Mary Ellen Angeletti's minutes of Feb. 1, 2006 session of STRS Board retreat

From: Mary Ellen Angeletti

To: Molly Janczyk

Subject: My Take of the First Day of the STRS Retreat

Date: Wed, 1 Feb 2006

This is MY take on the happenings today, Wed., Feb. 1st at the first day of the STRS Retreat. IT WAS A SET UP!!! Unbeknown to Dennis or John (I don't know about the other Bd. members), Conni Ramser and Dr. Brown met in late December to establish an agenda for the Retreat and to do the planning for it. They hired a retreat facilitator named Craig Rider (I wonder how much we paid him?). The sessions he conducted in the A.M. and in the P.M. were sessions to encourage warm and fuzzy feelings toward each other as Board members and to encourage TRUST, RESPECT, and "effectiveness in successfully working together". IF Conni and Bob thought that this was going to temper Dr. Leone and Dr. Lazares, they made some serious misjudgments.

PURPOSE OF RETREAT (as stated by Brown, Ramser, Rider, & Asbury): Review of STRS Ohio's Mission, Vision, & Guiding Principles TRUSTING AND RESPECT ARE PARAMOUNT:
1. In developing goals
2. In coming together as a Board

As soon as the Retreat agenda was available to all Board members, John Lazares offered that he did not know anything about having a facilitator until Friday, Jan. 27th as he had been out of town. He requested more lead time for future agendas. He expressed concern when he had not received any agenda for the Retreat earlier and was suspicious of just this type of surprise, pre-planned agenda.

Following this, it was clarified that there would be no formal votes at the Retreat. There could be consensus votes if so desired.

Dennis then asked who determined the agenda and the hiring of a facilitator, & it was announced by Damon that the Bd. Chair Brown and Vice Chair Ramser had met the end of Dec. to do just this. I am unclear if Damon joined them or not.

A solid, sound pension with affordable health care were the goals for the Board to achieve. It was mentioned that this Board is one of the most diverse Boards since it has elected members, 3 superintendents, two unions
(OEA, OFT), and appointed members. Still they must represent ALL of their membership, not just the group who may have helped get them elected.They decided to explore what stands in their way of achieving these goals. Must learn how to improve working conditions of the Board so that consensus could be reached by the end of the week of the Retreat. Must have shared goals.

Following this discussion, the remainder of the A.M. session consisted of a review of the Board members' self-evaluation (a document given them to complete in the autumn). This document consisted of a list of Guiding Principles which represented the manner and method by which the Board would conduct its operations, both present & future. Bd. members rated each of the 5 principles on a scale of 1 to 5 with 0 for "Don't Know".

Only 10 Bd. members completed the Evaluation. Right off the bat, Dr. Leone challenged the first Guiding Principle which stated the "Board honors & supports the values, vision, and mission of STRS Ohio". He said that "in terms of expenditures" he did not agree that this was being done.

Buser volunteered that they haven't reconciled the conflict of pension security and health care versus member service. Buser stated,"If we aren't at 30%, we have certain restraints, and we may NOT support member service." Do we support HC over pension?

Lazares added, "People forget about member service over money (pension)." Lazares said, "The ultimate goal is for us to provide the best benefit STRS can." Puckett reminded the Bd. that health care is part of the STRS mission now. Security is pension and health care. Buser reminded the Bd. that the current 10 year funding in health care was due to the last few good years of good returns. Leone warned that the Bd. has not planned for external factors that might negate our pension.

An earlier risk assessment study said that there is a 1 in 6 chances of a significant downturn in the economy. Fisher said that contingency planning needs to be done for this possibility. Lazares said still the PENSION CHECK IS THE MOST IMPORTANT THING.

Sandy Knoesel reminded the Bd. members that they must communicate with membership as she reported many anxious phone calls concerning the 35 year enhancement. Damon reminded them that pension and health care (service) are not either/or issues. Brown offered that contingency planning is okay as long as there is good communication to members. Buser asked about contingency planning for both negatives and positives.

