Dennis Leone: Board Indecisiveness Harmful to Legislative Initiatives

STATEMENT OF RECORD
By Dennis Leone
STRS Board Member
October 22, 2007

Many lawmakers I have spoken with are undecided about House Bill 315 because in many ways, they are undecided about STRS in general. Sometimes, I feel, the Board shoots itself in the foot by its indecisiveness and its inability to properly address many issues - especially those dealing with policies.

At the STRS Board meeting on Friday, October 19, I made a motion (which John Lazares seconded) for language to require the enforcement of existing Board policies that are designed to restrict the ability of the STRS Executive Director to establish - on his own - STRS employee compensation and fringe benefits without formal board approval. Upon a substitute motion by Steve Puckett, the board voted 6-2 to table my motion. (John Lazares joined me in dissent, while Board members Tom Johnson and Tai Hayden were absent for the vote.) The Board's inability to deal with this problem is very upsetting and a disservice to the entire membership of STRS.

There have been recent examples of the Board not being given the opportunity to vote on issues that should have come to the Board for a formal vote. The Board did not vote on the decision to pay the private legal fees of STRS employees (two of which earn in excess of $100,000 per year at STRS), and nor was the Board given the opportunity to vote on the $93,000 in cash severance checks and free health insurance given recently to laid-off STRS employees. What do you think would happen to any school superintendent who awarded severance checks and free health insurance to laid-off employees without a formal School Board vote authorizing such? I am also aware of a decision from a few years ago - that occurred without a formal Board approval - when a retiree was rehired at STRS and said retiree was allowed to bring his accumulated sick leave with him to STRS, even though he had received a sick leave severance check from his previous public employer. This would translate into a second, big sick leave severance check upon departure from STRS.

Existing adopted policies of the STRS Board state:

1. "The Executive Director exercises all authority transmitted into the organization by the Board." Note the words "by the Board." (Page 42 of Board Policy Manual, first paragraph.)

2. "The Executive Director's job contributions can be stated as performance in the following areas: Organizational operations within the boundaries of prudence and ethics established in Board policies." Note the words "established in Board policies." (Page 42 of Board Policy Manual, paragraph B.)

3. "He or she (the Executive Director) may not establish current compensation or benefits that are not within Board-approved salary schedules or benefit provisions." Note the words "compensation or benefits that are not within Board-approved salary schedules or benefit provisions." (Page 41 of Board Policy Manual, paragraph C.)

The Board has allowed the Executive Director to supersede and bypass the above policies because of two other policies that exist - one that says he is "authorized to act for the Board in all matters related to the employment and compensation of personnel…..(with) expenditures subject to subsequent approval by the Board," and a second one that says he is "authorized to establish all further policies, make all decisions, take all actions, and develop all activities as long as they are consistent with a reasonable interpretation of the Board's policies." See how these two policies are in basic conflict with the three policies above?

When additional Board policies allow the Executive Director to supersede original Board policies, "to act for the Board in all matters related to the employment and compensation of personnel," and "to establish all further policies," this causes me to wonder - I told my fellow Board members on 10-19-07 - why there is a Board, except to do things like approve minutes and adopt insurance rates. My main point is this:

Since a long-standing Board policy stipulates that the Executive Director may not establish employee compensation and benefits "that are not within Board-approved salary schedules or benefit provisions," how is it possible that another "policy" developed later by the Executive Director (without Board action) can supersede an original policy? The Executive Director's ability "to establish all further policies" cannot give him, in my opinion, a special right to knock out a policy already on the books. I contend that the Executive Director is without authority to implement his own policies (without formal Board action) that supersede other Board policies.

After the Board voted to table my motion to address this matter, I told my fellow board members that tabling was a cop-out and that it would harm our legislative initiatives. Board members tell me I am disrespectful to them. This may be, but it can't be any more disrespectful than the Board majority has been when they vote to raise my STRS retiree health insurance premiums, while - at the same time - allow the Executive Director to spend pension money as he sees fit and adopt his own "further" policies without formal Board action. The clever way an Executive Director gets his/her Board to "approve" such things is for them to be buried in the monthly expenditure report, which the Board adopts on a monthly basis without really knowing what individual actions and expenditures are in there. This happens monthly and makes the Executive Director's decisions official legal, after the fact.

I know what will happen next. The staff will give a boatload of reasons why no adjustments should occur to policies and the Board majority will be intimidated by what they are told - which is what happened when I initially recommended a policy requiring the Board to review summaries of big ticket vendor contracts before the Board votes on them. (This was initially rejected 8-2 after the staff warned the Board that increased involvement on their part might increase their personal liability. It passed, finally, two months later, by a 7-2 vote.) The staff also, in the recent past, wrongly told the Board that is was okay to go into executive session to discuss proposed policies (which is flagrantly against Ohio law) and to adopt a settlement agreement without having a document in hand (which is just plain dumb).

It is difficult to serve on a Board where the Executive Director is allowed to adopt his own policies and procedures that can supersede existing Board policies. What happened with the payment of employee private legal fees and the awarding of cash severance checks and free health insurance to laid-off employees is precisely the same kind of nonsense we saw with the "old" Board.