Take Action: INPRS Board Delays Vote on Privitization of ASA Annuities

CONTACT THE INDIANA PUBLIC RETIREMENT SYSTEM (INPRS), MEMBERS OF THE PENSION MANAGEMENT OVERSIGHT COMMISSION (PMOC), and YOUR OWN STATE SENATOR AND REPRESENTATIVE.

The Ball was in INPRS’ Court to Reverse Course on Privatizing TRF/PERF Annuity Savings Account Funds; INPRS Dropped the Ball Today.

Next Possible Decision Date:  December 13, 2013.

Today, the Indiana Public Retirement System (INPRS) discussed the Pension Management Oversight Commission’s (PMOC’s) series of recommendations adopted unanimously this past Monday opposing the privatization of the ASA component of the Public Employees Retirement and Teachers Retirement Funds.

Specifically, PMOC’s recommendations were:

(1) The Commission considered the four proposals considered by the INPRS Board regarding the issuance of annuities to retirees for their ASAs.  (NOTE: The four proposals were: (1) Do nothing; keep the rate at 7.5% and see in the long run if that is workable; (2) Keep the annuitization work in-house and reduce the discount rate from 7.5% to 6.75% to match INPRS’ new long-term rate of return assumption; (3) Keep the annuitization work in-house and have INPRS set an annual rate based on some market-principles; (4) privatize to a single outside vendor.)

(2) The Commission recommends that INPRS pursue an option that would keep the annuitization of ASAs in-house and to not proceed with a third- party contract. Instead INPRS should periodically establish an interest rate that will not create an unfunded liability in their managed funds.

(3) The Commission recommends the General Assembly not set a statutory interest rate at this time.

(4) The Commission recommends that the date to undertake these activities occur not earlier than October 1, 2014.


INPRS had representatives at each of the PMOC meetings in August, September, and October at which PMOC addressed the potential privatization of ASA fund annuities and ultimately unanimously opposed that course of action.  Yet INPRS’ information today to the INPRS Board of Trustees reflected “confusion” as to PMOC’s intentions.   There appeared to be an attempt to parse the wording of the recommendations to find leeway to keep working on the privatizing option.  One INPRS Board of Trustee member did speak up and say that he didn’t believe that PMOC’s opposition to privatizing the ASA program was unclear at all.

At any rate, in response to the characterizations made today, the INPRS Board of Trustees has now deferred its decision to reconsider the privatization of member ASA funds until its next meeting, scheduled for December 13, 2013—and in the meantime, INPRS will continue to proceed with the implementation timeline for privatizing—preparing a Request for Proposal (RFP) to outside vendors.

Anyone who attended these PMOC meetings witnessed unabashed bi-partisan support to recommend a less draconian course of action that had been taken this summer by INPRS.  Legislative and non-legislative members of PMOC made their opinions clear.   There was public testimony on this issue on September 23, 2013, from a variety of stakeholder groups.  Sen. Karen Tallian (D-Portage) offered up a motion in September and then re-offered it in writing at the October meeting to be incorporated as part of PMOC’s official final report.  To argue that there is uncertainty as to where PMOC stands on the privatizing plans is dubious.

INPRS consistently contends it “follows legislative direction.”  PMOC is the legislative oversight commission for INPRS and it gave its direction in the form of these recommendations.

WHAT THIS MEANS FOR US NOW:

INPRS’ delay in reconsidering until December means that we all must continue to communicate:

(1)    with INPRS to make INPRS understand what we already know about PMOC’s intentions . According to the INPRS website, the email to communicate “suggestions” to INPRS = ehankins@inprs.in.gov

(2)    with the legislative members of PMOC to let them know our disappointment in INPRS not accepting at face value the PMOC recommendations:

Sen. Phil Boots (Chair) – s23@in.gov   Sen. Gregory Walker – s41@in.gov

Sen. Karen Tallian – s4@in.gov           Sen. Lindel Hume – s48@in.gov

Rep. Jeff Thompson – h28@in.gov       Rep. Woody Burton – h58@in.gov

Rep. Chuck Moseley – h10@in.govm    Rep. David Niezgodski – h7@in.gov

(3)    with our own legislators and PMOC members to let them know our disappointment in INPRS not accepting at face value the PMOC recommendations and to further register our opposition to privatizing TRF/PERF member funds.  The link to find your legislator is:

https://keepthepromiseindiana.org/_data/files/Copy_of_House_Senate_emails.pdf

Or call the numbers below:

·         House Switchboard: (800) 382-9842          

·         Senate Switchboard: (800) 382-9467

 

TELL YOUR STORY.

