Jubilación

Retirement

A UARA publication for retirees

Volume 26, No.3

April 2005

MESSAGE FROM THE PRESIDENT

Cornelius Steelink, President, University of Arizona Retirees Association

CONTENTS

President's Message 1

Honored Page 2

UARA Life Members Page 2

Member Viewpoints Page 3

Major Points Page 3

New Ownership

Page 3

Private SS Accounts Page 4

News From ASRS Page 4

Legislative Update Page 5

February Forum

Page 7

CatWalks Page 7

Picnic In the Park

Page 8

On the Lighter Side Page 8

It was two years ago in April 2003 that Jan Murphy handed me the gavel of the presidency of the UARA. Soon, I will be handing this emblem of office to my successor. So, it is an appropriate occasion to look back at our accomplishments of the past two years.

During that period, our Council and its Executive Board have provided the UARA membership with a remarkable array of services. Even I was surprised at the variety of activities. I will list them for you.

* Publication of Jubilación. This newsletter goes to 1,100 UARA members three times a year. It is packed with salient information on important issues, notices of UARA events, volunteer opportunities, and other materials. The editor is Janice Murphy, who is ably assisted by Jean Discorfano.

* Forums. We have sponsored a number of topical forums which address retiree interests. Three included health insurance, Medicare prescription programs, and federal deficits. Keith Meredith, followed by Chéle and Bill Logan, who are the current co-chairs of our education committee, are responsible for planning these forums.

* Scholarship award. The UARA has finally accumulated sufficient monies in its UARA/Irving Yall book scholarship fund to make its first award. Five hundred dollars went to UA sophomore Jeffrey Guilfoyle, who received it at our fall luncheon. Credit goes to Corinne Wilson, who has doggedly shepherded these funds for the past two years.

* Legislative Activities. Our legislative committee maintains a year-round watch on the Arizona State legislative process. Its chairman is Bob Sankey. It monitors and lobbies bills in progress in the Spring and works with legislators on preparing bills in the Fall. It works with two other statewide retiree groups: the Tri-University Group and the Coalition of Arizona State Retirees. It has also worked with the Board of Regents and the Arizona State Retirement System (ASRS). Two years ago, we lobbied the Governor to appoint Dr. Keith Meredith to the Board of ASRS. Last year he was elected president of that board.

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This is a difficult task, since we have an ever-shifting population of retirees. The necessity of an accurate list is especially critical when we mail out notices or newsletters.

To all you Council members over the past two years, THANK YOU. Job well done!

Cornelius Steelink

(You may remember that Keith Meredith was president of our own association for three years.)

All of these activities are designed to protect our hard-won benefits. Our coalition allies were indispensable in gaining these benefits. The UARA will widen its lobbying activities to Congress, where Social Security is under attack (see related articles elsewhere in this issue) and where Medicare coverage has been changed.

* Volunteer Activities of Retirees. Betty Snider continues to expand her survey of the volunteer services of our UARA retirees. Her latest count showed that 48 retirees gave 12,800 hours of volunteer service to the community last year. Another survey was made of volunteer services to the University of Arizona.

* Luncheons/Picnics. Yes, we cater to your appetites for food and fellowship. This year, we had three luncheons and one outdoor picnic. Conversation, congeniality and gastronomical delight were equally mixed. I get a lot of personal satisfaction watching former colleagues swap memories with one another. Some of them linger long after the program has ended. Thank Bob Calmes for arranging these.

* Office computer. Our office in the Sun Building has entered the 21^st Century. It received a new computer in February 2005. Betty Snider did all the leg work (literally, she carried it in), ordering and setting up. Corny Steelink's good friends in the U of A Chemistry department supplied the technical support.

* UARA Data Base. Basic to our operation as a thriving organization is the maintenance of our membership records. Jo Henry has kept a detailed and up-to-date list of the more than 1,100 members.

WERE YOU, TOO, HONORED BY JO HENRY?

Cornelius Steelink, Jo Henry, Henry Koffler (1989 U of A Retirement Reception)

NOTICE TO UARA LIFE MEMBERS

Please note, if the letters "LM" follow your name on the mailing label of this issue of Jubilación, UARA has identified that you are a life member in its address system. If you have questions, call Jo Henry, 520-744-2779.

