Tom Curtis, Mike Nehf re: Employee numbers

Tom Curtis to Michael Nehf, February 19, 2009
Subject: 021909 Curtis To Nehf, Employee Counts

Hello Mr. Nehf,

Would you kindly provide me with the current number of STRS employees at this date? Please break that down into full and part-time, if that applies.

Further, would you kindly have a listing prepared of the number of employees, month by month, from July 1990 to March 2009. That will cover a span of four executive directors. I will ask that you provide me with this listing in a reasonable amount of time, as it should not take much time to produce.

I am requesting this information, because I find it troubling that the STRS continues to employ the highest number of employees, of the five public pension systems in Ohio, yet does not have the largest amount of holdings or members. Further, the STRS does not provide the best benefits for their stakeholders. Actually, in my opinion from documentation that I have obtained about the other four, the STRS provides fewer benefits to their retirees, with the exception of the State Highway Patrol. Please correct me if I am wrong.

These are very trying times, which you are well aware of. All of us are having to cutback on our expenditures. In my opinion, so should the very people that are employed to handle our retirement funds. I have not witnessed, or know of any reduction in force in the history of the STRS.

The STRS does not produce a product and therefore does not require a specific workforce to provide the most crucial benefits the stakeholder needs. Reducing programs and the work force at the STRS should be highly considered and completed no latter then the end of this fiscal year.

We have more employees, but receive fewer benefits then do the OPERS stakeholder. I realize some of the other pension funds show little comparison to the STRS, but we most closely are compared to the OPERS.

I for one am getting very tired of loosing ground every year financially, while the STRS employees continue to gain in compensation at a rate far above what the retire receives and/or the rate of inflation has been. This is absolutely wrong!

Just one example: The pay increases given this fiscal year, along with all of the added ways of receiving more bonuses, shows little consideration of the very people that you are employed to represent. Please explain how you justify such? Please do not tell me we paid a consulting firm to justify the increases for the employees, as that simply verifies your greed and shows how little concern you have for your stakeholders.

Others and I had discussed these issues with Damon Asbury and the executive staff as far back as when we held monthly CORE/STRS meetings in 2003-2005. I chaired many of those meetings. I stopped doing so in 2005, when my level of frustration grew far beyond my ability to be civil to those people that provided us with so many lame answers. I lost all respect for those people, because they were not being held accountable for their decisions and actions. Unfortunately, little has changed since that time.

After reading about your background and experience prior to coming to the STRS, I was very encouraged by your selection as our new executive director. I will show you the respect and courtesy you well deserve, but as my father used to tell me, respect in earned and not simply given. I will continue to question many policies and practices at the STRS and I am hopeful that you will respond to such in an appropriate manner.

Please keep in mind, that business as usual is no longer the norm. Our new president, who I highly admire and voted for, is offering a new direction for this country. One of renewed accountability, though I realize that is a very tuff avenue to travel down, considering the mindset of today's society.

With all due respect Mr. Nehf, despite all of the various surveys the STRS wastes our money to have produced, the stakeholders of the STRS are not getting value for their dollar.

The STRS literature sent to the stakeholders is and has been skewed to the positive for as many years as I can remember, which makes for a truly uninformed stakeholder. A stakeholder lulled into thinking everything is just peachy, when many of us know it is not.

I implore you to follow the freedom of information policies of this country and state and provide the information I have requested.

"We the STRS stakeholders will be ever vigilant, not because we desire to be, but because the personal greed of our money managers has forced us to be."

Tom Curtis
STRS Stakeholder

Michael Nehf to Tom Curtis, February 20, 2009
PM Subject: RE: 021909 Curtis To Nehf, Employee Counts

Tom,

I recently reported to the Board how the number of STRS employees has decreased over the years. STRS is also the only one of the five public pension systems to manage its real estate portfolio with its own staff, thus saving thousands of dollars in investment fees. I’ll work with staff on your request, but hopefully you witnessed positive results from this week’s Board meetings.

Sincerely,
Mike Nehf

Curtis to Nehf, February 22, 2009
Subject: 022109 Curtis To Nehf, Re Your Response

Hello Mike,

I greatly appreciate your quick response and willingness to provide the figures I have requested. I hope the information might be a valuable snapshot for you as well, possibly for future planning.