Reacting to the third guiding principle, Flannagan said that the Board needs to get to those problems which cause conflict and are emotional. Lazares offered that it was not possible for the Board to speak as one voice because Board members represent others. History separates us. SB 133 came about because of misconduct and resulted in ethics training, etc. THAT Board was wrong so speaking with one voice may NOT always be the right thing to do.

Flannagan emphasized the importance of the sunshine laws. Chapman offered that diverse opinions haven't had respect so the Bd. is several groups trying to form one group. Ramser added that the focus must be on the job and setting policy. Brown added that the pros and cons of one voice need discussing.

Lazares emphasized that the main thing is 3307.15. The perception of the Bd. is that there is more discussion going on now than ever before. The 5th guiding principle concerned conducting business in a courteous manner toward fellow Bd. members. It was mentioned that courtesy aided how cranky & inpatient Bd. members became.

Leone strongly disagreed with this principle. He was referring to the anger displayed when he offered his substitute motion at the earlier Board meeting. Fisher disagreed and said that lack of knowledge was what caused the problem. Confusion was the cause of the cut off by Ramser of Leone's substitute motion. Fisher suggested that a person be present at Bd. meetings to rule on Roberts Rules. Dr. Asbury said that Bill _______?
(he was in attendance) would volunteer to help enforce Roberts Rules at future Bd. meetings. Billirakis (who was absent at today's Retreat) had offered cliff notes of Roberts Rules to the Bd.

The second page of the self-evaluation involved Governing Style. During discussion of this part of the evaluation, Ramser offered that there is still a struggle, that control issues seem most important.

Leone said that one cannot delegate away their fiduciary responsibility to the staff but instead Bd. members must take personal responsibility. Damon said that fiduciary responsibility is at the heart of the issue. He said Bd. members must trust the staff but Bd. members must question the answers the staff gives.

Buser complained that managerial concerns monopolize the Bd.'s time. The legislature says we are responsible for every nickel. Fisher felt that Bd. members should not be required to question the staff information. Puckett said that oversight does not mean management.

Leone reminded that the prior Board did not provide oversight. Fisher said staff is ethical & honorable but communication can be improved. Fisher said Board is micro-managed. Meyer said areas of problems have been corrected.

Leone brought up the Vitec ITcontract. He wants to know how the 64 million dollars (of this contract) are going to be spent. Lazares did not agree with Meyers' contention that the Bd. should leave the contract formation to the staff to do. He reminded the Bd. that this is public sector, not private sector. He feels Meyers and some of the other appointed members of the Bd. have great knowledge & experience about the private sector but this is now public sector and is very different. Facilitator then said that oversight then is verification??

It was asked if there was an IT Committee to which Damon said that Puckett was on the IT Committee last year but the committee was dropped. Damon offered that he felt he had the mission to do the selection of the vendor for the IT contract and to develop the contract. Should committee construction be renewed?Leone then suggested that future contracts be shaped similarly to labor contracts in that only the NEW items are HIGHLIGHTED for the members to review. Meyer liked this suggestion.

Patterson (the attorney) offered that the Board is a client but when members leave STRS on Friday, then they are individuals. The facilitator said that the Board had voted to approve a project and not a contract. Flannagan felt that Leone's view was concern over fiduciary responsibility. Buser asked if they did too much voting on managerial items. Rather than a matter of oversight, it was felt that the Bd. needed better communication. Bd. members should not be reluctant to say, "I don't understand." or "Let's just table this item or contract."

Fisher asked what governing with excellence means. Damon said this was an ideal. In Principle #4, Fisher was bothered that 4 Bd. members rated it negatively. That is, four members felt that not all Bd.members were competent, conscientious & effective.

