Colorado Public Pension Board Boldly Says "NO" to DIVESTMENT

From John Curry, August 25, 2007
Subject: *Bulletin* 8/24/07 - Colorado Public Pension Board Boldly Says "NO" to DIVESTMENT!

"...., the money administered by PERA, whether received through investment returns, employee contributions, or employer contributions immediately becomes part of a trust fund. This means that money transferred to PERA is no longer “public money” or “state money.” Such money is paid as compensation pursuant to employment contracts and agreements between employers and employees and is considered earned at the time of transfer, just as employees who invest in defined contribution retirement plans retain ownership over the funds they have invested. Thus any divestment directive affects money that is not the property of the state or any other public employer, and in the case of the employee’s contributions and investment returns, never was."

8/24/07 Source: http://www.copera.org/PERA/about/latestnews.stm#Divestment Colorado PERA Board of Trustees' Statement on Divestment

We start from the premise that there are occurrences of violence in today’s world that are and should be intolerable in any civilized community. In addition, there are causes being pursued by interest groups that could greatly affect such critical issues as our environment, public health, the working conditions of persons throughout the world and even the global threat of terrorism. As individual Americans we all enjoy the political and philosophical freedom to speak out against the atrocities and join in those causes which align with our personal beliefs. As an organization, however, PERA serves the singular purpose of operating the retirement system serving more than 400,000 current and former public servants. PERA does not have the authority to determine social policy, foreign policy, economic policy, or any other policy beyond the operation of the retirement system.

It is commendable that the Colorado General Assembly would consider adding its voice to those striving to address complex issues in today’s world. PERA cannot and does not quarrel with that body’s laudable goals. However, in considering issues of divestment, the General Assembly must also be cognizant of the following:

• First, in meeting its fiduciary responsibilities, PERA seeks to maximize long term risk-adjusted investment returns while incorporating the fund's liability characteristics. A central component in managing investment risk is diversification. Security prices usually reflect and are dependent upon many factors, including economic, political, environmental, industry and company specific risks. PERA does not make investment decisions based on any one singular factor. Consideration, when applicable, is given to business presence in sensitive geopolitical areas, environmental compliance risks, sanction risks, and other economic, financial and company specific risks. Every day PERA and its investment managers prudently assume investment risk in seeking to maximize long term investment returns while incorporating the fund’s liability requirements, in an ongoing effort to secure the retirement benefits promised to public servants throughout Colorado. Divestment, by its nature, adversely affects diversification.

• Second, ordering divestment comes with significant associated costs. Those costs include the cost to search for and certify those entities that may have the characteristics or affiliations targeted by a divestment effort; the transaction costs that will be incurred in selling or disposing of securities; the cost of researching and conducting due diligence for any replacement securities or funds; the lost opportunity cost; the cost of reduced investment return; and the cost of creating investment strategies that exclude such entities.

• Third, the money administered by PERA, whether received through investment returns, employee contributions, or employer contributions immediately becomes part of a trust fund. This means that money transferred to PERA is no longer “public money” or “state money.” Such money is paid as compensation pursuant to employment contracts and agreements between employers and employees and is considered earned at the time of transfer, just as employees who invest in defined contribution retirement plans retain ownership over the funds they have invested. Thus any divestment directive affects money that is not the property of the state or any other public employer, and in the case of the employee’s contributions and investment returns, never was.

• Fourth, the trust fund must be administered by the PERA trustees, who have a fiduciary duty to invest and expend those funds for the sole and exclusive benefit of the members and beneficiaries. Trustees cannot allow financial decisions that would undermine the funded status of the plan. In order to protect and preserve members’ assets, state dollars should be used to reimburse PERA for the initial and ongoing costs and potential losses of any mandated divestment effort. Such an approach would spread the cost to all Colorado taxpayers, and would add the voice of the entire state’s citizenry to the call for action.

• Fifth, the activities of a company that trigger a divestment mandate may constitute a very small fraction of the company’s total global operations. Frequently the companies in question are multinational with primary headquarters in friendly foreign nations and significant operations in the United States, and even here in Colorado. Divestment mandates are designed to impose economic hardship on the subject companies but there is no assurance where the impact of that pressure will be felt. Widespread divestment could (and is intended to) impair the economic resources required for a company to operate, potentially resulting in an array of unintended consequences.

The variety of issues facing our world today are not easily separated in to gradations of severity or importance. Consensus as to the priority of these types of issues and the proper recourse are difficult to achieve. As a result, once a divestment mandate is imposed to address one issue, the resulting “slippery slope” makes differentiation among the remaining issues contentious and divisive.

In a rare display of virtual unanimity on these types of issues, the General Assembly during the 2007 session adopted HB 07-1184 which imposes targeted divestment from companies with active business operations in the Sudan. The rationale for this step, unique in PERA’s 76-year history, was the first recognized campaign of genocide in the new millennium. The Governor, the General Assembly and the PERA Board of Trustees were in agreement that the standard for triggering divestment is genocide. The passage of this landmark legislation in Colorado has sent a strong message to the international business community and the Sudanese government. Adoption of additional divestment mandates which do not meet the genocide standard adopted in HB 07-1184 will most certainly detract from the message to Sudan and the offending companies.

For the above reasons, PERA will generally oppose any mandated divestment effort that does not meet the genocide criteria and that fails to account for these stated concerns.

Jim Kimmel re: Dispatch article 6/7/07

Jim Kimmel to John Curry, August 24, 2007
Subject: Fw: Teachers, it's not over! Let your legislators know...NO Divestiture!

John:

Here is the article I received from Ryan Holderman on August 22 [Click here to view article]. The article was from June 7, NOT August 22, which is probably the reason you could not call it up on your computer. Sorry about the error. However, Mr. Husted needs to be reminded anyway that we don't want such a ridiculous law to be passed. These guys are relentless about getting their way-always at the expense of someone else they deem "unworthy".

