STRS is reviewing retiree health care policies

The Health Care Committee of the State Teachers Retirement Board is reviewing health care benefits for current and future retirees to determine what measures should be taken to prevent the health care fund from becoming bankrupt in the next decade.

Changes already announced for 2003 include reducing the subsidy of enrollee cost from a 90 percent maximum to an 87 percent maximum, increasing pharmacy co-payments, and increasing deductibles to $500 per person on some plans.

Additional changes in health care eligibility and cost-sharing options are being considered for 2004 and subsequent years in response to rising health care costs, said Larry M. Lewellen, associate vice president for human resources and the Inter-University Council of Ohio's representative to the retirement board. The Inter-University Council is a consortium of the four-year public higher education institutions in Ohio.

At a roundtable discussion held on Aug. 27, the STRS Health Care Committee presented to constituency representatives, including the IUC, an outline of potential changes for 2004. The STRS board requested that representatives prepare feedback to be given at an Oct. 3 meeting.

"Ohio State, under the auspices of the IUC, recommended that STRS take an additional three to six months for discussion and research before taking any further steps," Lewellen said. "The initial timeline proposed by STRS did not give universities sufficient time to consult with faculty about their most important aspects of health care funding, nor with deans and vice presidents about their priorities."

After presentations made by the IUC and other affected constituencies on Oct. 3, STRS board members indicated they may take up to six additional months to conduct further study of the issues, including potentially holding focus groups with active and retired members.

The University is very focused on this situation, and will continue to work with STRS until a final decision is made, Lewellen said.

"It is too early to say whether STRS is over-reacting and responding to a worst-case scenario projection for the viability of the system. Health care trends can be very cyclical and we're not convinced that STRS has taken all potential factors, both positive and negative, into full consideration," Lewellen said.

Under discussion

At the Aug. 27 roundtable discussion, the STRS Health Care Committee presented these potential changes for 2004:

• New retirees in 2004 will need 10 years of service to be eligible for health care (up from 5 years);

• No health care subsidy will be provided unless a retiree has at least 15 years of service (up from 5 years); and

• The subsidy formula for enrollees will reduce from 87 percent, to a subsidy matching the individual's pension formula percentage; e.g., if a retiree's pension formula is 66 percent of average salary, then the health care subsidy will be 66 percent of the total health care premium; if the pension formula is 40 percent, then the health care subsidy will be 40 percent of the total health care premium.

Other potential changes are requiring all new retirees to reach the age of 60 before receiving a subsidy and, by 2007, reducing subsidies for dependents to zero and reducing the subsidy of Medicare Part B reimbursement from 3 percent to 2.2 percent. Or, instead of the latter choice, eliminating Medicare Part B reimbursement entirely in 2004.

Finally, STRS is putting forward for consideration a plan that would limit STRS' annual health care increases to the average increases in employer contributions.

"If the proposed changes are made, they would entail the largest reduction of retiree health care benefits in the history of the system," Lewellen said.

The system

STRS is required by Ohio law to ensure pensions are correctly and fully funded, and cannot fund health care until after pension obligations are met. Historically, the health care fund has been supported by 2 percent of the 14 percent employer contribution to STRS and by occasional special STRS allocations to the fund.

Currently, the health care fund is at $3 billion. For 2003, employer and employee contributions and investment earnings will only provide for $400 million of the estimated $600 million expenditure for the year, leaving $200 million to be drawn from the fund to cover the difference.

The gap in funding is expected to widen each year. STRS estimated that with no changes beyond those approved for 2003, the Health Care Stabilization Fund will be depleted by 2011. Depending on the number of changes put into effect, the fund life would be extended somewhere between two years and ten years.

STRS has apparently been examining potential changes for some time, and conducting focus groups with retirees, but only notified employers in August, Lewellen said.

The Public Employees Retirement System has not announced any changes to its health care benefit plans for active members and current retirees.

OSU's actions

In preparation for the Oct. 3 meeting of STRS' Health Care Committee, Ohio State's Office of Human Resources sent a memo to deans to inform them of the situation and to encourage them to communicate with their faculty about the issue. Lewellen also held meetings with the Faculty Compensation and Benefits Committee, the Senate's Steering Committee and the Faculty Council.

"We can't take a position that no changes are necessary because we face our own health care challenge here and recognize the need for adjustments to be made. But, we can question whether such sweeping changes are needed at this point in time," Lewellen said.

Faculty should be concerned not only for personal reasons, but also because of the potential impact on the institution, said Stan Ahalt, chair of Senate Steering and a professor of electrical engineering.

"The STRS retirement plan is a very important part of the hiring and retention plan, and a reduction in benefits could negatively impact the University's ability to recruit faculty," Ahalt said. "If STRS has to make changes, we'd like to see them monitor those changes, so if the situation improves, benefits can be restored."

A letter from the presidents of the IUC institutions presented to STRS on Oct. 3 expressed concern over the STRS Board's swift process. The letter presented no objections to the 2003 changes already announced to STRS members, but did question several aspects of the potential changes for 2004. Most notably, the IUC urged STRS to consider more incremental changes, such as a plan for grandfathering a defined set of benefits for current members and retirees.

"We've always known that health care coverage is not a guaranteed benefit of STRS, but no one expected them to just remove it without warning. This could potentially blow the retirement planning of many of our faculty right out of the water," Lewellen said.

Concerns expressed by the IUC were echoed by other organizations on Oct. 3, leading to the decision by STRS to consider providing more time for feedback and research and to consider additional options.

Ohio State will continue its efforts to discuss changes and solutions with faculty and to influence any decisions STRS makes on the topic, Lewellen said.

"We are cautiously optimistic that our voice will be heard during this process," Lewellen said.

Poet Laureate

Board confers honor on Citino

In a surprise tribute, the Board of Trustees on Oct. 4 named David Citino, professor of English, as Poet Laureate of Ohio State.

Citino read a poem at the trustees' meeting that he composed for new University President Karen A. Holbrook's first day on campus. Citino also has read his poems to University audiences as the Winter 2000 commencement speaker and following the Sept. 11 tragedy.

The Board's resolution included praise for Citino, "both in his words and in the life that he leads," and for being a "champion of words" who "demonstrated with style and grace that poetry is the language of a free, just, and humane world."

Citino has taught at Ohio State since 1974 and has authored 12 volumes of poetry and a long list of publications in prestigious journals and anthologies, and has been the recipient of many fellowships, awards and honors.

A Welcome to the President

Born a cross between a Hawkeye and Cyclone in Des Moines, you transformed yourself using the everyday miracles of zoology, into a scrabbling Badger whose province

is the stony patience learned in burrows. Not content, you rose to cooperative ventures as a team player, trusty Husky running hard all day for greater good of each and all.

You weren't finished. Impossible nearly to imagine, with that kind and easy demeanor, charming smile, you became a Bulldog, pugnacious growler guarding those

you hold most dear. In the midst of this, you learned the ways of one who feels at home in earth and water both, a Gator who bides her time, mistress of strength and cunning.

Now, this day, you've come to us, not to metamorphose yet again, but to share that wisdom gained from creatures of your totem, every life lived earlier,

finally an Ohioan. The newest Buckeye, you're not a nut but one possessed of that eye of the deer the ruddy, old ones admired, far-seeing, quick to discern. Our place

is now your place, this university and state, and we all are round on the ends and high in the middle with joy to say those words we've waited years and years to say,

We welcome you, President Karen Holbrook.