September 2002

FROM THE PRESIDENT
By the time you read this the SEA elections will be in progress - take some time to read
about those who will represent you and vote for those who will represent you best. It is
important for you to make good choices in the Association elections. Your vote counts and
it does make a difference.

Your participation in the State's primary and November elections is very important Local
sections are encouraged to meet and talk with potential candidates and learn about their
views on the issues facing the State today. Do some research and learn about the
candidates. If you find candidates you 1ike send a donation, help them with their
campaign, put up a yard sign, etc. Wisconsin is your State and you pay lots in tax dollars
to support it so make sure it is heading in the direction you think it should be heading.
I don't think we, as State employees, can be happy about how things are being run today.
Stress in the workplace continues to grow as vacancies go unfilled. Managers are being
forced to use more and more consultants to accomplish tasks normally done by State
employees, the State continues to be willing to pay more for less in the consultant area, but
refuses acknowledge and pay State employees a comparable wage. We need
legislative changes--your vote is a start to making those changes. Make a point to vote in
the upcoming elections - make an informed vote.

VOTE VOTE VOTE VOTE VOTE VOTE VOTE VOTE VOTE VOTE
Remember to manage your stress at the work place. You can only do so much in an 8
hour day so if things are getting difficult and the piles are high, take a moment and talk with
your supervisor - ask them to help prioritize your tasks. Be honest and let them know if
you can't get everything done, do your best... that's all anyone can ask for. Keep lines of
communication and keep them informed.
Continue to be professionally and technically the best at your jobs ,it's how we can best
serve the taxpayers and ourselves! The Association is YOU! Your participation is critical
to the success of the Association.
Respectfully,
Timothy R. Hanley, SEA President

Legislative Report September 2002
Larry Legro 2nd Vice President
The good, the bad, and the ugly.

Good - A Hospital based union in Madison just won a ruling that em ail can be used to inform its
members of the results of bargaining.

Bad - Milwaukee Journal Editorial criticizes "free" health benefits for us (state employees).

Ugly - Wisconsin political arena. Can things get much worse than the current state of affairs at the
Capitol?
Good - Upcoming Elections both SEA and local, state and counties. Be sure and vote in the
September 10th Primary Elections and in the November 5th Elections. It is real important to
cast your ballots in all of these elections. SEA has already sent out its ballots too. Also, Please
attend our (your) Annual Meeting of the Members in Rhinelander on October 12, 2002.

Bad - Tax referendum proposed by Governor McCallum. First he entertains the bad idea of
ending shared revenue to local governments, then he pushes for constitutional amendment that
would require any tax increase proposal to pass in a statewide referendum before it could be
implemented. He hinted a special session (in an election year) would be called which in many
views was thought to be a gimmick to help his uphill reelection bid. What is really needed is II
what he claimed he would do when he took office - that is to live within his budget. What is
needed is fiscal responsibility and better financial planning
Another reason this referendum is a BAD idea is the elected legislators (the ones we elect by
Voting) are supposed to be the ones making these decisions. If you do not like their priorities
or how they perform at the Capitol, then fire them and find someone else.

Ugly - Another editorial by the Milwaukee Journal called the budget repair bill signed into
law recently "a 4 day old fish would smell sweet by comparison.", and a "sorry substitute for
responsible governance."
 

Did you Know?
51 of the 116 legislative incumbents are running
unopposed.
Since the year 2000, the state pension fund has
decreased by II billion dollars primarily because
of the economy and corporate greed.
The legislature recently cut their per diems, and
postponed their pay raises, but part of this is due
to overspending their internal budgeted
allowances, such as paying for re-districting
($488,000 legal fees), attorney fees for staff in
the caucus investigation ($574,822) - Scott
Jensen alone has charged over $160,000 of this
amount). The Assembly deficit is at $2.3 million
dollars at present and growing.
Jim Doyle, candidate for Governor, has pledged
to cut 10,000 state jobs if he can win and be
governor for two terms through 2010.
Senior care has started so get your elderly loved
ones signed up, it might reduce the cost of their
prescription drugs now and in the future.
The state DOA is reducing their car fleet by 370
vehicles. The Governor still likes to fly though,
according to some sources, meaning the state of
the current airplane fleet is still "up in the air."
SEA employees get reimbursed .19/mile
(.14/mile for a motorcycle) if using their private
vehicle on state business while legislators
receive over .30/mile (likely the federal IRS rate
of .345/mile) and this is paid regardless of type
of vehicle (just ask Senator Dave Zien of Eau
Claire who raked in about $20,000 in mileage
expenses while being a fun time legislator
make that... fun time driver and part time
legislator. Kind of makes me want to run for
elective office, buy a Harley and see the world
on the state taxpayer's dime.
John Gard-Assemblyman from Pestigo (and
critic of state employees) lives in
Sun Prairie, his daughter is enrolled in the Sun
Prairie school system, but he claims to live in his
district. Having a home in Pestigo goes not
qualify as living in the district. I intend to
pursue this issue some more.
 

ETF ANNUITANT ROUND TABLE MEETING - AUGUST 20, 2002

Ken Johnson and Keith Johnson, both from SWIB, provided much information
on investment per£ormance and corporate governance including a Litigation
Recovery Report for Fiscal Year 2001-2002.

SWIB July 30th Performance year to date:
Fixed Fund -9.4%
Variable Fund -19.1%
Ken reported that the Board will take a new look at long term income and
change their asset allocations in the next 3 or 4 months.
Currently, the WRS is into a negative cash flow to pay benefits of the
system. The contributions, because of reduced employees, are not providing
adequate cash to pay annuities of 112,000 retirees.
Kei th Johnson's report on Governance started with a report on Enron & WOrld COm
losses totalling $125 million, which amounts to 0.2% of the retirement
funds.

