FLASHBACK -- 3 YEARS AGO -- SOME THINGS STILL REMAIN THE SAME

3 YEARS AGO -- CREDIT CARDS -- CHILD CARE -- IG-PROPOSED INVESTIGATION, ETC. -- Guess what, 3 years later and the same problems still exist! John

From Dennis Leone, September 9, 2003

Subject: Important STRS Update

1. In a few days, State Representative Michelle Schneider tells me that she will be sponsoring a NEW bill regarding the make-up of the STRS Board. While she intends for time being to let House Bill 227 stand as it is, the bill she will be introducing will call for the State Auditor and the Atty General to be removed from the STRS Board, and replaced by: (1) A retiree; and (2) A "person" to be appointed by the Ohio Retirement Study Council. This "person" could be whomever the Study Council desires, but likely will be someone with a strong financial background....or so I am told. Rep. Schneider is not willing to pull the plug on H.B. 227 just yet. If both bills pass, the net effect will be the addition of TWO retirees plus the "person" appointed by the Study Council. If OEA leaders were wise on this issue, in my opinion, they would support the new bill vigorously. They lose nothing by doing so, and the Board becomes better and more representational in the process. I hope all understand that there will be political realities and difficulties facing H.B. 227. It seems that the new bill is a very smart move on Rep. Schneider's part. And it's clear Petro will support it because he was "legislator shopping" for a sponsor for similar language.

2. State Senator Kirk Schuring tells me he is introducing a new bill on Thursday of this week which will permit the Ohio Retirement Study Council to contract independently with the State Inspector General to investigate STRS. While State Senator Teresa Fedor intends to let her original Inspector General bill stand as it is, Kirk is going to move ahead with this one anyway. The new legislation also will include a new process to REMOVE pension system board members for malfeasance or misfeasance. Sen. Fedor also will co-sponsor the new bill. This is a huge step in the right direction. This would mean, for example, that there would be a mechanism to remove board members using STRS money for alcohol, parties, inappropriate travel expenditures, etc.

3. Senator Schuring also tells me he is sponsoring an amendment to an earlier bill he submitted (S.B. 105). The original bill called for ALL employees at STRS (not just non-investment staff members) to file financial disclosure statements with the Ohio Ethics Commission. His amendment will require all pension system boards to adopt an "ethics policy" as recommended by the Ohio Ethics Commission. Another good move on Sen. Schuring's part !!

4. I have received the official STRS form that is signed and certified by board members when they ask their home school district to bill STRS for replacement teacher costs when a board member misses work due to STRS "business." This is the form the home school district sends to STRS seeking a reimbursement for lost teacher services. But read the following language carefully that's on the form, and think about how Michael Billirakis could possibly have submitted this form in the past:

"Attached is a bill from the __________ Board of Education for reimbursement of substitute teacher compensation incurred while I was away from school on STRS business. I certify that the bill is correct and reflects substitute teacher services needed during my absences from my employment to attend official meetings of the STRS Board. I hereby request that the reimbursement be paid directly to the _________Board of Education."

Wow! It is clear from the above verbatim transcription of the form that the STRS guideline is designed to make a school district whole for lost teacher services and for substitute replacement costs. How is possible that Michael Billirakis ever certified such form from the first day he served as OEA President, not to mention his current "leave of absence" from Perry Local for a job he's never had and for a position that doesn't exist?

5. Damon Asbury has informed me that he has put new guidelines into effect "to ensure there are no unnecessary expenditures of STRS funds for special events." A step in the right direction, but I wonder who gets to define the word "unnecessary." In the past, someone decided that gifts, instamatic cameras, airfare and lodging for former board and staff, etc., were necessary and proper expenditures. What will happen in the future? It's like the definition of "due diligence" in the new travel policy. Who decides what the "due diligence" exceptions will be for travel in the future?

6. Damon Asbury informed that he has reduced the staff level for food service and is exploring "ways to enhance revenues to make this operation self-supporting." Another good step in the right direction, but it causes me to wonder what will happen if there are NOT ways to enhance revenues. He also informed me that he is currently reviewing issues regarding credit cards, STRS-owned vehicles, and travel expenditures by staff. Good. I hope there are solid changes forthcoming.

7. While it appears that STRS has raised the tuition rates for the child care center, and while additional increases will go into effect on Jan. 1, 2004, I am still not seeing evidence that the child care services will either pay for themselves or be eliminated. Damon Asbury informed me that "the family income level used to determine eligibility for a fee subsidy (for child care services) will also be reduced." That's fine, but why is there a fee subsidy of any kind?

8. Damon Asbury has informed me that he disagrees with me completely about my recommendation to eliminate annual cash reimbursements for unused employee vacation days and sick leave. He also has informed me that the artwork is not going to be sold or auctioned. Further, he also disagrees with me completely regarding my criticism of Board members and staff members continually saying that ORC Section 3379.10 was the STRS "guideline" for the artwork purchases. I am NOT going to let this one go. They cite the statute's language which stipulates that 1% of "state money appropriated" be spent on artwork, even though NO state money was appropriated for the new STRS bldg, and even though ORC Section 3379.10 doesn't apply to STRS. They want to say that it's their guideline, but they are not volunteering to anyone that it's a guideline they don't have to follow. Without that admission, it's deception in my book.

9. Damon Asbury has informed me that he disagrees completely with my recommendation that a special 9-member committee be appointed to review several aspects of STRS operations and make recommendations to the STRS board. He informed me that the 9-member committee already exists, and it's the STRS Board itself. This posture is completely unacceptable in my eyes. The actions and behavior of the current Board have been a dismal failure. The Board would NOT be giving up its statutory and legal responsibilities by receiving such recommendations from a committee of STRS members. In fact, it would be a way to involve more in the decision-making process and improve communications, which is what the STRS Board said it was interested in doing.

10. On Sept. 17, I am meeting with Senator Lynn Wachtmann about the scope of the audit that the Study Council desires. I am concerned that the scope will be unreasonably restrictive. I am also concerned that the audit will be overly concerned with what other pension systems in the country do instead of being chiefly concerned with the economic realities facing Ohio. I care not if the pension board in New Jersey spends money on bonus checks, and I care not if the pension board members in California fly to Honolulu every year.

11. On Sept. 23, Dave Travis will be joining me in a meeting with Dave Varda, who is Betty Montgomery's deputy auditor. She felt it was better to meet with him first since all compliance issues go through him. I wish to know why STRS appears to be able to operate under a different set of rules than all school districts in Ohio. I wish to know what will be done in the form of findings for recovery and non-compliance citations.

12. Fact of the day: Last year, around the Christmas season, STRS purchased 323 poinsettias to decorate the STRS headquarters. The cost: $5,594.00 !!!
Dennis Leone