Dennis Leone re: 9/30/08 STRS news release

From Molly Ganz, October 1, 2008
Subject: WCRTA/CORE member Molly Ganz asks Dr. Leone about latest STRS release

Teachers,

I asked STRS board member Dr. Dennis Leone about the latest STRS online newsletter and received the following response from him. (STRS newsletter is below his comments)

Molly [Ganz]

From Dennis Leone:

I consider the STRS communication PART of the story. Any way one cuts it, we have dropped $13 billion in the past 11 months, which is 16.2% of our pension system's total assets. If things go back up, we'll be fine. If we lose another $13 billion over the next year, I think things will start to get scary, especially for those who have NOT retired. Also, the report below does NOT explain the huge bonus checks the STRS investment will be eligible to receive over the next 9 months -- which I do not feel they should receive in the year following such a huge drop in our assets.

Further, I will continue to push for STRS to put a new mechanism in place that will REQUIRE the board to be notified regarding when certain stocks are tanking due to severe abnormal external factors (like fraud) -- and whether we need to deviate from our normal investment strategies. It is embarrassing that this is such a problem for my fellow board members to accept right now. I think the new executive director may agree with me on this topic. We shall see. He and I do not agree on whether investment staff deserve bonus checks in years after we lose money overall. He, and the board majority, feel that it is sufficient if the investment staff doesn't receive as much as a bonus check as they would otherwise. I will say that it appears Mr. Nehf may agree with me that certain investment personnel should NOT even be on the list to get any bonuses -- ever. Why should a real estate attorney, for example get a bonus just because our real estate experts get a bonus check? He is paid a very nice base salary to give advice and that should be it.

I am just profoundly disappointed in my fellow board members for not asking questions and for not offering suggestions that call for change or improvement. It often seems that I am the only one questioning things. Of course, OEA executive director Patricia-Frost Brooks addressed the board and urged them NOT to adopt any of the policy recommendations I was recommending a few months back. I recommended 5 and 3 of them got through. I am still working on a 4th one.

Dennis Leone