A 2004 memo from Dennis Leone to all Ohio Superintendents re: 'STRS-initiated cost-saving measures'

Subject: STRS Initiated (?) Cost-Saving Measures
Date: Fri, 22 Oct 2004
TO: All Ohio Superintendents
FROM: Dennis Leone, recently retired Chillicothe supt of schools

On October 12, 2004, STRS Executive Director Damon Asbury sent all of you an e-mail entitled "Cost-Saving Initiatives." His e-mail was in response to a front page Cleveland Plain Dealer article on October 10 that was headlined "Retirees Appalled By Pension Fund Perks -- Workers Enjoy Tuition, Child Care Benefits."

While I do not dislike Damon Asbury, and appreciate the enormity of the task he has at STRS, I take issue with the claims in his e-mail and his insinuations of STRS-initiated managerial and budgetary changes. Not one of the ten changes he listed -- not a single one -- would have occurred had it not been for a group of articulate, persistent, strong-willed, and pushy retirees who pushed and pushed and pushed. Also, it deserves noting that the ten changes he listed in his e-mail did not address the subjects of the October 10 Plain Dealer article, which were:

1. Between 2000 and 2002, when STRS assets dropped a huge $12 billion, the STRS Board and Administration handed out college tuition reimbursements to their staff totaling $1.1 million. Remember, this occurred during a time when active STRS members were informed that their contribution rate would be increasing from 9.3% to 10.0%, and at a time when retirees were told their health insurance premiums would significantly increase and that their 13th check would be no more. The Plain Dealer pointed out that STRS staff members can receive up to $7,000 per year for college tuition. How many school districts give their teachers this kind of money for tuition reimbursements?

2. A work week for full-time STRS employees constitutes 37 1/2 hours. Unknown to almost all, this apparently has been in effect since the 1960's.

3. While STRS claims that the child care services they provide employees are now cost-neutral, here's the full story: Prior to this school year, the pension fund forked out over $500,000 per year so staff could have child care services inside the STRS headquarters. After actives and retirees expressed their outrage over this, employee fees were increased and it brought the excess amount down to $190,000. STRS then announced its plan to "cut" the remaining $190,000: Certain employees at STRS will voluntarily work additional hours per week, and not be paid for the additional work. This, in the eyes of STRS, is a way to "cut" the budget. I say it is wrong, and -- for all of us -- would likely represent a Fair Labor Standards Act violation.....not to mention the fact that school boards and the public would never accept such an idea.

4. It was recently revealed that employees at STRS who adopt a child are given a $5,000 cash gift by our pension fund. The rationle at STRS for this? It is because Dave Thomas at Wendy's recommended it to Columbus-area businesses some years ago. I say we also need to ask Ronald McDonald how to spend money from our pension fund. Why not? It makes as much sense.

I gave the following speech to the STRS Board yesterday, October 21, if you wish to read it:

"Members of the Board, I am here today to do two things....to make an observation and to make a request. I have noticed over the past several months a common theme in remarks coming out of STRS. Former Board President Eugene Norris, STRS press releases and newsletters, and both Damon Asbury and current Board President Joe Endry all have had an obsession to say: (A) Beware of those who continually criticize STRS; (B) Be patient with us at STRS; and (C) Look at what we done at STRS.....just look at that changes we have made.

"I am here to remind you that not one of the changes that have occurred in the past 16 months -- not one of them -- would have occurred had you not been pushed and pushed and pushed. You act like, oh yes, these are STRS intiatives. The truth is that if it had not been for a good number of articulate, persistent, strong-willed, and pushy retirees, none of the changes would be in place. And if you think I am wrong about this, you are kidding yourselves.

"There would no cuts in the STRS budget, no reductions in staff, no policy changes. Herb Dyer would still be here. Eugene Norris would still be on the Board. There would no John Lazares, no Dave Speas, no Judith Fisher on the Board. There would be no additional retiree on the Board in 2005. There would be no Senate Bill 133, and there would not be new group like CORE (Concerned Ohio Retired Educators).....not a chance. No new oversight mechanisms would be in place, no new disciplinary procedures for Board members who misspend pension fund money would be in place. There still would be a boatload of STRS credit cards and pension money being spent on things like alcohol, parties, concert tickets, Kings Island, baseball games, thousands of poinsettia plants for this building, and of course, the huge bonus checks for STRS non-investment staff.

"How do I know? There are several examples. When the staff here hit its all-time high of 735, the Board approved a budget to go even higher -- up to 765 or 775, and this was at the peak of the decline of assets here. Mr. Endry, when you spoke to the Allen County Retired Teachers Association last year, you said they didn't even know about the bonus checks. And Joe, do you know who shouted the loudest back in 1995 about the money STRS Board members were spending on flying around the country? You did, as ORTA President. Then when you got on the Board yourself, a year later you went to Anchorage. The next year, you were one of 7 Board members -- that's right, 7 of you -- went together to the same meeting in Boston (when one or two could have gone and brought information back for the rest). I've heard that you're going to Oregon with Board member Debbie Scott for STRS business soon. I hope that's not true.

"None of you have said in your speeches and in your written communications: "We screwed up." You've said it in small gorup session, but never publicly. Board member Michael Billirakis said it publicly about the artwork that was purchased here, after months of the staff inappropriately implying that they were bound to follow a new construction guideline that didn't even apply to STRS. The point is, after Michael said what he did, everyone basically shut up about it. You want people to believe that what's happened here is due to STRS initiatives. Not true. You had to be pushed and pushed.....that's why the changes have happened.

"I urge all of you to be cautious of saying "no more changes until see the results of the independent audit." I urge you to listen and respond to what the membership of STRS is telling you it wants.....whether it involves staff sizes, child care services, your 37 1/2 hour work week, huge tuition reimbursements for staff, and another one you've chosen to ignore that I brought up last year. You are still paying a cool $1 million per year if full-time STRS staff members decide to cash in up to 18 days of unused sick leave and unused vacation leave. You offer a nice benefit to staff, then you pay them not to use it. That's about as smart as saying that you're going to cut $190,000 from your budget by asking certain employees to work more hours, then not pay them for the additional work.

"You need to remember that it may not matter to us out here if you are told by the independent auditors that the pension board in New Jersey goes to Honolulu each year, or that the California pension board gives out big bonus checks to staff each year. And it really doesn't matter to us if you know of a few school districts who allow teachers to cash in unused sick leave every year? What matters is whether YOU are meeting the spirit of ORC 3307.15 -- which dictates that ALL of your decisions are to benefit the participants and beneficiaries of STRS. What matters is whether YOU are being responsive to the membership of STRS.

"In closing, Herb Dyer said to the Ohio Retirement Study Council in July of last year: "No one told me run a cheap system." A week later, State Representative Michelle Schneider said in the Cincinnati Enquirer -- referring to Board expenditures and STRS staff perks: "They're like kids in a candy store." It's now up to you, as Board members, to dispel both comments."

Thank you.

Dennis Leone