Jim Kimmel

Rep. Scott Oelslager to Tom Curtis re: Healthcare initiative

From Rep. Scott Oelslager, August 20, 2007
Subject: Curtis - STRS Health Plan

August 14, 2007

Mr. Thomas Curtis

Dear Mr. Curtis:

Thank you for sending me a copy of your letter regarding STRS retiree health care. I appreciate you taking the time to voice your concerns.

As you may know, I introduced House Bill 707 last General Assembly, which would provide an ongoing, dedicated revenue stream for the STRS Ohio Health Care Program. This initiative will preserve health care coverage for Ohio's current and future retired public educators. Although this legislation has not yet been introduced in this General Assembly, I plan to do so in the near future.

If I can be of further assistance in this matter, or with any other state government related issue please feel free to contact my office.

Sincerely,

Scott Oelslager
State Representative
House District 51

SO/jrl

Paul Boyer: Letter to STRS Board

From Paul Boyer, August 24, 2007
Subject: Board

Dear STRS Board members:

In September we will be starting a new year with new officers in charge of the meetings. I understand, Jeff, that you will be the chair this year and I hope that you will not make the same mistakes that some previous board chairs have made. You have an awesome responsibility to see that all of the rules are followed and that every board member gets an equal chance to make motions and to discuss others' motions. Be very careful about declaring a board member out of order just because he or she says something that is not to your liking. Your statements in the STRS Ohio Election edition impressed many members who voted for you. We feel sometimes that you have not always followed through on what you promised. I have not heard much from you as a board member so I hope that our decision was justified and that you will do all in your power to see that this is a memorable year.

Mary Ann, you and I have spoken to each other and exchanged emails. I trust that you will accept what I said to Jeff and make it your intention to take your position seriously and consider each and every item before making decisions.

To the rest of the board members, may I say again what I have said a few times before. You, as a board member, have no authority of any kind except when the board is in session. That means that each of you have no authority to work out agreements with Damon or any other staff member when the board is not in meeting. Keep in mind the fact that every board member has equal rights to make motions, debate and vote.

As board members, remember your fiduciary duty. There may be times when your own thoughts clash with what is being discussed and voted on but please remember your solemn fiduciary duties to see that OUR money is used for the most benefit possible to the members and their beneficiaries. Remember that some of our members have been retired for a long time and receive a very small benefit because of the size of their final average salary and the regulations in effect at the time. There is a very great disparity between older retirees and more recent ones. I understand that we have over 100 retirees that are over 100 years of age. I am sure that their benefits are very small and I know that some retirees receive so little that they have to make a decision whether to buy food or medicine. Remember, retirement with our health care is a BUMMER.

My wife and I have been retired for 22 years and we are just able to keep our heads above water because of some sound investments in the past.

I would like to see a more harmonious working of the board members through this year as you steer us through rising costs and sometimes dwindling income.

I wish all of you a very good year and we will be watching and listening.

Paul L. Boyer
Retired since 1985
Life member OEA/OEA-R, NEA, ORTA, CORE
Proud to be named “Core” of CORE by Dr. Dennis Leone

A little "Josh Mandel 101" from a taxpayer (and blogger) in his neck of the woods (Cleveland)!

From John Curry, August 23, 2007

The words below were taken from the "Writes Like She Talks" blog written by Jill Zimon. It gives you some idea how & why Mr. Mandel (HB 151 sponsor-divestiture) thinks like he thinks and where he gets some of his funding. Here's the URL for this piece and more from Jill:

http://writeslikeshetalks.blogspot.com/

Is Josh Mandel re-upping for action in Iran?

I have no idea, no intelligence per se.

As a side note, I have to commend my state rep Josh Mandel's office for their keeping up with my requests for information, specifically about funding for and deficits in the provision of wireless 911 emergency service (which I really need to check on myself before the end of the month because I'd read last spring that the financial support provision for wireless 911 in Ohio was to expire if the law wasn't acted upon this month).

But I just read this on Cliff Schecter through my feed reader and all I could think of was, is this what they're setting Mandel up for?

[DISCLOSURE: This item that says that filmmaker Robert Greenwald (Wal-Mart: The High Cost of Low Price) says that Fox News wants a war with Iran just came through my email and implies that Greenwald is working to spread that word about Fox's intentions. Schecter blogs for Brave New Films, one of Greenwald's ventures. That obviously has nothing to do with the existence of former CIA agent Bob Baer's assertions in Time magazine, here, to which Schecter links. But in full disclosure, the connection should be noted and perhaps others can tell us if in fact there are more connections worth noting related to these items.]

So our government? politicians? who? want to make Mandel (or Mandel wants to make Mandel, or both want to make Mandel) a big pooh-bah with the run on Iran? I know what he's said about Iran in off the record chats. I know what his stand is, on the record as well, to wit, HB 151 and divesting. He's used very strong, uncompromising phrases to convey his concerns about Iran and its threat to Israel.

We know from whom he gets money and advice, including AIPAC and other groups known to support military intervention in Iran on behalf of Israel.

Maybe some things are better left unsaid. But this jolt into my very depleted mind at the moment - I need to know how bizarre it really is.

One to ten - how bizarre?

Lots of rain and flooding in north central OH lately, but one place that's going to get a lot of sunshine from now on is 275 E. Broad Street, Columbus

From John Curry, August 24, 2007
Subject: An April AG request and results..... More sunshine for 275 E. Broad Street!!

It has been a few months since I and others have asked our Attorney General for his stance on secret balloting by STRS Board members at an open board meeting. Unlike this CORE member, Marc doesn't editorialize much! His reply, "We are looking at it." Well....it appears that he did! My April letter to Dann is attached and below is a paragraph taken from the ORTA web page (yes, I credit them for informing us) which gives us the good news! John

Election Procedures for Board Leaders Changed

"The Board changed the procedure for electing officers from a written secret ballot to an open meeting voice vote. This change was prompted by an opinion from Ohio Attorney General Marc Dann that the secret ballot process previously in place was a violation of the Open Meetings Act. A similar change in the procedure for filling vacant Board seats is under review and is expected to be brought to the Board in the coming months."

