An STRS FLASHBACK DOUBLEHEADER - 5 years ago

From John Curry, September 20, 2009

The recent STRS board bonus vote, proceeded yet again by a lengthy "executive session," brings to mind what happened once before in the history of the STRS concerning "another" bonus issue. The following two articles were authored by (former Copley Columbus Bureau chief) Paul Kostyu back in May of 2004. Many who will read these moments in STRS history will be doing so for the first time as we now have many more actives and retirees who have suddenly become interested in the current and past actions of "our" retirement system.

John

STRS employees should sue
By PAUL E. KOSTYU
Copley Columbus Bureau chief
Canton Repository, May 28, 2004

COLUMBUS -- The noninvestment employees of the State Teachers Retirement System should sue the pension fund. Doing so would tell us something about them.

Last week, the pension board rejected paying bonuses to 268 employees despite the recommendations of Executive Director Damon Asbury and Assistant Attorney General John E. Patterson. Both said the pension fund risked a lawsuit that it would likely lose. The employees should sue.

Asbury said the board had a legal obligation to pay the employees for completing their “stretch goals” in the 2002-2003 fiscal year. It wasn’t a stretch to see that those goals were really little more than what many considered the employees’ regular duties.

Paying the bonuses would perpetuate an STRS culture of entitlement, which flourished under former Executive Director Herbert L. Dyer. His undoing came from publicly proclaiming that the money flowing into STRS from members and investments was the board’s money to spend as it wished.

But the culture enveloped more than employees. The so-called 13th benefit check was sent to retirees for years while investments were good. They depended on the extra monthly payment, which they felt they deserved and had been promised. That entitlement ended when investments soured in the early 2000s. Nobody sued the system.

Health care is another STRS entitlement. The system is not obligated by law to provide health care coverage, but it does. Asbury has said there is no retirement without affordable health care. Sounds like a promise. But the care is no longer affordable for many retirees and their spouses. Nobody sued the system.

The bonus plan for noninvestment employees was abolished last week in the wake of questionable spending at STRS for travel, artwork, expenses and salaries. Surely employees are entitled to just one more bonus. They should sue.

STRS culture fits with an American culture based on greed. That’s the only way to explain why employees would sue. All those eligible for a bonus are the most highly paid STRS employees. We’re not talking about the janitors, secretaries, security guards or any of the hundreds of other dedicated STRS workers.

We’re talking about their bosses, those who rake in high five- and six-figure salaries annually. We’re talking about many bonuses in the neighborhood of $30,000 and $40,000. The irony shouldn’t be lost on anyone that the person eligible for the lowest bonus — less than $200 — is a teacher.

The staff members receive regular compliments from the board about how wonderful they are, how hard they work, how dedicated they are to retirees, actives and the system.

The employees should sue. Let’s see how dedicated they really are. Do they work for a more-than-decent paycheck and the satisfaction of being STRS employees, or are they in it for every dollar they can grab in bonuses, even if they haven't done much to earn them?

Let’s not be too surprised if greed is the answer. We’re living in an era of corporate greed — Enron, Martha Stewart, Tyco and others. It’s a long list.

There was a time when people were satisfied with having a job. There was a time when people took pride in their work. There was a time when “nice job” was a sufficient bonus. Not anymore.

The employees should sue.

They need to do so soon, before tort reform kicks in and limits the amount they can recover. It’s hard to see how employees could collect punitive damages. There was no purposeful intent to harm them. They’ll ask for damages any way — attorney fees, too. They’re entitled.

Here’s what employees ought to do. If they really are dedicated to STRS and not driven by greed, prove it. Do they want the system to escape the scandalous morass of the last year and move forward? Stipulate in their lawsuit that if they win or settle, all the money received — the bonuses, attorney fees and punitive damages — goes into the STRS Health Stabilization Fund for retirees. If employees want to show they deserve the bonuses, then the money shouldn’t matter. Why punish the employer they supposedly love just to prove a point? Or is it really about greed?

Employees should sue so we can find out.

I got a big bonus at the board’s meeting last week for doing my job. Several retirees, whom I’d never met before but who had been reading my stories about STRS, shook my hand.

“Thank you,” they said.

Five STRS employees sue to get back their bonuses
By PAUL E. KOSTYU
Copley Columbus Bureau chief
Canton Repository, May 29, 2004

COLUMBUS — Five employees have sued the State Teachers Retirement System seeking the bonuses they were denied by the pension board last week.

The employees filed the suit in Franklin County Common Pleas Court late Friday asking for class-action status for 268 noninvestment staff eligible for the $1.8 million in bonuses ranging from $416 to $46,574.

The documents filed by Columbus attorney Michael R. Szolosi Sr. appear to ignore Cassandra Hill, a teacher in the STRS Day Care Center whose bonus was to be $174, even though she appears in the appendix filed with the lawsuit. In fact, the appendix lists investment staff and the bonuses they received even though they are not a party to the suit.

Included among the 268 employees are two deputy executive directors, Robert A. Slater, with a bonus worth $46,573, and Sandra L. Knoesel, $43,324, and the board’s executive assistant, Eileen Boles, $6,427.

Repeated attempts to reach retirement system spokeswoman Laura Ecklar for comment about whether she and others would join the suit were not returned. Her bonus was listed at $15,204.

The suit asks for an unspecified amount of punitive damages and attorney fees. The suit seeks temporary and permanent injunctions to prevent the retirement system from using the money set aside for the bonuses for other purposes.

Reached in Chicago, Executive Director Damon Asbury said he knew some employees were talking about filing a lawsuit.

“This was not unexpected,” he said. “We will turn it over to the attorney general to look at and advise us on our next step.”

Kim Norris, a spokeswoman for Attorney General Jim Petro, said the case “is winnable because of the financial condition of the funds” at the time the bonus plan was in effect.

The bonuses were to be awarded to noninvestment employees for work done in the 2002-03 fiscal year. In the aftermath of media reports about questionable spending at the retirement system, the bonuses were suspended last year. The retirement system board voted 5-4 on May 20 not to pay the bonuses to noninvestment employees and unanimously terminated the program. Bonuses were awarded to investment staff, however.

At the meeting, Asbury and Assistant Attorney General John E. Patterson, who is the board’s attorney, recommended that the bonuses be paid. Both predicted a lawsuit would be filed and that the retirement system would lose if the bonuses were not paid.

Petro, however, instructed his representative on the board to vote against the bonus plan because he said it wasn’t in the best interest of the pension system.

The employees bringing the suit are Thomas P. Scott of Mount Vernon, Marvin L. Moore of Columbus, Donald E. Van Loon Jr. of Delaware, Dwayne T. Lane of Canal Winchester and Carmen Fenton of West Jefferson.

Scott, who works in the information technology section at the retirement system according to Asbury, has an annual salary of $98,310. He was scheduled to receive a $15,729 bonus.

The annual salary, job and bonus of the other four are: Moore, a retired computer specialist, $60,560 and $5,632; Van Loon, Web developer, $81,610 and $12,155; Lane, Web developer, $79,420 and $7,433; and Fenton, tax coordinator, $52,150 and $2,033.

The suit accuses the board of acting arbitrarily and in bad faith by giving bonuses to some employees and not others when many of those receiving the money had similar jobs to those who did not. It also said lack of the bonus will affect employee retirement benefits, which are based on the average of the final three years of pay.

The suit also accuses the system and board of arbitrarily setting a lower figure for calculating how much the bonuses should be. The maximum bonus was set at 80 percent instead of 100 percent. The plaintiffs said the retirement system broke its contract with employees because a performance-based incentive plan was in place in 2002-03, which was to be paid in September 2003.