Dave Parshall's speech to STRS Board, April 23, 2009

Public Speaks Message April 23, 2009, by David Parshall, 41 year STRS member.

STRS Board Members and Director Nehf:

(The following words represent my views and are not necessarily those of CORE.) It has been many months since I have spoken to the board in this public manner. During this time I have attended all of the board meetings and other public meetings of the board. I listened to the speeches of the four OEA/OFT board members during the March 20 board meeting These speeches were just more evidence that they lack the ability and wisdom to sit on this board no matter how well-meaning they may be. I, along with thousands of your stakeholders, find ourselves on the edge of a cliff looking down into a very deep canyon, and feel that we can no longer remain silent in hopes that someday these board members will come to finally realize some common truths. I wonder even today if these board members fully understand just how close this board came to a total meltdown after the 5 to 5 vote. All stakeholders owe Mr. Nehf a huge amount of gratitude for stepping up and saving the day. I have personally thanked Mr. Nehf for his actions, and do so again.

Now let us back up a little and see what we can agree upon.

I fully understand:

...1. That our investment people here at STRS are fine, dedicated professionals who, through their personal actions since August of 2008, did not cause STRS to lose over 31 billion dollars.

...2. That having in-house fund managers actually saves us money.

...3. Because of the skill of our staff, STRS actually lost 0.3% less than most other pension funds.

...4. That we are in unique economic times far different than the historic 10 to 15 year recession cycles that have plagued our history since colonial times. The most similar historical economic event was the Great Depression. Changes in Wall Street were made afterwards that have kept us sound for fifty years.

So how did we get ourselves in this mess?

Well, the greatest single factor is that over a period of 3 or more decades greed was systematically allowed to trump principle. These words are not just mine, they are the words of Dr. Elizabeth Warren, chair of the Congressional Oversight Panel of the TARP.

Now, the big question -- how does this board fit into the current national and state situation?

Like it or not, you have become a part of this corrupt financial system. This industry has been allowed to set their own standards for far too long, and have sent out consultants to tell the public that these are the standards and that we have to follow. Willing Congressmen from both sides of the aisle were bribed to do away with regulation and break down the Chinese Wall that stood between Main Street banks and Wall Street since the 1930s. Alan Greenspan has publicly apologized for playing a major role in this mess by not realizing the depth of human greed. Keep in mind this is the industry that coined the phrase, "This stock is a pig, get on the phones and put lipstick on it". The compensation for our fund mangers is outrageous. Do you really think that anyone here at STRS is more valuable than the president of the United States?
You as board members have failed to realize that at last transparency is coming to the financial world. The discussions should not be about the 25th percentile, rather to pay bonuses when the fund grows back to 53 or 65 billion, or what floating benchmark should we use, but rather why are we paying any bonuses at all, considering the base salary and perks that STRS offers? We at least need to totally restructure our PBI program and be a leader for reform. If I hear one more time that we have to pay these salaries to keep the best and brightest, I will just scream. This has always bordered on extortion. Why would any of our investment staff want to leave a secure position today to go out into the mess that has become Wall Street, especially with more than 20 years in OPERS and a secure retirement in sight? CalPers is hiring Wall Street fund managers at bargain prices.

The bottom line is as long as we have union-controlled STRS board elections, especially for active seats, we will not get the truly qualified members on the board that we need. This must be overhauled so that the election process is totally open and allows for all candidates to have complete access to both actives and retirees. Change is coming with or without you. It is time to stand back and see the forest. These are serious times and we need qualified people making serious decisions for us. I thank you.