April 8, 2007

Dear Attorney General Marc Dann,

Recently, the State Teachers Retirement System of Ohio conducted several “secret” ballot votes in public sessions to appoint replacements for open seats on the Ohio STRS Board.

In light of your “reform stance” concerning actions of Ohio governmental agencies and the desire to ensure that the Ohio Open Records Act is followed in both the spirit and the letter of the law, I am requesting that this practice of secret balloting in an open meeting be addressed by you. I do understand that sometimes the administration at STRS has stated that Ohio STRS is a quasi-governmental body and as such is not subject to certain statutes of the Ohio Revised Code and the Ohio Administrative Code. By the same token, the Ohio STRS is funded by public tax monies in the form of employer contributions from over 600 public school systems in this state.

Would you please examine this practice of secret balloting during open meetings at Ohio STRS and inform thousands of Ohio STRS retirees as to the legality of this practice? I and my fellow retired brothers and sisters are eagerly awaiting your answer to a practice that we feel is not in the best interest of open government in the State of Ohio. Thank you.

Sincerely,

John Curry
30 year retiree of Ohio’s public schools
Member of Concerned Ohio Retired Educators (CORE)

E-mail response from Marc Dann, April 8, 2007:

We are looking at it

Jim Kimmel to Speaker Husted: Give it up!

From Jim Kimmel, August 23, 2007
Subject: Divestment

August 22, 2007

Mr. Husted:
"Give It Up!" That was the title of an article in the Columbus Dispatch today. Good advice! What you are trying to do is a case of "Let's you and him fight": you are using private money (teachers, police, firefighters, etc.) to conduct US foreign policy. And by the way -- states cannot conduct foreign policy for the US -- only the Feds. The state retirement systems' total assets are made up of money taken from paychecks of teachers and firemen and others in public service. Just because we were are paid out of public funds has nothing to do with it. Once we do the work and are paid we are free to do what we want with our money. But it is still our money -- even that which is contributed to the retirement system. And that includes the school boards' contribution to STRS because it is part of our pay as well -- for retirement. Remember 3307.15 of the ORC? The money is for our retirement -- not foreign diplomacy. You know it is illegal Why else would you try to make STRS Board members immune from liability for any losses caused by this scheme?

Also, such divestiture would do no good anyway. You know that, I am sure. You and your friends just want bragging rights to help you move up to a higher office. Besides, if it is such a good idea, why not require everyone -- brokers, bankers, private individuals and corporations -- to divest instead of just public servants? What do you have against us? Ironically, the very stocks STRS must divest I could (if I could afford it) buy those stocks as an individual. If these stocks were divested en masse they would temporarily fall in price and those in the know could make a lot of money as stocks like Toyota, Rolls Royce, Coca Cola, etc., would inevitably return to normal value. And you can be sure the pension funds would not gain from that. I had thought that this all had been placed on the back burner-- if not, shut it off now!

Mr. Husted, I was not born yesterday but you are acting as if you were, when you proceed in this manner. You are very young and need more experience in life before you make life changing decisions for your elders. Divestment -- "Give it up"

Respectfully,

James O. Kimmel STRS Retiree
30 year veteran teacher
Ohio Air National Guard 1963-1969
Life long Ohio Resident

Molly Janczyk to Laura Ecklar: An apology

From Molly Janczyk, August 24, 2007

My deepest apologies to Laura Ecklar for misquoting her. She states she is not the one who used car payments , etc. as a reason for severance pay for laid off workers. I used Jim McGreevy's STRS Board Meeting report using her name and when I reread it, it does say she talked of policy. Since she was addressing this issue, I thought she was the staff member who used car payments as well in her reasoning.

Evidently more than one staff member spoke for the severance for laid off workers expenses. I have asked who the the individual was who did make this comment.

I never wish to be inaccurate and stand corrected by Ms. Ecklar and apologize to her. I do understand however , that no such real written Board policy exists as approved by the Board. If one does, I will correct that as well.

Thank you, Laura, for the correction. I appreciate it.

Molly J.

Teresa Pressler and Molly Janczyk re: Severance pay at STRS

From Molly Janczyk, August 22, 2007
Subject: RE: STRS

Absolutely! And I AM complaining. As long as the Dyer era staff of STRS and some other organizations remain, it will continue as they were closely tuned with the former Exec. Direc and Board and have never admitted anything was wrong, really. Blinders are hard to remove and change comes slowly for most. We are the new generation of ALL organizations and one day, most of us will not benefit as it is too late for us, mindsets may improve on ethics vs. legal. I believe that Steve Mitchell is one of the few who has gone thru changes. I believe he sees things differently than he once did or was part of as an employee. Of course, none of this pertains to staff who work so hard for us on a daily basis such as Joyce Baldwin, etc. Just my take.

From Teresa Pressler, August 22, 2007
Subject: STRS

I am appalled at this severance situation.When will this ever stop?!I remember the days when we were told not to go out to eat etc.and to tighten our belts. I do not recall the majority of the board worrying about our houses,rent,etc. We've had some mighty lean years.Not complaining just stating the facts. Teresa

Molly Janczyk re: Severance Checks/HC for laid off workers

Molly Janczyk to STRS Board, August 22, 2007
Subject: FYI: Severance Checks/HC for laid off workers

I have sought answers to some disturbing questions: Here are my findings from reliable sources.

The STRS Board has voted 7-0 to look into the following matters: (Thank you all!)

Recent severance checks (and continued STRS-paid health insurance) for eight laid-off IT employees.