SUGGESTED TALKING POINTS:

·         THANK members of PMOC for making the recommendations and ask them to be follow-up with Executive Director Steve Russo at INPRS about your opposition to continuing with the privatization option.

·         It is time for INPRS to adhere to PMOC’s recommendations.

·         There is no need to privatize my funds.

·         INPRS has been annuitizing funds for decades in-house—this is neither a new obligation nor new risk to INPRS.

·         There is a big difference between finding a balanced solution between INPRS’ needs and my wishes and unilaterally privatizing “my” money against my wishes.

·         I can already transfer my funds to the open market, but that is my choice—not one foisted upon me.

·         INPRS is taking away an option that potentially has the most value to me.

Recap of INPRS ASA Issues

·         By definition, there is a cost to privatizing that hasn’t been fully vetted. This results in questions about the value to the members of privatizing their funds. 

·         It is unclear what relationship the member will have to the private vendor versus the state.

·         Originally, INPRS set a July 1, 2014 implementation date and it was only when ISTA and a few teacher members pointed out that current year teachers would be negatively affected retroactively did INPRS reconsider and move the effective date to October 1, 2014. 

·         Changing the implementation date solves the current year retiree issue.  But there are many more members in the “pipeline to retirement,” especially those five to ten years out, who will likely lose significant funds each and every year of their retirement if these changes go through next year– members who had not anticipated or planned for such a drastic and unnecessary alteration to their ASA accounts.  

·         According to INPRS data, for every 1 percent reduction in rate from the current rate, members are projected to lose 8% in benefits.

·         Members who gave many years of public service should not be penalized due to bad luck or timing.

·         Simply put, this is a quality of life issue for those who have spent an entire career serving children and taxpayers. And it should never be forgotten that these retirees are also Hoosier consumers who will help drive Indiana’s economy.

·         The privatization option is not the only prudent option available to INPRS.  Let’s find a better solution that better balances the interests of INPRS in having a balanced fund and the members’ interests in maximizing income available to them.

 

Background Information

·         Indiana’s public pension system is, by all accounts, in good shape. There is no emergency here that requires this extreme about-face in terms of how INPRS administers the ASA funds of its PERF/TRF members.

 

·         ISTA led last-minute efforts to remove language from the Budget Bill (HEA 1001) on the last day of the 2013 legislative session that would have had similar consequences to members of PERF and TRF.

 

·         INPRS unilaterally adopted this policy before the first Pension Management Oversight Commission (PMOC) meeting could even take place in August.

 

·         Of the four potential options INPRS considered when making its decision, INPRS chose the most extreme option of any that had been proposed and the one which transfers all of the risk to fund members.

 

·         On October 21, PMOC gave recommendations to INPRS to do an about-face on privatizing member ASA funds.

 

·         On October 25, instead of moving to reconsider its privatizing scheme per PMOC recommendation, INPRS deferred action until at least December 13, 2013—and in the meantime will continue working on an RFP to privatize.

Potential Loss to Those Retiring After October 1, 2014 

(using current market conditions)

TRF (Teacher Retirement Fund)

Upon retirement, TRF members currently average (round figures) $90,000 in their respective TRF ASA account.

Today, when you retire, you have the option of keeping your ASA funds with INPRS and having INPRS annuitize them and then pay you a monthly retirement benefit that is the combination of your pension and your annuity distribution (currently, about 50% of TRF members who retire elect this option.)

INPRS currently uses a 7.5% discount rate in its annuity calculation, which provides about a $725/month ASA annuity payment assuming $90,000 is annuitized. Those payments equate to $8700 per year.

Under the INPRS change that will be effective October 1, 2014, and based upon figures provided by INPRS, the open market rates with an outside annuity provider would be between 4 and 4.5%. INPRS states that for TRF the reduction would be about $180/month. That equates to a reduction of $2,160 per year.

