Molly reports on Friday session (2/17/06) of Board meeting

From Molly Janczyk; Sent: Saturday, February 18, 2006; Subject: STRS: FRI: /17/06 Employee Compensation and other issues

Many interesting items were discussed yesterday at STRS by the Board.

1. Employee Compensation was given thorough discussion:

-Leone and Lazares both feel the Investment Team and Key Staff are essential for our futures. Both stated they realize the need for compensation. Lazares: " No one has written more letters complimenting the staff than I have. Am I right Damon? Damon: Yes. Lazares: Have any of the other board members done such?" No response. Lazares: "I have written at least 20. I am contacted by retirees needing service. For ex., a lady in need of experimental meds for her cancerous tumors given a death sentence and refused the $10,000 per month meds for treatment. I contacted Sandy Knoesel who contacted the lady with approval of the meds which did not yet have FDA backing. I got a call from her crying and thought it was dire news. Her husband got on the phone to tell me her tumors have dissolved and she is in remission." I have asked Slater to help retirees who call me and he has done so. These staff members have done excellent jobs of helping retirees time after time and I appreciate their efforts."

-Regarding compensation: Some pts: Slater is highly qualified for his position and could be making much larger salaries in private sectors. Leone and Lazares feel that Mitchell, Slater and Knoesel and other key staff are essential to STRS and need compensation to reflect their talents.

Lazares: POINT: We are asking people for money. I am in an unusual position on this board of dealing daily with active, retired educators and have many legislative ties and meet with school boards. I have to decline raises when my teachers receive no raise. I do not feel I can receive a raise when they do not. We face anti tax groups now raising up to speak against school board increased contribution legislation. Damon has to face the ORSC next month. Michelle Schneider called me to ask about the unfunded liability recently. She is incensed that we are so high stating STRS promised 2 yrs ago to reduce it.

Leone: I have no problem paying Knoesel, Mitchell and Slater as well as key staff for the job they do for us and they should be well compensated - paid well.

Lazares: Slater is paid low for private sector and he has a lot to do with investments. So, he needs to be well compensated for his overqualifications and job done for public sector.

Leone, Lazares, Buser: No problem paying what they deserve to keep key staff. Reasoning: For investment staff, they are paid based on what they earn. Mitchell had to release 2 investors for not producing. If they don't produce , they will also leave as they will not receive good pay. Also, we have come to learn some specialists at STRS are very hard to come by when they are very highly qualified. Lost key staff because we could not keep due to money. We need good staff and it is key to our survival.

Lazares: 'We have to find ways to justify compensation to our membership and to compromise on this issue.'

Fisher: Feels it is micromanaging to know each employee's salary.This came up at retreat.

LEONE: LAZARES: RAMSER AND PUCKETT: All want to know what they are voting for and supported seeing all the individual salaries before voting.

Puckett: The increases seem too high and this is not a good time for overcompensation-supports seeing salaries and justifications for increases.

Lazares and Leone: Open minded and want to keep talented people.

This issue was up for vote on Fri. and postponed due to the input of these board members.

2. Board Policies: Agenda:

*Public Speak: Board members can now answer participants on the spot to address hit and run speakers or respond after public speak, if they choose. Passed 10-0.

*Fisher wanted to amend policy to allow political appointees to hold the chair and vice chair positions.

LEONE: CHAPMAN: FLANNAGAN:RAMSER: ALL SPOKE AS TO WHY THESE POSITIONS NEED TO BE HELD BY ELECTED BOARD MEMBERS as private sector appointees cannot relate as well to public pension issues. The motion was defeated .

3. TRIPS: SADLY CHAPMAN AND FLANNAGAN REQUESTED AND WERE APPROVED FOR a combined $7000 inservice seminar in Fla.

Leone and Lazares feel our investment staff should go to any necessary conferences and inservice the board members.

Leone: "I would rather spend time with Mitchell on these issues."

Lazares: "Better to give needy retirees $7000 and let our staff inservice us.

LAZARES AND LEONE voted no on the trips feeling it looks bad to retirees to spend money on something which can be accomplished inhouse. Also, this has been a source of anger and mistrust for retirees asking why money cannot be saved being that no board member can ever gain the expertise needed in this area. Board members are there to protect the system and act on behalf of retirees. We have a talented investment staff to explain items of importance. Anything THEY do not know should be the topic of THEIR inservice and they can transport that info back for staff and board members.

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From: Teresa Pressler; Subject: Employee Compensation Date: Sat, 18 Feb 2006

Has anyone heard what happened Friday A.M. regarding the employees? Just curious.

Teresa