Hope she never gets picked up for speeding!

Kathie Bracy to Laura Ecklar, September 23, 2008
Subject: Re: [News] September Board News Details Retirement Board Actions and Discussions

Thanks, Laura, for your response. Many STRS readers are aware of the volatile financial markets, as they read about it every day in the newspapers. However, STRS members who read STRS communications are unaware of the $13 billion loss in the time period since last November.

Suppose you're driving your car out on the freeway and you're picked up for speeding. How understanding is that officer going to be when you tell him your average speed is 55 miles per hour, after he clocked you at 80 mph? Your 55 mph average doesn't tell him the whole story. In this case, "smoothing" just doesn't seem to tell the whole story, nor does it with STRS investments. We need to see a little more "bottom line" information. $13 billion is a HUGE amount, and I don't see that mentioned anywhere.

Kathie Bracy

From Laura Ecklar, September 23, 2008
Subject: Re: [News] September Board News Details Retirement Board Actions and Discussions

Dear Ms. Bracy:

If I may respectfully disagree with you, I do not believe that STRS Ohio members who read our communications are unaware that the volatile financial markets have negatively impacted the return on STRS Ohio investments during the past several months. We provided an update on investment returns in our member newsletters in both the March and July 2008 issues, as well as several times throughout the year in Board News, including the January, March, August and September 2008 editions. Investment performance is a topic that is also always addressed in meetings with active and retiree groups throughout the year.

At the end of each fiscal year, STRS Ohio posts the market value of its total investment assets, as well as the return on those assets, for the one-year period. At this time, the preliminary figures for the fiscal year that just ended on June 30, 2008, show total investment assets of approximately $70.3 billion. The fiscal year-end asset figure is used throughout the year in communicating with all STRS Ohio stakeholders, including members, legislators and the media, for consistency due to the day-to-day volatility in the markets. Market gains or losses that occur during the fiscal year are reflected as percentage gains or losses against the asset base that STRS Ohio began the year with. By using the same period of time (July 1-June 30) in assessing and reporting investment returns and the market value of investments each year and over the long term, we ensure we are always comparing "apples to apples." The latest issue of Board News reiterated last year's return of -5.44% that had already been communicated to members, as well as this year's return-to-date (through Aug. 31, 2008) of -1.2%.

From fiscal year 2007 to fiscal year 2008, preliminary results show total investment assets declining by $6.5 billion, mirroring primarily the decline in the markets. Also, the fact that we pay more in benefits than we collect in member and employer contributions on an annual basis also reduces pension assets. As you know, negative return years such as this are offset by positive return years, such as the +20.7% return experienced in fiscal year 2007. The fact that STRS Ohio is a long-term investor with a diversified portfolio helps us to ride out market downturns. I hope that I have adequately answered your question. Thanks so much.

Laura Ecklar
Director, Communication Services