An STRS FLASHBACK - 6 Years Ago...A Deja Vu all over again? Do these words sound familiar...

From John Curry, July 7, 2009

"But bonuses were suspended in June by the pension fund’s board in reaction to complaints about excessive spending by the fund’s administration and board." July 9, 2003 - Canton Repository

State pension fund recovers, but normal bonuses remain on hold

Canton Repository, July 9, 2003
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — Investments by the State Teachers Retirement System climbed 2.1 percent in the fiscal year that ended June 30.

That kind of news normally would ensure that the pension fund’s investment staff gets a chunk of the gains this month as bonuses. That’s because the bonuses are based partly on the success of the accounts the staff manages.

But bonuses were suspended in June by the pension fund’s board in reaction to complaints about excessive spending by the fund’s administration and board.

The board is expected to receive a report from Executive Director Herbert L. Dyer at its August meeting to justify staff hiring since 1998 and how he is improving efficiency and keeping administrative costs in line.

The fund’s return, spending and other issues are expected to be discussed at a meeting today of the Ohio Retirement Study Council, which provides legislative oversight of the state’s five public retirement systems. Two members of that council, Sen. Kirk Schuring, R-Jackson Township, and Vice Chairwoman Rep. Michelle G. Schneider, R-Cincinnati, have called for Dyer’s resignation. Another council member, Rep. John Boccieri, D-New Middletown, wants an audit of the STRS books.

Teachers’ retirement system spokeswoman, Laura Ecklar, said Thursday that during the last quarter, from March through June, the value of the fund increased nearly $5 billion and now stands at about $47.2 billion. It peaked in August 2000 at $58.8 billion.

One of the issues drawing heat from lawmakers and teachers and retirees who are members of STRS is the awarding of $16.7 million in bonuses to supervisory and investment staff since August 2000. The bonuses came at a time the fund’s investment portfolio declined $16.6 billion.

The staff manages accounts of domestic stocks, real estate and fixed-income, international and alternative investments.

A Copley Newspapers analysis of the pension fund’s records shows that 108 investment employees were paid more than $2.1 million in bonuses in March, three months before the bonus policy was suspended. Those bonuses were awarded based on individual performance reviews for work in 2002. The investment staff usually receives a second bonus in July based on how their accounts performed.

In March 2001, for example, 95 investment employees, got $2.18 million in bonuses for work in 2000; in July of that year, 63 of those employees shared $2.2 million based on their accounts.

In March 2002, 110 investment staff received $2.25 million in bonuses and, in July, 64 employees shared $1.5 million.

The analysis also shows that, year to year, the same people get the highest bonuses.

With the bonuses added to their regular salaries, three investment employees in 2001 actually made more than their boss, Stephen A. Mitchell, the deputy executive director for investments.

John K. Imboden, assistant director of equities investments, had a base salary of $164,000 compared to Mitchell’s $215,000 in 2001. But Imboden received two bonus checks that year totaling $178,880, which increased his pay to $342,000. Mitchell received $73,000 in bonuses that year, leaving him in fourth place in total compensation behind Elizabeth L. Lynch, assistant director of international investments at $335,342 and Mary Ellen Grant, director of the real estate division at $305,000.

Mitchell is now the highest paid investment employee. Lynch remains second and Grant third, but Imboden has fallen to seventh because his bonuses have declined.

Base salaries among the department’s top 17 wage earners increased an average $12,178 from 2001 to 2002, and an average $4,164 from 2002 to 2003. Bonuses for those same employees averaged $122,491 in 2001, $92,156 in 2002 and $43,671 in 2003, though the latter is the single bonus given in March.