Bev Rice and Molly Janczyk re: Dennis Leone's report

From Molly Janczyk, November 22, 2008
Subject: RE: : Dennis Leone: My Report -- STRS Board Meeting on 11-20-08

And hey! Let's put the one who firmly believes ALL STRS says in charge of the committee considering changes for bonus PBI program! As Tom Mooney said: "What do you expect them to say?" Didn't change Cervantes or Chapman, though. Seems Cervantes thinks she is supposed to obey what they say cause as it is reported she said: 'They are the 'experts' put in place to tell them what to do.'

From Bev Rice, November 22, 2008
Subject: Re: : Dennis Leone: My Report -- STRS Board Meeting on 11-20-08

Dennis,

I just read your report concerning the bonuses. I am very disturbed about the condition of our pension fund. It's hard to believe this is all happening. Greed is a terrible thing. I wonder why the majority of the active members of the board don't seem to be alarmed about giving so much of our money to these investment people. One would think that they would be seriously concerned about whether there will be anything left for their retirement. Their confidence in what the consultant advised them to do is amazing. Again, thank you Dennis for fighting for the future pensions of all active and retired teachers. Where would we be without your representation. Keep up your efforts to get rid of this "Wall Street" mentality at STRS!

Bev Rice
Clark County Retired

Duane Tron: What is presently unfolding will make the Great Depression of the 1930s pale in comparison

From Duane Tron, November 22, 2008
Subject: Re: If Ohio was Switzerland CORE members would have waved sausages under the noses of the STRS Board!

Greed isn't uniquely American and I resent anyone, including the Swiss, to imply same! At the present greed has become a universal problem which has embraced every culture and nation on the earth. Selfish people pursuing personal gain have created the mess devouring global economies. From the very beginning I have opposed all of this global financial garbage that has been touted by Republicans and Democrats alike. Why? Because I have taught economics most of my life and I understand the danger of placing all of one's eggs in one basket. This is what has been happening globally for many years. Second, I don't feel sorry for the Swiss. They weren't complaining when the profits on their bank shares were running at record levels.

I wish to point out that Freddie Mac and Fannie Mae were into redistribution of wealth well before Barack was elected. They made it their primary goal to provide financial support, and loans, to every American who wanted to buy a house, whether they could afford it or not. As we've discovered a critical number of mortgages weren't able to make balloon house payments, variable rate mortgages, and house payments that were too high based on family income.

Four years ago I was helping at the Lions Club Pancake Days here and listened to a top local realtor telling about a young couple who came to him and wanted to buy a house. He told us they looked at the listings and picked out a house they wanted to see. He looked at the pre-application they completed listing their annual incomes. He informed them that based on their combined incomes they couldn't afford the house. They insisted on going out and looking at it anyhow.

One of them had their parents meet them at the house. It sat on about 15 acres and cost well over $375,000.00. Their combined incomes were less than six figures. Do the math! The parents gave them about $30,000.00 for a down payment but it still made the price in excess of $350,000.00 once all of the fees were added onto the price. This made their monthly mortgage payments in excess of $3,500.00. John, You and I could easily handle a three to four thousand dollar a month house payment couldn't we?

The realtor again indicated that he thought they might want to look at something smaller and in a lower price range since they were starting out in their first home and they were in their late 20's. They bought the house on a variable interest rate plan, which the realtor advised against. The house? Oh! It sold at auction just about six months ago at a price roughly one half of the original price following foreclosure. We've experienced record foreclosures in this county and I know the same applies across the state and nation. And now we know how we got into this mess!

Let's see! My wife and I were married for seven years before we bought our first house. It was a modest one story brick ranch sitting on a small lot in a housing development. Seven years later we bought this house and it was sitting on a third of an acre, is frame and sided, and only 1,165 sq. ft. Four years after we bought it I purchased another acre of land adjoining to give us more space and prevent anyone from building close to us. That was a nice move. We would have never looked at any house costing six figures then and I can't afford to even look at anything costing what the young couple bought. They bought it and they lost it! I don't blame the realtor as he was honest and upfront with them from the beginning.

We've progressed into a culture where everyone wants what they want when they want it, and they want it ALL right now. Nobody wants to start out with starter homes. NO! They have to start in upscale homes for the nearly rich and famous. This has become one of the most pronounced lessons of the housing market meltdown. In the states with the highest foreclosure rates (ie CA, TX, FL, etc.) banks and mortgage companies were making ridiculous, and very risky, loans to young couples like the one I described here. Most were buying huge and expensive homes they couldn't pay for and AIG, Fannie, and Freddie, among the worst, were making sure they could get low interest variable rates, that ballooned after a few years, and their monthly payments went off the charts.

It started out as a small problem and quickly blossomed into a full scale economic crisis for which you and I are going to pay for the rest of our lives. The meltdown started in California as my daughter quickly points out. Speculators were putting people into expensive homes with the idea you buy it at a lower price, own it for a couple of years, the value will increase two-fold or more, and then sell it and move up to something bigger and nicer. This is the scam builders, mortgage companies, banks, and insurance companies perpetuated to inflate home prices. They were encouraging people to become housing speculators and then selling off risky mortgages to larger banks globally. They were all speculating with OUR money. And now we're paying for it with bailouts and requests for more bailouts, huh?

We had all of these people who bought houses on variable rate (cheaper) mortgages, and then the payments ballooned to levels they couldn't pay back. Then when the meltdown started the value of the houses began to drop and people had to just start walking away because they would never be able recover what they paid for the houses. For example it's like making payments on $400,000.00 homes that are now worth less than $200,000.00. Do the math!

In California people were buying million dollar homes and watched the value drop by half. And friends, we have a housing meltdown that started spreading across the country like dominoes! The banks started selling off the sub prime loans trying to salvage whatever they could. Who did they sell the sub prime loans to on Wall Street? Oh! Pension plans such as ours! They pointed out how these loans had been making quick returns on the investment and everyone wanted a piece of the action. When investing in the markets the idea is to make as much money as you can and as fast as you can. Get those big and handsome returns!

This is precisely why our investment staff don't deserve any bonuses. I'm not an investment expert and I would have stayed away from investing in home mortgages as far back as five years ago. If I knew there was a major crisis brewing, why didn't our EXPERTS know the housing meltdown was coming?

