NEWSLETTER THE. Second Quarter In This Issue: Legislative Report. A Message From the Chairman. Issued by PUBLIC EMPLOYEE RETIREES, INC.

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1 THE Legislation has been introduced in the General Assembly that deals with Iran. H. B. No. 151 s stated purpose is to: a) prohibit any public investor or any asset man- John Gilchrist ager investing on behalf of any public investor from investing in a foreign country with active business ties or operations in or with Iran; and, b) to require any existing investments in such companies be divested and the stated purpose of this is to protect the public investments from global security-related loses. NEWSLETTER Issued by PUBLIC EMPLOYEE RETIREES, INC. Second Quarter 2007 Legislative Report PERI strongly opposes this bill because PERI opposes having OPERS s assets used in an attempt to affect social, political, or foreign policy. Maybe the objectives of the Washington think tank that is spear-heading this national initiative are the proper foreign policy approach; but maybe they are not. In any event, PERI has traditionally opposed having the funds of the retirement system used to suit an outside group s desire to make a social or political statement. In addition, if the OPERS board were to do this on its own, it could result in a breach of its fiduciary duty. By the time you read this, we will have pre- (continued on page 4) PERI s 2007 Annual Meeting New day MONDAY September 24 New location Crowne Plaza Hotel More information on page 5 In This Issue: Legislative Report Page 1 A Message From The Chairman Page 1 Acronyms Page 2 First Time Opportunities for Chapter Officers Page 2 Insight From The Administrator Page 3 The Ohio General Assembly is back in session with many new faces in state office. This can be a dangerous situation for the financial health Donald F. Moyer of our retirement system. Our new legislators will be bombarded with ideas from a variety of interests, and lacking a historical background of previous political endeavors by these groups, may be talked into introducing ill-advised legislation. A Message From the Chairman OPERS has is an informed and active retiree association. That s us, you and me, PERI, Public Employee Retirees, Inc. We have been involved since 1948, and have played an active roll in insisting on an honest Board of Trustees, a top quality staff, and no legislative interference in our pension fund investments. We have worked hard to secure health care and other benefits, but only to the extent that the retirement system could properly fund them. (continued on page 2) Government Pension Offset and Windfall Elimination Page 3 PERI District Roundup Page 6-7 We have one of the best retirement systems in the country. It is overseen by a board of mostly member elected trustees; and well managed by a competent staff. One of the greatest assets that Partners in Retirement Public Employee Retirees, Inc. 659-F Park Meadow Road Westerville, Ohio (614) (800) Fax: (614) office@operi.org Web site:

2 Page 2 Acronyms: Am HB: Amended House Bill Am SB: Amended Senate Bill COLA: Cost of Living Allowance HB: House Bill HCR: House Concurrent Resolution HJR: House Joint Resolution HPRS: Highway Patrol Retirement System JCARR: Joint Committee on Agency Rule Review NCPERS: National Conference on PERS OP&F: Ohio Police & Fire Pension Fund OPERS: Ohio Public Employees Retirement System OPERS-LE: OPERS-Law Enforcement ORSC: Ohio Retirement Study Council PERI: Public Employee Retirees, Inc. SB: Senate Bill SCR: Senate Concurrent Resolution SERS: School Employees Retirement System of Ohio SJR: Senate Joint Resolution STRS: State Teachers Retirement System of Ohio Sub HB: Substitute House Bill Sub SB: Substitute Senate Bill A Message From the Chairman (continued from page 1) With this new legislative session, maybe more now than ever before, retirees have to get involved and stay involved. We have two freshman representatives, Josh Mandel from the 17th district in the Cleveland area, and Shannon Jones from the 67th in western Warren county, who have introduced H.B. 151 to restrict the investment of public funds in companies who do business in certain countries such as Iran. Avoiding the discussion of whether state legislators have enough perspective and information to formulate national policy, we come directly to the point that is of utmost importance to you and me. No one has a right to include our personal retirement fund in the category of public funds. It is our private money. It was public money before it was paid to us. Once we earned it, it became our money, including the employer contribution that was FIRST TIME OPPORTUNITIES FOR CHAPTER OFFICERS With the passage of several amendments to the PERI Constitution last fall, all chapter officers are now eligible to place their names before the State Nominating Committee, for consideration to be nominated to fill two of the state officer positions: 1st Vice Chair and 2nd Vice Chair. These are officer positions on the Executive Committee and PERI Board of Trustees. Each position is for one year, which starts with the conclusion of the 2007 State Annual Meeting and runs through the 2008 State Annual Meeting. If you are interested in being