From the President

Fall 2002

Dear Active Member:

In May 2002, I wrote to advise you of the improved financial condition of the Active and Retiree Health and Welfare Funds. After inheriting an insolvent Retiree Fund and an Active Fund that was heading quickly in the same direction, we took some painful steps to ensure the continuing viability of the funds. Those steps, coupled with the recent PERB award which provided to the Funds a substantial lump sum payment of $350 per member and a $200 annual increase per member starting August 1, 2002, puts us in a position to begin implementing certain enhancements to our Health and Welfare benefits.

In response to the needs identified through discussions and communications with our members over the past three years, we have considered various benefit options. As of the dates identified below, we will be implementing the following benefit enhancements:

Prescription Drug Maximum Increase
The present $5,000 annual maximum will be doubled to $10,000 annually and the $75,000 lifetime maximum will be increased to $120,000.

Optical Plan "Premier" Designer Frames
"Premier" designer frames will be part of the PBA's frame selection under the Davis Vision Program.  They include designer frames from Alfred Sung, Pierre Cardin, Elizabeth Arden, Bill Blass, Cosmopolitan, Advantage Eyewear and Ultrathin.  Many of these "Premier" frames have retail values well over $200.  The total PBA plan frames available will be increased to 267 and there will no longer be a co-payment differential asked of our members who wish to obtain these high-end designer frames.

Dental Plan Enhancements

1. Schedule of Allowances Increase
   The schedule of allowances paid to our participating dental providers and to our members who do not utilize participating dentists will increase dramatically.  This significant schedule enhancement will enable us to not only maintain the dentists who have already earned our member's trust, but to also effectively recruit the higher quality dentists who we want to add to our panel, in and out of area.

2. Orthodontic Services Enhancement
   Orthodontic services for eligible dependent children will be expanded to cover children, who are full-time students, to age 23.  Presently, orthodontic services are provided to age 19.

3. Sealants Coverage
   Dental sealants will be provided for eligible dependent children to age 12.  Previously, such sealants have always been considered an exclusion under the PBA Dental Plan.

Conclusion

In the final analysis, we believe the benefit enhancements presented in this letter represent a successful joint effort between this administration and its membership to turn around the Funds. The sacrifices made by our members, coupled with effective benefit planning and management, have made these improvements possible. We will continue to monitor actively the fiscal condition of the Funds. We do not consider the role of the funds to act as a bank for the monies. Nor will we jeopardize the funds by allowing reserves to drop to dangerous levels. Through your continued careful self-policing of benefit usage and our active management of the Funds, we expect to deliver high-quality benefits long into the future.

We thank you for you continued cooperation and support. Together, we have restored financial integrity to our Health and Welfare Fund.