The warnings regarding Freddie and Fannie were being sounded back in 2002. Serious questions about sub prime lending first surfaced in 2003 when President Bush called for an investigation into the business practices of Freddie and Fannie. He was ignored and Barney Frank, Chris Dodd, and a few others insinuated that his requests were racially motivated. They ignored him and did what they wanted to protect and prop up their friends at Freddie and Fannie. We reap what we sow and we've been sowing the seeds of greed with an entire generation! Welcome to a new world order of even greater poverty, starvation, and deprivation.

I do know one thing and that's the fact that we are just in the beginning of a major global crisis unlike anything ever seen before! What is presently unfolding will make the Great Depression of the 1930s pale in comparison. You heard it right here!

Mr. T
St. Paris, OH

Alice Marson: Why should they be paid better than our state governors?

From Alice Marson, November 22, 2008
Subject: RE: Dispatch coverage of STRS meeting...OEA endorsed active teacher/board member Meuser defends bonuses and entitlement continues...

The average salary of a governor in US is $115,000 - $130,000. Governor Strickland gets $144,831. Why should these STRS employees get so much?

Alice Marson
Summit Co RTA

RH Jones: The silence is hurting

From RH Jones, November 22, 2008
Subject: The silence of active teachers

To all:

The silence is hurting. The tremendous loss of $30 billion, the bonus giveaway of STRS dollars to some employees for 2008, and authorizing them for 2009, not only profoundly violates common sense; it was a public relations disaster. The Associated Press, in all probability, has sold this information around the world. And they have reported that the pension board vice chairman, who supports the bonuses as a motivating tool, will head the review committee studying the issue! Is that common sense, or is it like putting the wolf in the henhouse? Does not that send out another message to the news media? Some LOVE to seize on this type of shocking news! Therefore, what can the majority on our STRS board be thinking? Or are they thinking? I think not. They are responsible for this.

As a “ Paid up for Life Member Builder” of the OEA, I would like to caution the OEA leadership that many of their active members are quite concerned by the above. Is not it time that all levelheaded active teachers take note? The indifference must cease. In the long and the short term such losses like this to the system threatens the availability of the STRS funding -- Public education foes are looking on with glee.

With the awful working conditions that most active teachers are now suffering under, “burnout” is coming earlier in their careers. Sadly, just recently at my old place of employment at an “open house”, I had to suggest to an older couple -- both active teachers -- that: they should not plan on retiring soon, not even with their 32-years of experience each. I know that the OEA cannot control how an OEA-backed STRS Board member votes once they are elected to the board. They can, at least, suggest caution to them. There is too much at stake for teachers to allow their elected representatives on the STRS board to vote with such lack of regard for the all-round financial health of the STRS. Therefore, time must be found and spent by responsible active OEA members to monitor their STRS and its board. In fact, all active educators should. At this time, silence is not golden.

A Note for the board: In the past and in the present, the board has blamed poor performance on the economy. While no one can predict the future, a reasonable person can expect that those who are employed by STRS, and those who are serving on its board, to be prudent in their judgment. Excellence is what we STRS members expect and demand of those employees who are paid to serve, or our board members who volunteer to serve. Most certainly, both should be aware of negativity in their records. Future employment or promotions can, therefore, be at stake for them. Supervisors most certainly are taking note -- it affects their retirement.

One retired teacher member who expects the best,
RHJones

Dennis Leone: Consultant advises STRS to make no changes in spite of record nosedive

From Dennis Leone, November 21, 2008
Subject: Also.............

……….and thank you, Donna, for “being there” for retirees as well. I wish I would have said one more thing yesterday to the consultant who spoke in support of the bonus checks: He started of his presentation by admitting that currently in the private sector, bonus checks are being cut, salaries are being reduced, and thousands of investment people are being laid off – yet (he said) STRS should not do any of these things. Instead (he said) we should make no changes, even though we’ve dropped $30 billion in the past 12 months, even though the previous consultant stated that we are heading into a recession that will rival the 1930s, and even though things are not going to get better in the near future. Unbelievable.

Dennis Leone

From Donna Seaman, November 21, 2008
Subject: thanks!

Hi Dennis, thanks, AGAIN, for sticking to your guns (and ours!) at yesterday's board meeting. Thank heavens you are there for us! I/we really appreciate your efforts.

Donna Seaman

[Sounds to me like the guy's trying to keep his own finger in the dike; after all, where would HIS company be if they couldn't keep top level managment of these organizations they advise on their side? KBB]

Vallens: It is as though those positioned in control of others' monies and investments are terribly disconnected with the concept of 'responsibilies'

From Ele and Vern Vallen, November 20, 2008
Subject: Re: FW: My Report -- STRS Board Meeting on 11-20-08

It all looks precariously gloomy as well as the article in the Dispatch about the meeting. It sounds as though the board members are indifferent to the losses as though their income is protected no matter what happens to retirees' funds. It also sounds as though the board members are inappropriately indebted to the house investment managers no matter whether those managers perform in a manner that is healthy for the STRS mission or not. It is as inappropriate as it was for those car company execs to fly the most expensive way they could to Washington for a bailout: neither seems to "get it." It is as though those positioned in control of others' monies and investments are terribly disconnected with the concept of "responsibility."

Are the board members working for the management investors or for us, the retired teacher population who has still not forgotten all that money lost with Enron. It seems there were bonuses then, too, for the very people who didn't do their homework. After all, PERS funds were not affected nearly so drastically, and their retirement and benefits are not in question. Their health insurance even covers hearing aids!! Imagine that!!! So whoever they are using as financial advisors and investment managers might just be more competent than what we in STRS are employing. Keep after them, and we will continue to balk at their Ivory Tower perspective.

Ele & Vern

Molly Janczyk re: Bonuses

From Molly Janczyk, November 21, 2008

Subject: RE: Duane Tron re. bonuses

We are not investors and that job does include bonuses. I am not against ALL bonuses for a job whose description includes them; I am for them being lowered in times of crisis in which needy retirees have a hard time paying for groceries. I am sure you disagree. But, we cannot compare ourselves to investors. We chose a profession and so did they. They have done amazingly well for us and they are contractually hired with job descriptions. I believe bonuses need redefined in bad times due to sensitivity to retirees for whom they work. Investment staff cannot be held responsible for a market crisis. I don't agree that benchmarks should be stagnant either as the market is so variable any more than I believe each child should have the same benchmarks imposed on teachers. If either outperformed other investors/educators and met benchmarks that are reasonable for the times/child, they jobs well done. We cannot say because we chose jobs that do not include bonuses, then others who did should not get them. That is all I am saying.