Leone responded that he held his position on the Bd. as accountable to membership as a priority. He used the example of the BASA saying "Beware, STRS Bd. will eliminate HC." and OEA saying "The OEA minority STRS Bd. is talking about ending health care. This never occurred when OEA was in the majority on the STRS Bd. This is a reason to vote for Ramser."

Leone stressed that accountability demands that one reacts to such untruths. Fisher said that OEA and BASA inaccuracies are not pertinent and that Bd. policy and position has not changed. Brown maintained that he represents ALL STRS membership, not just those who encouraged him to run for the STRS Bd. and not just actives or retirees. Chapman felt that the Bd. must address Board policy more frequently.

The third page of the evaluation involved Board Job Description. Brown said that the link was the STRS staff. Buser was concerned about Bd. policies saying that perhaps the policies got in their way. Brown said that they don't have enough resources. Buser did not think that the policies were up to the tasks of the end.

Leone offered that the one disagreement voted on the Exec. Director limitations was his and was based on the incident in which Damon paid the legal fee for the non-investment staff suit against STRS without informing Leone. Leone expected Board discussion before the fee was paid. He was the only Bd. member to NOT know about this. Damon added a process point explaining that STRS had a legal responsibility to pay the legal bill and that a majority of the Bd. members felt it was a legal responsibility. BUT Buser, Leone, & Lazares all felt that they wanted more information on this before the fee was to be paid and that discussion would follow. It did not. Leone asked, "Is it wrong to expect discussion on such important matters?" Lazares suggested that perhaps making changes to the Executive Director's job description might be in order after Damon's vacates the job BUT Fisher said if any changes were needed that NOW was the time to do it. .. . .at the Retreat.

There was an hour break for lunch. Following lunch, the facilitator assigned each Bd. member to one of the Nine Principles of Boardship (a booklet) with directions to respond to their principle with positives and negatives as part of their evaluation of the principle.
1. Conni Ramser was assigned to Principle #1. She shared that policies are okay but some operational issues are problems. She felt that the Bd. had a way to go to stay on big issues but it still gets caught up on the day to day operational decisions. She said she needs to step back & wear her STRS hat & listen to constituency groups but must keep the mission of STRS & ignore issues that don't move STRS forward. She needs to ask critical questions that help her understand issues. The she said, "The past is past".

Buser offered that they must have priorities on governance issues (What is the main thing?) and instead they use most of their time on managerial issues (details). Puckett referred to Russell's 11 ratios of performance. He said they need more benchmarks of measurement for other issues, not just investments. Leone asked Damon, "Can Board members engage in management activities?" Damon responded, "NO".

Leone asked, "Can Board members ask questions? Can a Bd. member question if a policy is in place that allows Bd. members to get frequent flyer miles? " Asking questions and getting information is essential. Leone continued, "At an RTA meeting in Lima, Joe Endry said ,"I would not have known the size of so & so bonus if it had not been for Dr. Leone's revelation". "OEA's Gary Allen said my revelations were allegations and were improper." AT THIS POINT, DR. BROWN REQUESTED A 5 MINUTE BREAK AND WALKED OUT OF THE ROOM. . . . IN DISGUST. Leone asked what was wrong with the discussion and as Brown walked out, Leone and Ramser continued their discussion with Ramser insisting that she has no control over Gary Allen and what he says.

When Brown returned to the room, he asked Facilitator Rider to move the Board through the remaining agenda. Meyer protested this request saying that the discussion needed to be talked out before the Board could move forward. Then Rider asked the Bd. members, "Are there any members who believe that there were NO spending abuses by the former STRS Board? There was total silence.

Then he asked, "Are spending abuses by the STRS Bd.continuing today? No one spoke but Leone who said, "YES". Rider reminded the Bd. then that STRS spending practices were yet to be defined at the Retreat. Buser offered that there were many gray areas (problem areas of agreement on the Bd.) but the Board MUST concentrate on the important issues of fiscal soundness of pension solvency and health care.

