Shirlee Zerkel: They spend like all is well with our money and tell us not to worry!

From Shirlee Zerkel, November 3, 2008
Subject: Financial Concerns

Dear STRS Board and Mr. Nehf:

As an STRS pension recipient, I am very upset concerning the bonuses issued to the approximately 80 investment staff members for the year 2008. These bonuses were voted on and given even though there is a financial crisis in our country. It is time for some belt-tightening, but I see zero belt-tightening in any operations at STRS unless the retirees' higher health care premiums is your effort. I also know that bonuses for the fiscal year 2009 have been agreed upon by a majority of the Board. Why? I have read the articles in the Akron, Columbus, and Lima papers. I have also read the information that STRS sends to its retirees concerning the financial losses. A quote in all the papers stands out in my mind. "In order to attract and retain quality people at STRS Ohio, and you need to have the best and brightest to have the kind of investment performance you want, you have to have these kinds of incentives." said Michael J. Nehf, executive director of the pension system. "The money we pay in those bonuses is repaid many times in terms of our investment performance." This is an example of what you want us to believe. If what you say is true, why hasn't there been a mass exodus of the investment staff from OPERS where they give much smaller bonuses? OPERS bonuses for 2008 were only $1.3 million compared to STRS's $6 million! I realize that they have fewer in-house investment staff.

Let's also look at the performance of our portfolio which STRS states that bonuses are repaid many times in terms of our investment performance. That may be true in some years, but not the year 2008, and it won't be true for the 2009 year either. This year the investment performance has been negative so the bonuses should be at a minimum and only given to a few of the staff just as the California State Teachers Retirement System has done. By the way, the California system has double the assets of STRS Ohio, so I maybe can understand the amount of some of their bonuses. Please tell me why the STRS Ohio investment staff needs $6 million in bonuses in a time of great losses?

Let's talk performance now. OPERS lost 7% of total assets and has only 62% of investments done internally; whereas, STRS lost 9% and has 80% of investments done internally. I was only an English teacher, but I do understand basic math. OPERS has lost less of its portfolio with fewer internal investment staff than STRS has. Please explain to me how this is better for our retirement system? At this time our portfolio lost more than the other Ohio retirements systems and, of course, the articles were based on the fiscal year 2008 and do not reflect the losses since July 1, 2008. Yet the STRS Board and staff spend like all is well financially and they tell us, the retirees, not to worry!

Regards,
Shirlee Zerkel