The loss of $2,160 per year times a 20-year life span post-retirement shows that this INPRS change cost the average member who chooses to annuitize with INPRS a total of $43,200 over the course of retirement plus whatever private sector administrative fees will be assessed along the way.

PERF (Public Employee Retirement Fund)

Upon retirement, PERF members currently average (round figures) $38,500 in their respective PERF ASA account.

Today, when you retire, you have the option of keeping your ASA funds with INPRS and having INPRS annuitize those funds and then pay you a monthly retirement benefit that is the combination of your pension and your annuity distribution (currently, about 50% of PERF members who retire elect this option.)

INPRS currently uses a 7.5% discount rate in its annuity calculation.

Under the INPRS change that will be effective October 1, 2014, and based upon figures provided by INPRS, the open market rates with an outside annuity vender would be between 4 and 4.5%. INPRS states that for PERF the reduction would be about $77/month. That equates to a reduction of $924 per year.

The loss of $924 per year times a 20-year life span post-retirement shows that this INPRS change cost the average member who chooses to annuitize with INPRS a total of $18,480 over the course of retirement plus whatever private sector administrative fees will be assessed along the way.

ISTA President Teresa Meredith Responds to Latest State Board Power Grab

Since her stunning election last November, ISTA has witnessed a growing and rarely subtle display of disrespect for Glenda Ritz’ authority as Indiana’s duly-elected Chief State School Officer from the governor-appointed members of the State Board of Education—the board that she is by law called upon to chair.

Those who have been around state government for decades have never witnessed anything quite like the “group dismissiveness” that she has faced from the balance of the appointed board—those who should have “gotten over it” a long time ago and become her colleagues in Indiana’s education policy-making.

ISTA has watched Glenda Ritz be a model of patience and professionalism while trying to fulfill her twin roles as State Superintendent of Public Instruction and statutory chairperson of the State Board of Education.

You name it, she’s faced it:  Springing surprise resolutions at board meetings diminishing her authority, creating “shadow” policy-making committees chaired by someone other than her with calculated odds stacked against her, wasting taxpayer resources to essentially duplicate the work of the DOE by hiring lawyers, special assistants, and executive directors, being told with a straight face that blatantly Republican members of the board are independent, and inheriting an A-F school accountability system that needed to be overhauled from the ground up.

And so now, faced with yet another bit of “medicine” meted out by this board with which she’s been dealt, while she was out of the country on business no less, Glenda responded—leveraging the very laws that she swore to uphold.  And, yes, now, people are watching…..and supporting her all over again. 

It is hoped that her action will better encourage and ultimately lead to increased transparency in government and education policy-making…and it is further hoped that the balance of Indiana’s state board might take a moment to exhale and resolve to try to work with Glenda.  Doubtful as that may be, wouldn’t it be a mighty nice example of adult behavior modeling by which Hoosier children might benefit?

And yes, now, people are watching…and supporting her all over again. 

Teresa Meredith, ISTA President

DOE: Ritz Files Suit Against State Board of Ed

October 22, 2013

 

Contact:  Daniel Altman

daltman@doe.in.gov

Office:  (317) 232-0550

Cell:  (317) 650-8698

 

INDIANA SUPERINTENDENT OF PUBLIC INSTRUCTION GLENDA RITZ FILES SUIT AGAINST GOVERNOR PENCE’S STATE BOARD OF EDUCATION

 

INDIANAPOLIS – In response to apparent violations of the Open Door Law by members of the State Board of Education, Superintendent of Public Instruction Glenda Ritz filed suit today naming ten members of the Board as defendants.  The lawsuit alleges that the named members of the State Board violated Indiana’s Open Door Law by taking action in secret by drafting, or directing the drafting of, a letter they sent to President Pro Tempore Long and Speaker Bosma dated October 16, 2013.  The suit seeks to prevent the State Board of Education from continued violations of the Open Door Law and declaratory relief.

 

Specifically, the lawsuit alleges that ten members of the State Board violated Indiana’s Open Door Law when they took action by requesting that Senator Long and Speaker Bosma appoint Indiana’s Legislative Services Agency to perform calculations to determine the 2012-2013 A-F grades for Indiana schools.  The suit alleges that no public notice was issued for a meeting that allowed for this action and that Superintendent Ritz was not made aware of this action until after it was taken, despite her role as Chair of the State Board of Education. 