2. Steven Puckett was assigned to Principle #2. He said that the Bd. must stay on task and meet time restraints. Felt that there were good intentions of staying on agenda topics. Could tighten up agenda more & listen to one another better & more intently. Complexity of agenda items is a problem. Need to listen to member's problems.

3. Meyer was assigned to Principle # 3. He agreed with this principle. What is done correctly? The staff provides requested information. Must trust the staff and ask questions..

4. Fisher was assigned to Principle #4. Board must use the order of the Roberts Rules in public sessions. But can speak more freely in Executive Session. She prefers exec. sessions. Bd. members MUST NOT be disrespectful. Some feel that there is too much control. All opinions must be considered. She suggested that a summary of pros and cons be a regular part of follow-up after discussions of principles. Need to acknowledge an opposing opinion but member does not have to agree with it. Encourage staff to give their recommendations (staff's perspective). They could remind Bd. members of current policy so a moderator might inform Bd. members if their recommendations go beyond policy or radically change policy in some way.

Buser offered that he is uncomfortable with the Board format. He feels it is not effective to have such a strict format. Buser suggested an executive summary and then the Board members would decide if they proceed or not.

5. Flannagan was assigned to Principle #5. She felt that the Bd.'s view was to encourage debate as long as it sticks to the topics and observes Roberts Rules. She said that these rules did not allow Leone to submit a substitute motion in December. This was wrong. She said members must listen actively and allow other members who request to share information . . perhaps at a later time. Allow a later 2 or 3 minutes opportunity to members to share. All Bd. members need to be open to this idea, she said. Even if members are out-of-order, this should occur . . perhaps at the end of the day.

Leone added that this encourages micro-management (problems?) for Damon. Leone again encouraged Bd. members to respond (if they want to) to membership concerns or questions raised during Public Speaks portion of the Bd. meeting. Facilitator reminded members that this would be determined when the Bd. reviews policy at a later time in the Retreat.

6. Buser was assigned to Principle #6. He agrees with this principle.

7. Leone was assigned to Principle #7. He offered that the Board's view was that he and Lazares have been problems for the Board. He emphasized that they spoke for themselves and that they tried to speak clearly. Obstacles to this approach are members inability to see that their actions may not be in sync with ORC 3307.15. Bd. members must be able to express dissent. Members need to explain their reasoning for Board votes.

Fisher feels that Bd. opinions being quoted in the news media is wrong. The opinions must be identified. Chair of Communications for STRS, Laura Ecklar offered that all messages for the mass media that have to do with STRS go through her. She releases them. She suggested that any STRS Board mass media release should go through the chair of the Bd. (Brown). She said that she and her staff would provide help to Dr. Brown if he requested it and he said he was not in favor of that. His take on this subject was that he alone should not represent the Board in this way as he felt it violated freedom of speech.

Leone then referred to Ecklar's "NO COMMENT" statement to the media on Nov. 2nd when she was asked questions regarding PBI inquiries. Ecklar maintained that there was "No information to share at that point." However, Leone pointed out that the PBI lawyers released everything to the mass media and it made STRS look bad. Damon agreed.

8. Damon was assigned to Principle #8. He felt that the Board's view was that they frequently revisit past decisions & are open. He said that no decision has been overturned capriciously by the Board. He suggests that if decisions need to be revisited, that the Bd. members approach the chair of the committee or the Exec. Director.

9. Brown was assigned to Principle #9 a and b. He shared that the purpose of the Board was to build by example. Must focus. Be ethical. That shades of gray are okay. Too often they see issues as black & white. Must caution against assuming to know what other Bd. members think. He will try, as chair, to allow all sides to be heard. Leone cautioned that when decisions are made by the Board, these decisions are setting an example. His example was "Voting expenditures for non-investment staff members when membership is HURTING."

10. Lazares was assigned to Principle #9 c and d. He felt this principle perpetuated how things have always been done at STRS by the Bd. He added that the Public Speaks portion of the Bd.meeting is predominantly negative and that Board members must not have a knee jerk response.