one of the overseers and guides for our association, please send your name, address and phone number, along with a brief resume, and a letter of willingness to serve if elected, to The Nominating Committee, c/o PERI, 659-F Park Meadow Road, Westerville, Ohio These documents must arrive no later than 3:00 PM Friday, June 1, Partners in Retirement part of our compensation package, and the earnings our deposits have generated over the years. You can go to our website and on the legislative page you can link to the other representatives that have co-sponsored this bill. You need to call and write your representative and let them know that you want them to oppose the retirement system s inclusion in this legislation. I really would like all of our members to help us educate our fellow workers and retirees on the need to join PERI. Every person who receives a check from OPERS should be a member of PERI, and if you are a member of PERI, and physically able, you should participate in a local chapter. I ll be out and about this summer and hope to meet you in one of our Chapter or District meetings. PLEASE REMEMBER TO INFORM US IF YOU MOVE You can call us... (614) or (800) Or you can us... office@operi.org Or you can write to us... PERI 659-F Park Meadow Rd Westerville, OH 43081

3 Insight from the Administrator by William I. Winegarner As soon as our retirement system began earning substantial returns on our pension deposits, outsiders began to develop schemes in order to skim off a portion for their friends or themselves. These attacks, which began in the late forties and early fifties, have increased in intensity over the years to the point where they are bold and blatant (in your face). Today, many of these poachers come from beyond the boarders of our state in the form of stock brokers and money managers attempting to break our defined benefit program, and the latest in the form of self appointed think tank groups from Washington DC trying to manipulate the investment decisions of OPERS to serve their purposes. In April, we sent a letter to every member of the Ohio General Assembly expressing our concerns over four major areas of encroachment. In addition, we sent a specific letter to the two Ohio Representatives, Josh Mandel from Cleveland, and Shannon Jones from Warren who sponsored H.B. 151, which is the legislation that would interfere with the OPERS investment decisions. A copy of these letters follows: Letter to all members of the Ohio General Assembly: The Public Employee Retirees, Inc. (PERI) Board has asked that I write to express concerns with recent bills and enactments by the Ohio General Assembly that affect the Ohio Public Employees Retirement System (OPERS). If you are not familiar with our association, please let me state that as recipients of the Ohio PERS pensions and benefits, we organized in 1948 for the purpose of being vigilant in watching the legislation, administration, and investment policies that affect our pension fund. We need your assistance in helping to maintain the fiduciary and financial responsibilities of OPERS by not passing bills that give preferential treatment to a select class of individuals or that mandate that the resources of the system be used for various projects unrelated to retirement. Section imposes a fiduciary duty upon the OPERS board to discharge their duties solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries. Had the OPERS Board undertaken many of the recent legislative enactments, it would have resulted in a breach of their fiduciary duty. Currently, we are vitally concerned with four general areas of activity: 1) allowing certain individuals to purchase additional service credit; 2) allowing certain other individuals to transfer from the regular division of OPERS to the Law Enforcement Division; 3) using the system s resources in an attempt to affect social or political change; and 4) requiring the system to use certain vendors. Please read the attachment to this letter for greater detail on each of these items. For the past 59 years, PERI has worked as Partners in Retirement with OPERS, the Ohio General Assembly, and more recently the ORSC, in playing an important roll in the development and maintenance of OPERS as one of the finer retirement systems in the USA. Last year alone, the retirement system pumped 4.4 billion dollars in refunds, pensions, and benefits into the Ohio economy. Our longstanding concern is that the retirement system retains its ability to carry out its fiduciary and financial responsibilities to its members and retirees. Thank you for keeping these points in mind, as you consider each new legislative proposal. Please remember, we are always available to you as a resource association in these matters. (continued on page 5) GOVERNMENT PENSION OFFSET AND WINDFALL ELIMINATION At the PERI Board of Trustees Meeting in March of 2007, Board Chairman, Don Moyer, introduced a resolution expressing the opinion of our membership as to the revocation of the Government Pension Offset and Windfall Elimination provisions of the Social Security Act. sions of The Social Security Act, do hereby support the repeal of these two provisions, and furthermore request that the membership join with the Board of Trustees in contacting their local US House and Senate members in an effort to secure their support in effecting the repeal. Be it Resolved that the Public Employee Retirees, Inc. Board of Trustees, representing over 110,000 members and spouses who have retired from public service and are affected by the Government Pension Offset and Windfall Elimination provi- This resolution further supports our position as stated in the Congressional Record. You can read this position on our website by clicking on the Legislative News tab and scrolling down to the statement link. Partners in Retirement Page 3