During the CORE/STRS meetings held a few years back, Steve Mitchell made us all very aware of the benefit of the investment department and the money saved. So, too, have the many STRS consulting reports I have read over the past 5 years. However, the operation of the investment department is completely over my head, or that of anyone who has not had a strong investment background; but then you know this.

I also realize there are few complaints when times are good and the department is producing at, or far above the 8% benchmark. However, that is another issue, and one I have absolutely no expertise in. I am a technologist and I look at things in a very different manner then do most other educators. I am a problem solver and use failure to my advantage, to better a procedure or process. I find so many others abhor failure and simply try to find blame and point fingers at others less likely to be able to defend such. Prior to teaching, I had a background in industry and manufacturing and know that one has to manufacture a product to make a profit. The employees of the STRS do not manufacture goods as such; they are there to provide a service. You and they were hired because of our money. Herb Dyer's culture was simple, but very wrong! His thinking, and I quote, "...it's the Board members' money to spend as they see fit." He made that statement to a retiree and again before the ORSC. The members of the ORSC quickly informed him that was not the case. His comments were in all of the major newspapers in Ohio and the AP press. I believe he felt that he and the investment people were the "chosen few" who were going to handle our money as they saw fit and needed no input from the stakeholder. Well, he failed, and the educators of Ohio are the big losers, because the cost of HC has never been properly funded and is bleeding retirees dry. It has been said that Herb Dyer wanted the STRS out of the HC business. It looks like he has accomplished that, doesn’t it? (What a shame he became one of our executive directors)

There is one glaring fault I find with most of the elected board members. Collectively, they have little to no background in business and finance. They could attend 2 seminars every year and still have little true understanding of how the investment department operates. Many of them, still active teachers, could not possibly have the time to read the vast amount of materials they are provided and asked to read each and every month, and also complete the school work they have 180-189 days a year. In my opinion, they are pawns for both the STRS and the union management. Companies would never consider hiring one of them to make billion dollar decisions, but the OEA/OFT pay their way to be on the board. From my experience, educators are ignorant of whom they vote onto the STRS board. They simply listen to their union officials, like good sheep.

Mike, you are aware that the educators of Ohio have provided a continuous flow of income to the OSTRS since 1920. That plan went well and they added HC benefits in 1974. Management promised such and were paid handsomely for providing that added service and for managing our funds; but failed to fulfill the HCSF obligation, seeing that it was properly funded for the future.

Please check your Newsletter library and locate the 1992 Newsletter when Herb Dyer came to the STRS. His picture is on the front. He clearly states that a dedicated flow of income must be found for the HCSF. But guess what: management and the OEA took their eye off of that ball. They never made that the #1 priority. They did many other things, of a lesser priority. They built a beautiful building with all of the luxuries of corporate America; they provided for entertainment and travel galore; they paid a 13th check to retirees for an unprecedented 21 years; in short, they provided themselves with the best, including free cars -- all at the Fund's expense. So, what do we have left now, a few drops left in the HCSF bucket? (I wish I knew the real figures).

The stakeholder is left with a HCSF that is nearly dried up; the death spiral is already in progress. We probably do not have more then a handful of years left until the HCSF is gone. This is really going to upset the actives, for they have paid into a HC system that will be gone when they retire. What are you and the board going to say to them? The miniscule 1% that has been placed in the HCSF for many years now is a joke, compared to the other four pension systems. That is just one more reason management is not trusted by those of us who understand what has been taking place at the OSTRS for the past 3 decades.

Mike, we desperately need an executive director with the ability to operate the STRS in an efficient and cost effective manner. We need an executive director that will place the concerns and the future of the stakeholder first. Are you that person, because we need you to be? The abuses of the past cannot stand. We need you to provide the leadership necessary to turn the "business as usual" around. Dennis Leone has done his best, along with John Lazares’ support. As you know, he will leave the board at the end of August. Undoubtedly, the two unions will take all stops out to fill the open board seats with union pawns. If that occurs, we will repeat history once again, by having all of the board seats filled by union representatives. In my opinion, their financial influence should not be permitted in determining who will be on the board.

Through the use of the Internet, your stakeholders can easily communicate with one another, as you have witnessed by reading Kathie Bracy’s Blog. Her blog reaches more stakeholders each and every day. She does an absolutely outstanding presentation of the many issues that effect educators. John Curry does an equally outstanding job of researching information that is pertinent to the retiree.

