Rich DeColibus: A Gone With the Wind letter to the STRS Board; and we DO give a damn

From Rich DeColibus, March 20, 2009
Subject: Atlanta 1864

Dear Gentle(wo)men,

We out here in the hinterlands are becoming concerned about what appears to be an increasing atmosphere of unreality at STRS. It is clear individually you are intelligent and competent persons. Yet, the things STRS institutionally says and does seem disconnected from the world around us and current events. We're all for Science Fiction and alternate universes, but we prefer STRS to stay in ours.

We are in the midst of an unprecedented world-wide economic crisis. You know this. STRS has lost $30+ billion in assets. You know this also. It is very, very disturbing to get the sense that STRS is "treading water" until things get back to "normal." Public statements issued talk about "difficult times," as if this is a temporary inconvenience, soon to go away. My sense is the last twenty years are, like the movie, Gone With the Wind. The landscape has changed, and my best guess is it'll be a long, long time before even a resemblance of what we considered "normal" returns. If ever.

Given that, my expectations are: (1) some realistic acknowledgment that things are different, and less wishful thinking that "This, too, shall pass away" because it's not going to; (2) a change in attitude from "let's wait this out" to proactive policy changes which reflect the new conditions; and (3) an abandonment of the Wall Street mentality which insists on bonuses and other business-oriented practices now as outmoded as the Southern society of 1860.

The current public furor over outrageous bonuses paid to investment counselors, whether at STRS or AIG, needs to be understood. It is not a temporary spike of irritation soon forgotten; what it has done is shake the faith people have in institutions which are supposed to manage financial affairs. Speaking for retirees I am in contact with, nobody trusts the board anymore to honor its duty of fiduciary responsibility. In short, we think you blew it. Somehow you were captured by the Wall Street mind-set that massive excesses in pay and bonuses could be excused away as "normal business practice" and "industry standard," an illogical fiction which has eroded severely our belief you have acted in the best behalf of STRS (and, by extension, active and retired members).

We now question what is the real condition of STRS? Do you have enough assets to continue with the current pension and retirement guidelines? If not, what are the options? What is going to happen to health care for retirees? Without affordable health care, there is no retirement. We would like real answers, not just platitudes to keep us happy until "things turn around." We're all adults and we can take bad news; not cheerfully, but we can take it. What we cannot take is being treated like children who must constantly be reassured mommy and daddy will take care of everything, and all will be well. We believe even if the economy makes a miraculous upturn, STRS has now been so damaged it can never again be business as usual and, that being the case, want to know what adjustments will be made to accommodate the ugly new world we live in.

We also believe STRS is grossly overstaffed; if you look at the personnel which STRS had ten years ago and the numbers it has today, there seems to be no justification for the increase. If I am incorrect, please correct me.

To make a long story shorter, what we would like to see is a new approach rooted in reality, however brutal, along with options being considered to deal with STRS's diminished capacity. We do not want to hear about "industry standard," bonuses, or how we must pay salaries which amount to extortion to keep our investment counselors. We recognize this as utter nonsense, the same drivel AIG uses to justify its recent spate of "retention" bonuses to the same people which created this economic disaster. We have nothing against our investment counselors and our best guess is most of them are quite competent, but they are not gods to be worshipped, which is the reaction we always seem to get when hard questions about their compensation are asked. They, too, must live in the ugly new world the rest of us must live in.

The truth, however unpleasant, has a way of oozing to the surface no matter how industriously papered over. If we're teetering on the edge of insolvency, say so. And then tell us what the options are. This is our lives and we very much give a damn.

Rich DeColibus