Tom Curtis and Mike Nehf re: Cost reductions at STRS

From Tom Curtis, July 6, 2009
Subject: 062909 Curtis, Re Nehf, Re STRS Cost Reductions

Mike,

Please understand that I have been actively involved in helping to bring about reform of the misspending and mismanagement of the STRS for the past 6 years. I have seen few good results. The current financial position of the STRS sorely attests to that. All I have seen is the continued erosion of the benefits I retired with in 1998. That certainly does not say much for the quality of management, does it? Further, I continue to be told that once vested, my pension is guaranteed for life. Would you stake your life on that for me?

After 6 years, I have learned one thing, management can no longer be trusted! That is sad! Management's priorities are far from being in the right order, though I am very sure you would clam they are. Well....HOGWASH! Management's accountability to its stakeholders looks like a piece of Swiss cheese.

You indicated in your email that changes within the STRS could save thousands of dollars. I would hope that you meant millions and that you are sincere about making that a reality. Wage reductions are very much in order for all STRS employees. The raises for all employees that were agreed to for 2009 by our unqualified elected board members simply shows the ignorance of the majority of the elected board members.

The reduction of our COLA is ridiculous, though I have been told you were successful in doing that very same thing in Georgia, so it does not surprise me that you will support such an action in Ohio. That COLA is the lifeline for our future, most importantly for most teacher retirees. Please look elsewhere and make changes that will not reduce the much-needed income of the teacher retiree and their beneficiary.

Documentation can prove that management and their consultants have been far more concerned about keeping the wages and benefits in the proper percentile for all employees then they have about providing the stakeholder with value for his/her dollar. Please correct me if I am wrong, but the STRS management and staff have realized little, if any reduction in wages and benefits, while losing billions. That is absurd!

Retirees have been taking it on the chin since 2001. Herb Dyer's lack of ethics and leadership, and a board he cohered into such, ruined our retirement system and placed a virus within the system that has not yet been expunged. Further, in my opinion, he was aided and abetted by the OEA leadership.

Mike, there was hope when Damon retired, that the next executive director would bring management to its senses, but I do not see that happening. None of the current management has offered any reductions in anything that they receive. It is all about the employee and not about the retiree. Why, because not one of you has any reason to be a loyal and trusted member of the STRS, you have absolutely no stake in our retirement system. All of your retirement goes into OPERS which, by the way, still continues to pay a subsidy for the retirees HC for them and their spouse.

Yes, there have been many changes in the past 6 years. Those results were credited to the executive director, the board and the OEA. That is so bogus! If it were not for the findings of Dennis Leone in 2003 and the pressure and support of CORE, few of those changes would ever have seen the light of day.

Retirees cannot change our retirement financial situation. Actives still have many avenues to plan for their future. Please do not continue to crush the retiree benefits, what little we have left.

Tom Curtis

From Mike Nehf, June 29, 2009
Subject: RE: 062709 STRS Cost Reductions

Tom, you’ve provided many comments here. I hope you are not surprised to hear that we are considering all of these. Changes here will save thousands of dollars. As we have said, everything is on the table. COLAs for retirees, unfortunately, are the most expensive pension cost – these can save billions of dollars. We will continue to work on all solution sample sets over the next couple months, so please stay tuned.

Sincerely,
Mike Nehf

From Thomas Curtis, June 27, 2009
Subject: 062709 STRS Cost Reductions

Mike,

Thank you for responding to one of my questions. Thank you for continuing to reduce the STRS staff numbers during your first year of tenure at the STRS. You are to be congratulated for doing such, something that obviously does not bring you praise from the employees. Please continue to evaluate all areas of employment expense and continue to make reductions accordingly.

You have not been willing to provide me with numbers of part-time employees for past years. However, it is my hope that the use of more part-time employees would be considered, as they are usually less expensive to employ. Considering the unemployment rate in Ohio, most employees being considered for layoff would be willing to move to a part-time status, as opposed to unemployment, which would remove their HC benefit.

The fact is the STRS has been way overstaffed since Herb Dyer's 10-year excessive misspending and mismanagement tenure. In 2003, Dr. Leone asked both Herb Dyer and Damon Asbury to make staff reductions by RIF, but neither would consider such. The fact is, all school administrators that you represent have to do that frequently in today's economy, so you should play by the same rules as well.

As you are aware from the many emails you must receive daily/monthly from retirees, you will be expected to continue to reduce costs. Staff reductions are only one area, but a major one. I will ofer a few more.

Retirees will certainly understand that educational programs that have been offered in the past are expensive to offer and staff. Banks, credit unions and investment counselors offer these educational programs regularly. Other then off-site retirement counseling (a reduction of incidence which should also be considered), all other educational programs for retirees should be eliminated until the economy and the STRS holdings greatly improve. These programs are nice, but really are not required, considering the cost to the system.

Parking for employees who work in downtown Columbus usually comes at a premium price, as does the cost of the large parking deck the STRS owns. Though it is a nice benefit for employees, amongst the many others they receive at our expense, charging for such should certainly be considered. I would doubt that many other large employers in the downtown area provide such a benefit for their total staff.

We the stakeholders of the STRS pay for numerous benefits for employees, far too many to review here.

The STRS employee does not share in the expense of any of these benefits, as they do not belong to the STRS retirement program. In my opinion, this is an oversight by the legislature, but then all 5 of the pension systems pay into the one that legislators pay into, OPERS, don't they? Is there a possibility that this oersight might be changed in the future?

As always, I hope you will kindly respond to my suggestions and questions.

Tom Curtis

From Mike Nehf, June 26, 2009
Subject: RE: 061609 Cost Reductions

Tom,

When I arrived at STRS Ohio nearly one year ago the head-count was 610, FTE’s 595, and position openings 9. As of today, the numbers are 592, 575, and 2, respectively. I take no credit for the work that previous administrations completed in reducing the numbers from over 700 to 610.

Respectfully,
Mike Nehf

From Tom Curtis, June 16, 2009
Subject: 061609 Cost Reductions

Mr. Nehf,

You were recently quoted as saying in Sidney that the STRS has reduced staff size from 700 to 600. Just how many of those reductions were generated under your watch? Please be specific.

To my knowledge, the STRS has always been about business-as-usual, no matter what the losses totaled. The STRS investments for this decade now total over $42 billion dollars (12.3 in 2002 & 30+ in 2009), yet the investment staff and others have continued to receive millions in bonuses. Just how can you possibly justify such rewards even being considered?

Please don't tell me the board approved such, as if these bonuses did not come up for a vote through you or your predecessor, they would not have even been considered.

Thank you for a prompt reply.

Tom Curtis
STRS Stakeholder