If STRS investors kept us ahead of other systems, then adjust down PBI's to fit the times and benchmarks in times that retirees are in crisis. I cannot compare myself to a contractor, doctor or investor. That is not what I chose. I chose a public service career and our investment staff chose a career based on their performance. Their performance can still be good in bad markets if they kept us ahead of other systems or made more than expectations state.

I think we must be reasonable in our requests or we will be met with -0-! I am looking for a compromise in times of devastation. Our investment staff has proven to be top preformers. I don't know how smart it is to completely change the rules or to imply such. I think we ask for a reasonable common ground in times of crisis for needy retirees. My opinion.

Meat, potatoes, and social niceties are nice but....they don't put the meat and potatoes on the table!

From John Curry, November 21, 2008

Below are the letters of two county retired teachers' association presidents; Don Gatchell of Ross County and Gorge Doyle of Allen County. The have the courage to speak out against the bonuses that are proposed to be awarded to STRS investments associates through fiscal year 2009. These presidents have courage and are to be commended. There are, however, some local chapters who have leadership that is not so bold or in tune with what is really going on at 275 E. Broad St. in Columbus.

I have visited various local county retired teachers association meetings and find that many of the retirees are ill-informed of what really is going on at STRS. All they know is what they read in their ORTA magazine which doesn't relate the whole story of what is going on so....they are satisfied eating their meat and mashed potatoes and seem to be happy knowing that all the world is just fine!

I have also just visited ORTA's website and find nothing on it concerning the bonus situation other that what was released to them by STRS's official press release.....it isn't the whole story, just like the STRS 25 billion dollar (now 30) loss wasn't in the previous STRS official release. I made the decision 5 years ago not to join ORTA because I felt they weren't addressing the current needs of STRS retirees...I still feel the same way. Thanks to Don Gatchell and George Doyle maybe there is still hope that ORTA will pick up the reins and take a stand on a controversial issue (bonuses)...but, I doubt it as it isn't a "nicety," is it? Niceties don't put meat and potatoes on retirees' tables, do they?

Am I criticizing ORTA? NO, I'M CHALLENGING ORTA TO BECOME PARTICIPATORY ON THIS ISSUE! Encourage your local RTA president to take a stand.

John Curry
A Proud CORE member

Don Gatchell to Michael Nehf and the STRS Board: Desperate times may require desperate Board actions

From Don Gatchell, November 13, 2008
Subject: Local RTA Members Fear Future of Pension Fund

STRS Ohio Board:

The key request most of the local STRS retirees have of the Executive Director, his staff & the Board members is "... please be good stewards of the money we earned and insure that it will grow over time so we can feel secure during all of our retirement years." Those of us who retired 10 or more years ago were told, no PROMISED by STRS officials in face-to-face meetings that during our retirement we would not have to worry because we would receive health insurance at 'little' cost to us, a 'secure' pension amount paid monthly that would 'rise' as inflation rose and a 13th check each year to help us with special expenses we incurred. Well, so much for promises! Right now I am not even sure that our pension fund is secure because of not only the failing economy and falling stock market, but also the risky STRS investments in financial & other stocks that investing resources like Morningstar were calling volatile a year ago. Maybe besides bonus checks to investment staff for superior performance, there should be a deduction from their pay for risky, non-productive investments.

The next step in the investments program is to compare STRS investment performance to not only the major stock indexes such as the DJIA, S&P 500, NASDAQ, etc., but also to the performance of other Ohio & out-of-state retirement funds. It might be wise also to check what big investment companies like Janney, Montgomery, Scott or Fidelity or Vanguard could do to assist or replace the STRS investment staff.. I do not wish to be ungrateful or rude to the dedicated STRS staff members, but many of us are very afraid for the future of our pension fund. Unfortunately, desperate times may require desperate actions by the Board.

Thanks for all you and your fellow Board members do to support STRS retirees.

Be well,
Don Gatchell

Allen County RTA President George Doyle to STRS Board...."this is a bunch of hogwash!"

From George Doyle, November 21, 2008

As President of the Allen County Retired Teachers Association, it has come to my attention that huge bonuses were given to the investment personnel, even though there was a huge loss in the market. Common sense tells me to ask, Why? Are you crazy? Have you all lost your minds? Never in all of my working career in business and in education have I ever heard of giving a bonus for failing to do your job! I just can't imagine why you won't listen to Dr. Leone when he suggests the sane way of handling things down there at STRS!

It is my understanding that you are going to take into consideration all of the complaints from the retired teachers about the bonus situation. Is that correct? I also understand that you say you cannot retain the best possible investment counselors without paying such high salaries. That is a bunch of hogwash!!! In this day and age when so many brokers are out of work, I cannot believe that you could not get qualified people for less! We retirees are sick and tired of having to bear the burdens of the "old" way of thinking. We have stated time and time again that we want you to stick to your fiduciary duties and safeguard our money instead of foolishly giving it away and raising our premiums and endangering our retirement incomes. When will you listen to us and start doing the jobs you are elected to do?

As President of our Chapter, I must insist that you listen to Dr. Leone when he suggests answers to problems before they exist and quit creating more problems for yourselves and we retirees. Get on the ball and start paying attention to our needs for once instead of the needs of your employees and investment people!

Thank you for taking time to read this. I hope that your will consider and change the policy of bonuses!

George V. Doyle, President
Lima/Allen County Retired Teachers Association

STRS investors...your job might just be a little more valuable than you think!

A Wall Streeter's Guide To Finding A Job
Tara Weiss, November 20, 2008

Citigroup will lay off 53,000 employees. JPMorgan Chase plans to cut one in 10 people from its investment banking staff. The drumbeats grow louder for an ailing financial services industry. Where will all these people find work?

Not on Wall Street.

They might try Main Street. Wall Street refugees will be able to put their deep experience to good use at finance jobs in the hot fields of health care, government and alternative energy. The bonus structure won't be as lucrative, but in many cases the hours won't be as punishing. (The cost of living also drops outside New York City.)

In Pictures: Firing Financial Firms

Did you work on the sell side of a bank? Start your job search in the industry you covered. Your knowledge of the business, the players and the emerging trends make you uniquely suited for in-house finance positions. Play up that angle when networking and in cover letters. Reach out to former clients to see if there are openings. Canvas companies throughout the industry.

