RPEA NEWSLETTER • January / February 2012 1

Retired Public Employees’ Association of California

NewsletterGeorge Linn, Editor

January / February • 2012 Volume 12 • Issue 1

RPEA Legislative Updatepage 6-7Health Benefitspages 8-9Diet & Healthpage 13RPEA MemberBenefit Programspage 15

THE WELLNESS ISSUE – Lets Stay Healthy!

RPEA ~ Serving Nearly 30,000 Retirees

2 RPEA NEWSLETTER • January / February 2012

RPEA NEWSLETTERPublished 6 times a year by the Retired

Public Employees’ Association of California, 300 T Street., Sacramento, CA 95811

1.800.443.7732Opinions expressed in articles are those

of the writer and not necessarily those of RPEA. Send suggestions and comments to

RPEA Headquarters, attentionGeorge Linn, Editor.

Send changes of address to:RPEA HEADQUARTERS

300 T StreetSacramento, CA 95811

Attention: Changes of Address

RPEAHQ@RPEA.com

www.RPEA.com

email

website

Published in Partnership with

Designed By Marcus Media Group

President’s Report

RPEA

A Message From President Harvey Robinson

Harvey RobinsonRPEA President

2012 COULD BE A BLOODY YEAR FOR PUBLIC EMPLOYEES AND RETIREESWe will face many issues in 2012. Unspecified “pension reform” is one of them. A joint house select California legislative committee has held two hearings, with more to come, on the Governor’s 12 point pension reform proposals. Since it is unlikely that a hybrid plan—a combination of a defined benefit plan, such as we have, and a defined contribution plan such as a 401k-style plan—will be mandated on current employees, whatever passes will not please “pension reformers”. At the same time, California Pension Reform’s (CPR) Dan Pellissier (he of “why yes, I did buy air time”) has presented two versions of the “Government Employee Reform Act of 2012,” currently known as initiatives 11-0063 and 11-0064. Notwithstanding the contract provisions of the State Constitution and federal and state contract law, both versions would significantly diminish the retirement benefits of current public employees and those first hired after July 1, 2013. The Legislative Analyst’s Office (LAO) found both initiatives’ provisions problematic and without any immediate pension funding relief. CPR is mulling over which version to gather signatures on. DON’T SIGN EITHER VERSION.On the November 2012 ballot will be (up for the third time) the initiative, “Stop Special Interest Money Now.” While touted as “paycheck protection,” this initiative, should it pass, would require public employee unions to annually certify their members’ desire to have union dues deductions be used for political purposes. As initiative supporter, Republican bon vivant and former Secretary of State, George Schultz, stated (as quoted in the Sacramento Bee), “This initiative gets to the heart of one of the most corrosive elements in politics; campaign contributions.” NOT QUITE!

Whereas union contributions would be significantly diminished, under the recent US Supreme Court decision, “Citizens United,” corporations as “people,” are able to put unrestricted unidentified contributions into independent expenditures campaigns.

ALSO ON THE PENSION FRONT As goes Rhode Island, due to pension funding difficulties, the Governor of Rhode Island signed legislation that will reduce retirement benefits for the state’s current public employees. The unions representing these employees have appealed this violation of contract law to federal court. A higher federal court decision could impact all public employees.

In June San Jose and San Diego (each having unique retirement systems) voters go to the ballot box regarding current public employee retirement benefits. In San Jose it is the imposition of a hybrid plan. In San Diego it is the mandating of a defined contribution plan. Should either pass, it is on to the courts challenging a violation of contract law.

RETIREE HEALTH CARE COVERAGE AS AN IMPLICIT VESTED RIGHT On November 21 the California State Supreme Court limited a public employer’s ability to cut health care benefits for its retirees. In a unanimous decision the court found that a city or county that sets retirement health care coverage at a certain level and implicitly agrees to maintain it can’t revoke that pledge later and reduce benefits for those who have retired.

RPEA GENERAL ASSEMBLYIS COMING RPEA’s General Assembly 2012 will held at the Sacramento Hyatt Regency across from the State Capitol from June 22 through June 26, 2012. More information will follow.

Headline Text

RPEA NEWSLETTER • January / February 2012 3

Public Relations Officer (PIO) Update

By Al Darby, Public Relations Committee Chair

NEW MEMBER RECRUITMENT EFFORTSThe RPEA Public Relations Committee has been largely focused on new member recruitment efforts. These efforts are taking various forms. The 2010 Card Insert program wound down in November after gaining approximately 1,500 new members for us. Card Insert also produces a fresh new prospective member list which is used by RPEA Headquarters and our chapters for subsequent recruiting campaigns. We trust that all chapters will use these lists to approach prospective new members on a more personalized basis. Headquarters will periodically e-mail these potential new members with timely pension and health care news and encourage them to join RPEA.

A second effort to recruit new members was launched in late November at the California Public Employers’ Labor Relations Association (CALPELRA) conference in Monterey, CA. This is an association of public agency human resources personnel from the entire state, who meet to receive updated information and techniques related to personnel management. One of their duties is retiree exit processing. We were represented by Dennis Cassella, RPEA Director of Membership, and other Board members and chapter leaders. Attendees were very receptive to RPEA and its goals for retirees. Over 200 participants visited our table. Every conferee we contacted received a package of RPEA recruitment material, and many accepted quantities of this material to pass on to retirees during exit interviews. A large database of HR people was created from this effort that will serve to keep RPEA engaged with them and supply them with supplemental material.

A third recruiting initiative was launched at the joint meeting of the RPEA Public Relations and Contract Agency Advocacy Committees on December 16. Contract Agency Advocacy Committee Chair, Ted Rose, David Rose and Bill Wallace represented the Contract Agency Advocacy Committee. A plan was developed to pilot a program similar to the HR initiative model that public employee union leaders would promote in the San Jose area. Both David and Bill have strong union ties and consider efforts to pursue various unions viable. If this plan is successful, they plan to expand it to other areas in the state. The Contract Agency Advocacy Committee will meet in late January to review this program.

