Dennis Leone: Motion to suspend bonuses, June 19, 2009 STRS Board meeting

Motion
By Dennis Leone STRS Retiree Board Member
June 19, 2009
WHEREAS the total market assets at STRS have dropped from $80.1 billion on October 31, 2007 to $53.4 billion on May 29, 2009;
WHEREAS this reduction in assets represents, over just 19 months, a drop of $26.7 billion, which represents 33.3% of the total market value at STRS;
WHEREAS in the 23 months between June 30, 2007 and May 29, 2009, the stock market returns at STRS have been -26.1%;
WHEREAS, on September 17, 2008, the STRS Board awarded $6 million in bonuses to 87 STRS investment staff members for fiscal year 2008;
WHEREAS the STRS Board will be presenting recommendations, by September 9, 2009, to the Ohio Retirement Study Council to increase the contribution rates for employees and employers, increase the minimum age for retirement, change the computation of the final average salary for new retirees, increase the cost of out-of-state purchased service credit, and reduce the annual Cost of Living Adjustment (COLA) for retirees;
WHEREAS the STRS Board will again increase the cost of health insurance for retirees, effective January 1, 2010;
WHEREAS since 2000, the STRS Board has: (1) Eliminated health insurance subsidies for the spouses of retirees; (2) Eliminated the annual 13th check that retirees received; and (3) Eliminated health insurance options for rehired retirees who work for employers who provide health insurance to other employees;
WHEREAS all investment staff members at STRS were told in writing by the STRS executive director in June of 2008 that fiscal year 2009 bonuses could be modified, suspended, or terminated by the board at any time for any reason;
WHEREAS STRS Board policy permits the modification, suspension, or termination of bonuses at any time for any reason;
WHEREAS membership institutions of STRS (public school districts, charter schools, and universities), the governor's office, state agencies, city governments, county governments, and private sector businesses across Ohio are addressing the downturn in the economy by sharply reducing staff, reducing compensation, and/or implementing unpaid furloughs;
WHEREAS the 132 members of the Ohio General Assembly are being asked by Governor Strickland to voluntarily take a 5% wage reduction in fiscal year 2010;
WHEREAS on March 20, 2009, the Ohio Education Association (OEA) issued a statewide bulletin which said the following, in part: "OEA is deeply concerned about STRS market losses. OEA does not agree with bonus payments to investment officers in years when STRS loses money."
WHEREAS numerous retired teacher associations in Ohio have taken a position against the awarding of bonuses in years when there are overall negative stock market returns at STRS;
WHEREAS the STRS Board, in the past four months, has received over 400 written communications from active members and retirees who have expressed their opposition to the awarding of bonuses in years when there are overall negative stock market returns at STRS;
WHEREAS House Bill 177, introduced on May 18, 2009, calls for: (1) The immediate suspension of bonuses at STRS for fiscal year 2009; and (2) The permanent suspension of bonuses at STRS in fiscal years when there are overall negative stock market returns;
THEREFORE BE IT RESOLVED that no STRS investment staff member be awarded bonus compensation for fiscal year 2009.

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The STRS Board voted on June 19, 2009, 7-2 (with Leone and Hayden voting No; Chapman was absent) to table the motion until the September Board meeting (after Dennis Leone leaves the Board).