Friday, October 08, 2010

Click image to enlarge.
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Thursday, October 07, 2010

What? They "revised" it?

From John Curry, October 7, 2010

From the STRS website. The vote on the proposed HPA plan won't be until Friday!

https://www.strsoh.org/whatsnew/news5.html

Revised Public Meeting Notice for Oct. 13–15, 2010

The State Teachers Retirement Board and Committee meetings currently scheduled at the STRS Ohio offices, 275 E. Broad Street, Columbus, Ohio 43215, are as follows:

Wednesday, Oct. 13, 2010
11 a.m. Disability Review Panel & Final Average Salary Committee (Executive Session)
2:30 p.m. Ad-Hoc Committee for Retreat Review


The Ad-Hoc Committee meeting originally scheduled to start at 1:30 p.m. on Wednesday, Oct. 13, has been changed to 2:30 p.m. on the same day.

Thursday, Oct. 14, 2010
9 a.m. Retirement Board Meeting

Friday, Oct. 15, 2010
9 a.m. Resumption of the Retirement Board Meeting


The Retirement Board meeting will come to order at 9 a.m. on Thursday, Oct. 14, 2010, and begin with a report from the Finance Dept., followed by the Executive Director’s Report, public participation and a report from Member Benefits Dept. — Health Care. The Retirement Board meeting will resume at 9 a.m. on Friday, Oct. 15, and begin with a report from the Investment Dept., followed by Long-Term Fiduciary and Financial Contingency Planning, routine matters, old business, new business or any other matters requiring attention.

Rich DeColibus to STRS Board: everyone deserves to be treated fairly and equally

From Rich DeColibus, October 7, 2010

Dear STRS Board Members,

Everyone understands the necessity for STRS to regain a more solid financial foundation. Everyone understands what we have now in the way of benefits cannot continue because, at this point in time at least, we are paying out more (a lot more) than we are taking in. Therefore, adjustments must be made.

The two fundamental factors which make up the mainstream of the revenue outstream are time and money ("When can someone retire, and what do they get at that point in terms of a pension and benefits?"). It seems to me, on a fairness basis, that all members should be treated equally, in this case in terms of what they have to give up so STRS can reach fiscal solvency. It is my understanding we have about 100,000 retirees and 400,000 actives and, from my point of view, all half million members need to contribute something, and they need to contribute it at the same time and in roughly equal proportions.
I'm not much familiar with the details of the plans being proposed; I'm retired and I figure I have a Board and an Executive Director to deal with the details. However, some things are universal in the pantheon of Man: everyone deserves to be treated fairly and equally. If, whatever you finally decide upon, it doesn't meet that simple standard, then it's a lousy plan no matter what it says, or how vociferously it is justified.

Rich DeColibus

Rich is former president of the Cleveland Teachers Union.

Wednesday, October 06, 2010

The HPA Proposal

Phase in of Retirement Eligibility:

· The HPA proposal calls for the change from retirement with 30 years of service at any age to 35 years of service at any age to be phased in over an eight year period.


· This change would limit the disruption of retirement planning for those who are in the latter stages of their careers while without adding substantially to the funding period.


· The plan adopted by the STRS Board is unfair to members who fall just short of reaching 30 years of service by 2015. They would need to work another five years in order to be able to retire.


· The HPA proposal would allow over 6,800 active teachers with between 21 and 24 years of service to retire earlier than the STRS plan.


COLA:


· The HPA proposal would set a 2% COLA for those who retire after 2011; however the COLA is deferred for 36 months.


· The disparity between the percentage given to those who retire before 7/1/2011 and those who retire after that point would create a “rush to the door” where anyone eligible to retire would be incentivized to do so.


· The rush to the door would be extremely disruptive to Ohio’s schools and campuses. Further, it runs counter the Board’s goals to have a spike in retirements in 2011.


· The deferral of the COLA for 36 months reduces the cost to the system of increasing the COLA rate for future retirees.

Early retirement at 30 YOS:

· The HPA proposal would allow members to retire with 30 years of service subject to an actuarial reduction of benefits.


· Those who reach 30 years of service after eligibility changes would still have the option to retire, albeit significantly reduced benefits.


· There is no negative effect on the funding period.


FAS:


· The HPA plan would grant the Board statutory authority to set final average salary based on three to five years.


· The change to FAS has the least impact on the system. However, this change does have tangible impact individual members’ pension benefits.


· Granting the Board statutory authority to make the change allows for greater flexibility should economic conditions improve substantially.

