna schools since 2001, retired at age 57 on Friday, Aug. 1, 2008. The following Monday, he was back at his desk as head of the about 3,000-student district in Portage County.
He was rehired with a $2,273 raise, bringing his salary to $115,515.
Calfee could have waited to start collecting his pension, but the financial benefits offered by Ohio's State Teachers Retirement System (STRS) are almost impossible to turn down.
''I would be crazy if I hadn't have done it,'' he said.
That judgment is hard to dispute.
Calfee and other STRS members with 35 years of service are eligible for annual retirement benefits equal to nearly 90 percent of the average of their highest three years of earnings.
But Calfee and the other superintendents aren't like the more than 400,000 teachers and other education workers, both retired and employed, covered by STRS. They are executives managing multimillion-dollar enterprises employing hundreds and dwarfing most private businesses in their communities.
As such, they have three advantages — unavailable to teachers and other STRS members — that dramatically improve their financial prospects in retirement:
• Superintendents are much more likely to be rehired full time while collecting retirement benefits.
• As independent contractors, they can negotiate perks and fringe benefits worth tens of thousands of dollars.
• Their salaries — on which retirement benefits are based — average six figures.
Superintendents contend their lucrative contracts are commensurate with the responsibilities of a tough job.
But that claim doesn't answer one tough question: Given their higher pay and other advantages, is it fair that superintendents' retirement benefits are calculated according to the same formula used for rank-and-file teachers and other education workers who earn so much less?
Higher earnings
The average teacher was paid about $55,500 last year, according to state Department of Education records.
Superintendents of urban schools averaged more than twice that: $118,066. The statewide average for all superintendents was $101,400.
Those higher earnings directly translate into bigger monthly pension checks.
For example, when Calfee retired in 2008, he was eligible to receive $95,130 annually, based on his average earnings of $107,492 for the previous three years, multiplied by the ''income replacement factor'' of 88.5 percent.
To offset inflation, the benefit would be increased by 3 percent the following year and then by that same dollar amount each subsequent year.
The exact size of Calfee's monthly pension check isn't available because retirees can opt for a partial lump-sum payment, with reduced monthly benefits.
Calfee declined to explain the details of his pension package, saying, ''My personal finances are not public records.''
While Ohio law does make the records of individual retirees confidential, some statistics are available.
They show the vast majority of re-employed STRS retirees — more than 70 percent — work part time. They make less than $20,000 a year and receive pension benefits averaging $42,899.
''A lot of the people go back to be substitute teachers,'' said Laura Ecklar, spokesperson for STRS.
In contrast, superintendents and other high-paid employees pulling down $100,000 and more make up less than 2 percent of all rehired retirees. But their numbers exploded in the past decade, from 19 in 2000-01 to 299 in 2008-09. In addition to the biggest paychecks, this group also got the highest pension benefits: an average of $80,542 a year.
Fueling the upsurge was a 2000 change in Ohio law that spiked the retirement checks by 11.5 percent for those with 35 years of service.
The change was designed to encourage teachers to work five years beyond the minimum 30 years because of a feared teacher shortage. But STRS officials now say paying a premium to keep retirees on the job doesn't make sense when many cash-strapped districts are laying off teachers.
Teacher opportunities
Today's tight school budgets mean retired teachers have fewer opportunities to keep their jobs.
Ravenna, which has about 190 full-time teachers, is typical of districts across the state.
''A few years ago, I think we had five who were retired and rehired,'' Calfee said. ''Now we're down to three,'' two counselors and a music teacher.
Not only are they fewer in number, but they're also paid much less — about $36,000, or about half of what they earned before retiring.
''They're on one-year contracts and they're on the first-year of the salary schedule,'' Calfee said.
''We used to rehire them right into their same positions, same responsibility and for the same pay. Now the teachers union contract limits them to one-year contracts at reduced pay.''
The Ravenna teachers union pushed for the changes. It's a statewide trend.
''They didn't want retired teachers to hold onto their jobs in case there were cutbacks — people getting laid off,'' Calfee said.
Ravenna hasn't laid off teachers, but Calfee said some jobs — fewer than 10 — have been eliminated through attrition.
But unlike teachers, superintendents who retire are still in demand.
Liberal state
The 2000 change in the law made it easier for school districts to keep superintendents on the job by eliminating an 18-month waiting period to return to work after retiring.
Calfee had to stay off the job for a single day.
Other states don't make it so easy.
''In some states, you can't work in the system you're retired from,'' Calfee said. ''Some states absolutely ban it.