The fourth recruitment effort will be a Headquarters campaign employing the “e-blast” e-mail system to send pension and health care information to prospective (new and old) members and encourage them to join RPEA. There will be plenty of material to disseminate in 2012 in view of the large number of potentially harmful ballot measures that will appear on the November ballot. In the coming months, RPEA positions on these ballot initiatives must be highly visible to oppose those that are detrimental to our pensions and health care.

A fifth recruiting pilot program created by our PR firm, Marketplace Communications, was the special price negotiation and creation of an ad to solicit new members from a retirement community newspaper. Early information indicates several new members joined as a result of these ads. If deemed successful, this program will be extended to other large retirement communities around the state.

Included in all the material that has been used in these recruiting efforts is the new RPEA Member Benefits 2012 brochure. This brochure makes member benefits far more visible to prospective members and hopefully will attract more public retirees to our ranks. A current member version of this brochure was distributed to current members with the November-December RPEA newsletter.

We continue to be active in Californians for Retirement Security (CRS). They represent many other public employee retiree associations and create public relations programs to present to the public about retiree benefit issues. In coordination with Marketplace Communications, they have recently placed opinion editorials in several daily newspapers around the state that bear the signature of RPEA members and their affiliation with RPEA. A Sacramento Truth Squad appearance by RPEA President, Harvey Robinson, was also arranged by MPC. MPC has arranged for Chuck Yates of CalPERS to appear at chapter meetings to promote participation in the CalPERS Ambassador Program. Finally, MPC has produced a holiday greetings video for RPEA-TV on You Tube (www.youtube.com/rpeacalifornia).

4 RPEA NEWSLETTER • January / February 2012

Legislative ReportBy Aaron Read & Pat Moran of Aaron Read & Associates

NEW YEARFirst, let us begin by saying that we hope everyone had a

joyous holiday season. We hope the New Year brings health and happiness to you and yours.

As the New Year starts, we liken it to the beginning of a roller coaster ride at an amusement park. As you get on the ride, you wonder how fast it will go, how high the climbs are, how steep the drop offs will be; and lastly, how long the ride will last. These same questions can and do apply to this upcoming legislative and political year. We have the second half of the 2011-12 legislative session to contend with, and given the fact that unfulfilled revenue expectations fell short in the current budget, we will start out with automatic and massive budget trigger cuts ($980 million). That, coupled with an election year (not just any election year; one that includes redistricting, open primaries and a presidential race), makes for an interesting year to come.

GOVERNOR’S PENSION REFORM PLAN On October 27, 2011, Governor Brown unveiled his “12-Point Pension Reform Plan.” In this proposal, he outlines various reforms and introduces a mandatory hybrid risk-sharing proposal, wherein newly-hired state, local and school employees would receive 1/3 Defined Benefit (DB) Plan, 1/3 Defined Contribution (DC) Plan and 1/3 Social Security. His proposal for safety members would be a pension that has a target of 75% replacement value with 2/3 of the 75% from a DB Plan and 1/3 from a DC Plan.

The Legislature has created a Joint Legislative Conference Committee that has been meeting and discussing the Governor’s plan in detail. So far there have been two hearings, and more are scheduled soon. We will keep you apprised as information progresses. Representatives from RPEA are heavily involved.

BUDGETAs a result of a computer glitch, the Governor’s 2012-13 state budget was inadvertently posted on the Department of Finance website. The link was eventually removed, but not until after the damage was done; and,

with that, the Governor rolled-out his budget proposal five days earlier than expected. The proposed budget makes more deep cuts to state welfare programs and Medi-Cal next fiscal year. The Governor also warned that if his tax proposal is not enacted, things would be even worse. The budget includes automatic trigger cuts that would slash school spending by $4.8 billion, university spending by $400 million and courts by $125 million. Spending on schools, universities and the courts will be reduced by billions if California voters refuse to pass his tax plan in November.

Governor Brown stated today that he would like to have some of the more significant budget cuts finalized by March, but leadership in both houses are calling that estimate premature.

Assembly Speaker John A. Pérez made the following statement today regarding the Governor’s budget plan: “The Governor’s budget plan reflects the fact that even though California’s economic recovery is gaining strength, we still face a year of difficult choices. His plan underscores the need for new revenues to avoid cuts that will be a major drag on the recovery, and I am looking forward to working with the Governor and my colleagues to produce an on-time budget that reflects California’s values by our June 15th deadline.”

Governor Brown’s new budget plan proposes to eliminate 3,000 state jobs (mostly from CDCR), reduce the number of state agencies from 12 to 10, eliminate 39 state entities and eliminates 9 programs.

GOVERNOR BROWN’S TAX PLANOn December 5, 2011 Governor Brown unveiled a piece of his 2012-13 budget plan, which calls for a temporary increase in revenues to go before the voters on November 6, 2012. The tax plan is being called the “Schools and Local Public Safety Protection Act of 2012,” wherein the Governor proposes to raise the top earners’ income tax bracket by up to 2% and increases the state sales tax by one half cent. The income tax increase would be retroactive to January 2012, while the sales tax would increase January 1, 2013. Both would expire at the end of 2016.

RPEA NEWSLETTER • January / February 2012 5

Legislative ReportBy Aaron Read & Pat Moran of Aaron Read & Associates

The income tax increase would apply to individuals earning at least $250,000 and joint filers earning at least $500,000 by imposing three new tax brackets. Under current law, an individual making $750,000 pays the state 9.3 percent of taxable earnings above $48,029. Under Brown’s proposal, that same individual would pay 10.3 percent of income between $250,000 and $300,000; 10.8 percent of income between $300,000 and $500,000; and 11.3 percent of income above $500,000.