Each king in a deck of playing cards represents a great king from history:

Spades - King David

Hearts - Charlemagne

Clubs - Alexander the Great

Diamonds - Julius Caesar

University of Arizona Retirees Association Mission Statement

Purpose:  to foster the benefit, interests and well-being of the retired faculty and staff of the University of Arizona through social, educational, and promotional activities, as well as to encourage continuing contact between retirees and the University.

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MEMBER VIEWPOINTS

ON SOCIAL SECURITY

Major Points To Consider For Social Security

by Herb Abrams

There is no crisis in social security. The fact is that Social Security can meet 100% of its obligations for the next 37 years (until 2042) with no changes in the current system, according to the Social Security Administration itself. Moreover, the Congressional Budget Office states that Social Security is fully solvent until 2052.

Further, people pay Social Security taxes on incomes only up to $90,000 per year. If this cap were lifted, the system would be solvent for many more years, and lifting the cap would, in the opinion of many, also make the tax more equitable for all income groups.

Privatization means cuts of up to 46% in guaranteed benefits, according to the Center for Budget and Policy Priorities.

Privatization will add trillions to the national debt and billions to Wall Street financial institutions for broker commissions and the large administrative costs of such a complex system, whereas social security administrative costs today are less than 1%.

Privatization puts us all at the mercy of the stock market.

President Bush, Congressman Kolbe and others have often touted the plan in Chile. The New York Times of January 27, 2005, has a detailed article starting on page one with the headline "Chile's Retirees Find Shortfall in Private Plan." The study points out that Chilean workers now retiring are getting only a fraction of what they would have received had they continued in the government plan. The private plan was decreed by General Pinochet, and interestingly enough, he arranged that the military would be exempt and stay with the governmental plan. They are now receiving handsome pensions.

Comments On "The New Ownership Society"

by Uwe Fink

By now, probably everyone has heard about the present administration's desire to "fix Social Security" by allowing people to divert a portion of their present Social Security taxes into private accounts. Instead of paying 12.4% of wages, split evenly between workers and employers, to the Social Security Administration, the plan would allow workers to divert up to 4% into a private account which would be invested in stocks or bonds.

Unfortunately, the plan has several serious problems. Since workers would pay less into the Social Security fund, the government would take in less money and would thus have to borrow more money or raise taxes to make up the difference.

More seriously, private accounts would trade a reasonably guaranteed benefit from the government for a benefit left to the vagaries of the stock and bond market. President Bush feels that these private accounts would do better than the Social Security "trust fund," which has and will invest its annual revenue surpluses (until 2018) in US Treasury bonds. The administration is talking about a required break-even point of 3% above inflation to beat the present Social Security surplus investment return. If one adds about 0.3% for annual expenses, this comes to a required real rate of return of about 5.3%, considerably above the present rate of return of

Treasury bonds, which yield about 4% or about 2% above inflation.

John Clements in The Wall Street Journal points out: "Inflation indexed Treasury bonds yield less than two percentage points above inflation, and that is before factoring in costs. At that level, private accounts lose most of their appeal." If one sticks to the safe investment of bonds, which a prudent investor saving for his retirement would do, a 5.3% return is presently not easy to achieve.

Perhaps stocks would do better? However, almost all stock prospectuses carry the warning: "Past results are no guarantee of future performance." Very wisely, President Bush has left that warning off his plan. He has given few details, apparently because he feels that this would "confuse the issue." Studies have shown that the general investor in his 401k plans does worse than the stock market averages. What happens if the stock market declines for a number of years? The S & P 500 average is still about 20% below its high of five years ago! What do you do if your retirement falls into one of the deep troughs of the market? The Japanese stock market has not yet reached the high it had some twenty years ago.

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more, the benefit is calculated on the basis of the average wages during the working years with a factor that favors low wage workers. While changes in this formula would not affect current retirees, it could diminish benefits for future retirees.

Will the private accounts be voluntary? If so, will sufficient information be provided to make an informed decision? How much will the guaranteed benefit be decreased to offset the money diverted to private accounts? Great Britain adopted a similar plan under the Thatcher government and there is widespread dissatisfaction with it. The same is true for retirees in Chile. Those who chose privatization 20 years ago now receive one-half of the pensions of those who stayed in the government plan.

