A little more in-depth coverage of the Minnesota COLA trial...

From John Curry, September 17, 2010

http://watchdog.org/6571/minnesota-judge-oks-discovery-in-pension-suit/ - Watchdog News - http://watchdog.org -

Minnesota judge Ok’s discovery in pension suit

Watchdog.org, September 15, 2010

By Jonathan Miltimore — Plaintiffs want state documents and employee depositions on decision to limit cost of living increases for retirees.

A Minnesota court deferred judgment Wednesday on a lawsuit challenging legislation limiting benefit increases for retirees currently drawing checks.

Stephen Pincus, an attorney representing retirees in Minnesota, Colorado and South Dakota, said plaintiffs need internal state documents and state employee depositions to determine if officials had explored all policy options available to shore up pensions, such as increasing contributions or reducing benefits of future hires.

“From our point of view there is no reason to rush to have this case decided,” Pincus said. “We had no idea the state wanted to have the entire case decided up front.”

While many states — including sixteen this year alone — have overhauled pensions in the wake of the stock market crash, only Minnesota, Colorado and South Dakota passed legislation that trimmed the cost of living adjustments (COLA) for current recipients.

The Minnesota case, first on the docket and involving an estimated $1 billion in future allocations, has been cited as a possible bellwether for cash-strapped states struggling to find immediate means to shore up pension systems that were in trouble even before investment values plunged.

Wednesday morning’s hearing, which lasted nearly three hours, ended with Ramsey County judge Greg E. Johnson granting the plaintiffs’ request for additional time for discovery.

The state had objected to the request, arguing Minnesota case law made it clear the state had the right to modify benefits because no contract existed between employees and the state.

“There is no contract here, express or implied,” Assistant Attorney General Rita Coyle DeMueles said. “Any delay creates a cloud of (public) uncertainty.”

But Johnson, noting the likelihood of appeal and the scope of the case, denied the request and granted the plaintiffs an additional 90 days.

“If I grant summary judgment it’s going to appeal, and you’ll have that cloud of uncertainty anyway,” Johnson said. “Part of my job as judge is to make sure the record is complete.”

In 2009, the legislature lowered its 2.5 percent COLA to a rate ranging from 1 to 2 percent for the majority of the 65,000 retirees and suspended increases for retirees in the Teachers Retirement Association.

In addition to the benefit cuts, the state has phased in [1] a series of contribution increases, but despite the law changes the funding level of state systems remains about 70 percent based on state assumptions of high future investment returns.

These figures, which assume average rates of return of about 8 percent — a number many economists believe is unrealistic [2] — do not include other post employment benefits such as health care, which are almost entirely unfunded.

Though the judge did not rule Wednesday, the hearing did provide a glimpse of the arguments the case will likely hinge on, as attorneys sparred over jurisdiction and case law.

The strategies of the opposing councils were easy to identify, with state arguments relying heavily on state legal precedent and plaintiffs invoking federal precedent in states with more expansive histories of worker rights.

Pincus cited case law from several states in which courts determined worker benefits could not be “drastically impaired” unless the state was under severe financial stress. He charged the state with backing down on promises to workers.

“The state itself took on this obligation,” he said. “Did they even think about other (available policy) options.”

DeMueles said the cases cited by Pincus have no bearing on this case and the legislature has clearly defined authority to adjust benefits to accommodate retirees, current employees and taxpayers.

“Minnesota’s laws on the interest and rights (of workers) are distinctively different from those in other states,” she said. “All the cases mentioned involved states employing collective bargaining contracts.”

DeMueles also said Minnesota statute makes no distinction between the fiduciary obligations to current employees and retirees.

More than a dozen people attended the hearing, including Richard Maus, a retired teacher who lives in Northfield.

Maus said he enjoyed watching the hearing, but was surprised to hear the state’s council say he didn’t have a contract defining his retirement benefits.

“I saw a lot of contracts in my 30 years teaching,” he said.

Jonathan Miltimore is a national reporter for The Franklin Center for Government and Public Integrity ^[3]. jonathan.miltimore@franklincenterhq.org ^[4]

Report on September STRS Board meeting

From STRS, September 17, 2010
Subject: [News] September Board News Details Retirement Board Actions and Discussions

This week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The September report follows.

SEPTEMBER BOARD NEWS

HILL AND PRICE TAKE SEATS AT BOARD TABLE

Mark Hill and Dale Price began their four-year terms on the State Teachers Retirement Board this September, following their election to the board last spring.

BOARD BEGINS HEALTH CARE STRATEGIC PLANNING DISCUSSION

As noted in previous STRS Ohio communications, funding for the STRS Ohio Health Care Program will be depleted by 2021. At the September 2010 meeting, the Retirement Board and staff began a review of the history and current status of the health care program as the first step in developing a strategic plan for retiree health care for adoption next spring.

When the STRS Ohio Health Care Program began in 1974, health care costs were insignificant compared to today. Just as an example, the limit for lifetime health care benefits for an enrollee was just $20,000. In 2010, the lifetime coverage is $2.5 million and it will be unlimited in 2011. During the last 20 years, STRS Ohio's health care cost trend rate has averaged about 11%. Despite managed care and the significant changes STRS Ohio made to the program in 2004 that significantly increased enrollees' portion of the health care costs, the trend continues to rise, matching what is happening nationally. Staff noted that the balance in the fund that supports the health care program must grow year-after-year just to help offset the yearly health care cost increases.