The in-house job prospects--for example, at a company like Pepsi--include financial analyst, business analyst, budget analyst or research analyst. Salaries hover around $115,000, according to data from TheLadders.com, a job site that posts positions that command salaries of $100,000 and up.

Higher-level jobs include vice president of strategic planning (the person who determines how the company should expand), vice president of finance planning and analysis (operations on a short-term basis) and vice president of corporate development (mergers and acquisitions). Average salary for those jobs: about $221,000, according to TheLadders.com.

Compare that with Wall Street salaries: Investment bankers make about $100,000 their first few years out of business school, along with a bonus that ranges from $200,000 to $250,000, according to Vault.com, which collects salary data. Salaries don't go up by that much, but bonuses do. Historically, once bankers at elite firms have about 10 years of experience they're at the vice president or managing director level and command bonuses of at least $1 million.

Compensation may be lower in other sectors, but security is higher. MBA students are already learning that lesson. Turnout at an information session for Kraft Foods Inc. at New York University's Stern School of Business has been light for the past 12 years with about 25 students attending each year; this year there were more than 60.

It's a nationwide trend. "Students are more likely to consider going in-house in a finance role this year as opposed to year's past," says Jana Kierstead, managing director of career services at Harvard Business School.

Refugees from investment banks should also consider the buy side. Institutional investors need money managers. So do companies like Vanguard and Fidelity.

Once you've tapped these sectors, consider ranging further afield into areas that are growing at a rapid clip like government, health care, tech and nonprofits. Here is a run down on these areas:

Government. With more than half of the 2.7 million federal employees retiring soon, there will be great demand for those who work in finance, budgets and accounting. Salaries in these areas start at about $67,000 to $75,000 and increase for those that have more experience. This site aggregates government jobs: http://federaljobs.net/.

The Treasury Department just created the Office of Financial Stability to oversee the federal bailout funds. Who better to monitor how banks are using that money than former bank insiders? There aren't a slew of jobs there--a few dozen, at the most--but those interested in a position with that office should visit http://www.treas.gov/initiatives/eesa/.

Health care. The provider side of health care includes hospitals, research centers, long-term health care facilities, providers of home health care workers and companies that provide expertise on disease management. (Alere is one example of this type of company.) They all need employees in the treasury office to manage investments and other accounts.

"These former Wall Streeters have a deep understanding of how the sell side works," says Richard Clarke, CEO of the trade group Healthcare Financial Management Association. "That's experience that is often lacking within health care."

The health care industry also needs financial analysts to examine merger and acquisition opportunities and analysts to manage employee pension plans. Base salaries for these positions range from $100,000 to $200,000 and usually come with bonuses too. "Those from investment banks will find salaries to be lower, but the good news is these organizations tend to be a little more stable then investor organizations," says Clarke.

Another plus, says Clarke: "It's a feel-good job. What they do has a direct impact on the health of the community."

Opportunities exist on the insurance side of health care too. Companies like Aetna, Humana, UnitedHealthcare, WellPoint and Anthem Blue Cross and Blue Shield all need investment portfolio managers, financial analysts for the company's operations and people to negotiate the cost of coverage with medical facilities.

Find job openings at the Healthcare Financial Management Association's job board http://www.hfma.org/jobs/. Another good job resource is http://healthcarejobs.org/.

Tech. You won't need a degree in energy to find a finance job in alternative energy. Look for mid-size companies that deal in clean coal, wind energy, hybrid motors and nuclear power. "They're looking for people who are critical thinkers with good quantitative skills," says Vault.com CEO Erik Sorenson.

Another hot area, says Sorenson, is virtual and online infrastructure. He points to companies like Akamai in Cambridge, Mass., which provides companies with large server bandwidth for their networks. Opportunities within online infrastructure are in business development and finance.

"They've all learned what it's like to work for a mature company," says Sorenson. "Now look at a growing company, that's ahead of the bubble."

Nonprofits. Foundations and universities are another place to look. They need money managers to invest their endowments. The foundation side doesn't offer high salaries, but universities are another story. At Harvard, which has the country's largest endowment, its former manager made $2.3 million. Don't count on a paycheck like that, though. Typically managers at schools with large endowments make in the high six figures.

These jobs are tough to get. You might have a leg up though if you're an alum of the school.

When applying for jobs outside your industry, tailor your resume. Show what you've accomplished instead of simply listing your responsibilities. For instance, show how much you've increased revenue in a particular time period. If you've managed a staff of 20 show how much productivity has increased. It also helps to convince hiring managers of your dedication to their industry by joining the field's trade group or attending seminars.

"Some of the most productive CEOs that turned around companies came from other industries," says Dennis V. Damp, author of Health Care Job Explosion and The Book of Government Jobs. "Outside experience can really help an organization, since someone from the outside brings a different perspective to the plate."

Duane Tron: Where does this stupidity emanate from? It's time to dump the mindset of entitlement and privilege!

Duane Tron to John Curry, November 21, 2008
Subject: Re: Looks like we're getting some national attention...the "big boys" read this rag

John,

Since when do we pay people bonuses to do the jobs for which we hire them? Just a question? If it requires paying people bonuses to do a job above and beyond expectations then we should approve bonuses for every classroom teacher, because if we don't, they won't do a good job educating our children? We should pay police and firemen bonuses in order that they do a good job patrolling our streets and saving lives. Our military deserve huge bonuses or they might not want to go into combat and do their very best to win??

Where in the hell does this stupidity emanate from??!! In other words if we expect to get the best from anyone, in any job, we need to pay them bonuses above and beyond the salary we hired them to work for! How utterly asinine!

I spent a lot of years serving this country in the Navy and I made very little money to place my life on the line, and I did so above and beyond what was expected. I never expected, nor would have asked for a bonus for doing my job. I spent 20 years as a volunteer firefighter, and member of the EMS, and we weren't even paid for our services most of those years. We didn't expect a bonus let alone being paid for placing our lives in harms way, for placing our lives on the line.

I guess we must have been way below the best at what we did since we were so stupid that we worked without pay, let alone a bonus??! My wife is the best at what she does and she doesn't expect a bonus and once in a great while she receives one and we are thankful! We don't expect it and are thankful when she gets a small bonus.

