Friday, October 20, 2006

Molly Janczyk: Notes on 10/19/06 STRS Board meeting

From Molly Janczyk, October 19, 2006
Investments:
Economics: STRS forecast expects real economic growth will fall slightly below long term potential for 2007. Inflation should remain largely contained. Relative to other economic forecasts, STRS Ohio forecast expects slightly higher real economic growth with a more moderate inflation outlook.
Fixed Income: Staff reduced portfolio's relative duration further during Sept. If rates continue to fall, they will continue to reduce. $337 M of cash was raised from the Fixed Income portfolio during the month.
Domestic Equities: U.S. Stock market gained 2/6% in Sept. and finished the quarter up a strong 4.6%. STRS was a net seller of approx. $256 M of domestic equities during the month to take advantage of market strength.
Internat'l: Internat'l markets rose slightly in Sept. with a gain of .7%. Emerging weight was 5.9% and total internt'l weight was 26.4%. Staff withdrew $95 M during the month and anticipates removing addt'l money from this asset class over the next few months as needed to keep the overwt. near
26%.
Real Estate: STRS sold office property in Cleveland which established a new high for suburban market. Strong performance in real estate led to increase in real estate weighting to 7.7% of investment assets.
During discussion of assets, Leone asked: - if we now have enough to pay right now for 76% of our benefit obligation in response to a statement about this - if we were at 92% over previously - if national average was 86% capability?
Laura Ecklar said yes to all these items.
Laura said we'd be at 37 years unfunded liability is the 1% of contributions to HC was dropped.
Leone asked why only this area shown as dropped when other areas could also affect unfunded liability.
Laura said because this is an area the Board decides and not legislation.
Leone said not true. The Board can make other decisions which would lower unfunded liability.
Laura did have to agree.
It was stated the STRS Board has NO intention of changing the 1% to HCSF (HC Fund) and this was used as an example, only of something the Board determines.
Leone: Question regarding Ferguson Headhunter Contract :
I understand this contract is effective 10/1 and Ferguson to receive $45,000 by 10/1 as start up payment and I have concerns.
Damon: both sides haven't signed so not in effect.
Leone: John Lazares and I feel a copy of this contract should have been given us for review. There are things in it I didn't know. I know we didn't vote on it but we should have. ((Damon worked this contract prior to 9/01 when the $100,000 limit went into effect for him to spend without approval)). We should have known all the specifics. John indicated he did not understand paying for a service not used, either.
Ques: If we received 5 names or so from this headhunter to hire and we only liked 2 from their qualifications and only hired 2 and then go outside of Ferguson to hire , do we have to pay Ferguson the $100,000 fee in effect for up to 18 months?
Ans. Yes , unless we fire one of their hires and hire someone to replace them.
I would think the Board would want to know these issues before hiring Ferguson.
Ques: Did anyone say we are a public pension system and we cannot afford to pay this amount and ask to remove this provision?
Ques: Like with the Russell contract, if people are brought in for meetings, etc., are we required to follow travel policy allowing them to stay over in Cols. or Fla. or wherever for more nights than the meeting dates?
Answers:
Damon: this is industry policy to pay a fee and we did negotiate and got 4 persons for the price of 3. This was their concession for us. They are a very successful firm placing employees and we were not successful looking on our own so we decided to go with them after talking with 4 companies. The choice was to continue to try to find staff or go with professional search firm.
We wouldn't pay for nights over the stay needed for meetings with Ferguson.
If Board members are here for a Board meeting or anywhere for conference, STRS Board policy is to pay for 1-2 additional nights .
Geoffrey Meyers: Not our job to set ourselves up as a professional firm who does this and you (Leone) are wasting our time on this when it has been explained. You want to keep pursuing this and we have so much on agenda. ((So much for oversight of our monies knowing how it is to be spent prior to vote or Director's decision to spend. Just explain it and then move on! We have so much money, why worry over the small stuff, huh Geoffrey?))