 

“When I was sworn in to office, I took an oath to uphold the laws of the State of Indiana,” said Superintendent Ritz.  “I take this oath very seriously and I was dismayed to learn that other members of the State Board have not complied with the requirements of the law.  While I respect the commitment and expertise of members of the board individually, I feel they have over-stepped their bounds. 

 

“Since my inauguration, I have worked tirelessly to communicate openly with the Board and the public.  I do not take this action lightly, but my obligations as elected state Superintendent require it.   I look forward to continuing to work to improve education for all Indiana students in a fair, transparent and collaborative manner.” 

 

The suit is Ritz v. Elsener, et al and it has been filed in the Marion Circuit Court.  The cause number is 49C01-1310-PL-038953.  The Department of Education is using in-house counsel to avoid any additional costs to the state. 

Course Change on Annuity Accounts

October 21, 2013

Dear ISTA Members,


We want you to know that today’s meeting of the Pension Management and Oversight Commission  (PMOC) went well. Much of what happened today is the direct response to your thoughtful communications with members of the Commission.


Today, PMOC members sent a unanimous message about the direction it supports - not to privatize this annuity work but, instead, to find a better balance between what INPRS believes it needs and the needs of its members.


Today’s motion from the Commission’s final report reads:

  1. The Commission considered the four proposals considered by the INPRS Board regarding the issuance of annuities to retirees for their ASAs.
  2. The Commission recommends that INPRS pursue an option that would keep the annuitization of ASAs in-house and to not proceed with a 3rd party contract. Instead INPRS should periodically establish an interest rate that will not create an unfunded liability in their managed funds.
  3. The Commission recommends the General Assembly not set a statutory interest rate at this time.
  4. The Commission recommends that the date to undertake these activities occur not earlier than October 1, 2014.

Basically, the recommendation calls for NO PRIVATIZATION and that INPRS continue to annuitize in-house in a way that will not create an imbalance between what INPRS promises and what it can earn in investments.


This is a “non-binding” recommendation, but carries weight inasmuch as PMOC oversees the work of INPRS. INPRS will meet this Friday and it is hoped that INPRS will take new action to reflect PMOC’s recommendations.

 

The reason for the Oct. 1, 2014 implementation date is to ensure that school employees interested in retiring next summer can do so under the current retirement system.


ISTA will continue to work to make positive impacts on behalf of members. Please stay tuned. We will keep you informed.


Please take time to thank Sen. Karen Tallian for her leadership on this issue and for offering her motion. Also, take time to thank the other legislative members of PMOC for voting for it.


Chairperson:  Sen. Phil Boots (R-Crawfordsville):  s23@in.gov
Sen. Gregory Walker (R-Columbus); s41@in.gov
Sen. Karen Tallian (D-Portage); s4@in.gov
Sen. Lindel Hume (D-Princeton); s48@in.gov
Rep. Jeff Thompson (R-Lizton); h28@in.gov
Rep. Woody Burton (R-Whiteland); h58@in.gov
Rep. Chuck Moseley (D-Portage); h10@in.gov
Rep. David Niezgodski (D-South Bend); h7@in.gov


ISTA knows this is a high-interest topic and will continue to hold its retirement workshops around the state as originally scheduled.

Lawmakers end voucher study with few clear answers

 

INDIANAPOLIS (AP) — Indiana lawmakers ended a review of the state’s school voucher program Tuesday with few clear answers — and more questions than when they started.

Supporters of the program that lets Indiana students use state money to pay for private schools argued Tuesday that private schools continue to outperform most public schools. Opponents said the vouchers are continuing a trend of siphoning money from public schools. But both sides agreed they could use more data on how the individual voucher recipients are performing, information that is not yet available in Indiana.

The assessment comes amid a continuing push from Republican lawmakers and Gov. Mike Pence to expand the 2-year-old program.

Republicans first signed off on the voucher law in 2011, and the Indiana Supreme Court recently upheld the law, deciding it did not amount to the state subsidizing certain religions. Lawmakers approved a modest expansion of the voucher program earlier this year and will likely consider further expansion when they return for their 2014 session.

