From John Curry, August 17, 2007
Subject: Paul forgot to mention that the vote was 10-0 to table divestment plans & someone suddenly springs to life!
"At one point, Steven Puckett, who represents the Ohio superintendent of schools, accused Leone of badgering Mitchell with his questions."
Maybe I should be positive by saying that at least we now know that Steve is finally among the living as he is finally speaking...even though it is in criticism of Dr. Leone. That's OK, Steve...I'm sure Zelman would be proud -- especially with the ODE's laxity over charter school supervision and the resultant (and deserved) bad press.
Dennis is just trying to press for complete and accurate information from Mr. Mitchell. Mr. Mitchell is a big boy now....he can take the heat without bailing out of the kitchen. Where was Mr. Puckett during the past several years when it came time to ask pressing and challenging questions of certain STRS administrators?.... At best, the descriptive word "AWOL" comes to my mind. John
P.S. Mr. Kostyu neglected to mention that the vote to table the divestment planning was a unanimous 10-0 !!!!
Pension divestment is contentious
By PAUL E. KOSTYU
Gatehouse COLUMBUS BUREAU CHIEF
Canton Repository, August 17, 2007
COLUMBUS Under pressure from the Legislature, the state's five pension systems are wrestling with how, and even if, they should move their investments out of publicly traded companies doing business in Iran and Sudan.
A two-hour meeting Thursday by the board of the State Teachers Retirement System showed just how contentious the issue is with the systems, who think lawmakers should keep their noses out of the pension investment business. Nonetheless, all five systems are trying to find a way to voluntarily divest to ward off passage of House Bill 151, which mandates divestment.
After numerous hearings, some of which included emotional testimony from Iraq War veterans and parents of soldiers killed in the war, the House Financial Institutions, Real Estate and Securities Committee passed the bill in May. One of its sponsors, State Rep. Josh Mandel, R-Lyndhurst, is now on military duty in Iraq.
House Speaker Jon Husted, R-Kettering, however, told pension executive directors in early June he would not bring the bill to a floor vote if they voluntarily divested at least 50 percent of their holdings by the end of the year and the rest later.
The Ohio Senate has not taken a position on HB 151, but Gov. Ted Strickland supports Husted's compromise, according to his spokesman Keith Dailey.
A plan presented by Stephen A. Mitchell, deputy executive director of investments, does not obligate STRS to a set any goal or deadline for getting rid of investments. In fact, it states STRS will not divest from and could invest in companies with links to the two countries "unless a comparable substitute of equal risk and return is available." And it limits divestment to its international portfolios on equities and fixed income.
If the system is mandated to divest, Mitchell said, STRS would lose between $70 million and $100 million, which could affect retirees' benefits. He said representatives of the five systems are meeting to develop similar approaches to Husted's request.
"We are not going to compromise the board's fiduciary responsibility," he said.
"It does appear the pension systems are taking positive steps toward what is in the letter," said Karen Tabor, a spokesperson for Husted. "We expect them to keep their word."
That June 7 letter committed the executive directors to work with their boards "to expeditiously develop an investment policy consistent with the boards' fiduciary duties" with the intent of divesting 50 percent of "active, direct holdings in certain non-U.S. publicly traded companies doing business in Iran and Sudan ... as of Dec. 31."
"If we take no action, we risk a mandatory policy," said STRS Executive Director Damon Asbury said. "If we develop a plan, then we control it, but the Legislature could come back. There's no sure-fire win."
"It's a gamble either way," said Mark H. Meuser, a board member from Franklin County.
"I do not like to be held hostage by the Legislature for some political reason," said Craig C. Brooks, who was appointed to the board by the state treasurer.
"I hope our membership understands we did vote to oppose mandatory divestment," said board chairwoman Constance K. Ramser, a teacher in the Jackson Local Schools. "It's the only position the board has taken."
Board member Dennis Leone, who represents retirees, argued vociferously that the board shouldn't adopt any plan and shouldn't allow staff members to explore divestment, because both use financial resources and time for a political issue and divert them from the system's responsibilities to its members. And he repeatedly asked Asbury and others why the board wasn't given more information and rushed to develop a voluntary plan. At one point, Steven Puckett, who represents the Ohio superintendent of schools, accused Leone of badgering Mitchell with his questions.
The board members decided to wait another month to vote on the voluntary plan until after they hear evaluations of it from their legal counsel and investment consultant.
Reach GateHouse Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: