From Dennis Leone: Important House Bill 177 Update

From Dennis Leone, June 3, 2009

Note the news service summary paragraph below on proposed HB 177. I actually was given the opportunity yesterday at the statehouse, during the sponsor testimony by Representatives Matt Huffman and Danny Bubp, to answer questions that some of the lawmakers had. Questions asked of me included how many investment staff members STRS has, whether the STRS investment staff members have individual employment contracts, and how many investment staff members received bonus checks most recently.

I also spoke to several of the lawmakers who had other questions when the committee meeting adjourned. Representative Chandler, in particular, asked me questions about what other big changes are on the horizon at STRS. She expressed concern over the matter of retirees having to pay more for health insurance year after year. During his sponsor testimony,

Representative Bubp read aloud a statewide OEA email that opposes bonuses in down stock market years. Bubp said: “We should enforce what OEA says it wants in this matter.” He also criticized OEA for referring to me as a “dissident board member” in the statewide email, and he publicly said that he appreciated my reform initiatives at STRS. A couple of lawmakers told me that despite the recent OEA statewide email, OEA is now stating its opposition to HB 177 because it singles out STRS (and not the other public pension systems).

In response to a similar question asked by Committee Chair Newcomb, both Huffman and Bubp said that the calls of concern from their home districts were coming from retired teachers, not retirees from the other pension systems. It is undetermined at this juncture if a second hearing, for proponent testimony, will be scheduled. Retirees who agree that a second hearing is needed should contact their own state lawmakers and ask that they communicate this desire to the Aging and Disability Services Chair Newcomb and to Speaker Budish.

Dennis Leone

BILLS HEARD IN COMMITTEE
HOUSE AGING AND DISABILITY SERVICES
Rep. Newcomb: 614-466-1405 Tue., Jun. 2, 2009
HB177 STRS INVESTMENT PERSONNEL (Huffman M) Provide that investment personnel of the State Teachers Retirement System may not receive performance-based bonuses or premiums in years of negative investment returns and to declare an emergency.
Reps. Huffman and Bubp gave sponsor testimony on the bill, which would prevent the State Teachers Retirement System (STRS) from paying performance-based investment bonuses to system employees in years of negative investment returns. They said the bill sparked from angry sentiments about the bonuses expressed by retired teachers in their districts, especially in light of news that STRS might cut benefits, move back the retirement age, or increase contribution requirements to account for a steep drop in the investment portfolio as a result of the economic downturn.
Huffman said bonuses aren't warranted when the fund loses investments, especially at a time when state workers are being laid off and those still employed have made significant concessions under the latest union contract. "It is appalling to me to think that anyone on that [STRS] board would vote to give a bonus in these times," Bubp said.
They noted that while the STRS board has suspended performance-based bonuses for now, they still might vote in September to pay bonuses for the first half of this fiscal year. Bubp also noted that the board has discretion to change or eliminate bonus payments at any time. They said dozens of investment workers got bonuses on top of six-figure salaries, and that some of the bonuses were six figures as well.
While they professed sympathy for the need to retain talented employees, Huffman and Bubp still said the bonuses were not merited. "I think in this market we should be happy that we still have a job," said Bubp.
Rep. Harris asked why the bill didn't address the other four state pension systems. Bubp and Huffman reiterated that the bill was in response specifically to retired teachers who are upset with the STRS board, and said they weren't as familiar with the other retirement systems. Huffman did say STRS also has a higher percentage of its portfolio managed in-house than the other systems.
Rep. Wachtmann commented that the Ohio Retirement Study Council would be able to provide a lot of information on STRS and the other state pension systems.
Rep. Harwood asked what bonuses are paid by contractors managing investments not held in-house. Huffman, who expressed an ultimate preference to see most investment managing done by contractors, said he didn't know, but that it would be important to get as much information as possible when deciding policy changes to the retirement systems.
Rep. Lehner said she wondered if the Aging and Disability Services Committee was the best place to debate this topic, especially with the requests for information about all the pension systems.
Rep. Newcomb, the committee chairwoman, noted only that the issue is currently assigned to her committee.
HOUSE EDUCATION
Rep. Williams: 614-644-5085 Tue., Jun. 2, 2009
HB178 DISTRICT BOARDS OF EDUCATION (Wagner J)=2 0To eliminate certain requirements and prohibitions applying to school district boards of education.
Rep. Wagner said the bill is a "radical" attempt to address the issue of state mandates on K-12 education, "Over the last several years, we have heard two main complaints from our school districts," he said. "First, obviously, is school funding. Secondly (and not far behind) is state mandates. We have all heard it from our local districts." Wagner said the bill would eliminate all state mandates except those addressing the follow items:
- federal requirements
- school district organization
- achievement testing
- compulsory attendance
- teacher licensure
- minimum high school curriculum
- basic health and safety
He said the issue is not whether other categories should be retained, but that in his view, those decisions should be left to local control. "I would submit to you that what works for Columbus City Schools might not be the best for Bettsville Local Schools in my district," he said, noting the latter graduates 20 high school students each year.
Wagner said he didn't have wild hopes of moving the bill out of committee but believed HB178 could become a starting point for "a long and meaningful discussion amongst thi s committee about mandates and the consistent erosion of local20control in our school system."