From STRS, October 6, 2010

PUBLIC MEETING NOTICE

The State Teachers Retirement Board and Committee meetings currently scheduled at the STRS Ohio offices, 275 East Broad Street, Columbus, Ohio 43215, are as follows:

Wednesday, October 13, 2010

11 a.m. Disability Review Panel & Final Average Salary Committee (Executive Session)

2:30 p.m. Ad-Hoc Committee for Retreat Review

Thursday, October 14, 2010

9 a.m. Retirement Board Meeting

Friday, October 15, 2010

9 a.m. Resumption of the Retirement Board Meeting

The Retirement Board meeting will come to order at 9 a.m. on Thursday, October 14, 2010, and begin with a report from the Finance Dept, followed by the Executive Director’s Report, public participation and a report from Member Benefits Dept. – Health Care. The Retirement Board meeting will resume at 9 a.m. on Friday, October 15, and begin with a report from the Investment Dept., followed by Long-Term Fiduciary and Financial Contingency Planning, routine matters, old business, new business or any other matters requiring attention.

Jones: Comments on Fw: Bracy to STRS Board - The HPA plan

From RH Jones, October 6, 2010
Subject:
Jones comments on Fw: Bracy to STRS Board - The HPA plan

To Kathie and all:
First, please read Kathie's comments below. I agree with everything Kathie says but would add that we retired educators have already have our HC/Rx cut (which could have been done illegally) and there was never a challenge out of ORTA, who are supposed to represent us. Like Kathie, ORTA does not represent me in the HPA. And I would add that, also, they do not represent me, a retired STRS teacher member, in the Ohio Retirement Study Council (ORSC) either.
The money from the recent ORTA dues increase should be spent in hiring a proper law firm to defend our U.S. Constitutional rights to our promised Defined Benefits that includes, as promised, the full original 3% simple COLA plus our original HC/Rx. If they want their membership to climb from the 32,000, to include most all of the 122,000 STRS retirees, they must abandon their ultra-right-wing political thinking and aggressively support our public sector retirement pension. The figure of 32,000, you will notice, is far from the majority of 122,000 of us retired educators.
Since the officials of the State of Ohio and our STRS have chosen ORTA to be on the various retirement committees that determine our fate, I think we ORTA members have an obligation to "sound off" to ORTA reps to do the right thing and legally challenge losses of our benefits -- better known as our deferred compensations. We want our ORTA to be powerful representative of us once again.
If you agree with Kathie and me, please let ORTA know. Phone them at: (877) 431-7002 or e-mail www.orta.org
RHJones, ORTA Life member

Kathie Bracy to STRS Board: Trash the HPA plan

From Kathie Bracy, October 5, 2010

Dear STRS Board member,

I am writing to strongly urge you to trash the current HPA plan immediately and come up with a plan that is fair to both active teachers AND retirees, which their plan is not. There should be NO cuts in COLAs for any retiree whose pension is modest at best and who has no way of improving his/her financial situation, as do active teachers who are not close to retirement.

In addition, to even consider any such cuts in the near future (2011) when the actives, many of whom have comfortable incomes far greater than the vast majority of retirees, get to be "grandfathered" and won't even see any changes before 2015, is a cruel slap in the face to your retired members.

It's time to go back to the drawing board, and I strongly urge you to do so. I also urge you to seek input from retirees other than those whom ORTA professes to represent (as a member of the HPA). I am a life member of ORTA, but ORTA does NOT represent me.

Thank you.
Kathie Bracy
STRS retiree

Tuesday, October 05, 2010

I see Police & Fire, I see SERS, I see PERS, I even see Plumbers & Pipefitters local 219 but I still (just like last time) don't see STRS.....

.....this list has been updated as of Oct. 1, 2010...what's the matter, STRS?

From John Curry, October 5, 2010

http://www.healthcare.gov/law/provisions/retirement/states/oh.html

Provisions


Early Retiree Reinsurance Program: Ohio

Rising health care costs have made it difficult for employers to provide quality, affordable health insurance for workers and retirees while also remaining competitive in the global marketplace. The percentage of large firms providing workers with retiree health coverage has dropped from 66 percent in 1988 to 29 percent in 2009.1 Health insurance premiums for older Americans are over four times more expensive than they are for young adults,2 and the deductible these enrollees pay is, on average, almost four times that for a typical employer-sponsored insurance plan.3

The Affordable Care Act creates a new program called the Early Retiree
Reinsurance
ReinsuranceA reimbursement system that protects insurers from very high claims. It usually involves a third party paying part of an insurance company’s claims once they pass a certain amount. Reinsurance is a way to stabilize an insurance market and make coverage more available and affordable.


Program to help address this challenge that employers and older employees are facing. The Early Retiree Reinsurance Program provides $5 billion in financial assistance to employers and unions to help them maintain coverage for early retirees age 55 and older who are not yet eligible for
Medicare
MedicareA Federal health insurance program for people who are age 65 or older and certain younger people with disabilities. It also covers people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).
.
*New program participants as of October 1, 2010. List to be updated weekly.


Businesses, other employers, and unions that are accepted into the program will receive reimbursement for medical claims for early retirees and their spouses, surviving spouses, and dependents. Savings can be used to reduce employer health care costs, provide premium relief to workers and families, or both. Applicants who are approved into the program receive reinsurance for the claims of high-cost retirees and their families (80 percent of the costs from $15,000 to $90,000). The program ends on January 1, 2014 when State health insurance Exchanges are up and running.