Although all of the proposed $7 billion raised by the two taxes are earmarked for education, it does leave some money in the budget for non-education programs. The Governor also put language into his plan that would amend the Constitution to permanently protect the recently enacted “local government realignment” program. This is the program that moves over 30,000 inmates from state to local facilities and control. By guaranteeing funding for realignment in the Constitution, the Governor is protecting those funds from changes by the Legislature or future Governors without going to a vote of the people.

As we stated earlier, the Governor’s tax plan is slated for the November 2012 ballot, assuming they collect approximately 1 million signatures needed to qualify the measure for the ballot. We believe they will.

PRIMARY ELECTIONThis year’s primary election is going to be like none other. In 2008, voters, through the initiative process, approved Proposition 11, which created a California Redistricting Commission; and in 2010, the voters approved Proposition 14, which brought open primaries to California. That said, this upcoming primary, which is going to be held on June 5, 2012, is going to be the first with these new directives in place.

Redistricting is no longer done by elected officials. It is done by a randomly selected 14-member commission consisting of five Democrats, five Republicans, and four commissioners from neither major party. These individuals are supposed to review all the legislative districts in an unbiased manner and redraw them in a manner that fairly represents the population. In the past, some districts were drawn to encapsulate certain areas that would benefit one party or the other.

The ideal purpose of this newly created commission is to redraw fair and just lines.

Under an open primary system voters will no longer be limited to choosing among candidates from their own parties; you can vote for anyone on the ballot. Proposition 14 puts the top two vote-getters in primary races for congressional and state legislative, regardless of political party, in a face-off in the general election. Ultimately, this attempts to garner more moderate candidates to help alleviate the gridlock created by both parties.

This new way of doing things puts RPEA in a somewhat precarious position. Due to redistricting, there are and will be several races where friends and/or supporters are running against one another.

You are probably thinking to yourself, “Why are we talking about this stuff in January?” Well, the reason is that we have to. The issues that we as a group have to face are going to be addressed through the legislative system, and we are either going to be a part of the decision making process or we will let others decide our collective fate.

PAYCHECK DECEPTION QUALIFIES FOR NOVEMBER BALLOTAs expected, the “Paycheck Deception” Initiative, known by the sponsors as “Paycheck Protection,” has qualified for the November 2012 ballot. In attempt to deceive the public, the sponsors have labeled their initiative the “Stop Special Interest Money Now Act.” This only silences the voices of working families; it does no harm whatsoever to corporations or businesses. They can continue to spend money on political elections and Independent Expenditure campaigns without any restrictions.

Find RPEA on Facebook!

Be Our Friend! Write On Our Wall!www.Facebook.com/RPEACalifornia

6 RPEA NEWSLETTER • January / February 2012

RPEA Legislative UpdateJim Anderson, RPEA Director of Legislation

EVERYBODY’S GOT A PLANIn the past several years it has become obvious that the legislative process in California

is seriously broken. Not only is there very little viable governance, but the budget has huge financial deficits and there is a diminution of public services and a general loss of confidence in the future for California. When in doubt about what to do, the People of California have turned to the initiative process to get the State “back on the track.” (It was the railroads that caused the initiative process to become available to the public, so the metaphor is appropriate.) So, what to do? It seems that everybody has a plan to correct California’s problems, and each has filed an initiative so the voters can choose how to fix the system. Up to now 100 initiatives have been filed to put ballot measures before the voters. There are several proposed initiatives that only deal with issues that affect certain segments of the population such as abortion and marijuana. In addition, there are various proposals that would make the legislature part time and seem to make the governing process worse than it presently is. (“The Local Taxpayer, Public Safety and Local Services Protection Act of 2011”, #11-0061; “The Neighborhood Legislature Reform Act,” #11-0067; “The Government Performance and Accountability Act,” #11-0068; “The Government Spending Limit Act of 2012,” #11-0092.) It is possible that some of these may get over the hurdle and get the required signatures and be placed on the ballot. The following comments will deal with those issues that have sufficient legs and financing to show up on the November ballot.

THE GOVERNOR’S PLANSThe Governor has two plans. His proposal for Pension Reform has been out since last March and was revised in August to a 12 Point Plan. Specific elements of this plan are still under discussion, but some form of pension reform is expected to be filed as an initiative for November. (The RPEA Board will review the proposals at their next meeting and decide which of the 12 points to endorse.) The Governor’s other plan has been filed with the Secretary of State with the title, “The Schools and Local Public Safety Protection Act of 2012” (#11-0090). This plan raises revenue through sales and

income taxes (mainly on high incomes) to generate funds for California schools. This plan would also include money to help local communities balance their budgets in 2012. OTHER PLANS TO RAISE MONEY FOR SCHOOLSThere are a couple of other initiatives that have been filed to also raise money for public education in California. Mainly, they would focus on taxing oil companies with an “oil extraction tax.” One would put the tax at 10% (raising between $1.5 and $2.5 billion). The other, “Tax Oil,” (#11-0044) would impose a 15% tax raising about $3.0 billion. A third money raising plan is titled, “Millionaires Tax to Restore Funding to Education and Essential Services Act of 2011,” (#11-0091). Obviously, this proposal only taxes very high incomes (3% over $1.0 million and 5% over $2.0 million). The money is split with 60% to education at all levels, 25% to senior and children programs, 10% to public safety, 4.9% to infrastructure and the remaining 0.1% to administration. The amount of money to be raised by taxing the 1% has not been estimated at this time. This proposal is sponsored by the California Federation of Teachers, and presumably has funds to get it on the ballot. The most comprehensive revenue measure now on file also addresses the issue of funding for public education. “Our Children, Our Future: Local Schools and Early Education Investment and Bond Debt Reduction Act,” (11-0100), proposes a significant fix to the financial system of the State. This initiative proposes to raise $10 billion per year with income taxes mainly on upper incomes. In the first four years, 30% of the money will go to reducing the bond debt of the state; thereafter 100% will be used for public education. Violation of the distribution plan would be considered a felony. (So keep your hands off, legislators!)

