STRS employees' class-action lawsuit over bonuses: Board votes 8-3 in favor of partial settlement

STATEMENT FROM STATE TEACHERS RETIREMENT SYSTEM OF OHIO (STRS OHIO)

NOV. 4, 2005

The Board of the State Teachers Retirement System of Ohio, at the recommendation of special counsel appointed by the Office of the Ohio Attorney General Jim Petro, voted to authorize a partial settlement of a class-action lawsuit filed in May 2004 by STRS Ohio associates seeking payment of Performance-Based Incentive Awards for the 2002-2003 fiscal year. The vote was eight in favor and three opposed.

The Retirement Board determined that this settlement was the responsible business decision at this time as it seeks to mitigate the cost of additional prolonged litigation. Issues that remain to be resolved include the possibility of any punitive damages and reasonableness of attorneys' fees.

TERMS OF THE PARTIAL SETTLEMENT

Performance-Based Incentive Awards will be paid to approximately 260 associates for work performed during the 2002-2003 fiscal year. The Retirement Board agreed to pay:

- Earned compensation, totaling $1,755,694

- The employer share of OPERS contributions as required by statute, totaling $237,191

- Interest in the amount of $245,068

- $14,139 to participants in the OPERS defined contribution plan, for lost investment opportunities

- Attorney fees and expenses totaling $638,000

- Prompt pay claims of $113,925

Payment for the Performance-Based Incentive Awards will come out of an interest-bearing escrow account that was established by STRS Ohio in 2004 when the litigation began. The results of the litigation do not have any financial impact on the pensions of current and future retireesof the system.

The Retirement Board previously voted to end the Performance-Based Incentive Award Program for non-Investment associates with the start of the 2003-2004 fiscal year.