Nancy Hamant's speech to STRS Board, February 19, 2009

STRS Board and Mr. Nehf:

Thank you for the opportunity to speak to you. My name is Nancy B. Hamant. I am a 26.8 year STRS member. I have been following STRS actions since 2001. Some STRS Board members and STRS staff question why STRS members and retirees continue to monitor STRS actions. We do so not only because of excessive spending uncovered in 2003, but today because of the apparent culture of entitlement and greed in banking, on Wall Street and in corporate America, major factors in an economic calamity second only to the Great Depression. The economic crisis today is "déjà vu" to STRS members. Starkly similar to the sense of entitlement engendered by former director, Herb Dyer.

The display before you contains about half of the Cincinnati Enquirer's articles on the calamity since the December STRS Board meeting. One cannot look at the mass of articles without feeling the fear of STRS members, of Ohio citizens and the entire nation regarding their futures during this disaster.

STRS Board members, the "buck stops" with you. You have fiduciary responsibility for STRS actions on members' behalf and for making prudent decisions. STRS members expect you to do what the economic world said should have been done prior to this mess, question anything you are asked to approve, to halt the greed and entitlement. STRS members expect you to question all actions occurring at STRS. STRS Board, you must not permit "business as usual" or following "Wall Street practices" as a reason to approve any action. Those reasons should raise a red flag causing you to demand justification from STRS staff for any recommendation, action or spending by STRS. "Business as usual" was a major factor in the mess the nation faces. STRS Board members, you are morally bound to provide ethical and legal leadership via the policies you establish. STRS policies should have one goal - ensuring the stability of the STRS Pension and Health Care Funds for the future of all STRS members.

Also, STRS pays many consultants to analyze various aspects of its operation, health care and staff performance. The consultants are often cited as providing "unbiased" analyses of the pension fund or of the health care fund. Often these consultants appear to give "sales pitches". Particularly shocking was commentary by a health care consultant at the December meeting. The consultant asserted that "STRS lost an opportunity to make the most money on Medicare Advantage reimbursements, as STRS made last year, but some money could yet be made." The presenter seemed focused on promoting Medicare Advantage plans and was not unbiased. Such bias-laden presentations cannot provide a true analysis! STRS Board members must question and question consultant data as to its accuracy and usefulness for making decisions, as well as require that all consultants are truly unbiased and ethical.

Mr. Nehf, the STRS Board voted unanimously to hire you. That is a feat unto itself. It represents the STRS Board's faith and hope that you would work tirelessly on behalf of all STRS members. All chief executive officers want to provide a work climate that promotes the best efforts of his/her staff. STRS members expect you to do that. An optimal work climate should never come at any expense or detriment of your fiduciary responsibility to all STRS members to protect pension and health care funds. Another of your responsibilities is to provide leadership to STRS staff to ensure the growth and viability of the STRS Pension Fund and Health Care Fund. Mr. Nehf, STRS members expect you to be "ahead of the game" during this economic calamity. STRS members expect you to analyze all the changes that are forthcoming from federal and state legislation developed to get the nation out of this crisis. Just because a change is recommended does not mean that it is in the best interest of managing the STRS Pension and Health Care Funds. STRS members expect you to fight at both the state and national levels for change that will protect and grow the pension and health care funds. STRS members expect you to require the best of all STRS employees and help them to change to meet the continuing economic challenges. Do not permit STRS staff to use the excuse "this is the way it is done in the corporate investment world." On December 30th, an investment consultant on MSNBC stated "Wall Street has been operating the last few years on the principles developed by Bernie Madoff". Heaven help us if that is true!

STRS members respect the work STRS staff does on our behalf. STRS staff are most patient and gracious in answering members' questions. Members expect STRS staff to be paid fairly and equitably for efforts in protecting and building STRS assets. STRS members also expect staff to present information about those assets in direct, simple and unambiguous language. STRS members expect graphs, charts and diagrams to accurately delineate any issue in light of the current situation, i.e., when showing growth during a period of loss, please be honest enough to show that amount of growth within the entire range of the loss. Showing only the amount of growth within one or two points is not the total picture. STRS members do understand Performance Based Incentives - we just question the percentage of the Incentive. When so many STRS staff are making a total annual salary greater than that of Ohio's Governor and more than the President, that is difficult to understand. Don't follow Morgan Stanley's lead and rename the PBI Bonus - a retention award. For most Ohio educators, an annual raise of 8.7% is unbelievable, and a raise of 15% has probably never happened! In fact, such increases are not given for a three-year contract period. Today, Ohio districts are not hiring teachers, are cutting teachers, are freezing salaries or are asking teachers to take pay cuts. "Unknown" perks, such as STRS staff being paid for the Friday after Thanksgiving as a "holiday" are beyond belief! Educators can only wonder at such generosity any time, let alone during the second greatest financial crisis for our country.

STRS members are more than worried - we are fearful for entire future! Without a doubt - change is here and STRS has to ensure that O.R.C. 3307.15 is followed.