WCRTA - Legislative
News - November 2011
Issue 2 and Senate
Bill 5: Curtailing of Collective Bargaining for Teachers and Other Ohio Public Employees
Today is the day when all of the hype comes to an end about Issue 2. The
petition drive to repeal S.B. 5 easily got enough signatures to place the issue on the November ballot as issue 2. A “NO”
vote today will repeal S.B. 5.
Both sides have spent tremendous amounts of money on TV commercials, trying
to sway the public on collective bargaining for public employees. The proponents of S.B. 5 have touted the money to be saved
by taxpayers, who are unduly burdened by the excessive taxes which are required to pay what they call excessive public salaries
and benefits. “Public employees are paid 43% more than the rest of us” one ad noted. The opponents of S.B. 5 have
argued that ending collective bargaining would result in ending negotiation for adequate staffing for public safety and pupil
welfare, such as adequate staffing for fire departments and for teachers to keep class sizes low.
The advertisements
from both sides have been misleading of misdirected. The ads favoring S.B. 5 are misleading because the “excessive taxes”
are not due to excessive public salaries. Most legitimate studies show that for the level of education required, most public
employees receive total compensation less than or at best equivalent to those in the private sector. The higher taxes are
the result of falling state revenue and cuts in state support for education and local government and are not the result of
excessive salaries and benefits. The cuts in state support are compounded by excessive reliance on property taxes for support
of local education and local governments. Falling property values have exacerbated the problem. The ads opposing S.B. 5 have,
in my opinion, not addressed the real issues. Instead they implied that collective bargaining is used by public employees
to bargain for the benefit of the public. Ending collective bargaining would therefore hurt the public, the ads conclude.
But while public employees sometimes bargain for adequacy of staffing levels or for maintaining or reducing class sizes, that
is not what collective bargaining is really about. Could we not have heard some facts about the real causes of the problems?
As expected, we have had a campaign filled with misinformation, and with lots of money flowing from outside
the state to campaign both for and against repeal. Some figures were made available in the Enquirer on Saturday on the spending,
but they are far from complete. It is worth noting, however, that public opinion polls all along have continued to indicate
the public is supportive of repeal of SB 5. Unfortunately talk is already surfacing about a further piecemeal campaign by
Gov. Kasich and Republicans to restore the provisions of S.B. 5 even if it is repealed.
STRS Pensions
HB 69, SB 3 on Pension Plans on Hold in Ohio House and Senate
STRS continues to advocate that any discussion of pension reform, including
changes in employer and employee contributions, be carried on in the context of the pension reform legislation in the above
two bills.
Legislation on Hold: Some Progress Reported in Selecting Actuary
In September, the Ohio Retirement
Study Council reported that six potential vendors had submitted proposals in response to its Request for Proposals (RFP).
The six firms are: Deloitte, The Segal Company, Bolton Partners Inc., Hay Group, Milliman and Pension Trustee Advisors.
On October 11, a subcommittee of the ORSC, chaired by Rep. Keith Schuring (R-Canton) and composed of two other
members, Rep. Dan Ramos (D-Lorain) and Seth Morgan, a gubernatorial appointee, met and scored the six proposals. The categories
used to score were: management summary, vendor capabilities and references, staff qualifications, resources, methodology,
timeline, additional information about services, glossary and cost information. The Hay Group received the highest score-a
46 out of 50. The Pension Trustee Advisors/KMS Actuaries came in at 43, Segal and Milliman at 37 each, Bolton Partners at
30 and Deloitte at 26. The full committee met in October 13 and accepted the scoring.
The six bidding firms are expected to make presentations to the
Council on November 16, after which the contract will be awarded.
Changes in
Health Care Program
As usual, in late October during the open enrollment period, each enrollee should
have received personalized information that outlines their premiums for the plan options for which they are eligible. The
open enrollment period is from November 1-22.
Reduction in Premium Subsidy: The information provided
on your premiums during open enrollment includes the 0.1% cut to be made in the health care subsidy for STRS retirees previously
reported. In 2012, the premium subsidy will be reduced to 2.4% per year of service from 2.5%. This is the first action in
a four part series of actions to reduce the subsidy from 2.5% to 2.1% over four years. That reduction over four years amounts
to a 12% reduction in the subsidy. The reduction is being introduced gradually, “to help members adjust to the change:”
0.1 % each year for four years.
The information provided on your premiums during open enrollment includes
the 0.1% cut to be made in the health care subsidy for STRS retirees previously reported. In 2012, the premium subsidy will
be reduced to 2.4% per year of service from 2.5%. This is the first action in a four part series of actions to reduce the
subsidy from 2.5% to 2.1% over four years. That reduction over four years amounts to a 12% reduction in the subsidy. The reduction
is being introduced gradually, “to help members adjust to the change:” 0.1 % each year for four years.