It will be necessary to examine all the proposals carefully to avoid being sold a "bill of goods." The devil will be in the details. In the absence of actuarial figures for a specific plan, all arguments are ideological. Everyone must watch Congress every day for changes in legislation.

Remember: Social Security solvency problems can be solved by minor adjustments. Saving the Medicare program will prove much more difficult. We should focus on that entitlement first.

It is very possible that the aging population and fewer workers for each retired person, i.e., the forces that the Administration claims are jeopardizing the present Social Security system, will also result in lower future stock market returns.

Finally, no details have been given about how much a person's guaranteed Social Security benefits would be decreased if he or she opts to put 4% into a private account. From the details leaked so far by the administration, Mr. Furman, a New York University economist, in a Wall Street Journal article on February 17, has made some estimates. It turns out that the government would only pay about 10% of his or her benefits out of the regular Social Security fund. The rest would have to come from that person's private account. If that account does badly, the person would end up with very little Social Security benefit. The government has thus shifted all the risk to the private person.

The Social Security benefits are intended to be the ultimate safety net of the older population. I feel it is much too risky to make major changes in this system, especially if the proposals are vague and have demonstrably serious shortcomings.

Private Social Security Accounts

by Leslie Forster and Cornelius Steelink

The Executive Board of the UARA decided to oppose any privatization plan which removed monies from the Social Security Trust Fund. Below is a rationale for that decision.

Proponents of privatizing a portion of Social Security for workers under 55 have admitted that the motivation for this change is ideological. The change will do little or nothing to solve any projected funding shortfall. Since reducing the contributions of a portion of younger workers will necessarily diminish cash inflow and lead to transitional costs, there may be pressure to make changes that affect the benefits of current retirees and pre-retirees in the 55-62 age group in order to minimize the deficit. Without any details of potential legislation, it is not possible to judge the effect on the benefits of current or future retirees.

The "social" aspect of Social Security should not be ignored. Thirty-five percent of current Social Security recipients are not retirees. This group includes younger disabled workers and widows with minor children. In addition, there is a spousal benefit for retirees whose work record would not provide a greater income. This benefit applies to divorced spouses who were married for at least ten years. Further

NEWS FROM ASRS

by Keith E. Meredith

The first order of business is some spring house cleaning, a job that I have grown accustomed to over the years, but have ne I would be remiss to not comment about some of the activities taking place in the legislature. As you know, this is the busiest time of the year and bills change almost hourly as a result of testimony, amendments, strike-all amendments, and political arm wrestling. The rising contribution rates are a major concern of legislators because these rates are a major concern of employers and active employees. The voices of the constituents are being heard. Ah, the glory of democracy is upon us. The threat is the solutions that are being proposed. For ex

At the time of this writing (early March), retirees are expressing strong support for HB 2552/SB 1014 and for SB 1426, and strong opposition to HB 2718/SB 1186. With respect to HB 2718/SB 1186, many retirees believe that the lower contribution rates proposed by these bills would

LEGISLATIVE UPDATE

by Bob Sankey, Chair, Legislative Action Committee

The Arizona State Legislature

The following bills, active in the current Arizona state legislature, are of particular importance to University of Arizona and other state retirees.

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Pat Pringle worked at the University of Arizona for 28 years. In her words, "I retired in 1997 and my husband and I moved to our cattle ranch north of Benson. Of course I've been enjoying the great freedom that retirement allows, and have pursued many interests including hiking, riding, gardening, and anything which involves being outdoors. However, I wanted to become involved in my new community and give a bit of my free time. An article in the Benson paper caught my eye. The Arizona Supreme Court was soliciting members for the Foster Care Review Board (FCRB) that serves this area of Cochise County. I applied and was accepted to the Board.

"County Boards are established statewide and consist of five volunteer citizens. The Boards meet one day a month to review the progress made in achieving a permanent plan for the child who has been removed from his/her parents' care. This review process continues at least every six months as long as the child is in out-of-home care. The Board listens to parents, relatives, foster parents, caseworkers, therapists, attorneys and other interested parties and makes recommendations which are sent to the juvenile court. The purpose of the Board is to make sure the children don't get lost in the system and to facilitate the return of the child to his/her family whenever possible. The child's welfare and stability are most important.

