RBOA Update – April 2024

Update on the Retirement Board of Authority (RBOA), April 20, 2024

By Patrick Butler, SJECCD Faculty, 1969 – 2009

The RBOA was created in 2007-2008 by the District to assure funding of a supplement for Medicare for those retired staff and eligible spouses who, in the case of faculty, were hired full time on or before September 5, 1983. It should be emphasized that this plan only serves as a Medicare supplement and that it does not cover vision, dental, etc.

The RBOA is comprised of three appointees made by CSEA, three by AFT 6157 and three designated DO managers and meets twice per year.  When the Board was created, the Board of Trustees hired three primary consultants, Keenan Financial Services who directs the others, Benefit Trust Company, and Morgan Stanley.

The Managers on the RBOA are Vice Chancellor of Administrative Services Edwin Chandrasekar, Interim Vice Chancellor of Human Resources Victoria Simmons, and Executive Director of Fiscal Services Joseph Cheshire. The CSEA Chapter 363 members are Dan Hawkins (RBOA Chairperson), Maria Holden, and Arlene Amelia. The AFT 6157 appointees are Jessica Breheny (RBOA Vice-Chairperson), Patrick Butler, and David Yancey. Of these members, Arlene Amelia, Patrick Butler, and David Yancey are retired.

The RBOA also hires actuaries and auditors on a year-to-year basis, but the contracts for the three consultants have never been reviewed and just roll over, unless the Board of Trustees decides to call for bids from other such contractors. These contractors bill the RBOA Trust about $245,000 per year and generally run the paperwork, investments, agendas and produce drafts of the BROA minutes.

The RBOA Trust is in excellent shape. The District issued about $40,000,000 in 15-30 year bonds in 2008, and after making interest payments on those bonds for 16 years, paying $1,800,000 to sell and set up the bonds, paying for the supplement to Medicare for the beneficiaries and paying the consultants approximately $4,000,000 to contractors, the Trust has over $40,000,000. That amount had a setback for a few quarters (when the stock market was down), but is once more growing.

The RBOA beneficiaries are few in number and will not grow by more than two individuals who qualified but are still employed by the District. In addition, the number of covered retired staff are declining in number each year, so it is clear that there are more than ample funds to increase the amount paid to its beneficiaries.

The RBOA did recommend to the Board of Trustees (BOT) in July 2023 that they allow the RBOA Trust to pay each beneficiary the basic cost of Medicare, which is about $168.00 per month. When I signed the union (CTA at that time) contract to drop full coverage for faculty hired after September of 1983, Medicare cost only $15 per month, Social Security was not taxable, and there were no additional costs for Medicare coverage for those making over $60,000.

The BOT, which was six members at the time, turned us down on the advice of the previous Interim Chancellor on the basis that such payments would conflict with the contract I signed (as well as subsequent AFT contracts), and thus prevented the District from paying for any Medicare costs. I countered with a personal opinion at the next BOT meeting that they could allow the RBOA to just provide a set amount of, say, $170.00 per month for the increased medical expenses from 1983. There has been no response to date, but we are hopeful that the newly elected Board of Trustees member may help us in this regard.

At last count, as this is 2022-2023 data, there were 54 Classified, 36 Managers, Supervisory and Confidential employees, and 119 Faculty covered by the Trust. In addition, there are a handful of “bridge employees” who are retired and covered from age 60-65.

This number of the beneficiaries is certainly lower than the figures below due to the deaths of several of our colleagues and the age distribution that was provided by the 2022-2023 audit. Here is the age distribution of those primary beneficiaries of the trust, who when they die, benefits end for any previously qualified spouse:

65 to 69 years old:  #16; 70 to 74 years old: #12

75 to 79 years old:  #33; 85 to 89 years old:  #46

90 + years old:  #39

As I told the RBOA at our April 17 meeting, you do need to be an actuary to see that our Trust has an embarrassment of riches.

