June Board News
Retirement Board Chair, Vice Chair Named;
Meuser Recognized for Service
During its June meeting, the State Teachers Retirement Board elected James McGreevy
as its vice chair for the coming year. According to Board Policies, Tim Myers, who is currently serving as vice chair, automatically
moves into the position of chair. Normally, both Myers and McGreevy would be moving into these leadership positions on Sept.
1, 2010. However, Mark Meuser, the current board chair, has announced his retirement from his position with the Gahanna-Jefferson
City Schools and thus is resigning from the Retirement Board. As a result, Myers and McGreevy will assume their new responsibilities
on July 1.
During the board meeting, a resolution recognizing Meuser’s service was presented. In it the board
expressed its deep appreciation for the valuable and tireless service he rendered to the membership and associates of STRS
Ohio upon being elected to the board in 2006.
Retirement Board Accepts the Annual Investment
Plan
The Retirement Board voted to accept the Investment Plan for fiscal year 2011 (July 1, 2010–June 30,
2011). The plan details staff’s investment strategy for each asset class comprising the system’s investment fund.
STRS
Ohio staff expects the U.S. economy to remain on a positive growth path during fiscal year 2011 that will spread to sectors
beyond business inventories. Rather than the typical “V-shaped” expansion that usually follows a deep recessionary
plunge, staff is forecasting a moderate “U-shaped” expansion. Outside the United States, a modest recovery and
expansion is expected for many developed countries, while stronger growth is forecasted for emerging countries. Though inflation
will remain largely contained, staff noted that monetary and fiscal policymakers around the world will need to slowly remove
the extraordinary stimulus they introduced to ward off another Great Depression. The economic threats from a potential sovereign
debt contagion that began in Greece will restrict growth potential and could threaten economic expansions in the United States
and elsewhere. Staff noted that policymakers will need to walk the tightrope of tending to longer-term fiscal sustainability
while not jeopardizing the cyclical recoveries by removing stimulus too soon.
On July 1, 2010, the Fiscal 2011
Investment Plan will be posted on the STRS Ohio Web site or available by calling STRS Ohio’s Member Services Center
toll-free at 1-888-227-7877.
Fiscal Year 2010 Budgets Adopted
The Retirement
Board adopted the proposed budgets for fiscal year 2011 (July 1, 2010–June 30, 2011). The operating budget totals $89,773,600,
which represents a 2.1% increase over this year’s operating budget. No merit or cost-of-living salary increases for
STRS Ohio associates are included in the budget. The capital budget for fiscal year 2011 totals $2,101,000. Additionally,
the system expects to spend $580,000 in contract payments for the STaRS system that has replaced STRS Ohio’s former
obsolete pension management computer system.
Retirement Board Approves Health Care Premiums
and Program Changes for 2011
The Retirement Board approved three eligibility changes for the STRS Ohio Health
Care Program resulting primarily from the health care reform bill recently passed in Washington, D.C.
Dependent
children, as well as incapacitated children, will now be eligible for health care coverage until the end of the month in which
they turn age 26, if they do not have access to other employer-sponsored health care coverage.
Upon reaching
age 26, the monthly premium charged for a person incapacitated since childhood will be the same rate as the spouse premium.
The
waiting period for late enrollees in the health care program will be reduced to 90 days from six months.
These
changes go into effect on Jan. 1, 2011.
The board also approved the 2011 premiums for all the plans offered through
the STRS Ohio Health Care Program. A complete list of these premiums will be posted on the STRS Ohio Web site on June 25,
2010, or can be obtained by calling STRS Ohio’s Member Services Center toll-free at 1-888-227-7877 after that date.
Additional information about the 2011 STRS Ohio Health Care Program will be provided in upcoming newsletters and on the STRS
Ohio Web site. In late October, all current enrollees will also receive personalized health care plan information in preparation
for the fall open-enrollment period, which extends from Nov. 1–23, 2010.
Other STRS
Ohio News
Legislative News Includes Update About Pension Plan Actions Around the Country
The June 2010 issue of STRS Ohio’s Legislative News includes a report from the National Association of State
Retirement Administrators listing reforms to public pension plans in progress around the country. The newsletter can be accessed via the STRS Ohio Web site.
STRS Ohio staff is still awaiting the draft legislation containing the Retirement Board’s proposed changes for
the pension fund, as well as language reflecting changes proposed by the other Ohio retirement systems. STRS Ohio staff continues
to meet with legislators, stressing the importance of the legislation to the system’s long-term viability.