"There is a complete two-day training program for FCRB volunteers, in addition to some required annual continuing education. Training includes gaining an understanding of the big picture...the court system, laws and statues, organizational structure, etc. We are told what types of questions to ask involved parties, and we are instructed on what we cannot say (no matter how much we might want to).

"My experience serving on the FCRB has been very rewarding, but mostly it has made me aware of the many aspects and challenges faced by the state's child welfare system. There are currently over 8,000 Arizona children in foster homes. I hope I can make a difference on a small scale to children who have been neglected, abused, and abandoned."

jeopardize the current strength of the retirement system. With regard to HB 2552/SB 1014, some legislators are expressing opposition due to the increased cost (projected to be $258 million) that the bill would require. To date, there seems to be little opposition to SB 1426.

Tri-University Retirees' Associations Meeting

The third annual meeting of representatives from the NAU, ASU and UA retirees' associations was held in Tempe on February 23. Bob Bloom, Co-chair of the Coalition of Arizona State Retirees' Associations, spoke about the coalition's activity regarding bills before the legislature, including the considerable effort by members of the coalition to gain support for the graded-multiplier bill and the spousal consent bill. Leonard Kirschner, member of the AARP Arizona Executive Council and former director of AHCCCS, addressed issues related to prescription drug programs. He discussed, particularly, the strengths and weaknesses of the 2006 Medicare prescription drug benefit program, noting that the forthcoming official interpretations will determine many details as to how the program is finally implemented. Pat Klein, Contracts Manager for ASRS, discussed the current ASRS health care contract with PacifiCare, noting that the current two-year contract guarantees no increase in premium and no reduction in services during the period that it is in force. He noted, also, that PPO premiums have been lowered and that HMO services for Medicare eligible retirees are being expanded in rural Arizona. Specifically, as of January 1, 2005, Medicare Advantage HMO was offered in Maricopa, Pima and Pinal Counties and as of July 1, 2005, Medicare Advantage HMO will also be offered in Cochise, Graham, Greenlee, La Paz, Santa Cruz and Yuma Counties.

In addition to "formal" presentations and discussion of these topics, attendees had the opportunity to share information on legislation and other topics of interest to the university retirees' associations.

UARA MEMBERS VOLUNTEER

UARA members volunteer many hours. We will feature at least one of these volunteers in Jubilación on a regular basis because we are proud of them and believe it is of interest to know what volunteer opportunities are available. If you would like to suggest someone to be featured in a future newsletter for his/her volunteer work, please call the editor at (520)323-7501 or email murphyj@email.arizona.edu.

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FEBRUARY FORUM: "IS AMERICA

GOING BROKE?"

by Chéle Logan

More than 120 retirees and non-retirees attended the UARA forum, "Is America Going Broke?" on February 9. Drawing from his newest book America the Broke, published in August 2004 and recently nominated for the prestigious Pulitzer Prize, Professor Gerald J. Swanson outlined the current status of the American economy. He said that America is running extremely large deficits on the cusp of the retirement of baby boomers that will put a massive strain on budgets, and wrote this book to warn people of the long-term consequences of careless government spending.

He said that the people must act now if our entitlement programs are to continue and be available for future generations. Programs like Medicare, Medicaid and Social Security are fiscal time bombs and the public has to understand that. He dedicated the book to his children and grandchildren because "they will bear the burden of this fiscal responsibility." He reiterated that Congress and the President have lost all semblance of fiscal responsibility.

Dr. Swanson is a professor of economics in the Eller College of Management and holds the Thomas R. Brown Chair in Economics Education. He has traveled the world and has concluded that no country can live beyond its means indefinitely. "The United States is currently living beyond its means," he said.

In his book, Swanson advises people to examine their spending habits and to start saving money now. He believes there is still time to act responsibly. "The wolf isn't at the door, but we have termites in the ceiling," he said. "If left untreated, the ceiling will come down on our heads in the future."

If you were unable to attend the workshop and would like a copy of America the Broke, copies are available at the University of Arizona Bookstore on main campus, where it is one of their best sellers.

CatWalks - THE EXPERIENCE

by Chéle Logan

A group of eleven met on February 17 at the cashier's booth of the Second Street garage for a visit to the College of Education and the Student Union. Gifted with bottles of spring water, we walked to our first site in the College of Education basement and the home of the Center for International Children's and Adolescent Literature. Professor Kathy Short explained the Center's goals, offerings, and plans for expansion. The mission is to house an exemplary teaching and research collection of the best books for children and adolescents published in the United States and around the world. The collection currently offers an excellent array of recent books from the United States and a small but rapidly growing collection of books from other parts of the world. There is a classroom, reading room, international room, studio/workshop room, office space for instructors, an international literacy journal, and teaching materials.