Where has all of this stuff gone wrong? Where did we become so crazed and stupid about bonuses for doing OUR job, for doing that for which we are paid, jobs for which we know what the salary is when we're hired onboard? They can accept the salary or they can turn it down and go elsewhere. I am having surgery December 16, so I guess I'd better ensure that all of the doctors and nurses are provided bonuses or they might not give their best and it might cost me my life?!

Bonuses? Bonuses? Bonuses? Bonuses? I have a word of advice for ALL Americans! Just do the job you were hired to do! Just do the job you're being paid to do! And do it to the best of your ability! In the classroom my bonus was just knowing that I was the very best at what I did and proud of it! I never gave anything less than my very best for my students and the idea of a bonus never crossed my mind! I never worried about putting in as many hours as I needed, to do the best job I could!

Now everyone knows why Wall Street is all screwed up right now! Now we know why our economy has tanked and things are going south! The people running everything think they should get bonuses in addition to good pay or they aren't going to do their best and give their very best! If investment staff want bonuses they should get a job waiting tables and then they'll be rewarded on the basis of the service they provide.

When they draw six figure salaries they don't need bonuses and we shouldn't be paying them! My advice to them?! Just do your jobs and if you don't like it get another job and go elsewhere! There isn't a single one of them who can't be replaced! There are so many unemployed investment brokers across this country right now we could replace them with people just as good, and maybe better, and tomorrow!

It's time to dump this mindset, of entitlement and privilege, that's been groomed and screwing the American people during the past 30 years! This is precisely why we're in the mess we find ourselves.

Duane Tron
St. Paris, Ohio 43072

Looks like we're getting some national attention...the "big boys" read this rag

Pension board to study bonuses
TradingMarkets.com
November 21, 2008
The Columbus Dispatch
By John Nash

The pension fund for retired Ohio teachers will take a closer look at the practice of handing six-figure bonus checks to some of its investment managers while the pension fund loses billions of dollars in value, the fund's board decided yesterday. The board of the State Teachers Retirement System was reacting to criticism from dozens of retired teachers that it continues to pay large bonuses even as pension investments are battered by the downturn on Wall Street.

The pension system paid about $6 million in merit bonuses to 89 investment officers this year, with 10 of the employees receiving bonuses of $200,000 or more. Two assistant directors of investments received bonuses of more than $250,000 in addition to their base salaries of $270,000.

State Teachers Retirement System officials defend the payments as the only way to attract and retain investment managers who help the pension add value during good times and minimize losses during recessions.

While some pension officials reiterated that argument yesterday during a board meeting packed with retired teachers, the board did agree to put the bonus program up for review. It assigned a committee of board members, headed by pension board vice chairman Mark Meuser, to study the program in the next few weeks.

Yesterday, Meuser advocated for the merit payouts and rejected suggestions that they should be awarded only when the pension fund grows.

"If you have incentives on a relative scale, then people are truly (motivated) to work," Meuser said. "By taking away our incentives, we are risking our bottom line. That, in my view, is not being a good fiduciary."

Some retired teachers saw it differently. They pointed out that the teachers pension fund -- which covers 449,000 current and retired teachers and beneficiaries -- has lost $30 billion in investment value in the past year as Wall Street has tanked. The trend endangers health care for retired teachers and may threaten pension payments, according to some retirees.

"No one from the executive director down to the custodian should be paid a performance-based incentive when our system is losing money -- period," said Lloyd Knudsen, a retired teacher from the Woodridge school district in Summit County.

Ryan Holderman, a retired teacher from Springboro community schools in Warren County, said news of the bonuses has "stirred feelings of betrayal and skepticism" among many retired teachers. He said the pension needs to rethink its practices during economic crises such as the current one.

In March, with board member Dennis Leone dissenting, the State Teachers Retirement System board approved a bonus plan for 2009 that could result in even higher payouts for investment officers, giving 13 of them total pay of $500,000 or more. That assumes that the market stabilizes and the investment officers meet their benchmarks.

Pension officials said yesterday that they'd study whether they could cut those previously approved bonuses without getting sued.

Leone had a spirited debate yesterday with a consultant for the pension system, Adam Barnett, who argued that taking away the merit pay would cause talented investment managers to flee for private-sector work.

"My son is a manager at Rite-Aid," Leone said. "One year he got a $2,000 bonus, and the next year, zero, because the company lost money."

Barnett, of the McLagan consulting firm based in Connecticut, said that even with the convulsions on Wall Street, some companies still are hiring investment managers. He said the State Teachers Retirement System of Ohio pays less than about three-quarters of private firms that employ investment managers.

"The consequence of (eliminating bonuses) is that you're basically saying to me, 'Adam, put your resume on Bloomberg,' " Barnett said, referring to the financial-information service.

jnash@dispatch.com

From John Curry

STRS report on November 2008 Retirement Board meeting

From STRS, November 21, 2008
This week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The November report follows.

NOVEMBER BOARD NEWS

RETIREMENT BOARD REVIEWS INVESTMENT RETURNS; ALSO BEGINS ASSET ALLOCATION STUDY DISCUSSION During its November meeting, the State Teachers Retirement Board received an update on the impact of current economic conditions on the value of STRS Ohio's investment assets. Noting that October 2008 was undoubtedly one of the worst months in STRS Ohio's history, staff reported a total fund investment return of -13.4% for the month. The fiscal year 2009 return-to-date on the total fund, which reflects the time period from July 1-Oct. 31, 2008, stands at -21.4%. The market value of STRS Ohio's investment assets on Oct. 31 was $54.5 billion.

John Osborn from Russell Investment Group, which is the board's investment consultant, provided perspective on the long-term behavior of the U.S. stock markets. Looking at a time period from January 1926 through September 2008, he noted that bull markets have, on average, lasted longer and been much more substantial than bear markets (as measured by the S&P 500). The average loss during a bear market is 29.5%, whereas the average gain during a bull market is 162.9%. Osborn said keeping this long-term perspective is important to avoid overreaction; the markets will eventually recover.

He also noted that the most important investment decision the board makes is how assets are allocated among the various investment options; 8% of the total 8.4% long-term projected return for the investment fund is expected to be generated by the asset mix. The current target asset allocation is 42% domestic equities, 25% international equities, 20% fixed income, 9.5% real estate and 3.5% alternatives. During the board's asset allocation study, it will review this mix and the outlook for long-term returns from each asset category and determine if any adjustments need to be made. The project timeline calls for the board to continue its discussions at the January and February 2009 meetings, with any recommendations presented in March 2009.