E-Mail
News Service Tops 100,000 Subscribers
During May, the number of subscribers to STRS Ohio’s e-mail news
service surpassed the 100,000-mark. This service is used to keep both STRS Ohio members and non-members apprised of actions
taken at each Retirement Board meeting, as well as other important news and events.
Recent Health Care Program
Changes Result in Significant Savings
Since mid-July 2009, several changes to the STRS Ohio Health Care Program
have gone into effect. These changes are resulting in positive outcomes for program participants, as well as significant savings
for them and the Health Care Stabilization Fund.
Here are a few examples:
The medical care management
program offered under the Aetna Medicare Plan (PPO) includes a Health Risk Assessment (HRA). During first quarter 2010, 70.5%
of the enrollees in the program completed the HRA; these assessments and other case management triggers resulted in about
4% of the enrollees now receiving case management assistance.
The use of generic prescription drugs has increased
as a result of the “Call for Generics” program that began in mid-summer 2009. From July 2009 through April 2010,
the estimated savings from the program is $1.8 million for the health care fund, with member savings resulting from lower
copayments totaling about $1 million.
Other changes to the Express Scripts prescription drug program (e.g.,
$150 deductible for Tier 2 and Tier 3 medications) has resulted in a more than $10.5 million reduction in program costs.
CORE
Message to CORE members from Dave Parshall
From Dave Parshall, January 18, 2010
To CORE members
Dear CORE members,
Please find below a letter
for you to use to send to the media or any interested group you wish. This letter was board approved and is the product of
the CORE Media Committee. You can use it as whole or any part you wish. It is time to start to get our side of the pension
issues to the public. Also, we need to be politically smart. There are groups out there that wish to do us harm for a host
of reasons. While the legislature is deciding what to do with Ohio Public pensions, we need to stop the public attacks on
STRS. CORE will still bring up some of the STRS issues we have with Mr. Nehf in February. All educators need to stand together
during these difficult times. We can’t afford to hurt our own cause.
Yours truly,
Dave
Parshall, President of CORE
You Asked the Wrong Question!
Recent attacks by the media on public employees and their pensions were asking the wrong question.
The real question the private sector should demand an answer for is, “What has happened to my pension?” Retirement
was meant to be a three-legged stool: Social Security, an employer provided pension, and personal savings. 401k plans were
never intended to be the foundation of anyone’s retirement, yet they have become so today. Corporations have been allowed
to undermine pensions and depress salaries to increase their bottom lines, enrich investors, and inflate CEO’s golden
parachutes at the expense of workers. It is simply the product of corporate and Wall Street greed that has taken pensions
and helped drive this country into the ditch.
Recent research published by the National Institute on Retirement Security, www.nirsonline.org entitled “More Bang for the Buck,” points out that a defined benefit pension is the best retirement plan for
all Americans. U.S. News and World Report, August 2008, states “401k plans save employers money because workers fund
a portion of the plan. But a new analysis says 401ks are an inefficient way to finance a secure retirement.” The Financial
News, August 2009, points out that “defined contribution schemes such as 401k plans are more expensive for employers
to implement even as companies shift toward them and away from defined benefit schemes.” Time Magazine, Oct 2009, tells
us, “Why it is Time to Retire the 401k...the ugly truth is that the 401k is a lousy idea, a financial flop, and a rotten
repository for our retirement reserves.” And that is the real problem.
Public employees have a “defined benefit pension”--more accurately a deferred contribution
pension--and so should you. However, there are some truths about public pensions and State Teacher’s Retirement System
(STRS) in particular that the corporate-dominated press will never tell you.
In the first place, by state law teachers fund their own pensions. Their pensions are deferred compensation
acquired through negotiations. The moment teachers sign a contract to teach, their contributions to STRS become part of their
salary. The school board’s contribution to STRS is part of that contract. The school board’s 14% contribution
to STRS has not changed since 1984. Over the same time period, an individual teachers’ contribution rate has increased
42.9 % to the current 10% of salary. The truth is teachers fund their own retirements. Switching public pensions to defined
contribution plans is just a bad idea and will cost the state more.
Ohio teachers’ pension system was designed to replace Social Security and provide a decent retirement.