ATTACKS ON PENSIONS AND PUBLIC EMPLOYEESIn addition to the initiatives attempting to raise revenue, there are several that directly attack the public pension system. A “group” called Californian’s for Public Reform (CPR, get it?) proposes major changes to the pension system that would modify the rights to collective bargaining, and change existing benefits (“Government Employees Pension Reform Action of 2012”; #11-

RPEA NEWSLETTER • January / February 2012 7

RPEA Legislative UpdateJim Anderson, RPEA Director of Legislation

0063 and #11-0064). There are two versions of this proposal that may evolve into one that is circulated for signatures. The Legislative Analyst’s Office believes many of the provisions violate the constitution as an impairment of contracts. The specifics of these plans have been previously discussed in this column, but they include much of what the Little Hoover Commission proposed in February 2011, and also those proposals by four Republican Senators as Constitutional Amendment 13 introduced in July, as their plan for pension reform.

There is one proposed initiative that takes the meat axe approach. The “Repeal the Dills Act,” (#11-052), would remove the statutes that allow the organization of public employee unions. Once existing contracts or MOU’s expire, the employers would not need to bargain further for wages, benefits or working conditions. A more subtle approach is the initiative that has QUALIFIED FOR THE BALLOT called “Prohibits Political Contributions by Payroll Deduction. Prohibitions on Contributions to Candidates. Initiative Statute,” (#11-010). This requires unions to get permission each year for payroll deductions for political campaigns and to file reports on how each contribution was used. This initiative is sometime referred to as “The Payroll Deception Act”. Similar attacks have been defeated in the past, but it will cost lots of money to oppose this measure this year.

STILL OUT THERETwo groups are still working on proposed initiatives that will radically change the way California is governed. “California Forward” is talking about an initiative that will make significant changes to the California constitution. One provision would require “performance based budgets.” (Governor Brown is looking at this by executive order.) In addition, any new major program would require specific funding sources. Pieces of these proposals are in initiatives that have already been filed (#11-0068 and #11-0092 above). However, the backers of this proposal have been working for several years, and they are a well-known and influential bipartisan group.The other group is called “Think Long” and has issued “A Blueprint to Renew California” on restructuring the governing process in California. This report calls for a constitutional amendment for a “rainy day fund” and multi-year budgeting. Besides having multiple

changes in the governance of California, they propose that a “citizen’s council” be appointed for government accountability. This “unelected group” would have extensive powers to review and prioritize regional and statewide plans for integration into the “Golden State Strategic Agenda.” The Think Long Group has significant financial backing and blue ribbon members. It is likely that this proposal will appear sooner or later on a ballot near you.

HOW WILL THIS SHAKE OUT?It is likely that many competing initiatives will be on the ballot in November. They will not be simple, and the voters will likely be confused. Because of the egos involved, and because everybody has their own plan, it is unlikely they will get together to find a common ground. The result is that a lot of money will be spent on the campaigns, few will be successful, and California will continue to be messed up. We can only hope that the newly elected legislators in the redrawn districts come to Sacramento willing to solve problems and stop the gridlock. KEEP THE FAITH!! Maybe they will have a plan.

2012 CalPERS Allowance Adjustments

The Purchasing Power Protection Allowance (3PA) payment, for those eligible, have been included in their January 2012 allowance payment. Payments are designed to restore up to 75% of the initial purchasing power of school and state members and 80% for public agency members. While state and school members who retired prior to 1981 or earlier will be receiving 3PA, those public members who retired in 1986 or earlier whose employers contracted for a 2% cost of living allowance (COLA) will also receive a 3PA benefit. Where a public agency contracted for a 3%, 4% or 5% COLA, a retiree’s date of entitlement and amount will differ and will be reflected in the amount payable.The CalPERS actuary has estimated that the rate of inflation for 2011 was 3.305%. For those who retired 2010 or earlier, the final rate will be reflected in the May 1, 2012 COLA adjustment based on employer formula.

8 RPEA NEWSLETTER • January / February 2012

RPEA Health Benefits UpdateBy Joanne Hollender, Director of Health Benefits

FEDERALMEDICARE and MEDICAID

The debate continues over future changes in

Medicare due to the desire for policymakers to reduce the federal deficit. There is pressure to make new deals in order to meet budget targets and preserve tax cuts and pressure to avoid major cuts in Medicare payment rates for physicians. These factors will most likely result in policymakers eyeing savings and changes in Medicare, as well as the Affordable Care Act (ACA).

As things stand now, the Medicare program could run out of money sooner than Social Security benefits. Based on current spending, Medicare projects its trust fund will run out of money in 2024, which is 12 years before Social Security is expected to be depleted. In 2010, Medicare spent more than $30 billion more than it brought in from payroll taxes and premiums.

CALIFORNIACalifornia Employer Health Benefits Survey for 2011In 2011 one-quarter of California businesses and government agencies saw their health insurance benefits diminish while copayments, deductibles, and premium shares increased. Health insurance premiums are rising faster than incomes. And, more than one-third of employers are considering shifting more premium costs to workers in 2012, according to the 2011 California Employer Health Benefits Survey from the California HealthCare Foundation (CHCF).

Key findings include:• Since 2002, family premiums rose 153%, more than five times the 29% increase in California’s inflation rate.

• The proportion of California employers offering coverage declined from 73% to 63% in the last two years.

• Annual premiums were higher in California than nationally for individual coverage ($5,970 versus $5,429) and family coverage ($15,724 versus $15,073).

• Employer contribution in California is significantly higher than the national average. California employers

contributed $5,213 annually for single coverage and $11,921 for family coverage.

• Workers at small firms were much more likely to cover at least half of the premium for family coverage than workers at large firms.

• Workers at small firms with a deductible of $1,000 or more increased to 27% from just 7% in 2006.

This report is published as part of the CHCF California Health Care Almanac, an online clearinghouse for key data and analysis examining California’s health care marketplace. Find all Almanac reports at www.chcf.org/almanac.