In the coming months, the board and staff will begin examining the four levers that affect the financial status of the health care program: (1) funding, (2) plan design, (3) eligibility and (4) premium subsidy. However, in light of pension funding issues, it is unlikely employer contributions beyond the current 1% allocation to the health care fund can be increased.

At the October meeting, the board will receive a presentation outlining how STRS Ohio's Health Care Program compares to the current marketplace and how the future retiree marketplace will change in light of national health care reform.

BOARD STILL AWAITING PENSION LEGISLATION

A final comprehensive bill containing the respective board proposals from each of Ohio's statewide pension systems to help address their long-term sustainability has not yet been forwarded to the systems for review.

During its September meeting, the board continued its review of the alternative proposal for pension benefit changes presented earlier this year by the Healthcare & Pension Advocates for STRS (HPA). The board also asked staff to study the possibility of providing further assistance to low-income retirees with at least 30 years of service credit; a report will be provided to the board at its November 2010 meeting. Any changes the board makes in the future to the proposed plan it approved on Sept. 1, 2009, will likely be included as amendments to introduced pension reform legislation. Staff recommends that if STRS Ohio members encounter legislators during this campaign season, encouraging support of the anticipated legislation could prove helpful when a bill is finally presented to the Legislature.

RETIREMENTS APPROVED

The Retirement Board approved 1,546 active members and 251 inactive members for service retirement benefits.

OTHER STRS OHIO NEWS

NEWSPAPER STORIES GENERATE SYSTEM RESPONSE

Several Ohio newspapers recently ran a story about conference-related travel by Ohio's five public pension funds, using data provided by each of the systems. Unfortunately, in the case of STRS Ohio, some important facts were not included. A significant portion of the travel expenses reported by STRS Ohio for the 12-month period was a direct reflection of the responsibilities STRS Ohio investment staff have for the internal management of international investments, real estate and the overall total investment fund, which currently stands at $58 billion. STRS Ohio manages about 80% of its total investments in-house, which is the highest level of internal management among the five Ohio systems. Further, STRS Ohio manages about 88% of its real estate investments in-house and about 59% of its international investments in-house. This internal management saves STRS Ohio approximately $90 to $100 million per year.

STRS Ohio has a stringent travel policy for board and staff that recognizes their collective responsibility to control operating expenditures. However, the board and staff also have a responsibility to maintain a level of knowledge and to conduct the due diligence that enables them to perform as successful fiduciaries of the system. In this time of global economic issues and global investments (including real estate funds), not all of that knowledge can be obtained in Columbus, Ohio.

Some Ohio newspapers have also recently voiced concern about the five Ohio systems declining their request for information from member records. This request was declined as current Ohio law prohibits STRS Ohio from releasing personal history information about individual members, such as their monthly benefit amounts. Further, redacting the names and addresses of STRS Ohio members would not be sufficient to protect their identities if members' personal data maintained by STRS Ohio was made public. STRS Ohio provides a significant amount of member information in aggregate, as well as information regarding its finances and operations, through various reports and third-party reviews. All of this information is readily available to the media.

CEM STUDY CONFIRMS COST SAVINGS OF INTERNAL INVESTMENT MANAGEMENT

For a number of years, STRS Ohio has participated in custom peer group benchmarking studies conduced by CEM Benchmarking Inc. One of these studies compares costs among participating plans' investment programs. The most recent CEM study shows that the savings to STRS Ohio due to the lower cost of its internal management compared to external management fees was $99 million in calendar year 2009.

RH Jones: Comments on yesterday's speeches

RH Jones to John Curry, September 17, 2010
Subject: Jones comments on Re: Public speaks portion of yesterday's STRS board meeting
John and all:

Bob Buerkle's speech was right on target. I would like to add to his points that we who retired before him also paid for increases to those who retired before us. ( I hope that makes sense). Many received 13th checks, and rightly so, and got a couple of legislated ad hoc increases along during their retirement.

However, unfortunately, if the STRS Board paid attention to the part of Carol Bertholf's speech that claims her RCRTA "membership was receptive and understood the need to back the plan sent to the ORSC", I take exception and do not go along with it. And I am sure that she is probably wrong to think that the RCRTA would go along with cutting something that has been guaranteed by law. In my opinion, this recommendation of cutting our OH STRS retiree COLA may be illegal. The 3% simple COLA is an Ohio Revised Code promise!

RHJones, a retired teacher member of OH STRS

Bob Buerkle's speech to STRS board, September 16, 2010

Whether you are an STRS Board Member, an STRS Staff Executive or a Legislator, you should consider STRS Retiree Pensions and COLAs as paid up, guaranteed and protected by Ohio Law.

Why should we pay for enhanced benefits for future teachers, some of whom have not been born yet, just to avoid what most other states are willingly doing to solve their funding crisis? Make a new promise to new hires and improve it if and when you can?