The faculty representatives (and other members) of RBOA have had, over the past few years, continued problems with our consultants concerning our minutes and agendas, as well as faced opposition to any attempt we have made to increase benefits for those retired staff covered by the Trust. Literally every draft set of minutes and several agendas have had significant errors and misstatements that would have hindered the attempts by RBOA members to recommend to our Board, for instance, the increase of benefits. Minutes and agendas have been sent out very close to the 72 hour Brown Act deadline for public distribution. The Board packets, which contain the text of all the materials, were just distributed to faculty and classified representatives as we entered the meeting. Consultants, and an occasional District manager, who are bound by the Charter of the RBOA to act as fiduciaries for the beneficiaries of the Trust, have openly opposed the increase in any benefits to these individuals.

The faculty representatives have made some progress with the problems cited above. The election of AFT representative (and current AFT 6157 officer) Jessica Breheny as Vice-Chairperson has helped to keep an eye on the consultants. After David Yancey protested the lack of a timely distribution of the draft minutes to all members, which the RBOA voted 9-0 to do at our previous meeting, he volunteered to do them himself if provided with the recordings.

After that, the Keenan representative agreed to get the draft minutes out to all members four weeks after our biyearly meetings and to provide agendas and packets as soon as possible before our next meeting on November 20, 2024.

We have also had some success in obtaining the contracts, signed in 1987-1988, for the consultants. I always wondered why there was so much pushback from the consultants whenever we mentioned spending more on benefits, and now that we were finally provided the contracts, thanks to Vice Chancellor of Administrative Services Edwin Chandrasekar, we now have copies of the contracts for Keenan and the Benefit Trust. Those contracts show that Keenan is paid a flat yearly fee of just $1,200 and Benefit Trust just $750 per year. The rest of their yearly compensation, which totals about $240,000, is directly related to the amount of money in the Trust. In other words, the less we pay out to the beneficiaries, the more money they make. Keenan refused to provide the Morgan Stanley contracts, even though for years we approved the amounts, stating they were confidential. We will continue to press for that contract.

The RBOA faculty representatives, as well as several other members, are also very interested in why the medical benefits broker for the District (and the RBOA) and our pool of insured schools and colleges (SISC) charges so much to provide just a supplement to Medicare. The new Anthem rate for just a supplement for Medicare is $882 per month for one person. Kaiser coverage is much lower at $383. Several members of the RBOA have met by Zoom with the brokers who said that those covered by the Trust were in a pool with 400 other schools, but it seems unusual that the charge for just a supplement to Medicare costs over 60% of what is now charged for the full Blue Cross coverage for current District employees. We did receive the following response from SISC to this question:

Why are the Anthem fees so high (about $860) as it is only a supplement to Medicare?  The cost is over 60% of the cost for the full plan for current District employees  ($1403)

SISC pools all Medicare retirees together in a statewide pool.  SJECCD offers SISC Anthem 100% PPO plan, SISC Kaiser Permanente Senior Advantage Plan, and access to SISC Companion Care Medicare Supplement plan.

The Anthem PPO is not just a supplemental plan like Companion Care and others available through AARP etc., it is a full PPO plan paying secondary to Medicare.  This means any item that may not be covered by Medicare but is covered by the PPO plan would be covered at 100% (less applicable deductible – which our retiree plans do not have, nor copays aside from emergencies and prescriptions).

Also, what makes the premium higher on SJECCD’s PPO plan is the outpatient prescription drug coverage.  The Medicare PPO plan has the same coverage as active & early retirees but is not an Employer Group Waiver Plan (EGWP) where SISC would receive subsidies to offset the costs for those 65+ retirees like you would see on the Companion Care Supplement Plan.  Additionally, being a Group Medicare Plan, there is no donut hole or gap in coverage. The copays stay the same all year long.   

It would be nice to see an accounting back-up for this explanation as the supplemental plan the beneficiaries of the Trust receive is far more costly than AARP’s Medicare supplement which is similar and costs only about $247 per month. As we academics often say, “more research is needed.”

The last major concern that we are dealing with is the ability of the District unions, AFT and CSEA, as well the RBOA, to bargain for increased benefits from the RBOA Trust. The unions and the RBOA are caught in a “Catch 22”, as the faculty pointed out at the last meeting, where the unions are told that benefit increases are not within the scope of formal bargaining, as that is up to the RBOA who can make recommendations to the BOT. However, when we make motions at the RBOA meetings, we are told that it is only the right of the District unions to ask for such increases. I asked one manager for some CA Code citations which dictate that refusal and got a data-dump of all of the code. Stay tuned.