HHS has approved the following sponsors from Ohio. More applications are being approved each day.

4th District IBEW Health Fund
A. Schulman, Inc.,
ABX Air, Inc.
AK Steel Corporation
American Electric Power Service Corporation
American Financial Group, Inc.
American Greetings Corporation
Andersons, Inc.*
Battelle Memorial Institute
Board of Trustees Canton Electrical Welfare Fund
Board of Trustees for the Building Laborers Local
Board of Trustees for the Iron Workers Local 17 Insurance Fund
Board of Trustees Insulators Local B4 Health Care Fund
Bridgestone Americas, Inc.
Carpenters Health Fund of West Virginia
Chart Industries, Inc.
Cincinnati Bell Inc.
Cleveland Bakers and Teamsters Health and Welfare Fund*
Cleveland Clinic Foundation
Cliffs Mining Co, Managing Agent of Hibbing Joint Venture*
Cliffs Natural Resources, Inc.*
Cliffs North American Coal LLC*
Cognis Corporation
Commercial Vehicle Group, Inc.
Convergys Corporation
Cooper Tire & Rubber Company *
Dana Non-Union Retiree VEBA Trust
Dealer Computer Services, Inc.
East Ohio Conference of The United Methodist Church
Eaton Corporation*
Electrolux Home Products, Inc.*
Empire Iron Mining Partnership*
Faurecia Exhaust Systems, Inc.
Federal Home Loan Bank of Cincinnati*
First Citizens Banc Corp
FirstEnergy Corp
Goodyear Tire & Rubber Company*
IBEW-648 Health and Welfare Fund*
International Brotherhood of Electrical Workers Local No. 129 Health and Welfare Fund
International Brotherhood of Electrical Workers Local No. 38 Health and Welfare Fund
Iron Workers District Council of Southern Ohio & Vicinity Benefit Trust
John Maneely Company
Jones Day
Kao America Inc.
Kenyon College*
KeyCorp
Lake Superior & Ishpeming Railroad Company*
Libbey Inc.*
Licking Rural Electrfication, Inc.*
Macy's, Inc.
Marathon Oil Company
Marietta Memorial Hospital
Marlite Inc.
Medical Mutual of Ohio
Moen Incorporated
Nationwide Mutual Insurance Company
NewPage Corporation
NewPage Wisconsin System, Inc.
Nordson Corporation
Nordson Corporation
Northshore Mining Company*
Novelis Corporation
Ohio Laborers' District Council - Ohio Contractors
Ohio Operating Engineers Health & Welfare Plan
Ohio Police and Fire Pension Fund*
Ohio Valley Electric Corporation*
Owens Corning
Owens-Illinois Inc.*
Painting Industry Insurance Fund*
Parker Hannifin Corp
PCC Airfoils, LLC
Pilkington North America, Inc.
Pipefitters #120 Insurance Fund
Plumbers & Pipefitters Local 189 Health & Welfare Fund
Plumbers & Pipefitters Local 219
Plumbers & Pipefitters Local 94 Health & Welfare Plan
Plumbers & Steamfitters Local 42 Health & Welfare Fund
Plumbers & Steamfitters Local Union No. 396
Plumbers Union Local 55 Health & Welfare
Plumbers, Pipefitters & Mechanical Equipment Service Local 392
Public Employees Retirement System of Ohio
Robbins & Myers, Inc.
School Employees Retirement System of Ohio
Sheet Metal Workers Int'l Assoc. of Dayton Local 224 Welfare Fund*
Sheet Metal Workers Local 33 Youngstown District Health and Welfare Fund
Sheet Metal Workers Local No. 110 Health Fund
Sheet Metal Workers Union Local 33 Cleveland District
State Automobile Mutual Insurance Company
STERIS Corporation*
Teamsters Health & Welfare Fund Local 377
Teamsters Local Union #348 Health & Welfare Fund
Teamsters Local Union No.20 Insurance and Health and Welfare Fund*
Teamsters Union Local No. 52 Health & Welfare Fund
The Andersons, Inc.*
The David J. Joseph Company*
The Goodyear Tire & Rubber Company*
The Lubrizol Corporation
The Ohio Police and Fire Pension Fund*
The Procter & Gamble Company
The Sherwin-Williams Company
The Timken Company
The University of Akron*
The Western and Southern Life Insurance Company
Tilden Mining Company L.C.*
Toledo Electrical Welfare Fund*
UFCW Unions' and Employers' Health and Welfare Plan
Union Construction Workers Health Plan
Union of Roofers Waterproofers & Allied Workers
United Taconite LLC*
University of Akron*
Youngstown Area Electrical Welfare Fund Trustees

[1] Kaiser / HRET. Employer Health
Benefits
BenefitsThe health care items or services covered under a health insurance plan. Covered benefits and excluded services are defined in the health insurance plan's coverage documents. In Medicaidor CHIP, covered benefits and excluded services are defined in state program rules.
: 2009 Survey.[2] Center for Policy and Research. Individual Health Insurance 2009.[3] Kaiser Family Foundation. 2010. Survey of People Who Purchase Their Own Insurance.

