STRS employees: hope you feel good about your huge bonuses while old, sick retirees suffer huge HC bills on incomes a fraction of your bonus alone

Judge says teachers pension system owes bonuses

By PAUL E. KOSTYU
Copley Columbus Bureau
October 21, 2005

COLUMBUS - The State Teachers Retirement System broke its contract with 268 of its employees and now owes them $1.75 million, a judge ruled this week. And the bill could go much higher.

In two rulings this week, Franklin County Judge Guy L. Reece II said noninvestment employees in a class-action suit against the pension system should receive bonuses withheld for the 2002-03 fiscal year. They ranged from $416 to $46,573.

Reece also left open the door for employees to recover attorney fees and punitive damages, which could cost the pension system millions of dollars more. A jury trial date on those issues is set for Nov. 8. Early in the case, retirement system attorneys turned away efforts to reach a settlement.

A 2003 investigation by Copley Ohio Newspapers found that bonuses were awarded for tasks, called “stretch goals,” that many considered part of employees’ regular jobs.

The retirement system board responded by suspending and then later abolishing the bonus program. It also voted not to award the bonuses to noninvestment staff, overriding decisions to do so by former Executive Director Herbert Dyer and his successor, Damon Asbury. The board also ignored the advice of John E. Patterson, an assistant attorney general.

In a letter to the board, Patterson predicted the retirement system would lose a suit for failure to pay the incentives even though Attorney General Jim Petro, his boss, instructed his representative on the board to vote against the bonuses.

Among the 268 employees to receive bonuses are two deputy executive directors, Robert A. Slater, who will receive $46,573, Sandra L. Knoesel, $43,324, and the system’s former in-house attorney, Cynthia Hvizdos, $29,052.

Michael R. Szolosi Sr., a Columbus attorney representing the employees, said the delay in paying the bonuses opens the retirement system to a fine under state law.

Joseph I. Endry, whose term on the pension board ended this summer, voted to award the bonuses in May 2004.

“It’s going to cost STRS a lot more money than it would have if we would have passed this originally,” he said Thursday. “I feel I did the right thing. The employees were working in good faith.”

Endry said he was surprised by the timing of the judge’s decision. “I just got a call from Damon Asbury last week asking if I was willing to talk to attorneys representing STRS. I guess they thought they had time.”

Kim Norris, a spokeswoman for Petro, said attorneys are “reading the judgment and taking a look as to where to go next. The attorney general still feels the bonuses should not have been paid.”

Laura Ecklar, a spokeswoman for the retirement system, did not return telephone calls seeking comment. The rulings were expected to be discussed by the board at its monthly meeting Thursday and today.

Reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail:

paul.kostyu@cantonrep.com
http://www.cantonrep.com

This page was created October 21, 2005 ©2005 The Repository

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May 28, 2004:

STRS employees should sue

By PAUL E. KOSTYU

Copley Columbus Bureau chief

"But the culture enveloped more than employees. The so-called 13th benefit check was sent to retirees for years while investments were good. They depended on the extra monthly payment, which they felt they deserved and had been promised. That entitlement ended when investments soured in the early 2000s. Nobody sued the system.

"Health care is another STRS entitlement. The system is not obligated by law to provide health care coverage, but it does. Asbury has said there is no retirement without affordable health care. Sounds like a promise. But the care is no longer affordable for many retirees and their spouses. Nobody sued the system."

COLUMBUS -- The noninvestment employees of the State Teachers Retirement System should sue the pension fund. Doing so would tell us something about them.

Last week, the pension board rejected paying bonuses to 268 employees despite the recommendations of Executive Director Damon Asbury and Assistant Attorney General John E. Patterson. Both said the pension fund risked a lawsuit that it would likely lose. The employees should sue.

Asbury said the board had a legal obligation to pay the employees for completing their “stretch goals” in the 2002-2003 fiscal year. It wasn’t a stretch to see that those goals were really little more than what many considered the employees’ regular duties.

Paying the bonuses would perpetuate an STRS culture of entitlement, which flourished under former Executive Director Herbert L. Dyer. His undoing came from publicly proclaiming that the money flowing into STRS from members and investments was the board’s money to spend as it wished.

But the culture enveloped more than employees. The so-called 13th benefit check was sent to retirees for years while investments were good. They depended on the extra monthly payment, which they felt they deserved and had been promised. That entitlement ended when investments soured in the early 2000s. Nobody sued the system.

Health care is another STRS entitlement. The system is not obligated by law to provide health care coverage, but it does. Asbury has said there is no retirement without affordable health care. Sounds like a promise. But the care is no longer affordable for many retirees and their spouses. Nobody sued the system.

The bonus plan for noninvestment employees was abolished last week in the wake of questionable spending at STRS for travel, artwork, expenses and salaries. Surely employees are entitled to just one more bonus. They should sue.

STRS culture fits with an American culture based on greed. That’s the only way to explain why employees would sue. All those eligible for a bonus are the most highly paid STRS employees. We’re not talking about the janitors, secretaries, security guards or any of the hundreds of other dedicated STRS workers.

We’re talking about their bosses, those who rake in high five- and six-figure salaries annually. We’re talking about many bonuses in the neighborhood of $30,000 and $40,000. The irony shouldn’t be lost on anyone that the person eligible for the lowest bonus — less than $200 — is a teacher.

The staff members receive regular compliments from the board about how wonderful they are, how hard they work, how dedicated they are to retirees, actives and the system.

The employees should sue. Let’s see how dedicated they really are. Do they work for a more-than-decent paycheck and the satisfaction of being STRS employees, or are they in it for every dollar they can grab in bonuses, even if they haven't done much to earn them?

Let’s not be too surprised if greed is the answer. We’re living in an era of corporate greed — Enron, Martha Stewart, Tyco and others. It’s a long list.

There was a time when people were satisfied with having a job. There was a time when people took pride in their work. There was a time when “nice job” was a sufficient bonus. Not anymore.

The employees should sue.

They need to do so soon, before tort reform kicks in and limits the amount they can recover. It’s hard to see how employees could collect punitive damages. There was no purposeful intent to harm them. They’ll ask for damages any way — attorney fees, too. They’re entitled.

Here’s what employees ought to do. If they really are dedicated to STRS and not driven by greed, prove it. Do they want the system to escape the scandalous morass of the last year and move forward? Stipulate in their lawsuit that if they win or settle, all the money received — the bonuses, attorney fees and punitive damages — goes into the STRS Health Stabilization Fund for retirees. If employees want to show they deserve the bonuses, then the money shouldn’t matter. Why punish the employer they supposedly love just to prove a point? Or is it really about greed?

Employees should sue so we can find out.

I got a big bonus at the board’s meeting last week for doing my job. Several retirees, whom I’d never met before but who had been reading my stories about STRS, shook my hand.

“Thank you,” they said.

You can reach Copley Columbus Bureau Chief Paul E. Kostyu
at (614) 222-8901 or e-mail:

paul.kostyu@cantonrep.com
http://www.cantonrep.com/

This page was created May 28, 2004