While we were working, all of the 30 year veteran teachers who retired around 2003-04 and beyond paid for the free health care that all retirees and their spouses received from 1974 through 1993. The 1993-94 HC change began charging $20/month and was gradually increased annually. It was still reasonable for the member and spouse through 2002. On 01/01/11 HC will cost over $12,000/year for our spouses. The 30 year cost of these subsidized health care benefits at present value is several billion dollars. We paid for those who retired before us and we have paid enough.

Retirees in this century have never had inexpensive Health Care or received a 13th check, but STRS certainly used our investment earnings and our deferred compensation, sent to STRS as employer contributions while we were working, to fund these two big ticket items. We cannot and should not be asked to pay for any more. We are retired and we do not plan to accept any reductions to the Ohio STRS Pension Contract we have been promised unless the judicial system rules against us.

We also paid for all of those pre-2000 retirees who were fortunate enough to receive a 13th check during the 18 years it was paid out, which today has a value of over 1 Billion dollars. These enhanced benefits were paid for because former STRS Boards, Staff, Actuaries and Directors thought that they were affordable. In reality, as we now can see, STRS did not have the proper reserves or contingency plans that were adequate enough to weather longer periods of negative investment returns.

During the 2009-10 fiscal year STRS Investments exceeded our 8% return goal by 70%, earning nearly 13.6% for the year. We are on the road to recovery. It will still take a long time to fully recover. However, STRS is not in any immediate danger of meeting near or long term pension obligations.

STRS will probably have to make some changes, but don't expect the most recent retirees who have already paid for the Health Care and 13th checks of those who preceded us to also subsidize the pensions of the future teachers that will follow us! Cutting a third of our future COLA increases will ruin the retirement plan we were promised. Today's retirees are not asking for refunds of their contribution that were used to benefit these other retirees. Our contingency plan is simple: "Leave us alone and just honor the promises in current law as described in ORC 3307.67."

Carol Bertholf's speech to STRS board, September 16, 2010

My name is Carol Bertholf. I retired after serving as a librarian for over thirty-five years in the Ontario Local Schools in Mansfield. I have been attending STRS Board meetings for the past four years as the legislative chair for the Richland County Retired Teachers.

The reason I am speaking today is that our RCRTA members directed me to do so. Our most recent meeting was this past Monday. I had prepared petitions asking the Governor and our two state representatives to support Ohio's public pension plans. These letters contained many of the talking points supplied by ORTA. I stressed to them that we retired teachers need to emphasize that our retirement benefits are actually deferred compensation. Our membership was receptive and understood the need to back the pension plan sent to the ORSC.

At the end of my report I asked if there were any questions. One member stood up and asked if I had seen the editorial in Saturday's Columbus Dispatch entitled "State pension funds have no excuse for lavish travel budgets." I was trying to walk the fine line of supporting the STRS Board for the greater good of retirees. Our members were made aware of the recent newspaper attacks on the public pension systems.

I quoted from the editorial: "The State Teachers Retirement System, which wants taxpayers' contributions jacked up by 2020 to 16.5 percent from the current 14 percent, saw fit to send its managers all over the world for conferences: Japan, China, South Africa, England, Mexico, India and Malaysia, all in the year that ended July 1. That's a year that followed one in which the pension funds lost between 23 percent and 31 percent of their value in the stock market slide of 2008-2009."

The mood of the meeting changed abruptly. How could I respond?

Here we go again. Was anyone here in Columbus paying attention? Was the STRS staff directed to find more efficient methods of professional training? Have current STRS Board members not learned lessons from previous STRS Board mistakes? Why give the attackers live ammunition? Has this ruined any chance of getting legislation passed?

The STRS Board must direct our executive director to respond immediately. It is our right as retirees and it is the right of the public to know that these funds are allocated prudently.

Send this one to someone who has 'pension envy!'

From John Curry, September 16, 2010

"We want talented people teaching our children. We want our trash picked up by workers who want to keep their job and we want the DMV staffed by individuals who aren't incompetent. That isn't to say we should pay every public worker millions and millions of dollars, but very few go into government work because they're of a charitable bent. It's a job, like any other, and it attracts talent only by paying it well."

http://voices.washingtonpost.com/ezra-klein/2010/09/public_employees_dont_make_mor.html

Public employees don't make more than private employees

Washington Post, September 16, 2010
By Ezra Klein

There seems to be a lot of jealousy toward public employees out there, most of it powered by an impression that public employees get more money for less work. But via Kevin Drum comes this table from the Economic Policy Institute, which suggests that this just isn't true:
(Click image to enlarge)

The data (pdf) come from Rutgers's Jeffrey Keefe, and he also ran "a separate calculation that controls for full-time status, education level, years of experience, age, gender, race, employer organizational size, industry, and hours worked," which found that "public employees are compensated 2-7% less than equivalent private sector employees."

Which makes sense: You never hear public employees say that they went into government for the money. But to make the more counterintuitive point, this is a fairly counterproductive conversation. We want really good regulators watching Wall Street. We want talented people teaching our children. We want our trash picked up by workers who want to keep their job and we want the DMV staffed by individuals who aren't incompetent. That isn't to say we should pay every public worker millions and millions of dollars, but very few go into government work because they're of a charitable bent. It's a job, like any other, and it attracts talent only by paying it well.