More than 20,000 students applied for vouchers this year, up from roughly 9,300 students last year. The study of the income-based vouchers for low and lower-middle class families was added to this year’s program expansion amid concerns a more extensive plan could become a budget-buster for Indiana.

John Elcesser, executive director of the Indiana Non-Public Education Association, delivered a report compiled by his group and other voucher supporters dubbing the program a success. He noted broad approval from the parents of voucher students and pointed to a Web-based survey that showed the top reason families left the public school system was a desire for better academics and religious training.

"I have no doubt, in my heart of hearts, this program is changing the lives of these families," he said.

But Democrats on the education panel, including one who participated in the 2011 walkout designed in part to block vouchers, said supporters were conflating performance by private schools with the performance of individual students. Rep. Vernon Smith, D-Gary, said without individual student scores it would be impossible to determine if vouchers are working.

"All you’re doing is supporting private schools — you’re not saying if it’s working," Smith said.

But Rep. Jim Lucas, R-Seymour, pressed that the surging number of applications was evidence itself that school vouchers are successful.

"Could that not be a measure of success?" he asked.

The Indiana Department of Education, led by Democratic School Superintendent Glenda Ritz, notably did not make a presentation before the panel. House Education Chairman Bob Behning, R-Indianapolis, said the DOE was not asked to present but could have signed up to testify.

Ritz was a plaintiff in the lawsuit filed by the Indiana State Teachers Association seeking to overturn vouchers but removed her name from the suit after winning election over voucher supporter Tony Bennett last year.

 

 

Ritz expects effort to diminish her authority

By TOM LoBIANCO Associated Press

INDIANAPOLIS (AP) — Indiana Schools Superintendent Glenda Ritz, a Democrat, said Wednesday she is wary of what she sees as a broad effort by Republicans to strip her power, amid growing tension between her and the State Board of Education she nominally chairs.

“I just think there will probably be things coming through the legislative process that will try to diminish my power as superintendent,” Ritz said Wednesday.  “They could include removing me as the chair of the board; they could include overseeing more of my budget; they could include overseeing of data.”

Ritz’s comments followed the first meeting Wednesday of a committee started despite her objections to set new goals for the Board of Education. But tension has grown in recent months between Ritz and board members who backed the education overhaul pushed by former Schools Superintendent Tony Bennett and former Gov. Mitch Daniels.

Ritz campaigned hard last year against new laws including limits on collective bargaining for teachers, school vouchers and a school grading system. But board members who support those changes, such as Dan Elsener, have scrapped with her recently.

Elsener caught Ritz off guard last month when he established a strategy planning committee to guide the board. Ritz fired back at a state board meeting last week, overruling a procedural request from Elsener to alter the board’s agenda.

Indiana’s school superintendent chairs the board of education, but a power struggle has ensued since her surprise victory in last year’s election. The strategy panel created by Elsener, with support from every board member except Ritz, will determine where the board focuses its efforts over the next three years.

Elsener pointed out that Wednesday’s relatively staid meeting was evidence there’s more collegiality on the board than there might appear from recent dust-ups.

“I thought today was very pleasant, and I thought that the board members — whether they’re governor-appointed or elected — worked quite intelligently and swiftly,” he said. “If there are personal differences … the heck with that. Let’s focus on children.”

Ritz attended the afternoon meeting but said little.

Pence and Republican lawmakers, who supported Bennett’s and Daniels’ education overhaul, made a change in the state budget earlier this year that shifted $5 million for staffing the state board from Ritz’s office to the governor’s. Staffing for the state board now comes from a new agency Pence created in August to coordinate career training and education. Critics have derided it as a second education department to get around Ritz.

More blatant efforts to shift control of education from Ritz’s office were curbed during the honeymoon period earlier this year between newly elected officials. Measures filed by Bennett’s former chief of staff, state Rep. Todd Huston, R-Fishers, that would have overhauled the board of education and altered the Indiana Education Roundtable were unsuccessful.

Lawmakers return to the Capitol in January for the 2014 session.