4 Legislative Report (continued from page 1) sented opposition testimony to the House Financial Institutions, Real Estate and Securities Committee. Below is the testimony we intend to give: OPPOSITION TESTIMONY On H. B. No. 151 By John Gilchrist Legislative Counsel PUBLIC EMPLOYEE RETIREES, INC. Mr. Chairman and members of the Committee, I have been asked by the Public Employee Retirees, Inc to appear here today to express its strong opposition to H. B. No The Public Employee Retirees, Inc. (PERI) is an organization of some 50 thousand retirees who are receiving benefits from the Ohio Public Employees Retirement System. One of the main goals of PERI is to work to help maintain the financial and fiscal integrity of OPERS. PERI is particularly concerned with four general areas of legislative activity: 1) bills allowing certain individuals to purchase additional service credit; 2) bills requiring the system to use certain vendors; 3) bills allowing certain individuals to transfer from the regular division of OPERS to the Law Enforcement Division; and the point at hand, bills allowing the system s resources to be used in an attempt to affect social, public, or foreign policy. Proponents of H. B. No. 151 want to use our retirement systems to send a message to Iran. In short, they want to use our retirement systems to influence foreign policy by requiring the divestiture of certain investments. Our systems are not here to be used by outside groups or Washington think tanks to send a message to Iran. Page 4 It is our understanding that this divestiture project is being orchestrated nationwide by the Washington think tank, the Center for Security Policy. Maybe this group s objectives are the proper foreign policy approach; but, maybe they are not. We suspect that there are probably more than one Washington think tank, of equally sincere and connected individuals, that hold diametrically opposed views from the Center for Security Policy. If the Center for Security Policy is allowed to use our funds for their message, PERI suspects that others will attempt to use the retirement systems assets to get their message across. In any event, PERI firmly believes that OPERS s resources should not be used to influence social, public, or foreign policy. Three witnesses from out of state testified last week about their concerns for our retirees, peace officers, firefighters, and taxpayers being involved with risky investments. If these individuals and those who paid for their trip are truly concerned for our Ohio citizens, they should provide us with the list of the 200 companies they deem to be inappropriate investments. Or at least allow us to purchase it so the investment managers could use it to assess risk. Do we really want to turn over a 156 billion dollar combined Ohio retirement portfolio to strangers and have them make a determination as to what are appropriate investments? Instead of providing or selling the list to our trusted investment counselors, the bill will require our systems and others to turn over their portfolio and have it assessed by a private company-apparently affiliated with the Center for Security Policy. How many such companies are there that do this assessment? How much will this cost and who will pay for it? (If asset managers are required to foot the bill (line 354), they will simply pass that cost onto the respective systems.) What criteria will these private companies use in assessing Partners in Retirement these various investments? What is its political world view of the Center for Security Policy? If the retirement systems currently own inappropriate investments, why have they not been sanctioned by our government? It is our understanding that these investments are not illegal or prohibited. Should this bill pass, PERI suspects that Vanguard or Fidelity could hold these investments in a mutual fund and private citizens could own the fund; however, the retirement systems would be required to divest the fund. Will the state indemnify the systems for any losses? If certain investments are improper, let it be our federal government that tells us. If the Center is concerned with risk, why do they not cover the so-called exempted American companies and why is there an exception for humanitarian investments? Are not these investments subject to the same global risk as the other investments they deem inappropriate? Section imposes a fiduciary duty on the OPERS board to discharge its duties solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries. We believe that if the OPERS board did what this bill will require it to do, the board would be breaching its fiduciary duties. PERI further believes that the bill recognizes this. Section (lines ) provides that a public investor is not liable for breach of its fiduciary duty if it divests pursuant to the bill; the section also holds board members and others harmless from lawsuits. Also, Section states that provisions of the bill prevail over any conflicting provisions of Section In addition, consideration should be undertaken to determine if this type of legislation would violate any of the federal tax laws under which the systems were created. Specifically, will divestiture that is done to affect social,