Reasons: Asking if this matter was pursuant to policy:

It seems that there is NO support that the checks issued were pursuant to board-adopted policies, the board-adopted associate handbook, or board-adopted administrative regulations at STRS. Nothing has been found and it seems no policy or revisions have been brought before the Board and no approvals in effect about severance for laid off workers at all.
This issue is disturbing because Leone, Lazares and CORE have worked hard on these matters which were brought to the Board. According to my notes and information upon request, the Board cut staff perks, including severance cash for unused sick leave, to save $410,000. Severance cash regarding unused sick leave was on this list, so wouldn't this pertain to severance cash for laid-off employees? The Board approved these changes with staff perks in 2006, so they would ,then, have to approve the 9-11-06 revisions and the policy involving severance cash for laid-off employees. No evidence of such approval, then or previously.

I asked IF laid off workers had a signed contract and am told that the settlement agreement that laid-off employees sign makes multiple reference to the term "employer." This Employer is the Board. So agreements reached CAN NOT BE without the board even having knowledge of such agreements.

Evidently two IT employees were laid off in 2002 and the "policy" given to the board by Damon a few weeks ago was used during Herb Dyer's reign. This certainly did not make it right then or now as a basis. During Herbie's days expenses of board member spouses were paid for out-of-state trips by STRS. Our dollars spent on bar bills, $1000 flights to N.Y., $600 dollar rooms in exotic locations where Herbie is said not even to have attended the inservices but went straight to the golfing range with his buddy Jack! (Told directly to me by Joe Endry). Past practice means nothing to me unless the "practice" was adopted by the Board. No evidence of such and Herbie's rules don't apply: He was convicted along with his approving all he wanted 6 Past Board Members.

I asked about the money for bonuses already in place: It has been confirmed during the board meeting on August 17 that the severance checks are NOT to be confused with the $700,000 the board set aside to pay bonuses to IT employees to get them to stay longer with the initiation of Vi-Tech. Those dollars are there to keep people longer, not to give them cash so they continue making car payments after they are gone Damon brought proposed changes in staff travel expenses to the May STRS Board Meeting in the associate handbook to the Board as they pertained to the staff's travel policy. Since expense implications were associated with this language, Damon knew that the board needed to approve it before it could be implemented. A policy on severance cash (and continued STRS-paid health insurance) for laid-off employees is no different.

This matter has nothing to do with whether the severance cash is deserved, desired or needed. The question is one of authorization, whether the payments were proper, and whether they pursuant to Board-adopted policies, handbooks, or rules.

We clearly do NOT go with implied promise or wishful perks or retirees would still have affordable HC and a stream of revenue would long ago have been sought. Educators had the past practice (though not mandated as policy) and the implied promise of secure retirements with HC second to none. We were ripped of our retirements virtually overnight and we had house payments, car payments, bills, medical expenses, college tuitions to pay, etc. WHO CARED? It is ALWAYS about the staff! The staff supposedly works for OUR benefit. Priorities , ladies and gentlemen! Not hoped for but mandated: ORC:3307.15. Yet, Board Members continue to be swayed by the nice folks who work so hard at STRS and forget those dollars are needed for retiree survival. As Tom Johnson said upon his induction: 'My Mother told me to watch the pennies because they belonged to others' (and those pennies add up to dollars to allow resources for needy retirees who can benefit from more extensive assistance plans.). $400,000-700,000 to retirees is beyond huge in assistance being tossed to workers to keep them on a job or because they , as knowing temp workers, have car payments. WE COUNTED ON STRS! WE WERE BETRAYED! HOW MANY INSULTS ARE WE EXPECTED TO ENDURE??????

See the faces of those suffering for whom YOU WORK, Mr. Asbury, and Co.: Mary Ann, Jeff, Conni, Mark, Steven. Yes, you voted to look into this issue. When time comes to vote on it: REMEMBER US! (FOR A CHANGE!) Go to bed at night with the ORC: as your prayer and meditation!

Jeff Glasgow: Turn over the rocks they're hiding under and expose what they're really doing

[From Molly]: At times, they want reelected. We are now a viable force, we are told as a lobby grp. But, certainly, uncovering misdeeds goes a very long way.

Jeff Glasgow to Molly Janczyk and RH Jones, August 22, 2007
Subject: Re: RE: My letter to the Honorable Jon Husted

Molly & Bob,

Frankly folks, I think letters to people like Husted are a bit of a waste of time. Those who want to take your money are going to ignore them. The only way that I know of to respond is to turn over the rocks they are hiding under and publicize what they are doing. Saying please and talking to ourselves is not going to work. Spread the word to everyone you know -- particularly public workers and retirees.

Jeff Glasgow

Damon Asbury to speak at Hamilton Country RTA September 10

Anybody want to go and ask some questions? Hey, this sounds a little better than the average RTA's meatloaf and gravy special! Thanks to CORE's June Hughes for this info. Since this is for Hamilton Co. RTA members, you might want to call first to see if they can accomodate "outsiders." John [Curry]

June Hughes to John Curry, August 21, 2007
Subject: Re: Did Damon have the LEGAL authority to sign this?

HCRTA is the Hamilton County retirees organization. Dee Scott is the legislative person, the Prez is Sandy Myers The sit down luncheon is September 10 @ Raffel's Banquet Hall, 10160 Reading Rd. at 12 Noon. It's located in the northern part of Hamilton County near I 275 about a couple of miles south. Reading Rd is between I 75 and I 71. Reservations must be received by September 3 for $15.00. Send reservation checks to:

Diane Barth
611 Covedale Ave #4
Cincinnati, Ohio 45238.

Food choices are Sliced Roast Pork in gravy, w/parsleyed potatoes, buttered corn, Waldorf salad, rolls & butter, Chef's choice of dessert. OR - a Vegetarian Entree of 3-cheese lasagna OR a Fresh Fruit Plate.

