Lloyd Knudsen responds to STRS Ohio writer

From Lloyd Knudsen, February 4, 2008
Subject: Re: STRS Associates are just regular people

Dear [xxx]...

My name is Lloyd Knudsen. I was the speechmaker that you referenced in Kathie B's blog. Kathie forwarded your e-mail to me so I thought I would respond to your comments.

The overall theme of your e-mail asserts that CORE has criticized and not respected the "normal associates" that work for STRS. Nothing could be further from the truth. CORE has always respected AND praised the efforts of the rank-and-file STRS staff. If you look back at my quoted words from your e-mail I said, "our STRS staff (that day in and day out does an excellent job)" is an indication of the regard CORE has for the STRS staff.

As for the criticism comment, CORE members have never criticized the regular STRS staff. We value their daily efforts on our behalf. But we have leveled considerable criticism at the senior STRS staff, past STRS Boards and their combined decisions. In my opinion, that criticism has been completely justified.

To me the most disturbing comment you made in your e-mail was that "The associates have had low morale and a sometimes general dislike for their jobs since CORE has become involved with the practices at STRS." If I link that comment with an earlier claim in your e-mail that "The general staff has had so many things taken away..." I assume you're blaming all those losses on CORE, also? Let me put you in the shoes of an STRS retiree and see if you might get a different perspective.

The months and years following 9/11 were bad economic times for STRS. STRS estimated they had "lost" 25-30% of their value during the resulting stock market decline. However, at STRS, business proceeded as usual. No big layoffs, bonuses still being paid, childcare was still being fully subsidized, adoption bonuses paid, etc, etc. Why did the STRS brass AND STRS Board not panic? Because according to their in-house financial experts this 25-30% loss was only a "paper loss" and they would surely earn it back. No big deal--not to worry.

But what that economic downturn did do was to immediately affect the retired and active teacher. The 13th check (the retiree's version of the STRS employee bonus plan) was stopped after years and years of being paid out. Active teachers had their STRS withholding deduction increased to 10% in July, 2003. With the loss in STRS value, the system now began allocating fewer dollars to the health care fund. Something or someone had to help offset that shortfall. That job fell to retirees. Retiree health care premiums increased dramatically. Coverage declined appreciably. Premiums for spouses and dependents were no longer subsidized. Talk about having some things taken away and lowering your morale. Retirees have been there.

Retirees were being asked to sacrifice. Teachers in their profession are used to sacrificing. How many occupations do employees spend their own money to help them do their job? Very few. In schools when money is tight teachers expect layoffs. They expect to teach more classes and have more students often with little or no raise. But teachers also knew that the parents were paying more for their children's books. School bus transportation was often stopped. Sports, clubs and extras were eliminated. But the saving grace was that it was a "shared sacrifice" for both teachers, kids and parents.

Retirees didn't see STRS sharing the sacrifice in its hard financial times. STRS was asking a lot from its actives and retirees but little from itself! It was business as usual at STRS. Thus, CORE was formed. In May, 2003 Dr. Dennis Leone presented the STRS Board with a list of changes STRS could make that would share the sacrifice. Yes, it bothered many retirees to see the STRS staff have numerous perks that they never imagined in their jobs. But CORE was NOT formed to take things away from the STRS staff. It was formed to bring back a sense of fairness to the sacrifices every member of the STRS system needed to make. That included active teachers, retired teachers, STRS staff members and the STRS Board.

In conclusion, I know this is more information than you needed. I know employee morale has suffered but understand retirees know that feeling also. I hope the truth is that STRS is somewhere between the "excellent" employer I called it in my speech and just a "decent" job in your words. CORE believes in the importance of the STRS staff's work and the value they add to this organization. Thanks for listening.

Lloyd Knudsen

A former STRS consultant called STRS the "Cadillac" of public pension funds. I suspect partly because of the excellent employee package available to the STRS staff.