SWIB has joined others in the recovery actions. The recovery of Enron
losses will take another year. SWIB has entered the California class action of
Enron.

SWIB loss in World Com bonds is $29 million. There have been several class
action suits filed on World Com; however, SWIB may be able to file their own suit
in a week or two on the direct purchases of World Com bonds.

Keith reported that the federal law passed July 30,2002, Sarbanes-Oxley Act,
is the most important bill passed since the 1930's. Keith provided a copy of
the Sarbanes-Oxley Act Summary and all SEA Board members have a copy for review.
I'm sure I will have more information on these subjects as the saga unfolds.
SWIB has another corporation, End A Con, with a $23 million dollar loss, which
they will be the lead attorneys, and they are going after the company, principle
owners, accountants Price waterhouse, and families of the owners.

We also touched on another subject of airline bankruptcies. Keith indicated
that SWIB is in better shape there because they have bonds on the aircraft
equipment only which have good value.

Keith also mentioned that UW Business School will conduct the Second Annual
Directors Conference in September, and they have speakers from Arthur Andersen, SEC,
National Directors Assoc. & Directors of Insurance Assoc.

Pam Henning, ETF, updated us on activities of their department. Pam has moved
up to Director of the Office of Strategic Services, and they have hired Vickie Pool
for the legislative liaison position.

ETF has a backlog of final annuity calculations because of Act 11. The
staff have 3,400 manual calculations left to complete of the original total of
8,400. They also have all the final annuity computer calculations for all
participants who retired between July of 2000 and this month, August 2002.
You can see it will take a while.

The federal tax law changes will require extensive changes in WRS to accommo-
date the changes.

Note the summary of the federal law changes provided to all SEA Board members.
Pam also mentioned the Dual Choice Period for Health care Plan enrollment
changes is set for October 7 through October 25,2002. Remember, the increased
co-pays for drugs: $5 generic; $17.25 for brand name for 2003 with a maximum of
$300.00 for single plans and $600.00 for family plans.

The next meeting of the Round Table is set for November 12, 2002.
Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative
 

ETF GROUP INSURANCE BOARD MEETING AUGUST 27, 2002

The following is a list of information provided to all SEA Board members
from the Group Insurance Board meeting for you to review if necessary:

. Group Health Insurance Fact Sheet 2002.
. Group Life Insurance Fact Sheet 2002.
. Accumulated Sick Leave Credit Conversion Program Fact Sheet 2002.
. List of pending appeals dated August 1, 2002.
. Letter from the LEAP FROG GROUP to ETF dated June 25, 2002.
. Group Health Insurance 2003 Monthly Premium Rates by County for Full Time Employees.

The weighted average increase for 2 standard plans and the 17 HMO plans who sub-
mitted bids is 13.6% for 2003. The total state employees and retirees covered by
all these state plans is 68,553.

The Standard Plan I 2003 rates are: Single $1,052..00jmonth;Family Plan $1, 953.50/month.
The Standard plan II 2003 rates are: Single $316. 21/month; Family plan $1,216.80jmonth.

The latest figures show only 2,017 active state employees are covered by
one of the standard plans and 66,546 are covered by the HMO plans.

In the South Central area for 2003, the increased percentages were as follows:
Physicians Plus increased 15.5%.
Group Health cooperative increased 9.9%.
Dean Care increased 8.6%..
Unity-UW increased 5.9%.
The Group Insurance Board also approved the waiver of premiums for employers on
the LTDI (Long Term Disability Insurance) because of current funding level and
the reduced number of applicants, and no adverse selection. The current premium
level is .24% of payroll.

The Board also approved the current procedures for LTDI be extended to the
year 2005.

The SEA Board members also have a copy of Matt Pommer's newspaper article (state
health costs up l3.6%) dated August 27, 2002.

Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative
 

WI COALITION OF ANNUITANTS (WCOA) MEETINGS - JULY 11 & AUGUST 21, 2002
The IRS changes made in 2001 by EGTRRA (Economic Growth & Tax Reconcilia-
tion Relief Act) were put in the Budget Repair Bill, Wisconsin Act 109.

Other items in Wisconsin Act 109 are as follows:
. Suspend state contributions for sick leave credit for 12 months.
. Private employer health care coverage program.
. State employee voluntary furlough (not to exceed 8 weeks).
The following items were removed or vetoed:
'. Mental health parity
. Coverage of contraceptive articles & services
. State employees to pay $10 or $20 for health insurance coverage.
. Require part-time employees to contribute 50% of health insurance
premiums.
. Reduce accumulated sick leave that could be earned by state employees.
. Elimination of employer contribution to Income Continuation Insurance
Program.
Partial veto of the following items:
. State employee CAP - DOA must ensure no more than 80% of vacant
positions are refilled for fiscal year.
. SWIB Venture Capital 50 million additional dollars invested in
Wisconsin. Governor vetoed the specific locations.

Pam Henning of ETF also mentioned that effective October 1, 2002, the
dividend payments next year for annuitants will be paid on April 1st instead
of May 1st: Also, anyone retiring during a year will be pro-rated to the
nearest 0.1% rather than the current 1.0%.
SWIB Performance Report year to date:
Benchmark
June 30, 2002 Fixed Fund -4.6% -3.8%
Variable Fund -11.0% -10%

SEA Board members have copies of the ETF Summary of Wisconsin Act 109
Budget Repair Bill for more details of the above information.
The next WCOA meeting is scheduled for September 18, 2002.

Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative