Henry County RTA president to STRS Board: Change your bonus policy

From Bonnie Eddy, 12/2/08
December 2, 2008

TO:
Executive Director Michael Nehf: nehfm@strsoh.org
Craig Brooks: craig_brooks@sbcglobal.net
Mary Ann Cervantes: cervantm@strsoh.org
Jeff Chapman: twoteach@aol.com
Taiyia Hayden: haydent@strsoh.org
Denis Leone: dennisleone@roadrunner.com
Mark Meuser: mmeuser@hotmail.com
Tim Myers: tmyers@bight.net
Steve Puckett: steven.puckett@ode.state.oh.us
Conni Ramser: ramserc@strsoh.org

Dear Executive Director and STRS Board,

I am writing on behalf of the Henry County Retired Teachers Association who strongly opposes the present STRS bonus system.

In your November Board News, you reported that the Retirement Board reviewed our returns and also is beginning an Asset Allocation Study. You further reported that the board is continuing an in-depth review of the Performance-Based Incentive (PBI) Program.

A message that Executive Director Nehf sent to the STRS members stated that "the events taking place in Washington and on Wall Street are unprecedented." May we suggest that giving bonuses to eligible investment associates, when as of 11-19-08 the STRS market value assets dropped $30 billion, is also unprecedented. We understand the method of paying bonuses when gains are made, but fail to understand why any bonuses are paid when losses occur.

According to The Columbus Dispatch, the total base salaries for the top ten of the STRS employees who earned $200,000 or more in bonuses in 2008 totaled $2,305,000 and bonuses paid totaled $2,222,740. In addition, the 'hidden cost paid to OPERS totaled $311,183. That's a total of $4,838,923 for only ten people. And two of them made over a half-million. STRS paid nearly $6 million in bonuses to 89 investment officers this year, most of whom have base salaries of $100,000 or more.

Most retired teachers, including us, can't even identify with these figures. Giving these kinds of "bonuses" when many people are experiencing difficult times because of the state of the economy is a "slap in the face" to the members of our retirement system who are struggling to make ends meet.

We strongly urge you to change your policy of paying bonuses in the present manner. Your decision is a poor one and needs to be rescinded. The policy should include bonuses based on performance. When there is a loss, no bonus. The policy should NOT include if the pension officer's assets lose less value than average for a comparable portfolio, they still qualify for a bonus.

We will continue to follow your actions regarding our concerns.

Sincerely,
Bonnie Eddy,
President