Dr. Damon F. Asbury, Executive Director, STRS of Ohio will be the speaker. Laura Eckler will be there too.

RH Jones to Speaker Husted: Divestiture unconstitutional, singles out elderly pensioned retirees

From RH Jones, August 22, 2007
Subject: My letter to GOP House Speaker, Jon Husted

To all:
While Rep. Husted plays aggressive, hardnosed, and no holds barred hardball with Ohio’s Pension Systems, the public education friendly politicians are quietly playing softball. I hope that they take note, as they read the letter that I sent in longhand to GOP Rep. Husted, and a CC to GOP Kevin Coughlin of Summit County. For ease of reading, I send it to you typewritten. The letter:

08/20/07
The Honorable Jon Husted
148 Sherbrooke Dr.
Kettering, Ohio 45429

Dear Representative Husted:
I write to you in longhand with 76-year-old arthritic hands. My message to you is that: Ohio Statehouse Legislation has been clouded with irrelevant, religious and misguided patriotism. This has to end. The only relevant values are obedience to our national and state constitutions. To do anything else will only get us a Hitler, a Stalin, a Mussolini, a Tojo, a Mao a Pol Pot, a Chavez, on, and on, and on!

Further, I feel that divestiture is unconstitutional and singles out the elderly pensioned retirees. My STRS OH should not have to decide on National Foreign Policy decisions. That should be left up to the National Executive Branch, the Senate and the Legislative Branches of our Federal Government.

My STRS OH CEO, Damon Asbury, acted with questionable authority when he signed the voluntary Iran/Sudan divestitures. Retired teachers cannot afford to be “scapegoats” in the battle for divestiture. After all, we taught the public to read, did we not? -- Especially the U.S. of A. Constitution!

Sincerely,

Robert Hudson Jones, STRS OH annuitant member

CC: Kevin Coughlin (R-Summit County)

An Update from Dennis Leone re: August, 2007 STRS Board meeting

From Dennis Leone, August 18, 2007
Subject: Update: STRS Board on August 17

Interesting, wasn't it (as the Canton Repository accurately reported), that Puckett accused me of "badgering" on August 16, seconds after I expressed my concern over the fact that the STRS staff had NOT given full information to the Board before the original June 21 divestiture vote. I guess it did not bother Puckett (who seconded the motion on June 21 to direct the staff to prepare a divestiture plan) that he did not have all of the facts before him at that time. It was okay in the past for Puckett, as you know, to have an STRS-purchased credit card, to have STRS pay for his personal long distance phone calls, to have STRS spend money on wine for a Hazel Sidaway going-away party, to vote for a settlement agreement without having a document in hand, and to support STRS paying for the private legal fees of 3 employees. Maybe I should do a little more "badgering" when it comes to Steve Puckett's behavior.

You soon will be reading about a motion I made at the STRS Board meeting on Friday, August 17, regarding Damon's decision to issue severance checks (costing $93,000) to eight STRS employees who were laid off recently from the IT Dept. I challenged that Damon did not have the authority to do what he did and pushed for a formal Board action to have our internal auditors (who now report directly to the Board, not to the STRS exec director) do an investigation into whether the payments were proper and pursuant to board policies. (They clearly were not proper and not pursuant to adopted policies, in my opinion, based on my research of ALL policies, board minutes, etc.) I made this motion, and Chapman seconded it. Before the vote was taken, Meuser gave a speech that he was not about to "jump because Leone says jump" and that he was NOT sure if such a follow-up was "worthy." After hearing that, I replied: "From my perspective, any board member who does not vote for this resolution is engaging in misconduct from a fiduciary standpoint." (Meuser's "don't know if this is worthy" statement and Puckett's "badgering" comment remind me Judith Fisher's "intrusive" comment, Geoff Meyers' "waste of time" comment, and Bob Brown's "shut up" comment.)

Anyway, after Meuser and I exchanged words, even Conni Ramser (yes, Conni Ramser) told Meuser that the spirit of my proposed resolution was to have our own internal auditors look into the matter. The motion then passed 7-0, with Meuser voting yes as well. Board members Johnson and Puckett had to leave the meeting before this vote was taken. Board member Hayden was absent on Friday. Before the vote, STRS staff members spoke in defense of the severance checks (and the continuation of STRS-paid health insurance for the laid-off employees) because the laid-off employees were "deserving," because many of them "have car payments," and because we shouldn't "send the wrong message to other STRS employees." Funny, isn't it, that staff wasn't as concerned about retirees' car payments in 2002 when health insurance was cut for spouses. Meuser's comments on Friday also reminded me of his written comments of a few months ago, when he wrote that any board involvement in vendor contracts "inhibits the staff's ability to negotiate." Whether Meuser realizes it, it was individual board involvement in the recently adopted PBM contract (as it was being negotiated) that caused it to be a better contract in the long run. He just plain doesn't understand this.

One vote change occurred on Friday. If you recall on Thursday, Ramser was the abstaining vote in the 5-4-1 vote to raise the reimbursement costs for retirees who are on the Medicare Part B plan. Ramser asked on Friday to change her vote to a yes. This means the record will now show that Ramser, Cervantes, Meuser, Johnson, Puckett and Brooks voted yes. Voting no on this cost increase were Leone, Lazares, Chapman, and Hayden.

All of the above can be verified by the Board meeting tapes. Also, Fayette County retiree Marie Fetters was in the audience on Friday and heard it all.

As you can tell, it sure is very hard to predict how board members will vote on these issues.

Dennis Leone

A message for House Speaker Jon Husted

Did Damon have the LEGAL authority to sign this?

