Lima News editorial re: STRS...."If you're not making money for your client, you don't deserve a bonus."

From John Curry, May 14, 2009
Editorial: No gain, no bonus is common sense
"Rewarding someone to lose money, though, is just obscene."
"If you're not making money for your client, you don't deserve a bonus."

The Lima News, May 13, 2009

Wall Street wasn't the only place where investment executives earned bonuses to lose money. It's been happening in Columbus with the State Teachers Retirement System, too.

The private sector is perfectly fit to make the changes needed on Wall Street, but a state system requires intervention of the kind state Rep. Matt Huffman, R-Lima, proposes. Huffman this week introduced a bill that would ban performance-based incentives if the teachers retirement fund isn't making money.

Preliminary reports show half-year bonuses for about 90 employees of the State Teachers Retirement System will total almost $3.4 million. That's a handsome reward when a fund has lost more than $33 billion over the last 16 months. And it's a reward that 460,000 public educators and millions of taxpayers alike would have to contribute to.

"All of these employees who are to receive these bonuses are already compensated for the work they perform, with some earning a six-figure salary," Huffman said. "When many Ohio citizens are losing their retirement investments in this economy, how can STRS of Ohio justify giving these bonuses?"

That's a good question.

A newsletter tried to justify the bonuses by saying the fund could have lost more than it did. That's a bold statement: You get to pay us even more money because we've only lost so much of yours.

Some people won't like that the average salary among those handling investments at the State Teachers Retirement System is $156,000, but some careers paying far better than others is part of life. Rewarding someone to lose money, though, is just obscene. Other states have eliminated bonuses. Ohio should at least go as far as Huffman wants: no bonuses in a year with negative returns.

The State Teachers Retirement System board is scheduled to vote on the bonuses in September. Other state lawmakers should join Huffman in seeing that such a vote isn't needed. If you're not making money for your client, you don't deserve a bonus.

http://www.limaohio.com/articles/bonuses-37333-state-retirement.html