ISTA Mourns the Loss of Rep. Pond

ISTA recognizes with sadness today the passing of long-time legislator and teacher from Northwest Indiana, Phyllis Pond (R-New Haven) and sends its condolences to Rep. Pond’s family

Rep. Pond served in the Indiana House for 35 years.  She had spent a full career teaching kindergarteners at East Allen Schools.   The hallmark piece of education legislation in which she was most directly involved was the A+ program for Educational Excellence during the Governor Orr years (enacted in 1987). 

Those who worked with her also remember her work to ensure, through financial incentives to school districts, smaller class sizes at the earlier grades through the creation of Indiana’s class-size reduction program (called PRIMETIME). 

More recently, Rep. Pond assisted in the fight to hold off starting standardized testing of students in 1st and 2nd and she raised concerns about the push to teach grade 1 material to kindergarteners.

 

On these issues, Rep. Pond and ISTA agreed and, even more telling—on the issues for which there was disagreement—ISTA representatives can say that Rep. Pond was always cordial, available, and attentive to the debate.  

Rest in peace, Phyllis. 

ISTA Counters INPRS ASA Changes

The Pension Management and Oversight Commission (PMOC) met today for the second time during the interim study session. The most significant topic of debate was the recent changes made by the INPRS Board to privatize TRF and PERF members’ Annuity Savings Accounts (ASA) by contracting out the annuities to a 3rd party provider at an open market rate.

 

ISTA testified at length about the actions taken by INPRS and brought to light a series of concerns that need to be addressed. ISTA raised both procedural and substantive issues.

 

Procedural:

 

INPRS took action to proceed with changes without clear justification and virtually no public input from stakeholders, despite the fact that no emergency  has been identified and that, by all accounts, the funds are currently in good shape. The July deadline INPRS previously set for making this decision was self-imposed.

 

Substantive:

 

There are many members in the “pipeline to retirement,” especially those five to ten years out, who will lose benefits each and every year of their retirement if these changes go through next year– members who had not anticipated or planned for such a drastic alteration to their ASA accounts. For every 1 percent reduction in rate from the current rate, there is projected to be an 8 percent reduction in member benefits. Members who gave many years of public service should not be penalized due to bad luck or timing. Simply put, this is a quality of life issue for those who have spent an entire career serving children and taxpayers.  And it should never be forgotten that these retirees are also Hoosier consumers who will help drive Indiana’s economy.

 

PMOC’s Response:

Legislators engaged in thoughtful discussion following testimony. These discussions included several alternative options – options not even considered by INPRS – that would differ from the privatization option, which goes to show that additional options do exist. After less than an hour of debate, members of the General Assembly already began generating other potential solutions once given the chance to weigh-in.

 

Senator Karen Tallian (D-Portage) questioned the extent to which INPRS consulted with all 4 legislative caucuses before coming to its decision and made a motion to request that INPRS keep ASA annuities “in-house” and that INPRS should recommend a rate that will, based upon its investment experience, not endanger the funds—in essence, not add to any unfunded liability.  In earlier testimony, an economist from AFSCME (national) from Washington, DC, suggested that using INPRS’ 10 year rate of return history, INPRS could prudently set a rate at a tick above 7%—a huge difference from the 4% currently estimated by INPRS to be an open-market rate it might leverage. 

 

Representative David Niezgodski (D-South Bend) also spoke strongly on the matter, indicating that INPRS “rushed to judgment” without even informing the legislature.

 

Gary Lewis, a non-legislative member of the commission, remarked that even the IRS provides a ten-year window for changes of such magnitude, whereas INPRS proposes to implement this change in a single year.

 

The vote on Sen. Tallian’s motion is delayed until the PMOC meeting in October so that the Legislative Services Agency can prepare the appropriate language.

 

While we still have a long way to go with this issue, today’s meeting was successful in that public input from ISTA and other stakeholder groups, alongside TRF and PERF member contacts to legislators, have already generated thoughtful discussion about potential alternative options. ISTA will continue to monitor the issue and work to educate legislators on finding a better balance between INPRS’ needs and the needs of the members of TRF and PERF.

 

Where we go from here:

ISTA has been conducting workshops around the state to educate members on the proposed changes and to explain how members will be impacted if the INPRS proposal is implemented in a year.  Contact your UniServ office to see if a workshop is coming your way.