Eventually, the Center hopes to convert the classroom space into a comfortable library and reading room, with an adjacent area to serve as a classroom for workshops and courses. Some future functions of the Center include professional workshops, presentations by authors and illustrators, an annual conference on children's and adolescent literature, establishing a website that offers reviews of international books, and reading rooms with open hours for students, teachers and the community.

From there, we went to the Office of Career Services on the fourth floor of the Student Union. We traveled by way of the Integrated Learning Center on the main mall, through the Information Commons where a myriad of computers hummed at the hands of students intent on their schoolwork. Up the circular stairway and down the hall to the elevator that took us to the fourth-floor level, where the Director of Career Services, Marie Rozenblit, escorted us to a conference room with a magnificent campus view. We settled into comfortable rolling chairs and enjoyed her visual presentation of the various resources offered by Career Services to both students and employers. Some student services include assistance in finding part- and full-time jobs; career counseling; career skill development; employer information and/or career opportunities. Employer services include campus interviewing, publicity, and UA Career Days.

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After answering questions posed by the group, Ms. Rosenblit escorted us on a brief tour of the offices. We sneaked a few peeks into the mock interview rooms as we made our way through the suite and onto the site of our last visit, located across the hall. There stood a smiling gentleman named Terry Thompson, our next host, the Coordinator for the Arizona Blue Chip Program in the Billy Joe Varney Center for Student Involvement and Leadership.

The Arizona Blue Chip Program, one of the most exciting new programs on campus, is a four-year comprehensive leadership enrichment program designed to build leaders who will make a difference. The Program takes 200 students from each freshman class. Their commitment begins on the day they arrive at the U of A and continues throughout their entire four years. It is an aggressive program designed in four stages, each called a "phase," and students must complete all requirements of one phase before moving on to the next. Phase four must be completed by graduation for the student to gain the official Blue Chip Certification. The level of skills they will have acquired is invaluable; these students are aggressively sought by employers after their graduation.

The tour ended, the group headed down to the Picacho Room on the third floor of the Student Union to enjoy a delightful lunch and some good conversation. Nobody had trouble digging into the lovely buffet of roast beef, ham, turkey, cheese, salads, fruit, cookies, water and iced tea. Lastly, we received a souvenir packet containing information about the places we visited on this tour, along with other fun facts about our University.

CatWalking is fun, educational, and you never know whom

you're liable to meet on one of these tours. Joining us today, for instance, were Joel Ireland, from the TUSD Governing Board, and Tucson City Councilwoman, Kathleen Dunbar. If you couldn't make this CatWalk, you have a chance to join the next one, scheduled for Wednesday, April 20. It will be fun!

PICNIC IN THE PARK

The March 10 UARA picnic at Ft. Lowell Park was a rousing success with beautiful weather and happily visiting retirees and guests. The Accordion Club of Tucson presented a toe tapping, hand clapping song fest (at least three of us were singing and KNEW the words to the old songs), including "Bear Down Arizona." Seventy-nine retirees and guests were signed up for the picnic.

Special events were guessing the numbers of jelly bellies and chocolate bars in their respective containers. Doris Woods guessed the exact number of jelly bellies - 1,018; Helen Connelley was the winner in the chocolate bar guessing contest. Two restaurants kindly donated dinners. Janice Barnard won the dinners from Sweet Tomatoes and Chéle Logan and her husband Bill will be going to the Confucian. The U of A School of Theater Arts generously provided two theater tickets to their current production of Shakespeare's "Pericles." These tickets were won by Inez Tucker.

The picnic was fun and may become an annual UARA event.

ON THE LIGHTER SIDE

A college student challenged a senior citizen, saying it was impossible for their generation to understand his generation. "You grew up in a different world," the student said. "Today we have television, jet planes, space travel, nuclear energy, computers..."

Taking advantage of a pause in the student's litany, the geezer said, "You're right. We didn't have those things when we were young; so we invented them! What are you doing for the next generation?"

(Don't you just love old people?)