5 Legislative Report (continued from page 4) public, or foreign policy subject the retirement systems to IRS scrutiny? In closing Mr. Chairman and members of the Committee, and with all due respect to the sponsors, since it would be an obvious breach of the Board s fiduciary duties to undertake divestiture actions on its own, PERI believes that it is inappropriate for the General Assembly to be passing legislation requiring the Board to do so. In addition, proponents allege that the five retirement systems and the state have investments that support our enemies. None of us want to inadvertently support terrorism. If the Center is aware of investments which do support our enemies or terrorism, as loyal and patriotic Americans, the Center should make this information public and not require that it be purchased. ANNUAL MEETING DATE AND LOCATION CHANGE The PERI Annual Meeting will be held on Monday, September 24, Historically we have held our Annual Meeting on the 4th Tuesday of September, but due to the yearly increase in number of participants, we have had to secure a larger facility. Because the larger facilities are booked years in advance, we had to take the only day that was left in the month of September. We will be at the Crowne Plaza, 6500 Doubletree Avenue, Columbus, Ohio This location is approximately one mile from our previous location, and we are going to be able to hold our registration fee to $20 per person. So make your plans and reserve this date for a new adventure at the PERI Annual Meeting. Insight from the Administrator (continued from page 3) Letter to the sponsors of H.B. 151 (Mailed before the legislation was introduced): I recently sent a letter to you and the other members of the Ohio General Assembly expressing the concerns of our membership over the potential for legislated misuse of our pension funds. We understand you are considering introducing legislation in one of our areas of concern. To wit: legislation that would attempt to influence or affect social or political policy by restricting OPERS investments beyond those established by the US State Department. Please allow me the opportunity to expand on our viewpoint pertaining to this topic. When the pension systems were set up back in the 1930s, The General Assembly, in its infinite wisdom, separated our pension contributions, including the employer s portion, from the state s general revenue and established a Board of Trustees to invest and guard these funds from political or private encroachment. This fact is clearly set forth in the Ohio Revised Code Section which imposes a fiduciary duty upon the OPERS board to discharge their duties solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries. If you will notice, there is no mention of a duty to the state of Ohio, the political viewpoints of the legislature, or any other entity. The money in Ohio s retirement systems belongs to its active and retired members only. Even though the fiduciary and financial integrity of the retirement systems operations still come under the purview of the General Assembly, when the retirement funds were originally established, they were intentionally separated from the general funds of the state in order to avoid the potential for legislative influence in investment decisions. PERI has been working with members of the Ohio General Assembly since 1948, to insure the integrity of our retirement system and the long-range security of our pension funds. This same fund will be the retirement fund for you and your family. One day you will be very thankful that we have been in existence all of these years and have been diligent in working with members of the legislature to protect its assets from any influence other than that entrusted to its Board of Trustees. PERI strives to conduct our business on the highest professional level. As a testimony to our integrity, it might be interesting to note that all of Ohio s Retired Governors, most of the retired members of the General Assembly, and most of the retired Administrative staff of Ohio PERS are members of PERI. In conclusion, we would like you to know that it is the opinion of our membership that the ORC section be adhered to, and that no legislation be introduced, or supported, that would usurp the Board s ability to carry out its fiduciary duties to its membership. Back to the Insight Article: You can go to our website and on the Legislative News page link to HB 151 in order to see if your representatives is one of the cosponsors of the bill. I would suggest that you call or write to them and politely express your opinion on this legislation. Partners in Retirement Page 5