Those of us that supported Dennis Leone’s historic document made quite a difference in the operation of the STRS beginning in 2003. No one thought we would. Herb Dyer thumbed his nose at Dennis Leone and would not even sit down and discuss the concerns he brought to the board. He was a very arrogant and rude man and was out of control. We brought about change by placing constant pressure on the executive director and the board. Damon Asbury and the OEA have attempted to take credit for the changes, but we all know who caused them to take place. There is still much to be undone. We, your stakeholders will continue to cause your administration and the board much concern, as we will never take our eye off of the operation, until we are all gone. We desire a pension system that we can all have trust and faith in. Right now, that is not the case.

You have to be aware that the STRS stakeholder is becoming increasingly fearful for his/her future. This is the pulse I get from those I talked with while getting signatures for two retiree candidates. If the stakeholder is going to suffer, then it is natural that they want the people handling their money to (at the very least) show good faith and restraint, not "business as usual." We saw "business as usual" with Herb Dyer after the $12.3 billion loss in 2001. He's gone and has a criminal record to boot. He received a handsome severance package, but he was forced to leave, like so many money managers of today. I can tell you first hand, being a disability retiree myself, no one wants to leave their profession under unfavorable conditions.

The STRS has been unable to provide the HC benefit I was promised by the OEA my entire career. My cost of HC for my wife and me, beginning in 2004, is in excess of one-third of my pension. Compare that to the $30/month for both my wife and me, and a 90-10% coverage, when I retired in 1998.

Yes, this all happened before you came, but most of the names and faces have not changed, and this is the legacy you inherited. If you did not understand why so many recent retirees are so untrusting and have little faith in the management of the STRS, I hope this snapshot allows for a clearer picture.

It looks like Steve Mitchell was wrong when he stated almost a year ago that the recession was going to be weak. Well, obviously, that was the signal for business as usual; what the heck, pay raises for everyone!

In response to your question, yes, I am pleased with some of the decisions finally being made to reduce costs. I've heard good reports about actions being considered but have not read about them yet. I must tell you though; I am very disappointed that our board allowed the huge salary increases given to everyone in fiscal 2009. When a company that produces a product has lost $8 billion dollars, which I believe was the case at the time when those raises were approved, they do not hand out 6%-15% pay increases, so why does the STRS? I believe I know the answer to that. The consultants were paid well to tell the board that those increases were justified. Who pays the bill, the goose that lays the golden egg, the stakeholder? Who has continually lost ground financially, the stakeholder? Who, has continually gained ground financially, the employees? What do you see wrong with this scenario? The cost of operation of the OSTRS is way out of line.

In conclusion, others and I feel management is taking unfair advantage of the lack of backbone, background and inadequate training of the STRS elected board member. Both Herb Dyer and Damon Asbury were masters at this game. Mike, you guys are supposedly to be the professionals hired to provide us with a comfortable pension. Both the OEA and the STRS promised us that we had the "Cadillac" of pension plans. We agreed to work for lower wages then we deserved, for the education required for a teacher. So, why can't the OEA and STRS management be trusted to provide us with what they promised? Is having faith and trust in one's own pension system too much to ask? Do any STRS employees place one dime into the STRS pension fund or have any investment in our fund? Correct me if I am wrong, but I don’t believe so. The only thing any employee has to lose is his/her job.

Tom Curtis,
OSTRS Stakeholder

Curtis to Nehf, March 3, 2009
Subject: Re: 021909 Curtis To Nehf, Employee Counts

Hello Mike,

It was my hope to have the numbers I requested by this time? Why the hold-up?

Would you kindly respond?

Thank you,
Tom Curtis

Nehf to Curtis, March 4, 2009
Subject: RE: 021909 Curtis To Nehf, Employee Counts

Tom,

My apologies. I was away for several days and will have staff respond with a copy.

Mike

Joyce Baldwin to Tom Curtis, March 5, 2009
Subject: 021909 Curtis To Nehf, Employee Counts

Tom,

Per your email request on February 19, 2009, Mike Nehf asked that I forward you the attached document.

Our apologies that the information was delayed with Mr. Nehf out of the office last week. I hope this information is helpful.

Best regards,
Joyce Baldwin

Curtis to Baldwin, March 5, 2009
Subject: Re: 021909 Curtis To Nehf, Employee Counts

Hello Joyce,

I could not open the attachment. It indicates that it is an unknown file type.

I was looking for a spreadsheet with employee counts, both part and full-time from 1990 - 2009 or present.