 

ACTION ITEM:

Your voice will continue to make an impact as these discussions continue. Contact your State Representative, State Senator, and the Pension Management Oversight Committee (PMOC) members to oppose the privatization of ASA fund annuity work and to urge more thoughtful public discussion on options that will serve both INPRS’ and members’ interests. 

 

 

  • House Switchboard: (800) 382-9842       
  • Senate Switchboard: (800) 382-9467
  • PMOC members who are legislators

Sen. Phil Boots (Chair) – s23@in.gov    

Sen. Gregory Walker – s41@in.gov          

Sen. Karen Tallian – s4@in.gov

Sen. Lindel Hume – s48@in.gov            

Rep. Jeff Thompson – h28@in.gov        

Rep. Woody Burton – h58@in.gov

Rep. Chuck Moseley – h10@in.govm   

Rep. David Niezgodski – h7@in.gov

 

Background Information:

The Indiana Public Retirement System Board (INPRS) recently voted to contract out ASA annuities to a private 3rd party provider at market-based rates (currently projected at approximately 4.0 to 4.5 percent) rather than the existing 7.5 percent rate. This decision was made unilaterally by INPRS without public input or discussion.  The legislature had voted to remove a similar proposal from the budget bill last legislative session, stating there had not had been enough input from stakeholders. 

·         Indiana’s public pension system is, by all accounts, in good shape. There is no emergency here.

·         ISTA led last-minute efforts to remove language from the Budget Bill (HEA 1001) on the last day of the 2013 legislative session that would have had similar consequences to members of PERF and TRF.

 

·         INPRS unilaterally adopted this policy before the first PMOC meeting could even take place in August.

 

·         Of the four potential options INPRS considered when making its decision, INPRS chose the most extreme option of any that had been proposed and the one which transfers all of the risk to fund members.

 

·         This process has moved too quickly.  Further dialogue is warranted to consider additional options that better balance the needs of INPRS with those of fund members.

 

·         At the end of the 2013 session, members of the General Assembly, including Speaker Brian Bosma, agreed that more time is needed to consider the many available options publicly. This is why consensus was reached to remove the language from the budget bill.

 

 

·         These changes impact TRF and PERF members personally, especially those in the “pipeline to retirement” who are five to ten years away from retirement and who had no way of anticipating this change of course.

 

 

Consider the following real world scenarios:

TRF

During a lifetime career in teaching, you might expect to save (round figures) $90,000 in your TRF ASA account (that is the current average.)

Today, when you retire, you have the option of keeping your ASA funds with INPRS and having INPRS annuitize them and then pay you a monthly retirement benefit that is the combination of your pension and your annuity distribution (currently, about 50% of TRF members who retire elect this option.)

INPRS currently uses a 7.5% discount rate in its annuity calculation, which provides about a $725/month ASA annuity payment assuming $90,000 is annuitized.  Those payments equate to $8700 per year.

Under the INPRS change that will be effective October 1, 2014, and based upon figures provided by INPRS, the open market rates with an outside annuity provider would be between 4 and 4.5%.  INPRS states that for TRF the reduction would be about $180/month.  That equates to a reduction of $2,160 per year.

The loss of $2,160 per year times a 20-year life span post-retirement shows that this INPRS change cost the average member who chooses to annuitize with INPRS a total of $43,200 over the course of retirement plus whatever private sector administrative fees will be assessed along the way.

 

PERF

PERF members currently average (round figures) $38,500 in their respective PERF ASA account.

Today, when you retire, you have the option of keeping your ASA funds with INPRS and having INPRS annuitize those funds and then pay you a monthly retirement benefit that is the combination of your pension and your annuity distribution (currently, about 50% of PERF members who retire elect this option.)

INPRS currently uses a 7.5% discount rate in its annuity calculation.

Under the INPRS change that will be effective October 1, 2014, and based upon figures provided by INPRS, the open market rates with an outside annuity vender would be between 4 and 4.5%.  INPRS states that for PERF the reduction would be about $77/month.  That equates to a reduction of $924 per year.

 The loss of $924 per year times a 20-year life span post-retirement shows that this INPRS change cost the average member who chooses to annuitize with INPRS a total of $18,480 over the course of retirement plus whatever private sector administrative fees will be assessed along the way.