6 PERI District Roundup District 2 District 2 held a Legislative meeting April 20th in Lima. It was conducted by District Legislative Chair Linda Rodgers and District 2 Representative Estella Nusbaum. One of the highlights was a mock legislative network exercise. Mercer County Chapter #13 met on March 13 at Hopewell Grange Hall in Celina. 70 members with 5 new members were in attendance. Kim Ball, Medical Mutual Insurance and Christy Miller, Aetna Insurance were the keynote speakers. Kim Ball and Christy Miller District 3 The District 3 Annual Meeting will be hosted by our Darke County Chapter on June 4. You may still register by contacting your Chapter President or District Representative Donna Harter. The registration deadline is May 28th. Greene County rallies the troops: In order to reactivate their local chapter, there will be a Get Acquainted and Informational Meeting on Thursday, May 17th at the Holiday Inn, 30 Towne Square Street, Xenia (Rt. 35) with coffee and doughnuts at 10 a.m. The meeting will be called to order at 10:30. Chapter. Please bring your fellow retirees, they will profit from the information and will enjoy the fellowship. We need an informed membership to help stop the political pilfering of our pension funds; and we know our retirees are up to the task. Call Carole Garman for reservations at (937) Carole recently retired as Director of the Greene County Board of Elections and has graciously agreed to help Greene County reorganize its 2007 Officers of Champaign County Chapter 27: Sec/Treasurer Nancy Bollenbacher, VP/Legislative Chair Ray Snarr, President Mary Sweeney and District 3 Rep Donna Harter. District 6 Franklin County Chapter 94 President, Al Bartfay (center) hosts Chris De Rose, (right) the new Executive Director of OPERS, and OPERS Retiree Representative, John Maurer, at their March meeting. District 9 District 8 District 8 held its Annual Meeting in Marietta for the first time. Mayor Michael Mullins (Left) and District Representative Tom Watkins, strike an official pose for the camera. Carroll County Chapter 81: District 9 Rep Marlene Bond, Legislative Chair Eugene Hutto, Secretary/ Treasurer Maxine Eaton, President Anna Mauch, VP Dorothy Leatherberry. Guernsey County Chapter 78: President Darrell Hopps, VP Elmer Bright, Secretary Susan McCracken, Treasurer Bonnie Bakos, Legislative Chair Phil DeLuca. Page 6 Partners in Retirement

7 PERI District Roundup District 10 Left to right: Huron County Chapter 87 s President Vern Hicks and VP/Membership Chair Barbara Bogan. President Frank James, Secretary/Treasurer Joyce Iler, VP Marjorie Dowlen, Legislative Chair Claire Bell Lee of Cuyahoga County Chapter 14. District 10 Representative Joe Stockstill swears in Summit County officers: Treasurer Betty Criss, VP Dave Crandell, President Ed Welch and Legislative Chair Richard Paddison. Secretary Sarah Brown was not present. District 11 Trumbull County Chapter 56 has conducted dynamic meetings in the past two months. In February, Mike Verich of the Ohio Consumers Council educated us on several ways that we could identify and protect ourselves from being defrauded. Mike Verich of Ohio Consumers Council, VP Terry Nicopolis and President Joyce Eckard at Trumbull County Chapter 56 February meeting. In March, Chris Lowe, Legal/Legislative Research Analyst from OPERS, explained some of the new legislative initiatives on the horizon; and then brought us up to date on the financial status of OPERS as it pertains to health care and pensions. Visit our web site - PERI Legislative Action History Current Legislative Information District & Chapter Contact Information Newsletter Archives Partners in Retirement Page 7

8 PUBLIC EMPLOYEE RETIREES, INC. 659-F Park Meadow Road Westerville, Ohio (614) (800) Fax (614) Web site: PERI Officers Donald F. Moyer...Chairman of the Board Jack Wymer...Vice-Chair Beverly Sycks...1st Vice-Chair Bev Calvert...2nd Vice-Chair Ellsworth Szkudlarek...Secretary/Treasurer PERI Staff/Advisors William I. Winegarner...Administrator Laurie Frithiof...Administrative Secretary Nancy Heath...Bookkeeper / Newsletter Layout John Gilchrist...Legislative Agent District Representatives Estella Nusbaum Donna Harter Ramon Mick Bill Cook Philip Roberts Tom Watkins Marlene Bond Joe Stockstill Becky Somerville (419) (937) (513) (419) (740) (740) (740) (440) (330) District # and Counties Represented #1: Defiance, Fulton, Henry, Lucas, Ottawa, Sandusky, Williams, Wood #2: Allen, Auglaize, Hardin, Mercer, Paulding, Putnam, Shelby, Van Wert #3: Champaign, Clark, Darke, Greene, Logan, Miami, Montgomery, Preble #4: Adams, Brown, Butler, Clermont, Clinton, Hamilton, Highland, Warren #5: Crawford, Hancock, Knox, Marion, Morrow, Richland, Seneca, Wyandot #6: Delaware, Fairfield, Fayette, Franklin, Licking, Madison, Pickaway, Union #7: Gallia, Jackson, Lawrence, Meigs, Pike, Ross, Scioto, Vinton #8: Athens, Hocking, Monroe, Morgan, Muskingum, Noble, Perry, Washington #9: Belmont, Carroll, Coshocton, Guernsey, Harrison, Holmes, Jefferson, Tuscarawas #10: Ashland, Cuyahoga, Erie, Huron, Lorain, Medina, Summit, Wayne #11: Ashtabula, Columbiana, Geauga, Lake, Mahoning, Portage, Stark, Trumbull Public Employee Retirees, Inc. 659-F Park Meadow Rd. Westerville, Ohio NON-PROFIT ORG. US POSTAGE PAID COLUMBUS, OH PERMIT NO. 3995