Thank you,
Tom Curtis

Baldwin to Curtis, March 5, 2009
Subject: RE: 021909 Curtis To Nehf, Employee Counts

Tom, I pasted the document into the e-mail.

Joyce

Memo
To: Mike Nehf
From: Robert Slater
Date: February 10, 2009
Subject: 2002-2009 Budget Savings and Associate Counts

Budget Savings

A schedule of administrative expense budgets and actual expenses for the eight most recent fiscal years is shown below. The total administrative expense budget increased from $89.1 million in fiscal 2002 to $98.8 million in fiscal 2009 – that is a 1.5% compound annual rate of increase. However, even that relatively small increase is skewed by significant increases in budgets for investment-related expenses, including custodial banking fees along with board-approved salary and incentive increases for staff in the Investment Department. Budgeted expenses in all other areas actually decreased by more than 16% over the period, a 2.5% compound rate of decrease per year.

Actual expenses were even lower, increasing 0.7% per year in total and decreasing 2.6% per year, on average, for all departments other than Investments. A summary of the most significant reductions over the period is also attached.

Click image to enlarge.

Associate Counts

Since June 30, 2002, the number of full-time equivalent associates has been reduced significantly. The chart below outlines the number of budgeted and actual full-time equivalent associates at the end of each fiscal year.

NOTE: Current staffing is 601 total associates or 584 FTE’s.

[See Summary of Actual and Budgeted Expenses, with % of Change in Budget, posted separately, immediately below this post]

Curtis to Baldwin, March 5, 2009
Subject: Re: 021909 Curtis To Nehf, Employee Counts

Thank you Joyce,

However, would you please remind Mike that I had requested the employee counts from 1990 - 2009, and would still like that information.

Tom Curtis

Baldwin to Curtis, Thursday, March 5, 2009
Subject: Re: 021909 Curtis To Nehf, Employee Counts

Thank you Joyce,

Would you also please remind him that I requested that both full and part-time numbers be listed separately. Because the employee count varies throughout the year, ask him to list the highest count per year.

Thank you for your assistance.

Tom Curtis

P.S. My wife Linda said, "Hello."

Nehf to Curtis, March 6, 2009
Subject: RE: Employee Counts

Tom,

STRS Ohio does not have this information available to copy for you. It would have to be compiled. I apologize that I cannot comply with your request. I reiterate that STRS is working diligently during these difficult times to serve our members’ most important needs. Tom, I hope you understand. Is there any additional information we can provide that we may already have developed?

Sincerely,
Mike Nehf

Nehf to Curtis, March 6, 2009
Subject: RE: Employee Counts

Dear Tom,

It is my understanding that we would have to create a document to provide you with this information. I’m checking with Human Resources to see what data they have. As you might imagine, STRS is working extremely hard during these difficult times to serve our members’ primary needs. I appreciate your patience on these types of requests.

Sincerely,
Mike Nehf

Curtis to Nehf, March 6, 2009
Subject: Re: Employee Counts

Hello Mike,

I had no thought that what I requested would be readily available to copy. Whether the information I requested would have to be compiled or not, the freedom of information act makes it clear that you will provide such. I would think, especially to a stakeholder, so your apology is not warranted. You are on very shaky ground Mike, when you start providing such excuses for not providing public information.

Please reconsider your position and have one of our many excellent employees put this together in a timely fashion. I have waited long enough, while you have been dragging your feet.

If I do not receive the information by the end of next week, I will file a complaint against you with the proper authorities. That is not what you desire, is it?

Tom Curtis
Curtis to Nehf, March 7, 2009
Subject: 030609 Curtis, Re Nehf, Re Employee Counts

Hello Mike,

Thank you for passing my request along to the HR department. I am confident that HR will be capable of fulfilling my request.

Would you kindly have the person in HR contact me either by phone or email on Monday? I would like to make sure they understand my request and thus would not have to duplicate the search at a later date. I find that good communication is essential to getting the job done the first time. I like efficiency.

And, this is a primary concern of mine and many other retirees. I am sorry you do not seem to feel that way.

Mike, with all due respect, if you want to know about difficult times, you should be in my shoes, your stakeholder. There is no greater feeling then knowing, that both the union and retirement system you provided a dedicated flow of income into throughout your career, could not uphold promises they made to you all that time.

But then, you won't have to experience that with the retirement system you belong to, will you?

Tom Curtis

03.10.09 Response from Mr. Nehf...None to date