Friday, December 07, 2012

Why Dennis Leone is running for a retiree seat on the STRS Board

By Dennis Leone, 12-7-12
1. The newly adopted pension solvency law adopted by the State Legislature and signed by the governor has a provision that should be of utmost concern to retirees. It is the provision that will give the STRS Board the legal authority in the future to make major financial decisions regarding our pension system WITHOUT legislative approval. I testified against this provision at the Statehouse before the law was passed, and was told by lawmakers that the language could have been revised had the STRS Board requested it. Interpreted literally and legally, the provision will give a future STRS Board the ability to put more money in the pockets of active teachers (by, let's say, lowering their annual contribution rate) and pay for it by reducing a retiree benefit - like our COLA. Have prior STRS Boards in years past made decisions that favored active teachers and/or STRS staff over retirees? Yes. There are numerous examples.
2. I believe our COLA and the Health Care Stabilization Fund will be future targets for total elimination by the STRS Board. This needs to be strongly resisted. As it is, the new pension solvency plan is flawed in that it does not contain language to protect the oldest retirees who have the least. The COLA simply should not have been cut for the very oldest retirees. In addition, while the new retirement age requirement has a very generous 13-year phase-in period for active teachers, there have been absolutely NO such phase-in periods for the reduction of retiree benefits, including the 13th check, health insurance for retiree spouses, and now our COLA. Cuts that affect retirees always seem to be immediate in nature.
3. An emergency contingency plan, which I first recommended in 2005, still needs to be developed at STRS in the event there is another significant drop in the stock market. Also, my published concern in 2008 about the flawed revenue assumptions which the Board and staff persisted in using, has proven to be accurate. Despite being warned, STRS has been too slow to react to smaller raises being awarded to teachers statewide.
4. I have some suspicions about whether the spending reform and the oversight measures that were put in place during my first term on the STRS Board (2005-2009) are still in full effect. We must not see a repeat of the irresponsible spending practices that I discovered and published in 2003, which were followed by the court convictions of six Board members and the STRS Executive Director for ethics violations. It seems that near-unanimous Board votes have somehow become the current rule of thumb, with insufficient advocacy for retirees. Before any Board vote is taken, the question should always be: "How will this action impact retirees, and will it affect retirees adversely?"
5. I firmly believe that when retirees and active teachers have to pay more for their health insurance, then so should the 600 employees at STRS on a proportional basis.
Larry KehresMount Union Collge
Division III
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