Ramser: This is on tomorrow's agenda: Contracts ((Interestingly, it didn't make it to today's when the attendees could hear the exchange)).
Leone tried to introduce his resolutions regarding paying for overstays and credit cards today but was met several times with this is for tomorrow.
After months, he and Lazares are STILL trying to get the Board to approve NO DOCUMENTS: NO VOTE!
Public Speak:
1. Nancy Hamant: speech about Medicare Part B Reimbursements being cut on line and forwarded yesterday. It is said that Medicare doesn't come out with their announcements until fall and STRS must approve a HC plan in August to be ready for the following Jan. so it is a problem.
After public speak, this was the exchange:
Leone: So we are telling retirees something we don't know until later and it can be changed affecting retirees. I feel badly about that.
Lazares: This is a time line problem. Sandy, what can we do about this as it happened before.
Agreement for further discussion at later meeting to see if this can be dealt with more effectively.
2. Bill Leibensperger: Co-chair HCA:
I am here to address a new board again, this month. ((Tom Johnson was appointed by the Governor to replace Judith Fisher who resigned)).
HCA is working to subsidize HC for current and future retirees. Mike Billirakis' experience will be hard to replace in this area as is his experience and behavior as a Board member. I want to thank Mike for all his work. We welcome Tom Johnson and know him for his professional behavior. He sets a tone for respectability and professional atmosphere. Anything less undercuts us with legislators. Let's work as a coalition of professionals. We worked with Judith Fisher and we look forward to working with Tom Johnson.
3. Ralph Roshawn: retired superintendent who says no to STRS providing HC for rehires; take away retirement for rehires-they don't know the definition of retirement. No contracts without review before approval; 4 new STRS staff must be miracle workers for a $315,000 fee and who knows what in salary and benefits; personal legal expenses should not have been paid and staff should have to use STRS attorneys or pay for their own; rescind the '99-2000 benefit increase as it is not properly funded; Boards of Educ. cannot be saviors - 14% good even tho other states pay more - employer should not be increased until employee is increased to meet 14%.
4. Dr. Glenn Keifer: wife and I career educators and service retirees. Thank you STRS! I have always been a supporter and don't like to come with complaint. As a superintendent, I have a nice retirement. My wife hasn't worked since retiring. I am a rehire and I object to the loss of HC benefits with STRS as a rehire . Give this more thought. I oppose employers assuming this responsibility and this creates inequities since I choose to work and may lose my HC with STRS while a rehire and a felon can get it. Unfair.
((Unfair for one making so much to ask for so much more when money could be used for needier retirees not able to work and ill/elderly)).
5. Jim Reed: Thank you Dennis Leone and John Lazares for your sacrifice and efforts! ((Both could have made much more as retirees and rehires but joined the Board because retirees asked them to do so)). You are a beacon of light for us and I challenge any veteran or rookie Board member with this thought. Think Renaissance: It is ridiculous for anyone to have an incomplete knowledge or be knowingly ignorant of past behavior - good, bad or ugly.
Follow the legal promise of ORC: 3307.15! No STRS expenditure is trivial!
Tom Johnson, new STRS Board appointee had to leave for a scheduled appointment made before his appointment. He said he was happy to work with all Board Members and looking forward to it. He thanked the Board for its efforts saying changes made were important and had to be made. He said, 'My mother, now deceased, told me: Remember, dollars are important and people worked hard for those dollars.' (Wise woman).
Someone else wise said: Lively debate; question; discuss and question; strong exchange and question to reach solutions.

Closing:
Former Pres. Clinton spoke yesterday with good advice for all touching on the current climate of communication in this country.
Generous arguments and disagreements lead to good solutions. Use evidence and I never felt I was always right so search for facts for better arguments and consequences of various causes. SEEK OTHERS' OPINIONS and ways especially if yours is not working.
Larry KehresMount Union Collge
Division III
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