BOARD CONTINUES IN-DEPTH REVIEW OF PERFORMANCE-BASED INCENTIVE (PBI) PROGRAM During the November Retirement Board meeting, Adam Barnett from McLagan presented an overview of the STRS Ohio Performance-Based Incentive (PBI) Program and its significance in the current market. McLagan specializes in compensation surveys and compensation consulting for investment staff.

Under the STRS Ohio PBI Program, eligible Investment associates are able to receive an additional percentage of their base salary through a PBI payment, depending on both total investment fund performance and their individual goals over the previous fiscal year. In 2005, McLagan conducted a pay study of STRS Ohio's investment staff and recommended that total compensation (salary plus incentives) for selected associates focus on the 25th percentile of the private sector, but that higher performance standards also be met for associates to achieve the maximum payment. These recommendations were adopted by the board. In this month's report to the board, McLagan recommended that STRS Ohio not change the PBI Program at this time at the risk of losing top performing staff.

Following the McLagan presentation, the Retirement Board voted to assign a detailed review of the PBI Program to its Staff Benefits Committee. This committee will explore compensation options and develop recommendations for the entire board's consideration.

FUNDING PERIOD AND FUNDED RATIO IMPACTED BY FISCAL YEAR 2008 EXPERIENCE AND CHANGES TO ACTUARIAL ASSUMPTIONS The net actuarial loss experienced by STRS Ohio in fiscal year 2008, coupled with changes to some of the actuarial assumptions (e.g., how long members are living), are resulting in a longer funding period and a slightly reduced funded ratio for the system's pension fund.

The funding period is the number of years required to pay off the unfunded accrued liabilities of the system at current contribution rates. As of July 1, 2008, the funding period for the pension fund increased to 41.2 years from 26.1 years. The system's funded ratio -- the market-related (smoothed) value of assets compared to liabilities -- decreased to 79% from 83%. This means that STRS Ohio has on hand 79% of the assets needed to pay all benefits accrued by STRS Ohio members to date -- even though the liabilities are not payable all at once.

At the October 2008 board meeting, STRS Ohio outside actuary PricewaterhouseCoopers (PwC) presented the State Teachers Retirement Board with its first look at the annual "snapshot" of the actuarial position of the retirement fund as of July 1, 2008. It showed an increase in the funding period to 28.3 years and a decrease in the funded ratio to 80.1%. Investment losses were a contributing factor, as were lower-than-expected increases in teacher payrolls and shifts in retirement patterns. Since a public pension plan's actual experience each year is rarely identical with all actuarial assumptions (such as payroll growth, salary increases and retiree mortality), public pension plans typically review all their actuarial assumptions every five years to determine if any adjustments are necessary. The results of PwC's five-year review of STRS Ohio, completed in October 2008, led the Retirement Board to adopt changes to some actuarial assumptions at its November 2008 meeting and furth er changed the July 1, 2008, status of the pension fund, as noted above.

The three changes having the biggest impact on the pension fund were to assumptions about retiree mortality, payroll growth and salary increases. The five-year experience review showed that, not only are STRS Ohio members living longer, but also that STRS Ohio member life expectancy is longer than that of the general population. Based on the five-year review, payroll growth was also adjusted downward. Both of these changes lengthened the funding period. However, the impact of these two changes was lessened somewhat by a change to the salary growth assumption that calls for an increase in the total expected salary increases before age 35, and a decrease to the expected salary increases after age 35.

The information contained in the actuarial valuation is one piece in a continuum of financial, investment and actuarial information that the Retirement Board continually reviews and considers as it addresses pension and health care issues.

STRS OHIO RECEIVES AWARD FROM AUDITOR OF STATE During the November board meeting, STRS Ohio was presented with the "Making Your Tax Dollars Work" award from the Auditor of State's Office. This award recognizes the quality of financial reporting and absence of audit issues at STRS Ohio. Less than 5% of the 5,500 entities that the Auditor of State's Office audits each year receive this award.

RETIREMENTS APPROVED The Retirement Board approved 172 active members and 74 inactive members for service retirement benefits.

ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR MICHAEL J. NEHF

TURN2GENERICS PROGRAM FOCUSES ON POTENTIAL SAVINGS FOR ENROLLEES The STRS Ohio Health Care Program began participating in the Express Scripts Turn2Generics program on Nov. 1. This program educates enrollees about potential savings they can realize by changing to generic prescription drugs. Individuals using brand-name drugs that have a generic option receive an educational mailing from Express Scripts within days of filling a targeted formulary or non-formulary retail brand medication. These mailings go out daily and currently focus on the following brand-name medications and/or therapy classes:

- Ace Inhibitors (hypertension)
- ARBs (hypertension)
- Bisphosphonates (osteoporosis)
- Calcium Channel Blockers (hypertension and coronary artery disease)
- HMGs (high cholesterol and triglycerides)
- PPIs (erosive esophagitis and heartburn)
- Celebrex (osteoarthritis and rheumatoid arthritis)
- Lyrica (neuropathic pain)

Increased use of generic drugs reduces enrollees' costs and also retains funds in the Health Care Stabilization Fund.

Dennis Leone: Report on STRS Board Meeting on 11-20-08

From Dennis Leone, November 20, 2008
Subject: My Report -- STRS Board Meeting on 11-20-08
To all – since I am not sure what will be said in the official STRS communication about the 11-20-08 STRS Board meeting, and since I disagreed with the way the previous STRS communications were handled, here is my report………speaking as one board member:

1. For the record, it was revealed that as of 11-19-08, the STRS market value assets have dropped $30 billion -- from $80 billion on 10-31-07 to “approximately” $50 billion yesterday. According to my math, and I stated this publicly, this represents a 38% drop of everything STRS has in a little more than 12 months. It also was officially revealed that the negative STRS stock market returns for the first quarter of fiscal year 2009 are – 21.4%.

2. I stated my belief that STRS assets (unreported) were as high as $81 billion in early October of 2007 when the Dow topped 14,000, and that STRS likely currently is far below $50 billion in assets as a result of the significant drop in the Dow over the past two days. This means realistically, in my mind, that STRS actually has lost about 40% of its assets in the past 13 ½ months.