June 7, 2007
The Honorable Jon Husted,
Speaker Ohio House of Representatives
77 South High Street
Columbus OH 43215-6111

Dear Speaker Husted,

On behalf of the more than one million active and retired members of the Ohio Retirement Systems, thank you for meeting with us on June 5, 2007 to discuss Sub. H.B. 151. The Ohio Retirement Systems oppose terrorism and genocide, and share the General Assembly’s concerns over the acts of the governments of Iran and Sudan. The systems are long-term investors that need balanced and diversified portfolios to accomplish their financial objectives. Those objectives produce the funds that provide pension and health care benefits. Buying and selling decisions are made through a prudent, deliberative process that takes into account quality, risk, return, and market conditions.

After fully considering our fiduciary duties, we would support legislation that requires the boards of the retirement systems to adopt policies to address divestiture from certain companies doing business in Iran and Sudan. This policy-driven approach would achieve the goals of Sub. H.B. 151 without mandating that the boards take action that would violate their fiduciary responsibility as trustees to act solely in the best interests of the active and retired members when making investment decisions. The systems have demonstrated in the past with S.B. 133 (eff. 9-15-04) their ability to act without mandates to accomplish the legislature’s goals.

Based on our meetings with you, the Executive Directors of the Ohio Retirement Systems commit to work with their Retirement Boards to expeditiously develop an investment policy consistent with the boards’ fiduciary duties, and with the intent of:

• divesting fifty percent of active, direct holdings in certain non-U.S. publicly traded companies doing business in Iran and Sudan, based on Sub. H.B. 151, by December 31, 2007, and

• with the ultimate goal of full divestiture from such holdings. The systems will report regularly to the Ohio Retirement Study Council on their progress.

We are happy to discuss this issue with you further at your convenience.

Respectfully,

Richard A. Curtis, Executive Director Highway Patrol Retirement System
James R. Winfree, Executive Director School Employees Retirement System
Christopher M. DeRose, Executive Director Public Employees Retirement System
Damon F. Asbury, Executive Director State Teachers Retirement System
William J. Estabrook, Executive Director Ohio Police and Fire Pension Fund
cc: Members, Ohio House of Representatives

Cincinnati Enquirer: Rep. Michelle Schneider and 'Gaming the system' (double dipping)

Rep. targeting 'double-dipping'

Cincinnati Enquirer
August 19, 2007
BY SHARON COOLIDGE
SCOOLIDGE@ENQUIRER.COM

Ohio state Rep. Michelle Schneider is outraged that a public employee would try to collect his or her pension early – a practice she said is becoming more and more common – and she wants to put a stop to what she calls “gaming the system.”

Schneider, R-Madeira, introduced a bill in June that she hopes will end “double dipping,” when a public pension member retires and returns to work at the same job. In doing so, the employee begins collecting his monthly pension in addition to salary.

“We’re trying to stop the gaming,” she said. “Even one person doing it is too many.”

Schneider said one example of the practice is the possible retirement of John Baron, director of River City Correctional Center.

The board that oversees the Camp Washington facility voted to allow Baron to retire from his $90,000 a year job and return to the same job at a lower salary while he starts collecting his pension.

That move is under fire from Hamilton County Common Pleas judges, who have asked for a re-vote by board members who are partly appointed by the judges.

Schneider’s bill focuses on four of the state’s five retirement systems that allow double dipping: The Public Employees Retirement System, the State Teachers Retirement System, the Service Employees Retirement System and the Ohio Police and Fire Retirement System.

The fifth retirement system, the Highway Patrol Retirement System, does not allow for re-employment

House Bill 270 says any member of the four systems who retires and returns to the same job within 180 days cannot receive both their pension and salary.

“The problem we’re seeing is with school superintendents or administrators like John Baron where people retire from their position on Friday and return to exact same position on Monday while collecting their pension,” Schneider said. “The system was never set up for this kind of gaming.”

After 180 days the person can return to the same job while collecting a pension, but Schneider said 180 days is too long to leave jobs empty and will curb double dipping. “This bill is a perfect balance,” she said.

It discourages people from collecting pensions early, but it also allows people who retire and later want to return to work – for instance teachers and police officers – to do so without a penalty, she said.

The system was set up for protection of public employees, police, fire, teachers and government workers who work at low-paying public service jobs for 25 or 30 years.

Hamilton County Auditor Dusty Rhodes, a Democrat who has long criticized the practice of double dipping, said other lawmakers have tried and failed.

“The legislature has been nibbling around the edges for years,” Rhodes said. “But any step forward to stop it I think is a pretty good thing.”

Rhodes said the proposed law could be tougher: “The best thing to do is say no more. People will figure out way to get around it.”

Rhodes noted the bill doesn’t address what happens when a person comes back and works at a different job, a common practice, he said.

“It will be about what you can and can’t get through,” Rhodes said. “Points to her for trying, but it’s really about the outcome.”

Schneider, vice chairwoman of the Ohio Retirement Study Council, who has been a member of the council for seven years, took up the cause when the executive director of the Montgomery County Board of Alcohol, Drug Addiction and Mental Health Services came under fire earlier this year for double dipping

“I was outraged by this,” she said.

Schneider said the retirement systems support her initiative.

“What they are seeing is people quitting on Friday and taking same job on Monday,” Schneider said. “They want to see it stopped.”

Hearings on the bill are expected in the fall.

Sudan Tribune: Ohio pension funds question divesting from cos. with Iran, Sudan

From John Curry, August 21, 2007
Subject: So now...we get to the Nitty Gritty of our divestment situation

Note from John:

I have distributed many articles re. divestiture but....this is the first article that REALLY addresses the central issue concerning whether we actually will be FORCED to divest or whether our state legislature can not FORCE us to divest. THE CRUX OF THIS MATTER IS AN ATTORNEY GENERAL'S OPINION! Will we get one or when will we get one is of major importance. The following sentence from the article below says it all:

"The State Teachers Retirement System at its Thursday meeting said it has hired an investment analyst and consulted the attorney general regarding its obligations to the Legislature and its members."