 

 

PDK/Gallup Poll on Public Opinion About Public Schools

A recent PDK/Gallup Poll reveals interesting findings regarding public opinion about the nation’s public schools. With implementation of Common Core State Standards well underway in most states and a wide array of school reform initiatives across the country, these findings shed light on how Americans really feel about public education and call into question some of the reforms that are taking place.

Below are some of the key findings from the poll. The results paint a positive picture for public schools and public school teachers:

·         Over 70 percent of Americans have trust and confidence in public school teachers. Parents overwhelmingly support public educators.

·         More than 65 percent have trust and confidence in public school principals.

·         The majority of Americans believe that their neighborhood and community schools are safe and effective at improving student performance. Fifty-three percent of parents gave their neighborhood schools an “A” or “B” grade – the highest ever recorded.

·         Parents also believe their children have higher levels of well-being, build stronger relationships, are healthier and have higher levels of community involvement as a result of attending public schools.

Additionally, results from the poll show substantial concern with the new waves of reform sweeping the nation:

·         Fewer than 25 percent of Americans think more standardized testing helps public school performance.

·         Two-thirds oppose releasing information on students and individual teacher performance on standardized tests to the public via newspapers and other media.

·         Fifty-eight percent said that standardized test scores should not be used to evaluate teachers.

·         Lack of financial support ranks as the number one challenge facing America’s public schools.

·         Americans do not rank redesign of high schools as the top priority as an option for school improvement.

·         More than 70 percent oppose private school vouchers – the highest level of opposition ever recorded from the poll.

Finally, the poll indicates interesting findings regarding Americans’ knowledge about Common Core State Standards:

·         Only about one-third of Americans have heard of the Common Core.

·         Among those with school-age children, fewer than half were aware of the Common Core.

The results from the PDK/Gallup Poll make it clear that Americans overall have positive attitudes toward public schools and the educators who staff them. These findings are critical as efforts to privatize schools continue nationwide. Many of the criticisms about public education in Indiana and across the country are unfounded from a public opinion perspective. Moreover, the poll reveals that more communication is needed to educate Americans about the Common Core State Standards, particularly to dispel the myths circulating that it is a federal intrusion into state and local control.

The most important piece of information to take away from these results is that our public educators are continuing to do their jobs at a high level of performance, and parents of public school children are satisfied with the education their children receive. Every public educator across the nation should be proud of their efforts and commitment to improving opportunities for all children attending public schools.

2013 ISTEP results released

By Mike Loizzo and Elle Moxley

Students in the West Lafayette Community School Corporation earned a 91.1% passing rate on both portions of this year’s ISTEP exam. That’s third best in the state, behind Carmel Clay Schools and Zionsville. The rate is 78.5% for the Tippecanoe School Corporation and 75% for the Lafayette School Corporation.

Statewide, 73.5% of students passed both English and math portions of the ISTEP. The data shows 79.5% of Hoosier students passed the English portion of the test and 82.7% passed the math part. That’s an improvement from 79.4% for English and 81.2% for math in 2012.

The release of the scores means schools can finally submit final teacher evaluation scores to the state. Usually Indiana schools get ISTEP results by early June, a few weeks after students take the standardized test. But after errors on testing company CTB/McGraw Hill’s servers booted some 79,000 Indiana students out of online exams this spring, state education officials brought in an expert for an outside review of the results.

The Center for Assessment’s Richard Hill concluded the interruptions had no noticeable impact on student’s scores. But they did have a noticeable impact on when schools got those scores.

"Finally some folks can get their evaluations," says Teresa Meredith, president of the Indiana State Teachers Association. "Teachers are still waiting in some places for their evaluations from last year. So that can finally be closed."

The 2012-13 school year was the first for state-mandated teacher evaluations. But because the new law requires schools use student growth data to rate teachers, many districts were waiting on ISTEP results to issue final ratings.

State Superintendent Glenda Ritz says she asked schools to work with teachers to reduce the impact of test score data on last year’s evaluation, which Meredith says most districts have done. But some State Board of Education members felt Ritz acted prematurely and should have waited for final results before issuing any guidance to schools.