Dennis, what you said in 2009 still holds true!

From John Curry, October 5, 2010

From Dennis Leone, June 10, 2009

Subject: Re: STRS Town Meeting at Apollo Career Center: Allen Co. RTA

Yes, you are correct. In fact, what I actually said in Lima (it's on tape) was that if active teachers are "grandfathered" in such a way that they will be allowed to take advantage of current retirement arrangements (i.e. 35-year/88% rule) -- which will help them for life -- then retirees should be likewise grandfathered with their COLAs. The reporter was a little mixed up on this issue. I also have said to many that taking away more from retirees cannot be the solution of the pension solvency problem.

Dennis Leone

The new site is up and running!

From John Curry, October 5, 2010

http://www.kaiserhealthnews.org/Stories/2010/October/01/hhs-website-park-pollitz-insurance-prices.aspx

Health Insurance Prices, Restrictions Now On Federal Consumer Website


By Jessica Marcy
KHN Staff Writer
Oct 01, 2010


Healthcare.gov, the website created by the new health law to be a one-stop consumer resource, today unveiled detailed cost and benefits information about health plans available in the individual insurance market. It's the first time such data have been made public - either by the government or industry.

The site will also list the percentage of applications turned down and of people who are charged more than that health plan’s advertised price.

Related Content

Listen to the interview (.mp3)

HHS officials say now consumers will be able to solve some of the mysteries behind costs and denials. By entering basic information such as age range, location and health status, visitors can compare plans based on monthly premium estimates, maximum out-of-pocket limits, annual deductibles, and coverage for benefits such as mental health, substance abuse and pregnancy.
Since its July 1 launch, healthcare.gov has had more than 1.8 million visits, according to Todd Park, the chief technology officer of the Department of Health and Human Services, who says visitors are "overwhelmingly positive" about the site.


KHN reporter Jessica Marcy recently spoke with Park and Karen Pollitz, who heads the consumer support division at HHS Office of Consumer Information and Insurance Oversight.

Here are excerpts of the interview:

What exactly are the prices? Are they sticker prices or real prices?

Karen Pollitz: Sticker price would be a good way to describe it. Price has always been sort of an elusive concept in the individual health insurance market and it remains so today. Insurers all have a base price, or a sticker price, that they may advertise or they may post for a health insurance policy. But, the price that you actually pay will depend on characteristics unique to you – your age, your family size, where you live, your gender, also your health status and your health history. While some of these demographic factors may be posted and knowable to you, you won’t really know until you try to apply for the policy whether you’ll be accepted at all or be given something close to the sticker price. [Editor's note: while in car dealerships the "sticker price" usually is higher than the price the buyer negotiates, in this case, the "sticker price" is the lowest, or base, price.]

Karen Pollitz
Something that is unique now, and it’s really a breakthrough, is that we show on healthcare.gov the sticker price -- what we call the premium estimate, for each of the policies that is displayed. Then we also give consumers new data about how often applicants for that policy get turned down or get charged more than the advertised price, so it’s at least clueing you in to what to expect when you leave this information site and go out to buy coverage.

What do you think will be the impact of publishing the information?

Todd Park: We believe that information empowers consumers and empowered consumers make for more efficient and effective marketplaces -- marketplaces that are more competitive, that pay more attention to what consumers want, where consumers can express their preferences more energetically and aggressively.


Consumers currently can’t sign up directly for policies on the site. Does that discourage users and will they ever be able to buy coverage there?
Todd Park
Park: They will not be able to buy coverage on healthcare.gov. Secretary Sebelius has been very, very clear that she never wants healthcare.gov to become a sales site. She wants it to be an information utility that people use to research their options.

Pollitz: Down the road, when [health insurance] exchanges are developed, there will be an option for consumers to select a health plan and enroll online if they want to purchase coverage through the exchange.

Would you like to add any more features or data? If so, what and when?

Pollitz: Absolutely. The next thing is to provide comparable information for small employers to what [is available] for individuals and families. We will be developing measures of plan performance and other important information tools for consumers so that they can understand more about how these plans will operate in practice, how they would actually cover not only specific benefits but also whole episodes of care. We have a long way to go and a lot of exciting things to come.

Why do you think so many Americans continue to be confused by the new health law?

Pollitz: The health care system is incredibly complicated. Sorting all of that out is going to involve a lot of changes. Certainly there has been continued argument about whether we should be moving down this way, so there’s a lot of disinformation. I’m hoping that whatever else is happening in the fray, that this website continues to stay on the path and just give people straight up information -- not a sales job one way or the other of products or politics.

If the GOP does take over Congress, is there any concern that they might defund the program?

Pollitz: I can’t really speak to that. Right now, what I do is very much focused on implementation [of the new law] and this week on implementation of healthcare.gov.

