January, 2003
From The President
Happy new year all!! I hope you and your families had some good family time over the holidays and you all found some time to relax and get "charged up" for a busy 2003.
First, I am sure the status of the 2001 - 2003 contract is on everyone's mind. At this writing the contract still has not been taken up by the legislature - it's ironic we waited for the Legislature and the Governor to develop, then "repair" the budget, now after everyone has done their part we're back waiting for action by the Legislature and the Governor.
The republican majority in the legislature has been delaying action on teh contracts under the "cloak" of fiscal responsibility- hmmm..... we're in this budget mess because of thier lack of fiscal responsibility. Holding up the contracts of the real working people who make the state government work is simply wrong - it should be common sense, but it appears common sense is something missing in Madison- hopefully Governor Doyle will bring it back.
What can you do? Write a brief note to your representatives and let them know how disappointed you are with their lack of action. Keep your note brief and professional. Let them know you object to a legislature that won't approve contracts for the working people of the state, but they can find time and money for legal fees and accused felons.
This should be a primer for all members to participate in our 2003 Visit the Hill day - stay tuned for the date and time, see you section president and sign up.
We are also preparing for the 2003 - 2005 round of bargaining. We anticipate starting something in April or May of 2003.
The next few years will bring budget challenges for us all in the State service - remember to continue to be professionally and technically the best at your jobs - that's how we can best serve ourselves and the taxpayers.
The Association is YOU! Continue to support your local leadership and participate!
Respectfully,
Timothy R. Hanley
SEA President
WI COALITION OF ANNUITANTS (WCOA) MEETINGS - NOVEMBER 20 & DECEMBER 18,
2002
ETF Secretary Eric Stanchfield was the guest speaker and he provided many
statistics on the WI Retirement System and the Gro'Up Insurance Board. For a
detailed report, see the Group Insurance Board article in this SEA Newsletter.
Eric's information on the retirement system comes from both ETF and
SWIB because he also is a member of the Investment Board.
WRS Information
Total Participants: 523,000
(One of every five people in Wisconsin are members or beneficiaries of WRS)
264,000 Active Participants
73% Local Government and Teachers
27% State Employees including UW Systems
Total Active Payroll: 9.7 billion dollars/year
Yearly contributions to WRS: 926 million dollars
71,000 Variable Fund Participants
135,000 Annuitants - average annual annuity: $18,400
144,000 Inactive Employee Accounts
In year 2000: 2.3 active employees for everyone annuitant
In year 2020: 1.0 active employees for everyone annuitant
WI's national financial rating was third. Now currently, we are 48th in the
nation between Mississippi & Louisiana.
(Act 11 provided a 200 million dollar contribution holiday for unfunded
liability; only 14 million 'Used.)
(Act 109 Budget Repair Bill provided the State with a holiday for 72 million
for the sick leave conversion program.)
Currently the State Administration has a 697 million dollar unfunded liability
to the WRS (IOU) costing them 8% each year of $55..76 million.
Eric Stanchfield is very concerned that politically they will try again
because of budget problems. He has provided info about contribution holidays for
employers. SEA Board members have a copy.
Guest speakers on December 18, 2002 were Ken Johnson & Ron Mensink of SWIB.
Ken covered SWIB's performance as presented in the SWIB article in this SEA
Newsletter.
Ron covered SWIB Quantitative Analytics, which covers the following:
. Asset
Allocation Analysis
. Performance Measurement
. Risk Measurement
Ron covered stage 1, setting long-term strategic objectives wit
best risk/return trade Off. Stage 2, asset allocation process to d
(a.) between asset classes (e.g. U.S. stocks versus bonds); (b.)
asset classes (e.g. overweight small cap stocks or corporate bonds;
(c.) individual portfolio security selection.
2003 Asset Allocation Process
. October 2002 strategic planning workshop
. Subsequent risk committee and board meetings
. January 2003 recommendations at Board Meeting:
a. Strategic target mix
b. Rebalancing versus tactical positioning
c. Cash allocations.
I We learned after the meeting that the new majority leader, Senator Panzer,
named Senator Schultz from La Crosse co-chair with Rep. Vrakas to the Joint
Survey Committee on Retirement Systems (JSCORS).
Ed Kehl announced that the WCOA annual conference will be held on
May 6, 2003 at the American Family Headquarters Center.
A motion was passed to share the WCOA Health Insurance Survey with
any organization interested. I have a copy and will provide a copy of
the evaluation data to all SEA Board members.
The next WCOA meeting is set for January 15, 2003.
Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative
STATE ENGINEERING ASSOCIATION - JANUARY 2003 PAGE 8
ETF GROUP INSURANCE BOARD MEETING NOVEMBER 19 2002
Blue Cross & Blue Shield of Wisconsin provided to the Group Insurance
Board the 2001 Health Care utilization Report on services used by Medicare &
Non-Medicare patients by all ETF covered employees & annuitants. The average
number of members using health care benefits has gradually decreased from
1995 through 2001 (both Medicare and Non-Medicare).