Sudan Tribune
Sun, Aug 19, 2007
Ohio pension funds question divesting from cos. with Iran, Sudan
August 17, 2007 (COLUMBUS, Ohio) — Some of Ohio’s public pension funds are considering reneging on a June deal cut with House Speaker Jon Husted that required them to partially divest from companies with business ties to Iran and Sudan.

Husted, a Kettering Republican, brokered the deal in exchange for killing a bill that would have mandated 100 percent divestment by the retirement funds for 1.3 million police, firefighters, schoolteachers and other public employees.

The five funds and hundreds of public employees had criticized the bill, sponsored by freshmen Republican Reps. Josh Mandel and Shannon Jones, as an attempt to drag their investments into politics. Mandel, from Lyndhurst, is a Marine veteran who served in Iraq and has volunteered for a second tour of duty.

Now some of the funds are questioning their obligation to meet the terms of the deal while others are saying it required them only to study the prospects of divestment.

The terms of the agreement were that the pension systems would divest 50 percent of the money they have in Iran- and Sudan-tied companies by Dec. 31, said Husted’s spokeswoman Karen Tabor — and the speaker expects them to meet that target.

"The fact of the matter is honorable people keep their word," she said. "We expect the pension systems to keep their word. Rep. Mandel is keeping his word to the American people by going back to Iraq for a second time."

The State Teachers Retirement System at its Thursday meeting said it has hired an investment analyst and consulted the attorney general regarding its obligations to the Legislature and its members.

The Ohio Police & Fire Fund, meanwhile, will leave the decision up to its board, said executive director William Estabrook.

"They’re independent boards. They may have a totally different idea of what to do," he said. "I don’t anticipate that this will go the same way for everybody."

The Ohio Public Employees Retirement System, meanwhile, has been working with Husted’s office to ensure it interprets the language of the deal properly. PERS was a vocal critic of the divestment legislation.

Judy Stalter, a member of the retiree advocacy group Public Employee Retirees Inc., said the funds should be given "wiggle room" within the agreement in order to best serve their members.

"It should be their right to look at the investments and make sure their fiduciary responsibilities are not breached," she said.

Thirteen countries or regions have been penalized after being accused by the U.S. of supporting terrorism, making human rights violations or other misbehavior. States have increasingly followed suit with similar state-level investment bans affecting countries including Iran, Sudan, Cuba and Libya.

(AP)

Dr. K. Fluke's speech to the STRS board 08/16/07

From RH Jones, August 19, 2007
Subject: Dr. K. Fluke's speech to the STRS board 08/16/07

To all:
Dr. K. Fluke’s speech is in my opinion an exposé of the Fordham Institute’s flawed “research”. His letter below, I send to you with permission from him, my SummitCRTA Legislative Committee Chair.

RHJones, a very, very, proud member of CORE

Dr. K. Fluke’s STRS board speech of 08/16/07
Re: Golden Peaks and Perilous Cliffs (Rethinking Ohio’s Teachers’ Pension System) by Robert M. Costrell and Michael Podgursky, Thomas B. Fordham Institute

The Fordham Institute study is a one-sided, self-serving report. To my knowledge the above publication was not requested or endorsed by the Ohio State Teachers Retirement System and was given to Ohio legislators. Questions – are the other retirement systems being researched and publications provided? According to the writers of the Ohio STRS report, they are college professors with virtually nothing indicated about their backgrounds and experience. What is their retirement system and how does it compare with Ohio’s STRS? Would they like to be analyzed?

This publication attempts to present the case that Ohio’s STRS might be subject to fall off a cliff or reverses. This writer’s view is one that does not attempt to fix that which is not broken. Ohio STRS as rightly indicated is the oldest public retirement system on Ohio. It has provided for annuitants (retirees) during the 1929-1939 Depression. Yes, the capable STRS board members may make changes to policy as needed. This is understood.

This publication does not endorse the Defined Benefit Plan that is selected by over 80% of STRS annuitants. They are persons who want the security of an annuity at retirement and access to health care. Many are not familiar or interested with equities and the stock market and want the security of capable investments by the STRS investors.

Mention was made about the 13th Check, available if exercised under Ohio Statutes. Also, mention was made of the Ad Hoc provision. Yes, these are necessary to adequately provide for inflation. It appears that the Fordham Institute is recommending cancellation of these benefits. A 3% cost of living does not truly balance with inflation. Historically, STRS has provided the 13th Check and currently is unable to do so. The Ad Hoc raises have been generally provided every ten years. This study completely omitted looking at any options for STRS health care and completely omitted the inadequate funding of Ohio Schools for the last 16 years.

This study totally impersonalized the Ohio State Teachers’ Retirement System and is attempting to analyze from a business perspective.

In conclusion, it is my opinion that the Fordham Institute and publication writers represent a neo-conservative philosophy and thinking to privatize everything for the benefit of a few. This is evident in the lack of the Defined Benefit endorsement but support of Cash Balance or Defined Benefit Contribution Plans. The present Ohio STRS Defined Benefit Plan is outdated. Some changes may be needed and capable STRS board members will address these.

Time will tell about retirees who want to do their own thing about retirement planning and those who enroll with the STRS Defined Benefit. Research is not providing the answer now.

With over 20 years as a STRS annuitant and 15 years as a Summit County Legislative Chair, I had experience with 13th Checks and Ad Hocs, etc. My support of the Ohio STRS is total.

K.W. Fluke, Ph.D.
Legislative Chair, Summit County Retired Teachers
Akron, Ohio

Mary Ellen Angeletti to STRS Board re: Clarification on Husted's statement

From Mary Ellen Angeletti, August 19, 2007
Subject: Clarification

House Speaker, Jon Husted, is quoted in the newspaper as saying that the divestiture deal is binding upon the retirement system. Please explain to me how this can be since the STRS Board has NOT yet officially made their FINAL VOTE on the issue. There seems to be a serious disconnect here. Please help me to understand Speaker Husted's statement.