CORE to meet October 14, 2010

From CORE, October 5, 2010

CORE (Concerned Ohio Retired Educators) will hold its October meeting on Thursday, October 14th at the STRS Building at 275 East Broad Street in Columbus. Parking is free in the STRS parking garage behind the building.

We encourage you to also attend the STRS Retirement Board meeting which usually begins around 9:00 on Thursday in the Board meeting room on the 6th floor; this time varies from month to month. Lately the STRS meetings have been held most of the day on the following Friday as well as Thursday. For this reason, we suggest you check the STRS website (www.strsoh,org) to confirm the time. STRS Board meetings are usually held the third week of each month, but occasionally the schedule changes as it does this month.

Please remember that CORE meeting attendees usually leave the STRS meeting around 11:30 in order to go to the cafeteria on the 2nd floor to get our lunches. We then take them to the small cafeteria room behind the Sublett Room on the 2nd floor where the CORE meeting begins promptly at 11:45. If you have suggestions for the October CORE meeting agenda, please send a reply to John Curry at curryjo@watchtv.net so that he can relay this information to CORE President, Dave Parshall.

...and why, pray tell, is not OHIO STRS one of these 3,000 (as of Oct. 1, 2010)...they were supposed to be as they said they applied......

From John Curry, October 5, 2010

As of Oct. 1, 2010, Ohio Police and Fire are in, OPERS is in and so is PERS!

John

http://www.kaiserhealthnews.org/Daily-Reports/2010/October/05/Early-Retirees.aspx

HHS Adds 1,000 Companies To Early Retiree Benefit Program

Oct 05, 2010
Congress Daily: The federal government added 1,000 companies to the "early retiree benefit program established under the healthcare overhaul law, bringing the total number of companies participating to 3,000. The $5 billion program is a stopgap measure meant to help cover retired Americans over the age of 55 who are not eligible for Medicare." The funding ends in 2014. The announcement followed a "report that 3M Co. would be dropping retiree health coverage in 2013, in favor of giving retirees an unspecified health reimbursement." Meanwhile, "Republicans seized on the announcement as further proof that a frequent promise from President Obama to voters during the debate on the law--that American's could keep their health insurance if they liked it--was not true" (McCarthy, 10/4).
Minnesota Public Radio: The 3M announcement drew attention to an analysis being conducted by many employers. "Many employers are reevaluating their health insurance benefits now that federal health care reform has become law. Minnesota-based 3M announced it would change its coverage for retirees-both early retirees and those over age 65. But some experts say that the number of companies that offered health benefits for retired employees was already falling and health care reform will speed up the process" (Stawicki, 10/4).
The (Raleigh, N.C.) News & Observer: "More than 50 businesses and nonprofit agencies in the state have qualified for federal health care subsidies to offset the cost of insuring their early retirees. The U.S. Department of Health and Human Services announced the first 29 recipients in North Carolina five weeks ago, and that number has nearly doubled since then. … The subsidies are designed for early retirees ages 55 to 64 who are too young for Medicare. The subsidies pay up to 80 percent of annual drug and medical costs between $15,000 and $90,000 per early retiree. Employers have to pay all the costs for the first $15,000" (Murawski, 10/5).
Detroit Free Press: "More than 140 Michigan employer and union-sponsored health plans have been approved to receive federal funds to help pay medical claims for early retirees, according to a Monday news release. … Many offering these benefits are municipalities, along with Detroit's three automakers" (Anstett, 10/5). WHTC in Holland, Mich.: "The U.S. Department of Health and Human Services announced the approval of about one-thousand additional participants, including 142 in Michigan" (10/5). The Associated Press/Bloomberg BusinessWeek reports that HHS "says Bank of Hawaii has been accepted into the Early Retiree Reinsurance Program. It said Monday that the Plumbing and Mechanical Contractors Association of Hawaii Local 675 Health & Welfare Fund has also been accepted. The two join the Hawaii Medical Service Association and The Queen's Health Systems in the program" (10/4). WOWK in Huntington, W.Va.: "Thousands of West Virginia early retirees, and their families, are now eligible for health coverage. … In the mountain state, 10 organizations have just signed on for the program. Those include Severstal Steel, Highmark West Virginia and The Fenton Art Glass Company" (Clutter, 10/4).
This is part of Kaiser Health News' Daily Report - a summary of health policy coverage from more than 300 news organizations. The full summary of the day's news can be found
here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.

--------------------------
Mr. Nehf.........WHY?

As of Oct. 1, 2010, Ohio Police and Fire are in, OPERS is in and so is PERS! The retirement system that you pay into (OPERS) is listed but mine is not, mine pays your salary, you have been taken care of but what about STRS stakeholders?
John

Yet another cry for a change to a 401(k) style of state pension from a politician named Polito!

From John Curry, October 5, 2010

Will this same mentality find its way to Ohio's borders? Let's hope not! The author, Karyn Polito, is a current Massachusetts State Representative and is also the Republican candidate for the Massachusetts State Treasurer. Notice how she sugar coats the harsh realities (and poor choice) of a 401(k) style of pension by saying that her plan has the "characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement?" Karyn, if it walks like a duck and quacks like a duck.....it IS a duck!