''Ohio may be the most liberal state in the country for their retired-rehire programs under STRS.''
STRS makes it easier for members to reach the minimum years of service needed to retire by allowing members to get credit for years worked outside the system. They do that by retroactively paying the full cost of contributions — both employee and employer shares — plus accrued interest for those years.
Calfee was able to reach 35 years of service at age 57 by ''buying'' two years he taught in the South Pacific island nation of Papua New Guinea and a year at a university in China.
Ohio law allows all STRS members ''to purchase service credit for certain types of past employment and leaves of absence.''
Superintendents have an added benefit available to few teachers: School districts ''pick up'' — that is, pay for — their 10 percent employee contribution to the pension fund, in addition to the employer's 14 percent share.
For a superintendent making $100,000 or more a year, that's a benefit worth more than $10,000.
Ravenna pays the pension contribution for all 22 administrators in the district, including principals and assistant principals. No teachers get that perk.
The pickup clause was included in Calfee's contract when Ravenna hired him in 2001. Since his retirement, the district pays the contributions to a second pension fund — a 401(k)-style annuity — that STRS provides re-employed retirees.
That has become the norm, according to a survey of 400 districts in the state's major urban and neighboring counties by the Ohio News Organization, a cooperative of the state's eight largest newspapers.
''Almost every superintendent has their employee's share picked up,'' Calfee said.
Ravenna also pays for Calfee's health insurance.
Joanne L. Newhauser, president of the Ravenna Board of Education, said covering his pension contribution and health care is the price school districts must pay to keep quality superintendents such as Calfee.
''I'm sure if he wanted to leave Ravenna, somebody would jump at the chance to hire him because of what he has accomplished in his nine years here,'' she said.
Newhauser credited Calfee with leading the successful 2006 campaign for a $16.1 million bond issue for a new high school and a 1.5-mill additional levy for permanent improvements.
''We had tried before to build a new high school,'' she said. ''He has done a good job, and we need to keep him.''
Providing superintendents generous pensions also can make economic sense as a form of deferred income, according to Anthony Webb, associate director of research at Boston College's Center for Retirement Research.
But that works only if superintendents ''pay for'' their better retirement benefits by agreeing to somewhat smaller salaries.
''By accepting lower earnings than they otherwise would have accepted in the absence of those pension benefits, nobody loses out,'' Webb said. ''If the taxpayer is getting an absolute wonderful superintendent at a rock-bottom salary, then I really don't care if he has a big pension.''
The Ohio News Organization survey found the median salary for retired superintendents was $103,000, compared to $110,000 for nonretired superintendents — about 6 percent less. But that finding might only reflect somewhat smaller raises for retirees. The survey found few superintendents who said they took a pay cut when rehired.
Furthermore, Webb said, the complexity of such tradeoffs in superintendents' contracts can hide their full price tag.
''The problem is that the true cost of the pension benefits is to some extent hidden from the taxpayer,'' he said.
Fringe benefits, such as cars or travel allowances, life insurance policies and additional annuities further obscure the bottom line, Webb said, as well as creating ''opportunities for all kinds of corruption.''
Calfee doesn't get fringe benefits beyond the pension contribution pickup and paid health coverage. But the father of two grown children and three grandchildren doesn't criticize superintendents who have bargained for additional perks.
As long as they play by the rules, he said.
The same goes for staying on the job after retirement.
''Retiring and being rehired is a legal, acceptable practice for STRS,'' he said. ''That's why a number of superintendents are choosing to do it.''
Question remains
But rules can be changed.
And the basic question of whether the same formula should be used to calculate the benefits of teachers and superintendents — despite the disparity in their incomes, fringe benefits and job opportunities — remains.
There's certainly precedent for doing it differently. Social Security, the retirement system most Americans pay into, doesn't treat all workers the same.
The percentage of income Social Security replaces varies widely, from as much as 60 percent for low-income wage earners to less than 30 percent for those with big paychecks, according to government figures. The average is about 40 percent.
Social Security — to which STRS members make no payments and receive no benefits — increasingly has become the sole source of income for retired Americans.
While the government stresses that Social Security isn't intended to be the only source of retirement income, the latest statistics show more than half of all workers don't have private pensions.
Calfee recognizes how much better his retirement package is.
How would he answer someone who complained, ''I don't have anything near that good''?
Eight seconds passed in silence.
''I don't know,'' he said. ''I'm blessed to be in a position where this retirement and rehire was available.
''That's all I can say.
Larry KehresMount Union Collge
Division III
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