Minnesota judge postpones pension ruling for 90 days!

From John Curry, September 16, 2010

http://www.startribune.com/politics/state/103012794.html?elr=KArks:DCiUHc3E7_V_nDaycUiD3aPc:_Yyc:aUU

"It was clear to me that the judge wanted to make a decision on a complete record and did not want to rule prematurely," said Susan Coler, an attorney for the retirees.

Pension ruling postponed

By PAT DOYLE, Star Tribune
September 15, 2010

A judge on Wednesday postponed a ruling on a request to dismiss a lawsuit challenging legislation that slows pension benefit increases for retired public employees.

The state asked the judge to dismiss the suit, saying the Legislature has periodically altered public pension increases for retirees to keep retirement funds solvent. Legislation approved this spring curtailed future pension increases but didn't cut current benefits.

The suit, filed by retirees in Ramsey County District Court, said the legislation violated their pension rights. The benefit changes were part of a package intended to rescue state pension funds from financial trouble.

While the package affects more than 700,000 state and local government employees and retirees, the lawsuit is on behalf of about 65,000 former public employees who already have retired.

Ramsey County District Judge Gregg Johnson on Wednesday gave the plaintiffs 90 days to gather information in support of their argument that the suit shouldn't be dismissed.

"It was clear to me that the judge wanted to make a decision on a complete record and did not want to rule prematurely," said Susan Coler, an attorney for the retirees.

Pat Doyle • 651-222-1210

The Vindy says the people have the right to know...

From John Curry, September 16, 2010

http://www.vindy.com/news/2010/sep/16/state8217s-public-pension-system-must-un/

State’s public pension system must undergo public scrutiny

Vindy.com, September 16, 2010

It’s just a matter of time (it had not occurred as this editorial was written) before Ohio Attorney General Richard Cordray comes to the conclusion that records (heavily redacted, no less) of public pensions are not sacrosanct.

Democrat Cordray’s challenger in the November general election, former U.S. Sen. Mike DeWine, a Republican, has certainly changed his tune. On Monday, DeWine called on the attorney general to end his standoff with the Ohio News Organization and advise the pension systems to make public non-personal information about their funds.

Several weeks ago, the Republican challenger refused to discuss the issue with the Cleveland Plain Dealer. This after the Democratic incumbent had advised the state pension funds not to provide records to Ohio’s newspapers, the Plain Dealer reported.

All five of the state’s public employee pension funds (note the word public) have denied a request from ONO, a collaboration of the state’s largest newspapers, including The Vindicator, to provide details about service time, pay and benefits for each of their 400,000 recipients.

The newspapers have gone so far as to agree to the names of the pension recipients being excluded from the records. That strikes us as being overly accommodating. After all, billions of tax dollars are funneled into the public pension plans.

But the newspapers, hoping to remove the statutory restrictions on the information, agreed to the deletion of the names. Even so, lawyers for the five funds said the restrictions remained, the Plain Dealer reported. It is revealing that two of the five funds are seeking more money from the taxpayers.

Ohioans now pay more than $4 billion a year toward the benefits for the 400,000 recipients.

On Jan. 3, the Ohio News Organization reported the results of a statewide survey of the state’s pension funds in several news stories. That reporting was followed by a package of stories about the widely used “retire, rehire” provision in the law that has enabled thousands of public employees to work in public positions and collect pensions at the same time.

That is why Attorney General Cordray’s refusal to support an opening up of the books is so puzzling. The people who pay the tab have a right to as much information as possible.

Even without the names, the details that are gleaned by the newspapers will answer questions such as, how much did the worker contribute towards his or her pension and how much did the taxpayers shell out? Or, how many years did a public employee work before being able to drawing a pension?

There are many more questions a review of the pension plans’ books would answer — even without the names of the recipients.

More money

It is instructive that two of the five pension funds are expecting the taxpayers to put up $325 million more to cover anticipated shortfalls.

With Gov. Ted Strickland and his Republican challenger, former Congressman John Kasich, and now DeWine supporting disclosure of non-personal information, the state’s top lawyer should get on board.

“This issue is not about politics, it’s about transparency,” DeWine said.

If we, the taxpayers, are expected to support a lucrative state public pension system, then we have a right to know how our money is being spent.

Soon we'll have an answer to the leagality of cutting COLAs in Minnesota.....AND.........other states ARE WATCHING!

From John Curry, September 14, 2010
http://online.wsj.com/article/SB10001424052748704190704575489872547566554.html?mod=googlenews_wsj

wsj.com, September 14, 2010

Wall Street Journal Case to Test Cuts in State Pension Benefits

By AMY MERRICK
A Minnesota court on Wednesday will consider whether the state can curtail pension benefits for current retirees from state jobs, in a case that could affect struggling public pension funds nationwide.

States have responded to budget shortfalls by raising the retirement age and cutting pension benefits for new hires. Minnesota last year replaced its previous pension formula, which increased retiree benefits annually based on investment gains and inflation, with a flat 2.5% increase. This May, the state lowered that increase for some retirees and eliminated it for others, until the pension plans are 90% funded, a level that could take decades to reach.

