Dave Speas' speech to STRS Board February 16, 2006
Thursday, February 16, 2006 - STRS
Good afternoon board members, staff, and guests. Thank you for giving us the opportunity to address you on matters important to each of us and the membership. I am speaking for myself this afternoon.
I remember when I retired how great it was to get my 13th check. There was no COLA then but it did help with inflation and surprise costs. Then in 1999, when we were all happy and making money in great quantities both privately and in the corporate world and STRS was having to explain to legislators why the organization was moving toward zero years in paying off its debts, we hit a bonanza of getting a COLA, moving us to 85% buying power, and nice retirement gains for actives. I do not remember any of us asking for the board to not do those things but remember how happy we were for ourselves and the actives.
All of this happened, and please correct me if I am wrong when I am finished, because our investment staff and the rest of the staff supporting them beat the bench mark average by 25 billion dollars over the approximate 25 year period prior to 2001. Then the unthinkable happened, the bottom fell out of the stock market and we all lost some of the nice things we had gained. At that time many of us began to come and really look into the organization and the rest is history. The primary cost to us was the nine billion we are short in covering health care at the level of service we all enjoyed before the bad times hit. It is Interesting to note that we would be 34 billion short if our investment staff and those supporting them had not been so good. We would be talking about a lot more than healthcare if that had been the scenario. Kudos to the staff.
My question over two years ago, and while serving, was why there was not an emergency plan in place to protect our pensions? As I looked back then and still do now, we got the 13th check. In hindsight, money should have been put away to protect us in an emergency situation. It looks like some of the increases in 1999 should have been modified and some of the money spent then put aside for a rainy day.
It is always easy to look back and tear apart past decisions. People should always be held accountable for making bad decisions or doing unethical things. However, learning from the past is as valuable a tool as anything and now I will ask the question that all of this is leading up to.
Is there a plan in place to protect us from another catastrophe like the one we suffered a few short years ago? Has the board and the staff been working on an emergency plan to protect us all from another market down turn or are we living so close to the edge in having to make 8% to cover our benefits that there is no way to put a financial emergency plan into place? If this is so, what is going to happen to us if there is another catastrophe? Have you played out this scenario? I know this is a subject that no one wants to face as we are trying to recover lost benefits by finding a funding stream for healthcare but the job of the staff and board is to protect our benefits to the tune of 3307.15.
Are you working on this plan and if not why? I believe what could happen, if we are not working on this plan now, will be even painful for all of us than the loss of our healthcare benefits. Please make this a priority, tell us the truthful facts of what could happen, what you can do to formulate a plan, or what stands in the way of protecting the basic retirement benefits we all enjoy. If you have not begun study and work on this plan, please explain why. A former board made this mistake and the pain it caused is obvious.
Thank you for serving us and I know the decisions you have to make are prodigious ones. I pray for all of you to have wisdom for all of us out here need you to be successful in your decision making.