California Adds Patients to Federally Funded Health Insurance PlanCalifornia has extended health coverage to those with pre-existing medical conditions to more than 6,000 patients in the temporary federally funded insurance plan. The interim insurance coverage helps people with cancer, heart disease and other long-term disorders, and pays for doctor appointments, hospitalizations and medications.

With federal dollars for 2012, the state plans to continue the plan. To be eligible, applicants must be U.S. citizens who have been uninsured for six months and have been denied coverage because of a pre-existing condition. The program is scheduled to end in January 2014 when insurers will be required to accept patients with pre-existing illnesses without higher rates.The monthly premiums for insurance coverage for pre-existing conditions coverage range from $119 to $535, in addition to co-pays and deductibles. Premiums are lower than last year, but many still cannot afford it. California has been allotted $761 million in federal funding for the program and is expected to receive $347 million of the funds in 2012.

Long Term Health Care PlanningThe state has launched a website to help Californians with long-term health care planning. The website: www.rureadyca.org, was created by the state Department of Health Care Services’ California Partnership for Long-Term Care. The site includes numerous tools, calculators and scenarios for individuals and households. Video presentations also are onsite.

RPEA NEWSLETTER • January / February 2012 9

RPEA Health Benefits Update

New California Laws in 2012California insurers who offer individual and small group health coverage must spend at least 80 percent of premiums on actual medical care.California is the first state to prohibit selling over-the-counter cold and cough medications containing dextromethorphan, or DXM, to minors. DXM is known to cause hallucinations and seizures when taken in high doses (SB 514).

California makes it illegal for individuals under 18 years of age to use tanning beds (SB 746).

Children as young as 12 years of age can be vaccinated without their parents’ consent against sexually transmitted human papillomavirus, HPV, which is a leading cause of cervical cancer (AB 499).

Insurers must provide coverage for maternity care covering individual insurance plans (SB 222) and group plans (AB 210).

CALPERS New CalPERS Committee Structure in February 2012In the fall 2011 the CalPERS Board approved governance changes to strengthen its accountability, efficiency, and effectiveness. Effective in February, the changes include a new Board Committee Structure, which reduces the number of CalPERS committees from seven to six.

The CalPERS Health Benefits Committee is being combined with the pension benefits issues previously addressed by the Benefits & Program Administration Committee (BPAC) to form a new board committee entitled, Pension and Health Benefits Committee. The Pension and Benefits Committee has the authority to approve actuarial valuations, employer rate setting, and approval of reserve levels. The other five committees are: Board Governance Committee, Risk & Audit Committee, Finance & Administration Committee, Performance & Compensation Committee and Investment Committee.

Health Benefits Purchasing Review ProjectAt the December 2011 CalPERS Board Workshop, several health topics were discussed including Market Dynamics; Health Plan Options and Adverse Selection Considerations; Wellness; and Evidence-Based Medicine and Disease Management.

Sharp Health Plan made a presentation on Wellness proposing an integration of programs that engage members in sustainable behavior change which reduces risk. The goal is for health risks to evolve becoming measured, managed and improved. The parting message: “Wellness is a journey, not a race.”

Adventist Health made a presentation on “The Evidence-Based Way to Wellness.” It emphasized that evidence-based care is essential for optimal wellness and chronic disease management. “Evidence-Based Medicine” was defined as: “the integration of best research evidence with clinical expertise and patient values.”

CVS Caremark Settlement with CalPERSCVS Caremark has agreed to pay $19.9 million to settle a whistleblower lawsuit alleging fraud that stemmed from a previous contract as Pharmacy Benefits Manager (PBM) for CalPERS from 2003 to 2006. In mid-March the CalPERS board canceled negotiations with Medco, which had been the front-runner for the three-year 2012 contract. CalPERS started negotiations with the runner-up, CVS Caremark, and approved the contract to replace Medco in June 2011. CalPERS is satisfied that appropriate precautions have been implemented by Caremark to prevent fraud.

CVS Caremark Pharmacy Benefits Manager for PPO PlansFor more information about the PERS Select/Choice/Care outpatient prescription drug program managed by CVS Caremark as of January 1, 2012, members are encouraged to order their prescription refills, locate a participating retail pharmacy or to ask questions by:

• Calling CVS Caremark’s Customer Care number toll free at 877-542-0284, or• Visiting CVS Caremark’s website at www.caremark.com/calpersMembers may also refill orders by using CVS Caremark’s Mail Order Form, which was provided in members’ Welcome Package, or by picking up their mail service prescriptions from a local CVS/pharmacy. (Call CVS Caremark for details.)

Interested members may wish to revisit the RPEA Newsletter for July/August 2011, which describes details about major changes in the pharmacy drug program for PPO plans, including price increases for brand name drugs.

10 RPEA NEWSLETTER • January / February 2012

RPEA Membership Program

BRING YOUR FRIENDS TO A CHAPTER MEETING.

HELP EDUCATE THEM ABOUT OUR PENSION AND BENEFIT ISSUES.

Recently a question was posed: Why are we recruiting Affiliate Members at a reduced cost and not reducing the annual dues for members and beneficiaries?

RPEA has long accepted “AFFILIATE” memberships from employed CalPERS members. Unfortunately, very few potential members have chosen to join. There really isn’t much incentive for them to do so. Their employment relationship is with their employer. It is their employer who will decide if they are laid off or not; what their COLA will be; how much they will pay for health insurance and other benefits. Usually they are not eligible for social security or Medicare. There is little in the benefits of RPEA membership that those still employed, don’t have from their employers.

Admittedly, we know that there is a future benefit to being a member of RPEA for those yet to retire. What we have found is: If they don’t join before they retire or within a year or two afterward, there is little likelihood that they ever will. We are seeking to get their involvement before they retire because we understand the consequences.

With the steady loss of members due to advancing age, we need to attract new members to keep and maintain our voice with CalPERS and the legislature. Lowering our membership dues is not possible until we are successful in gaining new members substantially faster than we are losing them.