Thank you.

Mary Ellen Angeletti, CORE

Molly Janczyk re: Voting and performance patterns of some STRS Board members

From Molly Janczyk, August 20, 2007
Subject: Voting: Aug. 16 STRS Meeting Highlights & Some Very Interesting Board Votes

Please let Jeff Chapman and Mary Ann Cervantes know how you feel about their voting patterns. Neither seem, in my opinion, to dare ask troubling questions nor do in depth research into important matters. The Medicare Advantage Plans are trouble all over the U. S. with many of us bringing news of these plans to STRS' attention. Many feel that Meuser and Ramser seem to go with whatever STRS wishes and while they may seem to peruse issues, it never seems they find any opposing stands to STRS stands. Meuser has been a serious disappointment in this area. I feel Chapman and Cervantes are both decent folks but lack the initiative to demand accountability for retirees, current and future. Retirees voted Chapman in due to his statement when he ran and I see precious little of the person who spoke to us or wrote that statement.

Both Cervantes and Chapman are OFT and the former late President, Tom Mooney, questioned all things in depth to see how they would affect every retiree. He stood, in my opinion, alongside Leone and Lazares in most all positions and fought for never signing contracts without having reviewed documents while some board members found that intrusive. Mooney fought for most of the same important issues as Leone and Lazares and never feared taking a stand. I lament Cervantes and Chapman's seeming lack of dynamic strength to question and go to all sides for debate on important issues and to place themselves in our circumstance, always, as ORC:3307.15 states.

We constantly hear Leone and Lazares ask the Board how they can raise costs without searching every avenue for retirees who cannot afford meds, etc. No response and no apparent in depth studies requested beyond STRS staff input by some.

I feel we need a stronger Retiree Board Member and Jeff Chapman's position is up in August 2009. Mary Ann Cervantes' position is up as well in 8/09, I believe, as an active representative. We need questioning minds, strong oversight and persons elected who understand that to simply go along is not what Tom Mooney ever intended as he clearly stated to me.

Paul Boyer and Speaker Jon Husted re: Divestiture

Paul Boyer to Jon Husted, August 17, 2007
Subject: divestiture

To the Honorable Representative Jon Husted:

I am a retired minister and teacher, having spent 29 years in the ministry and 18 years in Ohio Public School teaching. My wife had 25 years as an elementary teacher and principal. We have both enjoyed twenty-two years of retirement under the Ohio State Teachers Retirement System. We have been able to live on that income along with a very small Social Security check each month.

Now I understand that you and some of the state legislators want to cause our STRS to lose millions of dollars by divesting their investments in certain multi-national companies that do business in Iran and the Sudan as only two of the many nations where they operate. I am wondering just how much of your busy time has been spent recently in reading the Ohio Revised Code as it pertains to STRS? Let me quote a little bit of it to you.

ORC 3307:15 SAYS:

"The board and other fiduciaries shall discharge their duties with respect to the funds "solely" in the interest of the participants and beneficiaries; for the "exclusive" purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the system;"

We retirees have all interpreted that to mean that the board members have final say on how to conserve and use our money that has been taken from our pay and that which the school board contributes, also considered part of our pay. Now, when the legislature wants to pass a law telling the STRS investment counselors who and where to invest the money to make the greatest income, you are taking over the responsibilities that the Revised Code say is exclusively theirs. Please understand that our investment people have done a marvelous job in restoring what was lost a few years ago in the stock market downturn and adding more income so that today our fund is the highest it has ever been. The head of our investment division estimates that it will cost many millions of dollars to sell some of these investments and put the money into others and will continue to lose money on the new investments because they may not be as good money makers as those they were forced to sell.

I am sure that you can see that I am trying to say that the legislature will be guilty of breaking the law by forcing its will onto our investment counselors. I am also sure that you know that some of our former board members have been found guilty of using our among in a wrong way. You don't want yourself or fellow legislators to wind up in that condition.

Please look at our side of it very closely and realize that the legis;legislature is beyond the scope of its authority in considering this devestiture bill.

Thank you for your attention.

Paul L. Boyer
Retired since 1985
Life member OEA/OEA-R, NEA, ORTA, CORE
Proud to be named “Core” of CORE by Dr. Dennis Leone
---

Here is a reply I just received from House Speaker Husted. It may or may not be a form letter that he is using to reply to all letters and he evidently does not know that STRS Board rescinded their decision last week.

Paul

Jon Husted to Paul Boyer, August 20, 2007
Subject: RE: divestiture

August 20, 2007

Dear Mr. Boyer:

I received your e-mail regarding your opposition to House Bill 151. I appreciate your concern for this issue and its importance to Ohio's public employee retirees, as well as your years of service to Ohio’s students.

According to the sponsors of the legislation, the intent of House Bill 151 is to protect public pension fund dollars from the risks associated with investing in these countries and address issues of national security. As you are likely aware, House Bill 151 was scheduled for a vote on the House floor on June 5. However, after meeting with the pension plans, my colleagues and I agreed to give the plans time to deliver a letter in which they state their intent to divest at least 50 percent of their investment portfolio with the intention of divesting 100 percent at a later, unspecified date. On Thursday, June 7, Ohio’s five public employee pension systems agreed to adopt policies aimed at dropping shares of companies that do business in Iran and Sudan. The systems said that they would divest themselves of half of these investments by the end of the year and ultimately divest the rest. In this case, I am thankful the pension funds have agreed to voluntarily comply.

Again, thank you for contacting me and sharing your views on this piece of legislation. You can be assured that as we continue to discuss this measure in the Ohio House, I will be mindful of your views. If I can be of further assistance, please contact my office.

Sincerely,

Jon A. Husted
Speaker
Ohio House of Representatives