A group of Minnesota retirees already receiving benefits under older pension formulas sued the state in May, seeking class-action status.

State courts generally have ruled that states can't reduce benefits for workers who already have retired. While a ruling allowing Minnesota's new pension formula to stand wouldn't establish a single legal precedent across the country, it could encourage other states, hit by deep budget deficits and a wave of baby-boomer retirements, to try to reduce benefits for current employees and retirees.

Cases similar to Minnesota's are pending in South Dakota and Colorado, and other states are watching the Minnesota case closely as they ponder solutions to their own pension dilemmas.

Stephen Pincus, a lawyer for retirees in the Minnesota, Colorado and South Dakota cases, said courts have ruled that benefits for current retirees can be reduced only when the employer funding the pension plans is on the brink of insolvency.

"Certainly ... [Minnesota] is not on the edge of bankruptcy," he said. "There is just not any political will to go back to citizens and say, 'We made these promises, and now we have to fulfill our obligations in total to the retirees.' "

Minnesota says retirees have no legal right to expect a specific formula of benefits. "A retiree's future benefits and rights are subject to reasonable legislative actions that are intended to preserve the fiscal integrity and stability of Minnesota's public employee pension plans," the state said in a court filing.

The shortfalls in state pension funds have been accumulating for decades, and states have skipped pension payments even in good economic times. During the market turmoil of 2008, pension funds suffered huge investment losses and have yet to fully recover.

A February report from the Pew Center on the States estimated a trillion-dollar gap between the pension, health-care and other retirement benefits promised to public employees and the money set aside to pay for them. The nonprofit research group ranked Minnesota among 15 states that needed to shore up their pension systems but were not yet "serious concerns."

Now, amid economic distress and in an election year, the cost of providing benefits to retired teachers, judges, police officers and other state workers has become a potent political issue.

In California, Republican Gov. Arnold Schwarzenegger has said he won't sign a budget until the legislature revokes an increase in its pension formula enacted 11 years ago and raises employee contributions to the pension system. New Jersey Gov. Chris Christie, also a Republican, on Tuesday called for raising the state retirement age and requiring workers to contribute more to their pensions. Illinois Gov. Pat Quinn, a Democrat, signed a law in April raising the retirement age for most newly hired public employees to 67—with Missouri's, the highest in the U.S.—and reducing benefits for future workers.

On Wednesday, a state court judge in St. Paul will consider Minnesota's motion for summary judgment against the retirees. Minnesota noted in its court filing that it had not reduced retirees' monthly base pay or tried to take back cost-of-living increases paid in previous years.

Richard Maus, a 71-year-old retired teacher living in Northfield, said suing the state was simply a business decision to enforce his contract.

"If a credit-card company or mortgage company had a contract with me, and I announced that I don't have as much money as I thought I would, they would be very willing to go to court to follow up," he said. Mr. Maus said he receives an annual pension of about $30,000.

The retirees said in a court filing that a person receiving an annual pension of $29,076—the average benefit in 2008 for retirees with 30 or more years of service in one of the major pension funds—would lose more than $28,000 over the next 10 years if the new law stands.

The directors of the state's three large retirement funds declined to comment on the lawsuit or didn't respond to requests for comment.

Jennifer Munt, a spokeswoman for the Minnesota council of the American Federation of State, County and Municipal Employees, said the public-employee union "reluctantly" supported the pension changes "because it protected our defined-benefit pensions by taking responsible actions to stabilize the pension funds." The union believes the retirees' lawsuit is "without merit," she said.

Write to Amy Merrick at amy.merrick@wsj.com

Uh, notice the last one..........

Click image to enlarge. (9/14/10) .......................

Tom Curtis: Response pending from Senator Schuring

Tom Curtis to Rachel Near, September 13, 2010
Subject: 091310 Curtis, Re Near, Re: 082710 Questions From a STRS Retiree

Thank you kindly for your note Rachel. I look forward to a favorable response from the Senator and not the wait and see response I have received from most others I have written.

This is going to be an important election year and STRS retirees can no longer afford to wait and see. If that is all I can be offered at this point in time, I will not support those candidates that will not commit to what they will support prior to the election.

The majority of all cut backs to date have been placed squarely on the STRS retirees back. When looking at the changes being recommended for the actives, most are not to be implemented for years to come, whereas a reduction in our COLA is recommended to start as soon as the legislation is passed. Our HC fund is rapidly drying up and we will be left with no secondary coverage, as we were promised at retirement.

Medical coverage and physician care have been rising unchecked. My out of pocket HC costs since 2004, when my spouses subsidy was eliminated and mine was reduced by 25%, have been in excess of $14,000 per year. Little of that has been able to be recouped on my Federal Tax return. I would have never dreamed that better then 1/3rd of my pension was going to be lost to HC costs.

If things continue as they have gone for many years now, you will find that when you reach retirement, many of the promises you were given during your working years will be abruptly withdrawn without regard for your concerns. This is a shameful quagmire we find ourselves in. It seems to me, as though only our politicians remain unscathed in the process, as OPERS is calling for very little change. Their system is solvent and they grandfather their retirees. The STRS management has just dumped on us with seemingly little concern. Fortunately for them, all STRS employees retire with OPERS benefits, as do all politicians. Very sad.