John


"Once we remove the political self-interests blocking reform, we should explore a new system for the future state workforce. I propose a plan that has characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement. People who work in the private sector know exactly how this works — it's basically the same 401(k)-style retirement system used by most private companies."
Karyn Polito

http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20101005/OPINION/10050332/-1/NEWSMAP

A sustainable plan for pension reform
By KARYN POLITO
October 05, 2010 2:00 AM
The Massachusetts public pension system is unsustainable and it's time to fix it.
We rely on a publicly invested contributory pension fund to pay retiree benefits. The current fund balance is about $44 billion. By current estimates, that's about $22 billion short of what is needed to meet our future payment obligations.
Ever-increasing annual infusions of taxpayer money are needed to make up the difference. This year's taxpayer share is about $1.4 billion — money we could spend on other priorities, like education and public safety. This is unsustainable. It's also unfair to jeopardize payments to the hardworking civil servants who are beneficiaries of the current system.
We need a new approach for the next generation of our state's workforce, and this can be accomplished in three crucial steps.
First, we need a political environment where substantive reform is possible. Many so-called "pension reform" bills have been passed, but they fall short of the systemic reform we need. The reason: Beacon Hill politicians. Elected officials are themselves members of the retirement system, and their own greed and self-interest gets in the way of real reform.
We have to draw a line in the sand and make a clean break. We need to say "no" to pensions for politicians and prevent future Beacon Hill pols from receiving a guaranteed right to a public pension. I am not taking a public pension when I leave state service, and other elected officials should follow suit.
Once we remove the political self-interests blocking reform, we should explore a new system for the future state workforce. I propose a plan that has characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement. People who work in the private sector know exactly how this works — it's basically the same 401(k)-style retirement system used by most private companies.
This new system should not apply to current state workers, only to those we hire moving forward. By moving future workers to a new system, we could save millions of dollars that could be used for other purposes, including offsetting our unfunded pension liability. Also, to be fair to dedicated civil servants whose work places them in danger, we should exempt state public safety workers from this transition.
Finally, we need to be smarter about the way we invest our state pension fund.
The total cost of managing the pension fund for FY2009, inclusive of charges, was about $180 million. Yet, in some cases, investment performance lagged behind the rate of return of the stock market itself. It doesn't make sense to spend money to lose money. We need to make greater use of index fund investments to ensure a better return over time.
We should also enact reform that imposes greater transparency and accountability with our investments. And, we should end the practice of paying bonuses to administrative staff at the pension fund — bonuses that in 2008 ranged from 16 to 20 percent of salaries and cost our state $500,000.
The time for real reform of our pension system is now. We need to keep our promise of a pension to current beneficiaries without resorting to taxpayer funds so the system continues to work long-term. I believe that saying "no" to pensions for politicians, transitioning to a 401(k)-style plan for future nonpublic-safety state employees, and reforming the way we invest pension funds will do that.
State Rep. Karyn Polito, R-Shrewsbury, is the Republican candidate for state treasurer and receiver general.

Monday, October 04, 2010

Cutting COLAs in Ohio discussed

From John Curry, October 4, 2010

(Note from John....they still don't mention the unfair burden placed on retirees for either of these plans, do they?)

In New Jersey and Ohio — two states also considering changes to COLA payments — decisions are likely to play out very differently from one another.


Steve Baker, a spokesman for the Trenton-based New Jersey Education Association, a union representing New Jersey public school teachers, said the union has not seen a formal plan outlining Gov. Christie's intention to suspend COLA payments for retirees, but he noted that if it “violated the legal rights of our members, it would invite a legal challenge.”

“We hope that the Legislature will be wise enough to realize that making changes that are illegal invite costly legal challenges that set the state back further,” he said in a telephone interview.

In Ohio, the Ohio Federation of Teachers has worked with a coalition of stakeholders — such as the Ohio Education Association, retiree advocates and state pension plan representatives, including from the $60 billion State Teachers Retirement System of Ohio — to advance a plan that would, among other things, reduce COLAs for teacher retirees. The teachers'system was about 60% funded as of July 1, 2009.

The coalition known as Healthcare & Pension Advocates for STRS has approved a proposal that would reduce the COLA for teachers in the retirement plan by one percentage point to 2%, Sue Taylor, president of the Ohio Federation of Teachers, Columbus, said in a telephone interview.

While the Ohio teachers system adopted a separate proposal in July that also would reduce the COLA for its retirees to 2%, Ms. Taylor, who spoke as a representative of the union and not of the HPA, said the pension and health-care coalition's proposal contains differences on issues other than the COLA reduction for existing retirees. It has not yet been voted on by the retirement system board.

Michael J. Nehf, STRS executive director, did not return calls requesting an interview.

http://www.pionline.com/apps/pbcs.dll/article?AID=/20101004/PRINTSUB/310049980/1031/PIIssueAlert01&template=printart

COLA reduction laws under fire in 3 states

Efforts to alleviate underfunding face backlashSource: Pensions & Investments
Date: October 4, 2010


Fixing: Stephen Pincus said states need to find other ways to improve funded status.

