Court of Appeals Affirms Lower Court Decision in Favor of SERS

The 10th District Court of Appeals yesterday issued a unanimous decision affirming a Court of Common Pleas decision to dismiss a lawsuit against the School Employees Retirement System (SERS) regarding changes made to its retiree health care program.

"SERS has won this case, not once, but twice," said James R. Winfree,
executive director of the system. "This is a critical decision for all the
Ohio retirement systems because it affirms once again that the systems have
the statutory authority to make necessary changes to preserve health care
coverage for future retirees."

The lawsuit was filed by the Ohio Association of Public School Employees
in 2003.

The appeals court upheld SERS' discretionary authority to make changes to
the retiree health care program. At issue was whether or not health care was
a vested right to which the system could not make changes. The court found
that neither health care coverage nor access to health care is a vested right,
allowing the system to modify the program to keep it viable for current and
future retirees.

Due to skyrocketing health care costs for SERS' 60,000 beneficiaries, in
2003 the system's outside actuary projected the SERS health care fund would be
depleted in 2006.

By making premium and co-payment changes effective in January 2004, SERS
extended the life of its health care fund.

Two minor issues in the lawsuit regarding the construction of the SERS'
administrative building and employee compensation were sent back to the Court
of Common Pleas for further proceedings on factual issues. The lower court
did not have the opportunity to review these factual issues.

Established in 1937, SERS is the $8.8 billion statewide public pension
fund providing pension benefits and access to retiree health care for Ohio's
more than 183,000 active and retired non-teaching public school employees.