Thank you for your email,
Tom Curtis

From: Senator Schuring
To: Thomas Curtis Sent: Monday, September 13, 2010 12:53 PM
Subject: RE: 082710 Questions From a STRS Retiree

Dear Mr. Curtis,

Good afternoon. I just wanted to let you know that I have not forgotten about you. Senator Schuring has been primarily working on constituent cases in Canton for the past few weeks and we have still not had a chance to go over your questions yet. I promise you a response in the near future.

Thank you for your patience,

Rachel

Rachel M. Near
Legislative Aide
Senator Kirk Schuring
29th Senate District
P: 614.466.0626
F: 614.466.4250
Rachel.Near@senate.state.oh.us

From: Thomas Curtis
To: Near, Rachel ; Schuring, Sen. Kirk
Sent: Tuesday, August 17, 2010 12:02 AM
Subject: Questions From a STRS Retiree

Sen. Kirk Schuring,

My name is Thomas Curtis. I am a STRS retiree. You and I have discussed issues concerning the STRS several times. I would greatly appreciate your written response to the following 3 questions. Thank you in advance for taking the time to respond.

Thomas Curtis
N. Canton, Oh 44720

1. The Defined Benefit Pension Plan has been proven to be the most cost effective retirement plan for both the State and its retirees (www.nirsonline.org, “More Bang for the Buck”). The STRS Defined Plan is really deferred compensation earned as part of an educator’s salary during his/her career. Will you support the continuation of the Defined Benefit plan in any legislation to “fix” public pensions?

2. The Ohio Revised Code, Section 3307.67 guarantees the payment of a simple 3 % Cost of Living Allowance, COLA, for current STRS retirees. In view of this fact, most other states have grandfathered current retirees from the financial harm of COLA reductions. Will you support the COLA promise by grandfathering current retirees’ 3 % COLA? (States that have not kept the COLA promise are now in litigation).

3. All the financial changes by STRS to date have been directed at the current retirees and these changes happened almost over night. Would you support the phasing out of the current enhanced STRS pension for 35 years of service (the 88% rule) in 2012 and not 2015 as the STRS plan calls for? This would save money and make changes far more fair for current retirees with much lower pensions and already reduced benefits. A higher percentage of the STRS proposed plan is aimed at current retirees who don’t have time to plan for such changes in their 60’s, 70’s and 80’s. Time is not on their side.

RH Jones: Common sense & restraint

From RH Jones, September 13, 2010

To all members who have a stake in the Ohio public pensions:

Please, everyone, try your best to avoid controversial statements in public over the next couple of months. Use your best common sense and restraint, for never in the history of the STRS, OPERS and SERS have we had an election so critical to the health of our retirement systems. It is absolutely critical that you vote for candidates that are friendly to public employees, particularly public education and its retired teachers.

The GOP’s candidate for governor, John Kasich, has already shown to be hurtful to Ohio’s public pensions. As recently reported in the Columbus Dispatch, The Bloomberg Businessweek and the Associated Press, Kasich made $432,000 as the hired “dealmaker” by the Wall Street investment bank Lehman Brothers. As you probably know, Lehman Brothers went bankrupt, costing STRS, OPERS, and SERS a total of $480 million.

Also, it is common knowledge that he has repeatedly mentioned that he will try do away with the Ohio income tax. Without the income tax, all kinds of Ohio public services will be severely reduced or abolished. The consequences for Ohio’s citizens will be disastrous.

Since Ohio politicians, and those whom are employed by the STRS, OPERS, and SERS also pay into, and plan on retiring with their earned Defined Benefit (DB) from OPERS, a GOP vote will be very much against their own best interests. The surprising thing to me, in spite of knowing this -- perhaps it is the snobbish appeal -- many of them and us, will foolishly vote for those who would be so inconsiderate as to put all public employees into the hands of a private enterprises’ Defined Contribution (DC) plan. In the DC plan, there would be a dramatic increase in chances for private individuals to exploit the OH pension systems for their own personal gain -- there are multitudes of negatives of which have already been previously exposed and are too numerous to include in this e-mail message. Most notable, perhaps, is that not having new employees paying into the DBs will severely curtail the investment and operations pools. Therefore, some of the employees no longer needed at the STRS, OPERS and SERS, will have their jobs terminated. However, all the system’s retirees would be grandfathered, but there could never again be “catch up” increases for inflation. The HC/Rx would soon expire. Future retirees would not have the security of a DB, which is now guaranteed by law.

It is impossible to run government like private industry; after all, with over 200 years of success, to do otherwise is to put our state in jeopardy.

The statements not quoted are of my own opinion,

RHJones, an Ohio citizen and retired teacher

PSU reaches tentative agreement with OEA

http://ohiopsu.squarespace.com/

Bob Buerkle: Time to put the spotlight on legislators, not teachers

Bob Buerkle to John Curry, September 11, 2010
Subject: Fwd: Fw: Young Missouri lawmaker takes his fellow lawmakers to task re. their pensions!

