NEWSLETTER
STATE ENGINEERING ASSOCIATION VOLUME XXXIV ISSUE 2 February, 2004

FROM THE PRESIDENT

We continue to work on bargaining issues with the state. Progress has been slow and we
have lots of big issues to deal with but we are committed to working out a fair contract for the
Association. Our next bargaining session is scheduled for Friday February 27, 2004.
We are beginning to hear from members and non-members about the health care changes the
state has made. As employees use health care it is becoming clear that employees see a
major cost shift from the previous formula and poorer service. Employees who have the SMP
plan have reported the largest drop in service and increase in cost. The SMP plan covered
approximately 400 employees in 2003 with the State's new system in place it now covers 5000
employees. The SMP does not provide the same uniform benefits that the other HMO's
provide and it comes with additional deductibles. This should be of concern to all of you
because for this year the State allowed the SMP as a tier one provider, but they noted it really
should be in tier two. Where do you think it will be next year if the State has all the union
contracts settled? See your section president for updates about bargaining.
Please report any insurance/drug plan problems you experience to your section president.
Visit the Hill day is scheduled for April 28, 2004. Plan to attend now. I know you all are
frustrated at the direction state government is heading. We are taxpayers and frontline
employees who see the results of bad policy decisions. This is a great opportunity for you all to
spend a day at the Hill and provide feedback on where government is heading and where it is
failing.

We see degradation in the engineering standards at all state agencies. We'll be developing a
special newsletter for Visit the Hill with information and examples for members to use when
they talk with their government leaders.

We were all optimistic that Governor Doyle would take the opportunity to lead Wisconsin away
from the "pay for play. politics of the past. It's very sad and disappointing that the Governor
seems to have settled into that system of politics. Cost to the taxpayer is not a consideration
in his policy. Government services and standards continue to be eroded by the Governor.
I encourage everyone to get involved and informed about the presidential race. Your vote is
important. Your issues are important, your tax dollars are important.

Remember to be professionally and technically the best you can be at your jobs! It is how you
can best serve the taxpayers of the State.

Respectfully,
Timothy R. Hanley
SEA President

SWIB MEETING - JANUARY 14, 2004

Performance for the year 2003 (December 31):

                                        October 31     November 30     December 31
Fixed Fund                      +l7.6%            +19.4%              +24.2%
Variable Fund                 +24.5%            +26.6%              +32.7%
Retirement Funds Fixed $56.9B 10.4% (external management)
(12-31-03) Variable 5.8- 7.5%

TOTAL: $62.8B 10.1%

SWIB has revised their investment targets for 2004 portfolio management
as follows:

Fixed Fund 59% equities; 3l% fixed income
Target & 10% alternative

Variable Fund 80% u.s. equities

Target 20% international equities

The highlight of 2003 was John Nelson's small cap portfolio ended the year at +90%.
SWIB has two bills in the Legislature, S.B. 380 & A.B. 740, identical bills
to combine two reports into one report for the Legislature. SWIB is working on
another bill to exempt the property tax on the building they purchased fro1!1
DOA who had a tax exemption for the building. They are still working on the
details with the City of Madison.

One 1!1ajor accomplishment by the WCOA organization was the letter communicating
WCOA concerns to the Investment Board--our concerns we have about the selection
of a new permanent Director of SWIB to replace Pat Lipton who retired January 2, 2004.
This letter, dated January 12,2004, was the first direct communication with the
State of Wisconsin Investment Board. We have only been able to discuss SO1!1e items
with individual Board members in the past. All SEA Board .members ha-ve copies of
the letter addressed to the Investment Board for additional infor1!1ation.
The next SWIB meeting is scheduled for February 11, 2004.

Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative

JOINT SURVEY COMMITTEE ON RETIREMENT SYSTEMS HEARING
JANUARY 14, 2004

This hearing was not well attended like other retirement hearings. Again, the
Notice of the Hearing was very short, and the bills being reviewed were A.B. 692 and
S.B. 344, both proposing to revise and set the minimum threshold for dividends paid by the
the WRS to annuitants, both plus and minus at 0.5%,. Presently the statutes have a plus 2.0%
minimum, which was set when ETF was hand calculating what our dividends would be.
The Committee did vote 10-0 to recommend the bills as good public policy; however,
other legislative committees will also conduct hearings and both the Assembly and the
Senate will have to pass them on to the Governor.

On February 11,2004, Senator Reynolds' labor committee did not take vote on these
two bills.

I recommend that everyone call their local legislators and urge them to move these
bills now or there may not be a dividend on the Fixed Fund for 2003!

Melvin B. Sensenbrenner,
SEA Retirement & Health
Insurance Representative

SWIB MEETING FEBRUARY ll, 2004

Dave Mills reported that the good performance is continuing into 2004
with the following numbers for January 2004:

                            YTD December 31,  2003 January 31, 2004 Benchmark
Fixed Fund         +24.2%                     +1.7%                 1.4%
Variable Fund     +32.7%                     +2.4%                 1.9%
Small cap portfolio January 2004: +15%

The Board is reviewing proposed pay levels for investment and support staff
of SWIB. They are below their peer group, and the consultant is recommending
they look at some increases both for base pay and a review of the bonus formula.

This is very important for them to review these levels because four years ago,
they had a high turnover of staff because of low pay. rt is very important that
they retain their good, high performing investment staff, which we supported four
years ago and we will support them again.

Today I was able to thank the SWIB Chairman James Senty for the opportunity we h
to communicate with the Board on the new Director selection process. He sincerely
expressed his appreciation and indicated he wants to be open for communication
from participants.

I also informed Chairman Senty of our ongoing battle with the State's
contracting out, which he was not aware of, that DOT contracts for 60-65% of
all construction and design of highways.

Remember when SWIB was contracting out for investment management, they were
paying seven times the cost of internal management, and we hope they don't have to dc
that again.

SWIB guest speaker was Dr. Gary Shilling, who is a professor of deflation.
His position is capital spending must increase in the structural area for the
economy to grow further. Up to now, the capital spending has only been in the
equipment and software area.

Legislative Report:
By Larry Legro

The next VHD (Visit the Hill Day) is scheduled for April 28. Start making plans to
attend. Contact your legislator and make an appointment to meet with them. In most
instances one or more SEA members will attend with you if you'd like moral support.
This is a very important and fun activities. Give strong consideration to attending
as it will help greatly in contract negotiations. Surely everyone can think of an
issue they'd like to discuss with their legislator. In the past the legislators
have said they don't get involved in contract negotiations. Well believe it or not
they are involved in contract negotiations and are a big part of the problem.

Larry has been in contact with the Governor's Office attempting to schedule a meeting
to coincide with our next VHD.

Larry Legro, Tim Hanley, and Jeff Olson all had attended the governor's recent Town
Hall Meetings in different parts of the state and gave their impressions on what took
place. In general, the meetings were terrible. The governor showed up late, gave
his spiel, and handpicked democrats asked very orchestrated questions. After one
meeting Tim Hanley had an opportunity to briefly ask the governor a question about
privatization. The governor said there was a task force working on this issue; Tim
offered SEA's help wherever possible.

Larry expressed some ideas about changes to the SEA brochure.