We have pleaded with chapters to step up their efforts to recruit retirees, but that message has pretty much been unsuccessful. One new member recruited by each of our existing members would have solved our membership problem. Since that has not happened, we have to try other approaches to recruit new members.

In light of the above, I would ask that you consider your personal membership. We do have a program where a Chapter President can request that a member’s annual dues be reduced when the member is experiencing serious financial difficulty. Your Area Director can help with that. We are distressed when we lose any member.

We also have a temporary membership available for any member who believes they can successfully recruit a newly-retired member by letting them receive our newsletter and member materials while they consider membership.See your President, Membership Chairperson or Area Director to extend a temporary membership to a potential member.

We are in the final stages of the 2012 Card Insert Program. Each chapter has been provided a list and mailing labels for those persons who have inquired about joining RPEA. A letter inviting the prospective member to an actual chapter meeting should be sent by the Chapter President. The letter should state where and when the meeting will take place, along with a telephone number to make reservations. If the potential member attends, HQ (membership director) will pay for their lunch.

We are still trying to improve our mailing address, telephone number and email address records. PLEASE, when you move or makes other changes be sure to let Headquarters know. You can do that by cutting the label page off your newsletter making the changes, include your phone number and e-mail address, and send it to RPEA, 300 T Street, Sacramento, CA, 95811-6916

My last comment is directed to those Chapter officers who complete the Monthly Membership Report. By logging onto www.RPEA.com and continuing on to the “Members Only” section, you will find the necessary report form under the “Chapter Resources” section. The monthly report form is in the right center of your screen. You can fill it out and e-mail it to tanya@ rpea.com.

Dennis Cassella,Director of Membership

By Dennis Cassella, Director of Membership

RPEA NEWSLETTER • January / February 2012 11

A NEW APPROACH TO REDUCING HEALTHCARE COSTSAn average two-earner couple, together earning $89,000 annually and retiring last year, would have paid $114,000 in Medicare payroll taxes during their careers; but their future medical services will cost Medicare $335,000. Most of us are concerned about Medicare’s long-range solvency, but few realize how drastically underfunded the program is. The longer Congress refuses to face this problem the more unsolvable it becomes. The U.S. spends over $2 trillion per year on medical care, more per patient than any other health system in the world. Medical costs in the United States are growing faster than our incomes and at twice the rate of our gross domestic product. Every year public funds are paying for a larger share of these costs, leaving less funding for other needed programs. Until recently, we have tried to control skyrocketing medical costs primarily through legislatively mandated cost containment. That isn’t working. The time has come to look at the root causes of spiraling healthcare inflation.

A disproportionately large amount of medical costs are due to chronic diseases such as stroke and heart conditions, diabetes, tobacco-related diseases and cancer. Chronic diseases are the major sources of illness and cause 70% to 80% of all deaths in the U.S. They account for about 80% of all healthcare costs and 96% of Medicare spending. The average annual healthcare cost for people with a chronic condition is five times higher than for those without such a condition. The United States outspends every nation on earth on per capita healthcare, and we have a significantly higher rate of chronic disease than other countries. The United States is 19th out of 19 countries in minimizing deaths due to preventable diseases. Every chronic illness closely linked to obesity is more common in the United States. 33% of Americans are obese vs. 17% of Europeans. At the present rate of increase, our obesity-related disease will soon cost us a third of a trillion dollars per year.

Not all chronic diseases are preventable, but most of them are. Type 2 diabetes, high blood pressure, strokes, heart attacks and many others result from obesity, lack of exercise and unhealthy eating

habits. Even some dementia and Alzheimer’s disease can be prevented or postponed by lifestyle changes. Tobacco-related disease costs $200 billion a year and takes 1,300 lives per day. Rather than focusing on treating disease after it happens, we need to adopt lifestyles that create health and wellness. The use of prescriptions has doubled in the last ten years. How many of them wouldn’t have been needed if we had focused on eating right, maintaining a proper weight and exercised? In the process, how many trillions of dollars could we cut from our federal budget? An impossible dream? Twenty years ago who among us ever thought that smoking would become unpopular – and even illegal in restaurants, bars and other places? It’s not too much to hope that America will take health seriously. We don’t have to wait for legislation. To a large extent every person controls his own health. It’s a new year, a time to make new resolves. Why not?

MINING THE JOURNALS . . . Smoking is still the leading preventable disease and cause of death. In the U.S. each year smoking kills 443,000 people. For every smoking related death there are 20 people living with a smoke-related disease. Quitting smoking at age 65 or older reduces your risk of dying from smoking by almost 50%. (Mount Sinai School of Medicine’s Healthy Aging, January 2012, citing a study published in Proceedings of the National Academy of Sciences) Type 2 diabetes increases the risk of Alzheimer’s disease and other types of dementia, according to a fifteen-year study in Neurology. Control of one’s blood sugar is “critical to prevent future dementia.” (University of California, Berkeley, Wellness Letter, December 2011) In autopsies of 147 adults in a long-term study of cholesterol, brain plaque (a sign of Alzheimer’s) was found in 86% of those who had high cholesterol but in only 62% of those with low cholesterol. (Consumer Reporters On Health, December 2011)

ITEM OF INTEREST. . . Effective last month, the patent on Lipitor ran out and it is now available as a generic at a saving of about $180 annually in copays.

Diet & HealthBy Mil Pribble

12 RPEA NEWSLETTER • January / February 2012

RPEA in Action

Your Public Relations Committee meets frequently to maintain a current flow of information during the ongoing attacks on pensions and benefits. These photos show the Committee meeting with RPEA’s Public Information Officer (PIO), Rachel Hooper, of Marketplace Communications.

Rachel Hooper, Public Information Officer

Joanne Hollender, Director of Health Benefits, and George Linn, Director of Communications& Newsletter Editor

Kathy Miller, President of RPEA Chapter 031,

& RPEA President, Harvey Robinson

CALPELRA ConferenceCALPELRA’s (California Public Employers’ Labor Relations Association) annual conference offers a unique opportunity for law firms, consultants and sponsors to interact with labor relations and human resource professionals. This annual conference has been consistently well-attended with registration over the last four years alone ranging from 600 to over 1,000 individuals representing over 500 public agencies. RPEA saw this as an opportunity to publicize our mission and distribute information packets to many public agency professionals. See the photo (right) of our booth at the last conference.