John,

It's about time a legislator stood up against their own. Now is the time to divert the attention away from our teachers and put the spotlight on the Legislators right away.

Ohio Legislators get an even better deal than those in Missouri. An Ohio Legislator earns 1.35 years of service credit per year (and for only about 60 days of work). This means that legislators earn a 30 year pension, at any age, after just 22.22 years of service. OPERS, which provides them their Plan, also has no anti-spiking regulations.

Please forward the information in the preceding paragraph to the Big Eight Ohio Newspapers and see if they will write an article about that before the election!

Bob

From John Curry, September 11, 2010
Subject: Young Missouri lawmaker takes his fellow lawmakers to task re. their pensions!

“I want to know,” state Representative Stephen Webber thundered during a floor debate on the bill, “why the members of this body find ourselves so worthy that we should get to retire five years before regular state employees, and with four less years of service.”

http://www.stateline.org/live/details/story?contentId=501865

Stateline.org, July 29, 2010

Pension overhaul treats lawmakers, other state workers differently

By John Gramlich,
Stateline Staff Writer

“I want to know,” state Representative Stephen Webber thundered during a floor debate on the bill, “why the members of this body find ourselves so worthy that we should get to retire five years before regular state employees, and with four less years of service.”

(Click image to enlarge)

When Missouri passed major pension reform legislation last week, lawmakers called it a difficult but necessary step for a state that — like many others — can no longer afford to provide the same level of retirement benefits that it has given to its state workers for years. Under the legislation, new employees will be required to contribute to their pension plans for the first time, starting in January. They will need to work twice as long until they become vested and can access those savings. And the standard retirement age will rise from 62 to 67 — the highest in the nation, along with Illinois. The plan is expected to save the state $660 million over the next decade.

Controversy surrounded many aspects of the overhaul, which lawmakers just barely passed in a special session. One of the more explosive elements was the fact that the new benefit rules are different — and more favorable — for Missouri’s elected officials. Members of the General Assembly will be able to retire at 62, not 67, and they’ll be eligible for a pension after six years of service, rather than 10. Statewide elected officials, such as the governor and attorney general, can qualify for a pension after four years in office.

“I want to know,” state Representative Stephen Webber thundered during a floor debate on the bill, “why the members of this body find ourselves so worthy that we should get to retire five years before regular state employees, and with four less years of service.”

The provision in question, Webber said in a telephone interview with Stateline after the bill became law, “had nothing to do with the fiscal stability of the state or modernizing the pension system. It had everything to do with politicians cutting themselves a break.”

Missouri is not the only state that provides better pension terms for its elected officials than it does for other state workers. And there are some reasons why legislators might expect to get a different arrangement than other state workers. Term limits, for example, as well as the need to win elections, reduce lawmakers’ job security and, thus, their ability to work long enough to qualify for pensions. Missouri limits its legislators to eight years in each chamber of the General Assembly, making a 20-year legislative career impossible.

But the debate in Missouri serves as a reminder of just how sensitive pension changes can be — particularly when one group of public servants is seen as getting a much better deal than others. When the lucky group is made up of the politicians who write the rules, Webber says, “it shakes people’s faith that elected officials are looking out for the people and not for themselves.”

Spotlight on lawmakers, too

Missouri’s experience may foreshadow similar lines of criticism as pension reform gains momentum nationally, particularly in places where state workers and retirees are asked to give more and receive less than they were promised.

This year alone, with the specter of unfunded pension obligations on the horizon, 16 states have reduced benefits for employees or increased their contributions, according to the National Conference of State Legislatures. Some states, including Colorado, Minnesota and Wyoming, are taking aim at the benefits of current workers, rather than limiting changes to future ones, as Missouri did. And New Jersey’s state treasurer raised eyebrows this week when he refused to rule out the possibility that even current retirees will see their pension checks slashed or their health premiums go up as the state struggles with an enormous pension shortfall.

Many good-government groups, labor unions and others believe that the flurry of recent pension downsizing for state workers — and the likelihood of further reductions next year and beyond — should invite more scrutiny of the benefits received by the lawmakers who write the rules.

“The more you try to eliminate the benefits of the rank-and-file,” says Pete Sepp of the National Taxpayers Union, a Washington, D.C.-based advocacy group that pushes for lower taxes, “the less you can justify keeping your own package of perks intact.”

Pennsylvania is a notable example. Members of the General Assembly — which is still battling an image problem after lawmakers voted in the middle of the night to give themselves a pay raise in 2005 — can retire earlier and receive a higher rate of return on their pension plans than other state employees, thanks to changes lawmakers made years ago.

Tim Potts, executive director of a government reform group called Democracy Rising PA, believes changes are long overdue, and he notes that the House of Representatives has passed a bill that would provide more parity. But he isn’t holding his breath that the Senate will approve the legislation. “Everybody’s skeptical,” he says.

In Illinois, like Pennsylvania, the terms for current legislators are more favorable than for other state employees, leading critics to call for a change. The state did pass a major reform package this year that addresses some of those concerns, including raising the retirement age to 67 for lawmakers along with other employees. But lawmakers and judges still will be able to qualify for a pension sooner than other workers.

