Reform Alert--STRB

REFORM ALERT

The Appropriations Committee will be holding another public hearing on the Governor’s budget proposals affecting the State Teachers’ Retirement Board (STRB) (House Bill 5016) on Thursday, March 8^th.  Representatives from CEA will be testifying again, as we did at the last hearing held on February 21^st and CEA will continue its lobbying efforts on this bill after the hearing. You can submit written testimony and/or call or email your State Representative or State Senator - if they are a member of the Appropriations Committee, they will be voting on this proposal.  If they are not a member, you should ask them to speak to their colleagues who are members of the Appropriations Committee.  Here are links to the list of Appropriations Committee members and your State Representative and Senator:

Link to Appropriations Committee members:

http://www.cga.ct.gov/asp/menu/MemberList.asp?comm_code=APP

Here is the link to identify your State Representative and State Senator:

http://www.cga.ct.gov/asp/menu/CGAFindLeg.asp

Here are some basic facts about the Governor’s proposals:

Governor Malloy’s Proposal Affecting Retiree Health Insurance:

·        The Retired Teachers’ Health Insurance Fund (“Health Fund”) was created in 1991 and is administered by the State Teachers’ Retirement Board (STRB).

·        Active teachers contribute 1.25% of salary annually into Health Fund – this represents the largest contribution to the Health Fund.  In 2010-11, active contributions of over $45 million were deposited into the Health Fund.

·        Retired teachers participating in the STRB’s Medicare supplement plan also contribute a premium share to the Fund.  In 2010-11, retirees’ contributions amounted to over $30 million. 

·        Retired teachers and spouses under age 65 and over-65 retirees who are not Medicare eligible obtain insurance through last employing board of education and typically pay full cost of insurance, minus $110 per month subsidy paid from the Health Fund.  Monthly costs currently range from around $400 to over $900 per person, depending on local plans.

·        Under the Windfall Elimination Provision, teachers who do earn social security credits from other employment will receive a reduction in social security benefits of approximately 40-50%.  The Government Pension Offset also results in most teachers receiving no spousal benefit from social security.

·        The average age of a retired teacher on the STRB’s Medicare supplement plan is 75 years old.   

·        Many retired teachers received a $0 cost of living adjustment (COLA) in 2010 and 2011.

·        The Governor’s budget proposal will reduce the State’s contribution to the Health Fund resulting in savings to the State of over $15 million.

·        However, the Governor shifts the State’s financial obligation to retirees by proposing to increase the premium share paid by retirees on the STRB’s Medicare supplement plan from 33% to 42%.  Based on current 2012 rates, that would amount to an additional monthly cost of $32 per person, a 26% increase.

·        The reduction in the State’s contribution to the Health Fund will negatively affect its long-term solvency.  Active and retired teachers have been paying into the Health Fund with the understanding that it will be there for them when they retire.

·        This proposed 26% increase in the premium cost financially harms the oldest retirees, many of whom are unable to pay a significant increase in their medical premium.  Over 2,000 of these individuals retired before the Enhancement Act of 1986 and thus are receiving pensions based on minimal teaching salaries.

Governor Malloy’s STRB Merger Proposal:

·        Governor Malloy is also proposing consolidating STRB into the Office of the State Comptroller.

·        This proposal eliminates the longstanding autonomy of the STRB by having its operations and management performed by the Comptroller’s Office. The STRB’s autonomy has allowed important decisions to be made by a diverse group of constituents comprising the STRB including gubernatorial appointments, active teachers, retired teachers, agency heads. 

·        The proposal transfers the STRB’s long-held authority to offer the STRB’s health plan (currently Stirling) from the STRB itself to the Comptroller.  It also transfers the power to hire its own Director/Secretary and the right to recommend and certify all expenses paid by TRB and enter into contracts to the Comptroller.

·        Given the significant difference in technology utilized by the STRB and the Comptroller’s Office, presumably it would increase costs to consolidate their computer systems and processes.

·        STRB provide services for its active and retired members at a cost of $27 per member.  No other teacher or state employee system in the country comes close to matching this cost-efficient number.