RPEA NEWSLETTER • January / February 2012 13

Proposed Ballot Measures Constitutional Amendments, Repeals, Rewrites

Paper vs. Technology

WHERE IS THE PAPER GOING?The fast-paced, high tech electronic age is changing many things we’ve become accustomed to. Letters with stamps on them are yielding to e-mails. Phone calls have not yet given way to texts that come with those smart phones.

There are more changes that are on the horizon that may not be exactly what we have been accustomed to or always want. Some of these changes affect retirees. For example, if you sign up for Social Security benefits this year, you must arrange for direct deposit of your benefits. And more is to come. If you are currently receiving your Social Security benefits in the mail, be ready. Effective in 2013—merely a year away—benefit checks will no longer be mailed. You must have direct deposit. Social Security tells us that the change will reduce their costs by 90 cents per check. Since 120 million checks are currently issued each year, this represents $108 million saved each year.

Other changes may affect your way of doing your normal business. As of January 1, savings bonds are no longer in paper form. Again, the government is estimating an annual savings of up to $20 million. The U.S. Postal Service is planning to close almost half of their processing centers in the near future. This will mean that mail will probably take longer from mailbox to mailbox. For example, if you have been accustomed to mailing checks to pay your bills, you will need to allow more time for the payments to be delivered.

Another change being tested is for the Treasury Department to issue pre-paid cards for some tax refunds. Although their test program was not met with success, this is an example of what we might see in the future.

Do we have a choice? Probably not. Are these changes better for us? The experts in the field tell us that mailboxes with social security checks are prime targets for thieves. Electronic payments go directly into your bank account.

What will the electronic age provide in the future?RPEA is already using electronic means to communicate with those members who want this form of communication. RPEA is on Facebook, which is an up-to-date information tool. RPEA has a website that provides a wealth of information about our organization and member benefits. RPEA distributes a weekly e-blast that provides current information about pension and benefit issues which is available at your request. RPEA is not eliminating the paper trail, but we do encourage our members to use the electronic tools that we are providing.

By George Linn, Editor

14 RPEA NEWSLETTER • January / February 2012

NOW IN PRINT!A new RPEA 2012 Members Benefits Brochure was distributed with the November-December issue of the RPEA newsletter. I

trust you all received it. If you didn’t, you can request a copy from RPEA Headquarters. This is the first brochure that encompasses all RPEA group insurance plans, discount products and discount entertainment programs. Now that our member benefits can be easily identified and accessed, we hope that members will take even greater advantage of these benefits. This brochure was also printed for recruiting purposes, but that version did not include information about accessing these discount offerings. Hopefully, this addition to our repertoire of recruiting material will augment our efforts to grow RPEA’s membership.

One of insurance programs we offer is pet insurance. As you may have experienced, vet bills are skyrocketing just like human medical care where the cost is growing at a rate that far exceeds inflation for most other products and services. We thought it might be of value to our members to remind members that VPI Pet Insurance is available as a low-cost group plan from RPEA. Here are some important details about this plan:

VPI® Pet Insurance is the nation’s oldest, largest and number one veterinarian-recommended pet health insurance provider. With comprehensive plans designed to protect you financially when the unexpected occurs, affordable coverage from VPI® Pet Insurance allows you to focus on providing optimal healthcare for your pet rather than worrying about the cost of treatment. You can be reimbursed for veterinary expenses such as surgeries, diagnostic tests, hospitalization, prescriptions, vaccinations and more. Discover the VPI difference:

• Reliable: With more than 29 years of experience, VPI® Pet Insurance is the only company with a proven track record of protecting pets—for life. Rest assured that we’ll be here, whether you enroll your pet at six weeks or six years.• Trusted: 4 out of 5 veterinarians recommend VPI® Pet Insurance.*• Guaranteed: Clear renewal terms guarantee your rate, coverage and benefits for one full year.

The number of claims you file will not affect your rates or coverage—even on your next policy term.• Comprehensive: Choose the medical plan and optional CareGuard® wellness coverage that best fit your needs.• Up-front: Our published benefit schedule takes the guesswork out of figuring out what’s covered.• Convenient: You’re free to use any licensed veterinarian, with no pre-certification required. Your pet is covered anytime, anywhere in the world.

Now, thanks to a special 5% group discount, you can save hundreds of dollars in VPI® Pet Insurance premiums over the life of your pet. For a no-obligation quote or to learn more, call 1-877-PETS-VPI or visit www.petsvpi.com

The Member Services Committee will continue to add insurance plans, products, and entertainment offerings when the right plans present themselves. We always attempt to negotiate the best possible benefits and lowest group plan cost. Please feel free to suggest new statewide and national programs that you feel would be attractive to and have value for our members.

Member Services UpdateBy Al Darby, Member Services Committee Chair

We know that communication via social media such as Facebook has become more popular than by personal e-mail and accounts for one out of every eleven minutes that Californians spend online. RPEA’s Facebook page has become very popular and enters 2012 with 214 “likes.” Not only is RPEA’s Facebook community growing, but member interactivity is growing as well. Over the last few months RPEA members have communicated using our Facebook page by “liking” comments and photos and by responding to posts. This is one of the tools we’re using to remind and inform members and non-members alike that RPEA is working to protect your retirement benefits and also present an avenue to communicate with old colleagues and socialize with friends.

Did you know?