Lawsuits in Minnesota, Colorado and South Dakota aim to reverse new state laws that reduce cost-of-living adjustments for retired public employees, and the outcome could affect other states' efforts to make similar changes.

Minnesota passed a law in 2009 replacing the annual COLA — which used a formula based on the consumer price index and the state retirement systems' investment returns — with a flat 2.5% annual adjustment until state plans reach a 90% funding level.

Colorado, which had a guaranteed 3.5% annual COLA for public employees and 3.25% for Denver public school employees, froze COLA adjustments in 2010 and replaced the automatic adjustment effective 2011 with a formula capped at 2% until the funded status exceeds 103%.

South Dakota in July replaced its automatic annual COLA of 3.1% with a formula that determines the annual adjustment based on the funded status of the state's pension plans.
Other states are considering making similar changes to the COLAs.


In Ohio, a coalition of unions, retirees, pension plan administrators and others are considering asking the Legislature to reduce the annual COLA to 2% from 3% for existing and future retirees, and New Jersey Gov. Chris Christie said in September that he aims to suspend COLAs for existing retirees.

Stephen Pincus, a partner with Pittsburgh-based law firm Stember Feinstein Doyle Payne & Cordes LLC, represents the plaintiffs in the Colorado, Minnesota and South Dakota suits. In all three states, he claims, the changes violate state and federal contract and so-called takings clauses. The COLA adjustments are contractual obligations between the state and retirees, the contract argument goes. The takings clause strategy argues that private property cannot be taken for public use without just compensation.

Mr. Pincus said, however, that states facing significant budget problems could get federal courts to support the proposals out of financial necessity.

“Most states find that pensions are contracts between the employee and the employer, and if (a court) establishes that there is a contract and this contract has been substantially impaired, the state can get out of its contract if it is able to show it's reasonable and necessary to serve an important public purpose,” Mr. Pincus said in a telephone interview.

No exploration

Mr. Pincus said he believes the three states have not explored other avenues for improving the funded status of their pension plans. The $5.6 billion South Dakota Retirement System, Sioux Falls, was 91.2% funded as of June 30, 2009, the most recent data available. The $36 billion Colorado Public Employees' Retirement Association, Denver, was 67% funded as of Dec. 31, 2009. The $10.1 billion Public Employees Retirement Association of Minnesota, St. Paul, was 70% funded as of June 30, 2009, the most recent data available.

University of Minnesota Law School professor Amy B. Monahan, author of the paper, “Public Pension Plan Reform: The Legal Framework,” said in a telephone interview that courts undertake a three-part analysis to determine whether a state's actions are unconstitutional under the contract clause. If the court determines a contractual relationship exists and that the contract has been broken, then changes to the contract still may be constitutional if “no other less drastic modification could have been implemented and the state could not have achieved its goals without the modification.”

It is uncertain, though, how courts will interpret the cases because there is little case history on COLA changes to serve as a precedent, Ms. Monahan said.

Ronald K. Snell, director of the state services division in the Denver office of the National Conference of State Legislatures and author of the report “Pensions and Retirement Plan Enactments in 2010 State Legislatures,” said in an interview that some states explicitly protect pension plan benefits for retirees in their constitutions and statutes.

New York, for example, amended its constitution in 1940 to identify membership in a state pension plan as “a contractual relationship, the benefits of which shall not be diminished or impaired,” according to an analysis by the National Association of State Retirement Administrators.

Arizona, Alaska, Hawaii, Illinois, Louisiana, Michigan have similar constitutional protections on pension contracts, according to NASRA, while others have specific protections through state statutes and court decisions.

Pension benefit protections in many states are more ambiguous. In Delaware, for example, courts recognize contractual rights only for vested employees who have fulfilled retirement eligibility requirements, according to NASRA.

States such as Indiana and Texas still statutorily consider pension benefit payments as “mere gratuities that do not vest and can be amended or modified at any time by the state,” according to Ms. Monahan's paper.

Mr. Snell said regardless of the outcome of the three pending cases, states could still move forward with their own plans to reduce COLAs because state courts are not bound by the decisions of other state courts.

“If it rises to the federal judiciary, it might be a different situation,” he said.

He also said that although any of the three cases could go to state appellate courts, he does not believe they would make it all the way to the U.S. Supreme Court, which could establish a nationwide precedent with its decision.

Different decisions

In New Jersey and Ohio — two states also considering changes to COLA payments — decisions are likely to play out very differently from one another.

Steve Baker, a spokesman for the Trenton-based New Jersey Education Association, a union representing New Jersey public school teachers, said the union has not seen a formal plan outlining Gov. Christie's intention to suspend COLA payments for retirees, but he noted that if it “violated the legal rights of our members, it would invite a legal challenge.”