The other main topic discussed was the recommendations by the study
committee on how to improve the health care system and, hopefully, maintain
cost level. The following members made up the committee:
Group Insurance Bd. members ETF Staff- members
Randy Blumer, Vice Chair Eric Stanchfield, Secretary
Bob Alesch, Annuitant Dave Mills, Deputy Secretary
Marty Beil, WSEU Tom Korpady, Div. Admin.
Peter Fox, DER Bill Kox, Director, Health Benefits
Esther Olson
A copy of the committee report dated November 13, 2002 has been provided to
all SEA Board members, and anyone interested can review the six pages of
recommendations.
The following are the key elements of the proposed recommendations:
-Changing the current premium contribution structure to a tiered
grouping approach.
-Carving out the prescription drug benefit and contracting with a
Pharmacy Benefit Manager for all drug benefits.
-Conversion of Standard Plan I and Standard Plan II into one Preferred
Provider Plan.
-Integration of quality and safety standards into program requirements.
-Exclusion of dental benefits from existing plans and create a stand alone
dental plan available to all state employees when a reasonable employer
contribution becomes available.
Please review the six page report for the details of the proposed changes.
The Group Insurance Board passed a motion by Peter Fox approving the concept
of the Study Committee Report and the ETF staff are to develop the steps
necessary to create the new system.
The whole Group Insurance Board will discuss the new system at the February 18,
2003 meeting.
Also of interest is that the SEABoard is developing a Benefits Research
Committee. A more detailed discussion will take place at the next SEA Board
meeting.
Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative
To All SEA Represented Employees
Previously Covered by the Dentacare dental plan
As you are aware, Blue Cross & Blue Shield - DentalBlue notified us of their
intent to terminate the current Dentacare plan effective December 31. 2002.
We attempted to implement a new plan through Delta Dental and many of you did
complete an enrollment form. Unfortunately, there was not enough interest from
the membership to meet participation requirements for the new plan. Therefore,
there will be no dental insurance plan available at this time.
MEETING WITH ETF SECRETARY ERIC STANCHFIELD - DECEMBER 5, 2002
The discussion with Eric Stanchfield and Dave Mills between WCOA, WREA,
and myself as Retirement Consortium President and SEA Representative! evolved
around newspaper articles about a possible contribution holiday being
considered for employer contributions to WRS.
ETF is not sure if it was a media assumption or a trial balloon from
Governor-elect Doyle's transition staff. They are not able to confirm the
origin.
If the holiday is considered, they could only count on the employer's
half of the contribution, which would mean they could only consider half of
the 946+ million due each year, which would be 473 million approximately.
Eric indicated that any holiday would be challenged. ETF is currently
preparing a legal challenge of the 72 million sick leave fund contribution
holiday, which started in August 2002 from the Budget Repair Bill, passed
last July.
We also discussed changes in legislative committees and the ETF & SWIB
Boards because of the November 5th elections.
Please note all the newspaper articles provided to the SEA Board members
regarding the retirement system and health insurance system changes coming in
the
next two years.
Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative
ETF BOA!3Q MEETING - DECEMBER 12,2002
ETF is drafting new rules for the changes in the new federal laws for
implementation. They also submitted final revisions to the variable fund
administrative rules.
There seems to be a question of the Standard Form of Beneficiaries vs.
a personal designated list, which would be part of an estate plan. Everyone
may want to review which designation they have provided ETF and whether a
change is necessary.
The legislative report by Pam Henning was not good because the Republican
Legislature is looking hard at Money Money Money.
1) The change to federal regulations is delayed because of revisions.
The temporary rules are held up.
2) The Legislative Budget Committee is questioning the $2 billion unfunded
liability of Act 11 and will try to merge SWIB & ETF.
3) The Budget Committee will review the effectiveness and efficiency of the
electronic government department.
4) Health insurance for small employers. They will look at pooling and
study how to incorporate quality & safety items.
5) The state has a $926 million unfunded liability on retirement. The
sick leave conversion dues holiday will reduce the funding level from
64% in July 2002 to 52% funding by July of 2003. They will be delaying
contributions of 72 million dollars which adds to the unfunded liability.
Julie Reneau provided a copy of the current status of Act 11 implementation
with the backlogs and estimated completion dates. All SEA Board members have
a copy of her report dated November 27, 2002.
Julie also mentioned that the annuitant dividend changes will be effective
April 1, 2003 as compared to May 1st in previous years.
Jonathan Becker, Legal Counsel for the Wisconsin Ethics Board, provided a
report to the ETF Board on state laws covering state public officials,
lobbying laws, campaign contributions, gifts & favors, conflicting interest,
use of confidential information for private gain and advisory opinions.
The ETF Board passed a motion to set negative dividends threshold at a
...0-5% and the positive dividends are set by State Statute at 2.0%, and
anything
less that 2.0% is carried over to next year in the fixed (balanced fund).
The variable fund has a state statute level determined at 1.0% both plus or
minus on dividends.
The ETF Board is considering a statute change to make the fixed fund (balanced)
threshold the same as the variable fund at -1.0% and +1.0%.
The next ETF Board Meeting is scheduled for March 13-14, 2003.
Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative