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January 8, 2013

2 Ala. powerhouses — Bronner, Mabry — at odds over pension system

MONTGOMERY — The chief executive of the state’s retirement system says the head of the Alabama Education Association is trying to wrest control of the system from him and control the board that oversees the state’s $19 billion pension system.

David Bronner, the longtime CEO of the Retirement Systems of Alabama, said Henry Mabry of the AEA is making a power play to replace members of the Teachers’ Retirement System Board of Control and replace them with members loyal to him.

Mabry disagrees and expressed concerns about the board continuing to pass along costs to teachers, support staff and retirees when they have not had a pay increase in years and have instead had their income reduced.

“I am concerned with board members who vote against the interests of support workers, teachers and retirees,” Mabry said.

He said, instead of trying to oust certain board members, he used the AEA’s Alabama School Journal to point out how board members voted and said he was trying to bring that to the attention of AEA’s almost 100,000 members.

Mabry, in his column in the Journal, let AEA members know that they elected the TRS board members and that they “can un-elect them.” Two board members are currently in runoffs for their positions.

Bronner subsequently warned people in RSA’s The Advisor newsletter to take the “power play” from Mabry seriously and said it could create a threat to the progress at the pension system, where he said assets have grown from $300 million to $19 billion in the last four decades.

Bronner wrote in the newsletter that those in the system have two choices in the current runoff election for the two seats.

“Your choice is to support the TRS, or go along with the new AEA director’s power play,” he wrote.

Mabry also said he is “gravely concerned about the status of the Teachers’ Retirement System” and said the returns in recent years have been “poor” compared to other pension systems, which he said is costing teachers and support personnel more each month.

The men, who are considered powerful by virtue of their positions managing prominent entities in the state, acknowledged there had been tension and disagreements between them dating back to the late 1990s, when Mabry served as finance director for then-Gov. Don Siegelman.

Mabry, according to the Journal, contended that the staff at the Public Education Employees’ Health Insurance Plan (PEEHIP), which has the same board as the TRS, was making decisions on the budget and making changes to costs, both increases and decreases, for active employees and retirees without the knowledge or approval of the board.

The TRS Board, according to the Journal, unanimously approved a resolution presented by Mabry at its December meeting to support cost-of-living increases for active education employees and retirees in the 2013-2014 fiscal year. Mabry, by virtue of his position, is one of the 14 members on the TRS board.

But, the board voted 7-6 to defeat a resolution from Mabry that would have prohibited an increase in health insurance co-pays in 2013 and required the board to approve future increases. The debate was contentious, according to the Journal, with some board members and PEEHIP staff opposing the resolution.

The PEEHIP staff, according to the Journal, told board members that the increase was necessary “for staff to negotiate rebates, formularies and generics with MedImpact, the company that contracts with PEEHIP, in order to save the most money for PEEHIP.”

Bronner said there always have to be adjustments to have a quality health insurance plan.

“You’re constantly adjusting the drugs so that your provider of the drugs has the ability to get you the best price,” he said. “. What you do is you employ somebody to do this because I do not know the ability of one drug to be generic compared to another one.”

Bronner said the board approved all of the actions, which he said is evident in minutes of board meetings. He said Mabry, who became executive secretary of the AEA a year ago, has “only been to a couple of meetings.”

Mabry said that those in education have not received a pay increase since 2008, have received a 2.5 percent reduction in pay, and that out-of-pocket health care expenses have increased by about 2.5 percent, eating away at take-home pay.

He said that is why he advocated halting further increases in costs until they receive a pay raise. Mabry wrote in the Journal that they will be asking for a raise of 10 percent.

Mabry wrote “we can do something about” the PEEHIP Board refusing to pass a resolution “prohibiting the increase of out-of-pocket costs for a one-year period.” He said the AEA General Assembly supporting the resolution was “not good enough for the PEEHIP Board, whose members are elected by you.”

Mabry urged members to contact PEEHIP Board members to express their disapproval and let them know “you want them to do the right thing at the next meeting” and “You elect them. You can un-elect them.”

Bronner said the real issue is not the arguments Mabry has made to AEA members about the actions of staff and board members, most of which Bronner said is misleading “garbage,” but about the control of the TRS Board.

“The more fundamental issue,” he said, is “are you going to trust the people that have taken the retirement program from $300 million to $19 billion?”

“Do the teachers of the state of Alabama want to turn over control from me to him? That’s their choice if they want to do that. That’s fine. I wouldn’t recommend it.”

The AEA’s Journal, which is sent to about 100,000 people and offices, showed photos and had a list of the elected members of the TRS Board who voted against Mabry’s resolution.

“What he is really trying to do is replace board members that won’t agree with him on everything he wants with people that will,” Bronner said of Mabry.

Mabry responded, “It is false that I am trying to replace anybody.”

He said he has not made any public or private efforts to try to replace any current board members. When asked why there might be that perception, Mabry said it could be because he “expressed displeasure with certain board members as far as how they voted.”

“They should vote with the people who elected them,” he said.

Bronner said those Mabry is trying to push out are AEA members. He said at least one of those members has been on the board for close to 25 years.

Bronner warned in The Advisor that the general public, politicians and AEA members realize the AEA’s political influence, “yet I do not ever recall a power play being used against some of AEA’s longtime members and your representatives on the TRS/ PEEHIP Board of Control.”

When asked what would happen if Mabry was able to replace board members with those more-closely aligned with him, Bronner said “he could do whatever he wanted to do, whether it protected the pension or not.” He said Mabry could push for a raise for members and not fund the retirement system.

“This comes to a fundamental thing that he feels like he should be in control of the Teachers’ Retirement System,” Bronner said.

The TRS had more than 136,000 active members and more than 77,000 retirees participating at the end of the 2010 fiscal year, according to a February report by the Legislative Fiscal Office.

The mail-in ballots for the runoff, which went in the mail Monday, must be received back by Feb. 11.

The tension between Mabry and Bronner is not new.

Bronner said, after his first meeting with Mabry when he was finance director for Gov. Don Siegleman, that he told Siegelman he would not meet with Mabry without the governor there. Bronner said, after he met with Mabry in his dark office because he refuses to turn the lights on, it was clear that Mabry’s way “is the only way.”

“His theory in life is that ‘I have to know everything and do everything’ and you can’t have that with a big operation like the state of Alabama,” Bronner said.

Mabry said they did meet individually during that four-year term.

“Anytime someone disagrees with him, he bows up,” Mabry said of Bronner. “I tried working with him from the very beginning of coming here and we will continue to do so if he would be reasonable and look after the interests of the teachers and support workers and retirees.”

Mabry, when asked if he believes there needs to be a change in leadership and staff at the RSA, said “I think there needs to be some compassion for the needs” of those who are on a fixed income who have had their pay cut in recent years, have increased out-of-pocket expenses, and continue to deal with increased costs elsewhere.

Bronner said he had disagreements with Mabry’s powerful predecessor, longtime AEA executive secretary Paul Hubbert, but said Hubbert was reasonable and they worked together to help teachers and the state.

“There is a difference between being a board member and looking at the bottom line and being a type of board member that wants to micromanage every decision,” Bronner said. When asked if he micromanages, Mabry said “absolutely not.”

 

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