3. There was considerable discussion about the bonus checks that STRS investment staff members received for fiscal year 2008 even though the STRS reported a – 5.44 return in the stock market. A consultant named Adam Barnett from the firm McLagan presented information. He reported that while staff and bonuses are now being cut in the private sector, he recommended a continuation of the board’s philosophy to pay the bonuses if staff members beat their so-called “benchmarks,” even when STRS loses money. I complained that their “benchmarks” are not benched – they are unfixed, floating figures that generate bonuses even if they go down and we lose considerable money. I said that school officials, conversely, have real report card “benchmarks” that have to be met irrespective of external factors that adversely affect them. I also reminded everyone that the STRS board, through formal action, has told retirees that improved pension benefits (like the 13th check and health insurance subsidies for retiree spouses) will not occur unless firm benchmarks are met pertaining to the fiscal stability and “unfunded liability” at STRS. In other words, the investment staff at STRS enjoy having benchmarks that are far different. They earn bonus checks (on top of base salaries, fringe benefits and PERS retirement contributions) as long as they beat the Wall Street “market” – even if the “market” declines.

4. I complained about the board’s 8-1 decision this past March to adopt a new bonus plan for fiscal year 2009 – even though we had just dropped $8 billion in assets and even though we didn’t know how much more we might drop in the final 4 months of fiscal year 2008. (We dropped another $2 billion.) To my surprise, my fellow board members expressed their belief that the board could deviate from the March vote and change the bonus plan for fiscal year 2009 if it decided to do so. Legal counsel was asked to advise the board on this issue, which occurred in executive session. This matter will be considered further next month. The board then voted unanimously to refer the matter of the previously-adopted fiscal year 2009 bonuses to a Salary/Benefits Sub-Committee. The Sub-Committee will be expected to bring a recommendation on the bonus matter to the board on December 12. All board members were invited to participate in the upcoming Sub-Committee meetings. I will participate, most definitely. I support bonus checks for investment staff when we have positive returns, but certainly not when we have dropped $30 billion in 12 months. Perhaps a compromise can be reached on this matter. I really don’t know.

5. I stated my hope that the STRS staff will be more cautious about future “all is fine” communications going out from STRS, given the realities of the stock market downturn. STRS Executive Director Mike Nehf reiterated his conviction that the pensions of current retirees are secure. I expressed my concern over how secure the future pensions are of teachers who have not retired (if the stock market continues to decline significantly).

6. The board’s “unfunded liability” was reported to be at 41 years, up from 27 years in 2007.

7. Four people addressed the board in the public participation section of the agenda: Expressing concern about the bonus checks were Lloyd Knudsen (CORE), Ron Lott (Fayette County RTA) and Ryan Holderman (Warren County RTA). Offering unqualified support for the bonus checks was former STRS board member Steve Buser.

8. Board member Mark Meuser (from Gahanna-Lincoln High School) was appointed to chair a committee to establish an agenda for the board’s January retreat work session.

9. At the end of the meeting, board member Craig Brooks asked STRS Executive Director Mike Nehf to provide the board with a list of operational cuts at the December 12 board meeting that he planned to implement. I also requested that such a report indicate whether there will be an upcoming wage freeze for employees at STRS.

10. I asked if the deceased Paul Boyer, a CORE founding member and vigilant retiree supporter, could be formally recognized in December as OFT’s Hershel Grim was in October. There was support for this to occur. I will work with Laura Ecklar in developing something appropriate. I think it would be good if CORE Chair Dave Parshall and Paul’s children could be present for the recognition on December 12, along with representative from the Allen County RTA.

Dennis Leone
STRS Retiree Board Member

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.

Lloyd Knudsen's speech to STRS Board, November 20, 2008

Hello, my name is Lloyd Knudsen. I am a retired, 30-year teacher from the Woodridge Schools of Summit County. I’d like to speak to you today about the recent STRS investment bonus situation.

There is a tremendous amount of anger and disappointment among retirees about this issue. There is anger that STRS would award 80% base salary bonuses to an investment staff who oversaw the loss of $25 billion in our assets. Twenty-five BILLION dollars lost. Coincidentally, that’s the same total dollar amount requested by the entire U.S. auto industry to bail them out. Twenty-five BILLION dollars. And there is disappointment in this STRS Board that not only approved those bonuses but in your infinite wisdom, in March of this year preapproved this same unconscionable bonus plan for fiscal 2009. Although the thoughts I am about to express are shared by many retirees, I speak only for myself.

In response to many e-mails sent to STRS about the bonus situation, Mr. Nehf and Mrs. Cervantes basically explained in two separate e-mails to retirees that the investment staff had earned their bonuses; that investment pay is based on the prevailing pay rate in the market; and that teachers need to understand that STRS is a business and needs to operate like one.

Teachers were not employed in traditional business but make no mistake-–we do understand how a "real" business UNLIKE STRS is supposed to operate.

What typically happens in a real business when it has lost approximately 30% of its value like STRS has in the last year? Job losses, pay freezes or cuts, bonuses eliminated, or possibly plant or store closings? Probably all of the above.

What typically happens in schools when expenses exceed income, when school levies don’t pass and budgets don’t balance? Same answer -- jobs are lost; classes are cut; sports and extracurricular activities become pay to play; and school buses stop operating. Probably all of the above.

Now, what typically happens at STRS when they have experienced a $25 billion loss when approximately 30% of its value evaporates in one year. Job losses? None that we know of. Pay freezes or cuts? None that we know of. In fact STRS just paid $6 million in performance bonuses to the staff that just lost the $25 billion. Any physical plant closings or reductions at STRS ? None that we know of. No, its business as usual at STRS. Does this sound like the way a real business operates?

So how can STRS operate this way? It can operate this way because STRS is not a real business, it is a pension fund. At STRS their $25 billion loss was not a real loss, it was in their words just a "paper loss". Not to worry. They’ll make the $25 billion back. They always do. Stay the course! That’s the STRS motto.

My second comment deals with STRS having to pay the investment staff the prevailing wage in the financial marketplace. It’s my understanding that we don’t do that now. According to Mr. Nehf’s presentation last Thursday, he stated the investment staff is paid only at the top of the 25th percentile of pay. In other words, 75% of all comparable financial investment people earn more than their counterparts at STRS. If that is indeed true.

Q. Why do our investment people stay at STRS if they are so underpaid?

ANS. Maybe our investment people stay because of their ever-growing future PERS pension, or maybe they stay because they have a Cadillac-type health care plan, or maybe they stay because every year they have a virtually guaranteed 80-100% performance bonus on their base pay coming or maybe they simply stay for the guaranteed employment.