RPEA NEWSLETTER • January / February 2012 15

RPEA Membership Benefits

Automobile/Home Insurance - Liberty Mutual Insurance Co.Dental Plans - MetLife (all States) | New Dental Choice (all States)

SelectDent | Delta Care (California only)

Atriba Discount Network Short Term Recovery Plan - The HartfordFamily Legal Plan - Legal Club of America (all States)

Hearing Plan - EPIC (all States)

Long Term Care - John Hancock (most States) GenworthMedicare Supplement Plan - (A-N –Transamerica (all States)

Prescription Drug Discount Plan - Outlook RxTravel Accident Plan - The Hartford (most States)

Vision Plan - Vision Service Plan (VSP) (all States)

Emergency Assistance PlusVPI Pet Insurance

Discounts On: Alpine Club/Palm Springs TramAquarium of the PacificCalifornia Academy of SciencesGilroy GardensGreat AmericaKnott’s Berry FarmLegoland CaliforniaMadame Tussauds of Hollywood

Ripley’s Believe It or NotRoaring Camp RailroadSan Diego Zoo Wild Animal ParkSea World San DiegoSee’s Candy CertificatesSix Flags Discovery KingdomUniversal Studios

Contact RPEA Headquarters at: 800 443-7732To request information on:

• Insurance plans • Certificates for Discounts• See’s Candy • Entertainment Admission Prices.

Your Member Benefits Committee is constantly seeking new and improved discount benefit offerings.

For a Membership application call RPEA headquarters: 800 443-7732 Or visit our website: www.RPEA.com

INCREASE IN SEE’S CANDYCERTIFICATE PRICE -

EFFECTIVE JANUARY 1, 2012 NEW PRICE IS $12.75 PER CERTIFICATE

Retired Public Employees’ Association 300 T Street, Sacramento, CA. 95811-6912

Toll Free 1.800.443.7732 Phone (916) 441-7732 • Fax (916) 441-7413 Email: rpeahq@rpea.com | www.rpea.com

CHANGE SERVICE REQUESTED

RPEA Board of Directors

Non-ProfitOrganization

PAIDPermit No. 400

Laguna Niguel,CA

Rev. 01/04/12 (A)

Retired Public Employees’ Association of California (RPEA) 300 T Street, Sacramento, CA 95811-6912 Toll Free: (800) 443-7732 Phone: (916) 441-7732 Fax: (916) 441-7413 Website: www.rpea.com

ROSTER OF BOARD OF DIRECTORS

NAME TITLE HOME ADDRESS PHONE FAX E-MAIL ADDRESSHarvey Robinson 8AM - 5PM President

1277 Ridgeway Dr. Sacramento, CA 95822 916 444-7019 NONE hrobin6766@sbcglobal.net

Ann McWherter 8AM – 8PM Vice President

8701 Valley Oak Lane Elk Grove, CA 95624 916 716-3343 916 585-9152 almcw2864@surewest.net

Marie Reed 8AM – 7PM Secty/Treasurer

6796 Pocket Road Sacramento, CA 95831 916 428-2090 916 428-2092 marie.reed@comcast.net

Ted Rose 9AM – 7PM Imm. Past Pres.

2894 San Minete Dr. Livermore, CA 94550 925-292-9017 NONE seniorsmokey@yahoo.com

Joanne Hollender 9AM – 9PM Dir. Health Benefits

3424 Java Dr. San Ramon, CA 94582 925 735-1150 NONE caljazzcat@att.net

Dennis Cassella 10AM – 5PM Dir. Membership

205 Cypress Hill Dr. Grass Valley, CA 95945 530 272-2130 SAME henryv@nccn.net

George Linn ANY TIME Dir. Communications

53 Aquavista Way San Francisco, CA 94131 415 999-3538 415 821-6539 gmlinn@aol.com

Jim Anderson 8AM – 8PM Dir. Legislation

578 Via La Paloma Riverside, CA 95207 951-212-8281 951-686-7261 waynesix@aol.com

Al Darby 8AM – 9PM Dir. Member Svcs

2601 Pine Knoll Dr., #14 Walnut Creek, CA 94595

925 926 0178 530 872 5060

SAME-CALLBEFOREFAXING

aldarby9@cs.com

Don Raffaelli ANYTIME Area Director I 3433 Trinity St.

Eureka, CA 95501 707-443-5485 707-444-9467 draffaelli@suddenlink.net

Ernest Sandoval 7AM – 9PM M-F Area Director II

22301 Dersch Road Anderson, CA 96007

530 365-5678 530 378-1315 NONE papaernie@gmail.com

Robert Van Etten 9AM-5PM M-F Area Director III

4401 Clovewood Lane Pleasanton, CA 94588 925 846-6563 NONE bobvanetten@comcast.net

Helen Segletes 9AM – 9PM Area Director IV

1800 Thelma Dr. San Luis Obispo, CA 93405 805 543-3996 NONE hsegletes@aol.com

Robert Seigler ANY TIME Area Director V

P. O. Box 751 Norco, CA 92860 951-769-4901 NONE seiglerbob5@verizon.net

Wes Stonebreaker ANY TIME Area Director VI

1060 Country Club Dr. Riverside, CA 92506 951 784-1060 951 781-3960 lindaandwes@aol.com

Richard Avilla 10AM – 4PM

Area Director VII 17082 Alexandra Way Grass Valley, CA 95949

530-272-8325 NONE avillarichard@yahoo.com

Jerry O’Keefe Area Director VIII P. O. Box 18651 Anaheim, CA 92817 714 998-9590 SAME Irishfree1916@aol.com

Cleave Govan ANY TIME Area Director IX

3621 Pinnate Drive Las Vegas, NV 89147 818 913-3544 NONE cleavegovan@yahoo.com

HQ OFFICE: Joe Umiker Tanya Rakestraw Radtana Lee Barbara Hernandez Eric Hoffman

Office Manager Asst. Office Mgr. Accts. Payable Clerk Mem. Svcs. Recep. IT Technician

300 T Street Sacramento, CA 95811 7:30AM - 4:30PM

916 441-7732 916 441-7413 Joe@rpea.com Tanya@rpea.com Radtana@rpea.com Barbara@rpea.com Eric@rpea.com