Aetna Medicare Plan (PPO) to be made available to Medicare Part B-Only enrollees
Those of you eligible for
Medicare Part B will now be eligible for the Aetna Medical Plan, provided you live in the U.S. and all your covered family
members are enrolled in Medicare Parts A & B or Part B only. You must continue to pay your monthly Part B premium on time
to remain eligible for the Aetna plan. If you do not wish to go to the Aetna Medicare Plan, you must opt out for the Medical
Mutual Basic Plan during open enrollment. Previously you had a choice of the Medical Mutual Plus Plan or the Medical Mutual
Basic Plan. The elimination of the Plus Plan and the substitution of the Aetna Medicare Plan should result in a lower premium
for you.
With this change, the only ones eligible for the Medical Mutual Plus Plan will be non-Medicare enrollees, families
that have both non-Medicare and Medicare enrollees, or enrollees who reside outside the US.
Prescription Drug Coverage: Increase in Maximum Annual Expense
The maximum annual expense for Express Scripts will increase to by $150
to $4,700 for Medicare and non-Medicare enrollees. The 2011 level was $4,550.
Current Medicare Part D enrollees should recently have received their
new Identification Cards from Express Scripts and should have begun using the new card immediately. They will not receive
a new card in 2012.
Medicare Premium Reimbursements for Part B to Be Continued in 2012
In April the Board
voted to continue the Medicare Part B subsides at their current levels for 2012.
Health Care Assistance Program to Continue in 2012
Also the Health Care Assistance Program will continue in 2012 with the same levels of coverage. This program provides
qualifying benefit recipients with medical and prescription drug coverage at no cost.
Medicare and Social Security Changes
for 2012
2012 Social Security Payments to Increase
Because of an increase in consumer prices, Social Security recipients
will get a 3.6% increase in benefits in 2012, the first increase in three years.
2012 Medicare Premiums Increase Slightly
The monthly Medicare premiums
for 2012 for most beneficiaries will increase by $3.50 per month to $99.90 per month. That is considerably lower than the
increase predicted in May 2011. Medicare premiums have been $96.40 since January 2008, the last time there was an increase.
Medicare premiums have been held in check by a law that prevents any reduction in Social Security payments that might be caused
by an increase in Medicare premiums. Because of low inflation, Social Security beneficiaries did not receive a cost-of–living
increase in 2010 or 2011.
2012 Medicare Deductibles Changes
The annual deductible for Part B of Medicare,
the amount that beneficiaries pay before Medicare starts to pay will be $140 next year, down $22. The deductible for Part
A will rise by $24, to $1,156 next year.
Because of an increase in consumer prices, Social Security recipients will get a 3.6% increase in benefits
in 2012, the first increase in three years.
STRS INVESTMENT NEWS
The Economy: Third Quarter Gross Domestic Product
Good news about the GDP in the third quarter. On October 27, the Government
announced that the GDP-the total value of goods and services produced by labor and property in the US-grew 2.5% in the July
through September period. That should dispel concerns about another downturn, economists say, and lift the confidence of consumers
and business.
Consumer spending rose 2.4%, the biggest increase since the fourth quarter
of 2010. Consumer sales of durable goods jumped 4.1%, including auto sales. Consumer spending on services also jumped 3% to
the highest level in five years. Business investment shot up 16.3% to the highest level in more than a year, yet businesses
cut back on inventories. Exports also rose 0.4% compared to 3.6% in the second quarter.
The U.S. recovery had seemed
to come to a halt in late summer. The GDP had grown by only 1% in the second quarter and by only 0.4% in the first. Those
were disappointing figures after GDP in the fourth quarter of 2010 had increased at a rate of 3.1%. The growth rate had been
only 0.9% in the first half of 2011. Confidence had been hurt even further by the budget standoff in Washington and Europe’s
worsening debt crisis.
However, in late September, the Gross Domestic Product for the third quarter was revised
up to 1.3% from an earlier estimated 1%. Then news came out of the 2.5% growth in the third quarter.
While this
is good news, the increase in the third quarter does not change the fact that this recession ranks as the worst in post-World
War II era.
STRS Portfolio
Because the market has been so volatile, what about the investment returns for
STRS? In round numbers, current assets at the end of June were $66.163 billion, up from $56.891 billion at the end of June
2010 or an increase of $9.764 billion or 17.16%.
The last figures available for the investments are
as of September 30: the market value of the assets was $59.354 billion a decrease of $6.809 billion. That is down 8.9% since
June 30. As seen in the stock market figures above, however, the months of October and November, which are not reflected in
the investment figures, have seen a significant rise, and the actual current investment figures are clearly not nearly so
bad now as they look as of the end of September.
For information about STRS, CORE, etc. visit the following
websites:
strsoh.org, kathiebracy.blogspot.com, concernedohio.org