In Maryland, one of many states with a part-time legislature, lawmakers have fended off criticisms about the fact that they are entitled to a full-time pension while only being in session three months a year.

Not the first backlash

State legislators’ pensions are a common focus of scrutiny.

Louisiana voters passed a constitutional amendment in 1996 to ban pensions for newly elected legislators. In California — which has the nation’s highest-paid legislators — voters abolished pensions for lawmakers first elected after 1990. The change was part of Proposition 140, which created term limits and, on the whole, “was designed to make life a little less cushy for career politicians,” according Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association, a group that favors limited government and supports the proposition’s changes.

Seven other states — Alabama, Nebraska, New Hampshire, North Dakota, South Dakota, Vermont and Wyoming — do not give pensions to lawmakers, according to a 2009 survey by NCSL, which also found a broad variation in pension terms given to legislators around the country.

In more recent years, anger over legislative and other government pensions have been aimed at specific practices that are seen as abuses of taxpayer dollars. Lawmakers in New Mexico, for example, this year passed legislation that sought to prevent “double dipping,” the practice of current government employees simultaneously collecting a paycheck and a pension payment for earlier service. Other states have clamped down on “spiking,” the practice of employees working overtime or otherwise increasing their pay in their last years of employment in order to maximize the salaries on which their pensions are based.

Shared sacrifices

What is driving reform this time around isn’t one particular practice of pension padding or high-profile example of abuse, but a recession that has laid bare the huge, unfunded obligations faced by state governments — and, by extension, the taxpayers.

State workers stand to lose the most from this fiscal shortage, as benefit reductions and higher employee contributions become the norm. For many critics of the recent Missouri pension bill, that’s the biggest problem: Lawmakers are asking state workers to make substantial sacrifices, while refusing to make those same concessions themselves.

Missouri state Representative Gina Walsh, for example, notes that new Missouri state workers will be asked to contribute 4 percent of their salaries toward pensions. “The 4 percent doesn’t seem like a lot, but if you only make $28,000 a year, it’s a lot of money,” she says, noting that Missouri state employees are among the lowest-paid in the nation.

That’s why it troubles Walsh that Missouri legislators didn’t accept the same terms for themselves when it comes to their pensions — notably, the length of time they need to work before they can qualify for one. “If we’re going to make state employees extend their vesting periods,” she says, “then we should do the same.”

Stateline intern Ali Eaves contributed to this report.

A little more about the author below

From John Curry, September 12, 2010

The Dispatch letter below did not include the business link to the author. Here it is.........

http://www.davecaperton.com/clientcomments.php

From John Curry, September 12, 2010
Subject: Author backs boards' travel decisions

Business Travel Is Often a Savvy Investment

I read with dismay the Wednesday Dispatch front-page story “Pension officials traveled in style,” citing travel expenses incurred by officials of Ohio’s five embattled public-pension funds, but not because I was outraged by the money spent to send a handful of individuals to workshops and industry conclaves.

I was, instead, disgusted with The Dispatch’s portrayal of those costs as somehow out of line or even newsworthy.

The Geraldo-esque exposé succeeded in little more than proving that conferences are often held at nice hotels that charge a lot for food.

Apart from dining and lodging costs associated with the conference venue and fixed conference fees, the writer seemed hard-pressed to find any evidence of improper spending.

Indeed, five paragraphs into the breathless report that employed sneering word choices, including jetted and hobnob, over less-loaded verbs such as flew and meet, the writer slipped in a grudging concession that “for every $41 steak billed to a retirement system — and there were few of those — there were a dozen hamburgers, salads and pizzas at airport and hotel cafes.”

So why wasn’t the headline, “Most public-pension travelers eat cheaply”?

As a professional conference keynote speaker, I open and close these types of meetings for all kinds of industries, and I can verify that the conference hotels are often very nice places, but that doesn’t mean that the attendees are on vacation. These conferences are filled from morning to night with full schedules of industry leaders and panels and breakout sessions that bring a lot of people up to speed on trends and practices, in the span of a few days.

They also provide opportunities for attendees to make invaluable contacts and to compare notes with other professionals facing similar challenges, and those connections often lead to innovative problem-solving that is an enormous return on investment.

A recent Oxford Economics USA study concluded that U.S. businesses reaped an average of $12.50 of incremental value for every dollar of cost in business travel and realized an average of $3.80 in profit (www.meetingsmeanbusiness.com/value-meetingsness.com/value-meetings).

The cost of travel may seem high, but citing costs alone is meaningless unless the value received is also explored.

I recently jetted to Orlando to hobnob with other speakers for a day at the National Speakers Association’s annual conference. I spent several hundred dollars on travel and another several hundred to attend just one conference day.

With conference business down across the country, professional speakers are really feeling the pinch, and so it was a tough choice to spend that money, but the information, ideas and contacts I made in that one day provided more enlightenment, motivation and value than I could have gotten in any other way. It was one of the wisest investments I’ve ever made in my own business. Why would The Dispatch advocate for anything less for those responsible for the health of our public-pension systems?

DAVE CAPERTON
Columbus