Ryan Holderman's speech to STRS Board, November 20, 2008

Good Afternoon:

I am Ryan Holderman and I speak this afternoon as a member of the Warren County Retired Teachers Association.

On September 30, 2008 I wrote an E-letter to Director Nehf and each of the STRS Board members to express my concern about the action the Board took with regard to performance based incentives. Director Nehf promptly responded to my letter and explained the STRS rationale for PBIs. Dr. Leone also responded to my letter with a clear explanation of the position that he, as a retiree representative on the STRS Board, has taken. No other STRS Board member responded to my letter.

On November 11, 2008 I sent E-mail copies of comments that I provided to CORE President, Dave Parshall. Only Dr. Leone responded.

I understand the rationale for the PBIs and, in ordinary circumstances, agree that they are a standard practice in the world of investment managers. We are not, however, in a time of ordinary circumstance. The downturn in the economy, combined with increased scrutiny of perks, bonuses, severance packages and golden parachutes throughout the financial world, indicates that "business as usual" is becoming increasingly less tolerable.

My discussion with fellow retirees (particularly those who are a members of WCRTA) of the bonuses awarded by STRS has confirmed that we are dealing with two highly divergent points of view. STRS sees PBIs as a routine expense related to doing business in the investment world and as encouraging investment managers to seek the highest level of return for pension funds. Retirees come from a world where doing the job that one was hired to do was expected and PBIs, which they see as bonuses, were non-existent. Each side finds it difficult to appreciate the viewpoint of the other.

Each year retirees face increases in costs for health insurance, medicines, local taxes, and living expenses. Their income simply is not keeping pace with those expenses. Those who were fortunate enough to be able to make small investments during their career have seen them shrink dramatically and, in some instances, disappear as the market has failed. Is it no wonder that the enormous bonuses they've read about have stirred feelings of betrayal and skepticism toward STRS?

Retirees that I have spoken with perceive that the STRS Board is reverting to business as usual, turning away from reform, and out-of-touch with the financial struggles of retirees, particularly those older retirees who are living on $30,000 or less. With the exception of Dr. Leone, they don't feel they have a voice addressing their issues.

Part of the resentment felt by retirees is fueled by the loss of the 13th check. A check that many, especially the older retirees with the lowest pension income, depended upon to meet expenses. I want to make it clear that I think that money would have been better spent by putting into the health care stabilization fund. Many, however, feel that retirees were called upon to sacrifice that bit of additional income when STRS faced financial pressure and yet STRS investment employees continue to receive very generous bonuses.

They ask why bonuses are so large? Why hasn't the STRS Board capped the bonuses? Perhaps it is time to change the way bonuses are calculated. Perhaps no bonus should be greater than the average pension of the people they serve. It seems to them that those who have the least are being asked to sacrifice the most.

Throughout the turmoil of this issue one attitude prevails, retirees appreciate the work that STRS employees do on their behalf. They speak of the courtesy extended to them when they interact with STRS staff. They value the quality of service that they receive. They have no vendetta with those good folks. They simply want their situation and viewpoint to be considered and understood.

On behalf of reform-minded retirees across the State, I thank you for the opportunity to be heard this afternoon.