“We hope that the Legislature will be wise enough to realize that making changes that are illegal invite costly legal challenges that set the state back further,” he said in a telephone interview.

In Ohio, the Ohio Federation of Teachers has worked with a coalition of stakeholders — such as the Ohio Education Association, retiree advocates and state pension plan representatives, including from the $60 billion State Teachers Retirement System of Ohio — to advance a plan that would, among other things, reduce COLAs for teacher retirees. The teachers'system was about 60% funded as of July 1, 2009.

The coalition known as Healthcare & Pension Advocates for STRS has approved a proposal that would reduce the COLA for teachers in the retirement plan by one percentage point to 2%, Sue Taylor, president of the Ohio Federation of Teachers, Columbus, said in a telephone interview.

While the Ohio teachers system adopted a separate proposal in July that also would reduce the COLA for its retirees to 2%, Ms. Taylor, who spoke as a representative of the union and not of the HPA, said the pension and health-care coalition's proposal contains differences on issues other than the COLA reduction for existing retirees. It has not yet been voted on by the retirement system board.

Michael J. Nehf, STRS executive director, did not return calls requesting an interview.

The COLA change is one of several proposals in the pension reform plan approved by the HPA, but Ms. Taylor described it as the “trigger that would give us the biggest bang for the buck in terms of (pension plan) insolvency.”

William W. Leibensperger, co-chairman of the coalition, said the COLA change might save the system $6.13 billion over a 30-year period.

Ms. Taylor said the lawsuits in Minnesota, Colorado and South Dakota were recently brought to her attention, adding that the potential for lawsuits was not discussed in the working group.

If approved by the teacher retirement system, the Ohio plan still would need legislative approval.

Building a consensus among stakeholders is no guarantee the proposal will avoid a legal challenge; Colorado tried a similar approach and the COLA issue still ended up in court.

COPERA board members spent much of 2009 holding informational meetings with stakeholder groups and others to solicit recommendations on fixing the state's underfunded pension, COPERA CEO Meredith Williams said in an interview.

He said the package of legislation approved by the Colorado General Assembly is expected to save the pension system $9 billion over the next 30 years, the timeframe the system projects it will take to get the pension system back to 100% funded status.

Mr. Williams could not say how much changes to the COLA would contribute to that $9 billion.

RH Jones re: STRSers...pensions are on the minds of politicians all across this land!

From RH Jones, October 3, 2010
Subject: Fw: STRSers...pensions are on the minds of politicians all across this land!

John and all:

Here in Ohio most, retired teachers know that we have been cut (perhaps illegally) in our HC/Rx while the school district employers have not had an increase in their contribution rate in over 20-years. This has all happened during times of depreciation of value of the dollar which has put increasing downward pressure on the living standards of the OH STRS retired members. (See today's Beacon "Wall Street Week in Review" by Simon Johnson of Bloomberg News Pg.D2, 10/03/2010. http://www.ohio.com/news/top_stories/104229359.html )This has happened while some radical conservatists have recommended that we take a 1% cut in our simple COLA!

The above Simon Johnson article goes on to say that foreign governments "will surely diversify more of their reserves out of dollars. ... The dollar is, therefore, likely to depreciate against all floating currencies." John, and all, this says, in other words, that we will have depreciated dollars to spend; and, further, the recovery that we are now experiencing in Ohio and will accelerate creating even more jobs here at home. Foreign products will be made less affordable and American made products made more affordable. The article goes on to say that the impact on interest rates "will be minimal because the Fed will continue easing." This, I strongly believe, will create more public purchasing of big ticket, made in America, products by the general public.

The conclusion of these two moves by the Feds, mentioned above, will create jobs and move the economy forward; but, with already having our retiree STRS HC/Rx cut, and with many recommending fixing the OH STRS 30-year funding goals by legislatively cutting current retired teacher's simple COLA --- Gee, we can't keep up with inflation now --- will even make it harder for us to keep up while the general working population will be prospering. This leaves me to wonder why the STRS officials and others would want retired members to be left out? Who can we count on to fight in the various committees to return and to keep the Defined Benefits we had and were promised? Most certain is that Defined Compensations in 401 Ks will not be a solution; Outfits like GOP Gov Candidate Kasich's bankrupt Wall Street Lehman Brothers is not the answer. As always, the Defined Benefit system will continue to work for us, as we continue to monitor our STRS. The present OH Gov Strickland is the best candidate to maintain and return to us a healthy STRS Defined Benefit. Just a year and a half is not enough time to for the recovery to come into full swing. Gov Strickland has shown that he deserves two more years to accomplish fixing that which was 8-years, or more, the GOP had in the making.

That is my learned opinion,

RHJones, retired STRS teacher member.

From John Curry, October 1, 2010

Subject: STRSers...pensions are on the minds of politicians all across this land!

What follows is a pretty good summary of how some people in this country are trying to destroy our defined benefits type of retirement. Will we stand idly by and let them? Who are these pols and where are they from? Read on!

John

http://www.stateline.org/live/printable/story?contentId=517581
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