To this day, teachers don’t pay into or receive Social Security. (Those teachers who worked enough quarters in the private
sector get a greatly reduced payment. Social Security has a true compounded COLA, cost of living adjustment, based on the
Consumer Price Index.) The STRS COLA is not compounded and is based on final salary average and never increases during a retiree’s
life time. Teachers’ salaries are still low compared to similar degreed professionals. The media loves to quote the
salaries of large urban school districts like many in Franklin County. What they don’t tell you is that about half of
the teaching force works in rural districts and are paid far less. In many districts in southern Ohio, after a 35 year career
a teacher is lucky to earn $40,000. Currently, 37,000 30-year retirees have pensions of $30,000 or less, and 62,000 retirees
receive a pension less than $39,000. With Social Security, a company pension, and a 401 K or IRA plan, professionals in the
private sector still fare much better during their career and into their retirement.
Until recently active teachers did not have the option of paying into
Medicare. Consequently, about 10,000 retired teachers do not get Medicare Part A. STRS retirees have no spousal subsidy for
health care. A retiree couple pays well over $1000 a month for health care. This is a big hit to a small monthly pension.
STRS retirees fund 95 % of their health care and yet the fund is running dry. It will be the crisis for Ohio’s taxpayers
if nearly 170,000 older retirees are added to the state’s Medicaid and Welfare roles.
Teachers and their leaders continue to work to find ways to solve the
shortfall generated by the current market drop. Some changes have already been made. It is understandable that the public
is upset with their own lot, and the feeling that they have lost control of their own retirement, but public pensions are
not the problem.
The question
needs to be redirected. The real revolt will come when those 30 or 40 year old workers finally realize that with a 401k foundation
they will never be able to retire. Perhaps the media attack on public pensions was an attempt to redirect attention away from
what has happened to private pensions and the unconstitutional funding of Ohio schools. It is time to finally ask the right
questions so we all will be on the same side. Corporations and Wall Street will be on the other side where they have always
been.
A proud member of CORE:
Concerned Ohio Retired Educators.
Note: Below is a CORE membership
and/or renewal of membership form. Please detach and return to the address included (NOTE THE NEW ADDRESS):
________________________________________________________________
Make checks payable to: C.O.R.E.
CORE MEMBERSHIP REGISTRATION FORM
Mail To: CORE, P.O. Box 167, Wilmington, OH 45177
PLEASE PRINT BELOW:
County: _______________________ New Member ______(yes)
Last Name: __________________________________
First Name: __________________________________ (Mr., Mrs.,
Ms., Dr.) Circle one
Street
Address: ________________________________________
City: _____________________________ State_________ Zip: ______________
Telephone Number: (___)___________________________
E-mail Address: _____________________________________________
Do you want to receive CORE email Alerts? Yes or No (circle
one)
Amount of your CORE
dues: $____________ ($10.00 per school year, Sept. to
Sept.)
Additional
voluntary donation to CORE: $____________________________
From John Curry, March 1, 2010
Columbus Dispatch - Feb. 28, 2009
Newspaper miscast report on pensions
With each
story it becomes increasingly clear that The Dispatch doesn’t support retirement security for the more than 500,000
public employees who work in Ohio. First, it ran the Jan. 3 “Good as gold” articles, a four-page spread bashing
Ohio’s public pension systems, burying the fact that public employees are not eligible for Social Security, a huge gap
that must be filled by the public pensions.
Now it missed the point completely on the Pew Center on the States
report about public pensions in the United States (Dispatch article, Feb. 18). One only has to look at the headlines to see
the bias. The Cincinnati Enquirer’s headline was “Pew Report gives Ohio pensions high marks.” The Dispatch’s
was “Public pension systems reeling.”
The true success of the public pension systems in Ohio was buried
in another negative story by The Dispatch. The fact is Ohio was issued the highest rating as a “top performer,”
with 87 percent of its total pension costs in the bank, way above the recommended 80 percent preferred by pension experts.
And why didn’t The Dispatch use this quote from the study: “It (Ohio Public Employees
Retirement System) started saving back in the 1970s, and today it is one of only six states on track to fully fund its nonpension
(retiree health care) obligations. Ohio had $11.1 billion — an amount far higher than any other state.” Clearly
the headline should have been, “Ohio public pensions outperform the rest.”
And in general
the Pew report supported public pensions, which despite losing money in today’s poorly regulated Wall Street, still
manage to be funded on average at 84 percent, 4 percentage points higher than preferred by pension experts.
It is a disservice to readers, Ohio residents and public-employee retirees to mischaracterize this report.
JOHN A. LYALL
President