I always knew teachers had a pretty good job security deal with the concept of tenure, but working for STRS apparently has that beat.

In summary, I believe this Board did a great disservice to all active and retired educators when back in March of this year you voted to REapprove the performance pay structure for our investment staff for fiscal 2009. Even though STRS had already lost $8 billion by March and our nation was facing an even more uncertain period after that, you gave your approval. In STRSese you "Stayed the course." You failed your stockholders in this system miserably.

No one from the Executive Director down to the custodian should be paid a performance-based incentive when our system is losing money. Period! Due to the Board’s lack of foresight we are locked into the 2009 agreement you signed off on. But I hope you will begin work immediately to rectify this pay program for the coming years.

Thank you for letting me speak to you today.

Steve Buser’s speech to STRS Board, November 20, 2008

To Members of the STRS Board:

I am speaking to you today in the hope that you will relay my deep felt thanks to Steve Mitchell and members of his investment team at STRS who continue to add considerable value to the STRS fund despite increasingly difficult economic times.

The fiscal year ending June of 2008 was a challenge for investments in general. Financial markets declined across the board, and STRS investments suffered as well. Financial conditions for the second half of 2008 are proving to be even more difficult.

So why am I happy? I am happy because despite all the bad news, STRS could be worse off. Some might say STRS should be worse off. And even I agree that STRS would be worse off, if not for the remarkable performance of Steve Mitchell and his investment team.

To understand the paradox of good performance in a bad year, it is essential to understand that it is the STRS Board, all of you, who are responsible for general asset allocation. When I served on the Board, I was supposedly an investment expert, and the allocation of STRS assets was one of the issues that kept me awake nights.

In effect, the Board chooses a game plan when it decides how many eggs to place in each of the various investment baskets. The general economy then determines whether conditions will be favorable or unfavorable for a given game plan. Despite the bad outcome for the last hear and probably for the next year as well, I approved of the current asset allocation strategy when I served on the Board, and I continue to approve now. It is a game plan that will win in most years. Unfortunately, no strategy will win in all years. That is what risk and return are all about. Little risk means little expected return. So if we want and need the STRS fund to grow, we must be willing to take some risks.

But if the STRS investment team does not choose the game plan, and if it cannot control the economic environment, how are we to measure performance? With the assistance of objective outside consultants, we measure the performance of the STRS investment team by comparing their results to formal benchmarks that reflect the corresponding performance of all other managers with similar assignments. In effect, STRS grades on the curve. Whether a given test turns out to be hard or easy, it is relative performance, not absolute performance, that determines final grades for the STRS investment team.

It is these relative results for the STRS investment team that I wish to focus on. I was pleased and even astounded to discover that despite the difficult economic times, STRS outperformed its benchmarks in most areas and produced combined relative value in excess of $200 million. I want to say that again. As a direct result of the exceptional effort and success of Steve Mitchell and his investment team, STRS ended the fiscal year with $200 million more dollars than it would have had if investment results had simply matched the results for average professional money managers, who typically earn much higher salaries than STRS offers.

To put this savings for STRS in context, I note that the $200 million that the STRS investment team managed to save is roughly equivalent to two years of the entire budget of all aspects of STRS operations. In effect, we are all getting two years of free service from STRS.

In exchange for such remarkable savings, and to encourage such efforts in the future, the STRS Board offers an incentive package that rewards relative performance. As a former Board member and a continuing retired member of STRS, I strongly approve of the STRS bonus program, and I urge all members of STRS to join me in supporting this program. More generally, whenever you read that one or more members of the STRS investment team has earned a bonus for exceptional relative performance, please do not assume that STRS is taking money out of the pot for STRS members. Instead understand that many, many times the amount of such bonuses is going into the pot for each of us as members.

So in conclusion, let me say thank you Board members. Thank you Steve Mitchell, and thank you valued members of the STRS investment team.

Whaaa?

From Rich DeColibus, November 19, 2008

Hey Guys,

Well, I'm sure glad to hear our investment associates didn't get a "bonus", but a performance-based incentive instead. Phew, and here I was all upset that they were getting an average of $70,000 extra each after losing $25,000,000,000, but now that I know it's a "Performance-Based Incentive" (with capital letters, no less), I feel just wonderful about the whole idea. I wonder if they had changed the name of the bubonic plague in 14th century England to "Rosy Cheek Syndrome" fewer people would have died? I'm sure of it, and the spirit of that type of cheerful nomenclature-based optimism is obviously alive and well at STRS.

I also hear the financial industry has about a million more employed than there are job slots. Soon, those job seekers will clog employment offices and institutions thicker than Alaskan mosquitos in the Yukon valley. STRS will probably have to hire armed guards to keep the displaced financial analyst masses at bay, especially when they get word of our employment perks. Wow, and we thought hurricane Katrina created a lot of refugees...

Hey guys -- we're not allowed to call them 'bonuses' any more. PBI...PBI...PBI

From Donna Seaman, November 19, 2008
Subject: Nov. 20 board mtg.

Board and Mr. Nehf:

Mr. Nehf spoke to members of CORE last Thursday and explained carefully and completely that the performance based incentives (we are not to call them "bonuses!") are contracted salary packages for investment staff. These pbi's were instituted by the STRS board several years ago, and can be changed, modified, removed only by the board, he reported to us.

I continue to request that you, the board, review, change, modify and/or remove the performance benefit incentive policy from the investment staff's salary package. The incentives are totally inappropriate, whether or not they are considered "industry standard practice," especially so in this time of several economic downturn and portfolio losses. This issue must be addressed and discussed openly.

You, board members, need to know you have hired an executive director who says he wants to hear retirees' concerns, but he became very defensive and hostile at the CORE meeting last week when he heard any number of angry, frustrated members expressing concerns such as past issues with the expensive building and art work, and current issues such as "bonuses," health insurance coverage, and the reinstatement of the 13th check.

Look at what is happening with regards to Wall Street executives and their excessive incentives. Most are losing them, or losing their jobs, or both! Discussions are taking place at this moment in Washington: If bailouts are given to the automotive industry, limiting or eliminating executive bonuses might be part of that bailout package.

I look forward to hearing these vitally important issues being discussed at tomorrow's STRS board meeting. Thank you.

Donna Seaman, 2002 retiree (These views are my own and not CORE's.)