Lloyd Knudsen's speech to STRS Board, September 14, 2006

Good afternoon. My name is Lloyd Knudsen. I retired as a 30-year teacher in the Woodridge Local Schools of Summit County. I have some concerns I would like to share with the board.

An STRS board member recently resigned because apparently Dennis Leone was just too intrusive and argumentative during board discussions. Dennis, what were you thinking? Perhaps a better question is, what were the rest of you thinking?

Since Dennis Leone was elected to this board he has exhibited a passion to represent us -- TEACHERS. Dennis understands his role on this board is NOT to represent and please STRS management and staff, but to represent the teachers who voted him onto this board. That role sometimes means asking tough questions and demanding specific answers to those tough questions. And sometimes, it means saying no tot eh STRS management and staff.

The recent board approved repayment of legal fees to three staff members is a perfect example. Should these three employees have been reimbursed for their personal legal fees? NO, not if Statute ORC 3307.15 is being followed. The board even later admitted it erred when it instructed Dr. Asbury to inform the STRS staff not to expect similar reimbursements in the future. As a board, I ask you -- what were the rest of you thinking?

Demanding to see written contracts in front of you before voting, or asking the STRS staff to find a more economical solution than paying an additional $315,000 fee is NOT "micro-managing" the system. It's doing the job that you were either elected to do or appointed to do -- making decisions in the best interest of the STRS benefit recipients. As a board, I ask you -- what were the rest of you thinking?

I challenge every board member to become passionate, intrusive and argumentative about representing us -- the TEACHERS, and not just passively agreeing with the STRS staff. I am particularly discouraged by the votes and actions of our newest additions to this board. Your apparent desire and willingness to seek admission to this board's RUBBER STAMP CLUB is most disturbing.

I say to every member of this board -- if you will not stand up and fight for us -- you need to resign and let our membership find someone who will!

My second concern is a general feeling I get from attending STRS board meetings, listening to board discussions and reading about your decisions. For lack of a better term I'll call it the STRS staff and board are proper and justified because things are going great. Don't question. Don't argue. Things are going great. This approach might be OK if an opposite "feel concerned" approach was evident in bad financial times. But that doesn't seem to be the case at STRS. Let me explain.

Let me take you back to the years 2001-2003. STRS suffered multi-billion dollar investment losses. STRS's overall value decreased by about 25-30%. Most normal businesses suffering those kinds of losses would have slashed expenses and greatly reduced staff. STRS did neither. They went on as if nothing had happened. No budget slashing. No job layoffs. Just business as usual. It was later explained to me in a CORE/Damon meeting that STRS took that approach because that multi-billion dollar investment loss was not really a loss. It was just a PAPER LOSS. And see, even when things are financially terrible at STRS, it still adopts a "feel good" approach to the future.

My point is this -- if yesterday's losses were paper losses (surely to be made up), why are today's gains not just PAPER GAINS (possibly to be lost in the future)?

As board members your job is to monitor the actions and expenditures of STRS. Your decisions should not be based upon whether the stock market is up or down that day or that month. ALL of your decisions should be based upon following Statute ORC 3307.15. In following that statute, during your board discussions, it might mean as a board member you have to become intrusive or argumentative or exhibit a passion to represent benefit recipients. As one of those benefit recipients I certainly hope so.

At the risk of being redundant I will say one more time -- if you cannot or will not stand up and fight for us -- you need to resign and let our membership find someone who will. Thank you for letting me speak to you today.