Jim N. Reed’s speech to STRS Board, October 16, 2008

An STRS Member’s Anxiety

Ladies and Gentlemen,

My name is Jim N. Reed and I am a 44-year STRS member, and my remarks today represent my personal views.

In light of yesterday’s plunge on Wall Street and the oft-heard admonition that the nation is on the thinnest economic ice since the Great Depression, it is only reasonable that there is much anxiety among most Americans, including members of STRS Ohio.

It would also seem reasonable that membership would question the payment of $6 million in “Performance Based Incentives” to our employees during an economic downturn that has cost members $13 billion in the past year. [I checked with Jim; the $13 billion figure he had is two weeks old; the figure as of October 14 was $25 billion; who knows what it may be today! KBB]

As a teacher of history and a STRS member familiar with the combination of stock market crunch and entitlement philosophy of just a few years ago, I cannot help but be reminded that there appear to be some unwelcome similarities with the current Wall Street crisis. That indicted entitlement Board of just a few years ago could have passed for a minor league affiliate of A.I.G.

Questionable Board spending during monster losses led to a period of disgust and distrust during that embarrassing examination and reporting of Board excesses. The bad taste remains. Any semblance to Yogi’s “déjà vu all over again” is a bitter reminder.

At that time, while STRS was losing billions of dollars to a bear market and corporate greed, membership was being financially abused by staff bonuses and Board entitlement expenditures while many of those members were struggling with exploding healthcare costs and declining purchasing power.

As I understand it, the Board, despite Dr. Leone’s objection, has again approved millions in PBIs while billions have been lost to membership. How does that decision square with ORC 3307.15? It seems too similar to the not-so-long-ago fiasco that led to a most contentious era in Board-membership relations.

I also understand that member Ryan Holderman sent a letter of inquiry to each Board member and to Executive Director Mr. Nehf as to the propriety of the PBIs given this current financial environment.

As a member I am especially appreciative of Mr. Nehf’s timely and thorough response to Ryan’s letter. Unfortunately, I was informed that Dr. Leone was the only Board member to reply.

Dr. Leone continues to loyally and courageously represent STRS members and we continue to be grateful for his vigilance and insistence on reform. He and former member Mr. John Lazares (who admonished investors to beware of Fannie Mae’s implosion) have given membership hope that their retirement system can again be trusted to fulfill its intended mission of caring for all retirees.

I would only ask that this Board’s fiscal decisions be made with the membership’s anxiety, sensitivity and welfare in mind.

Thank you for listening and understanding.

Jim N. Reed