Friday, March 20, 2009

Rich DeColibus: A Gone With the Wind letter to the STRS Board; and we DO give a damn

From Rich DeColibus, March 20, 2009
Subject: Atlanta 1864
Dear Gentle(wo)men,
We out here in the hinterlands are becoming concerned about what appears to be an increasing atmosphere of unreality at STRS. It is clear individually you are intelligent and competent persons. Yet, the things STRS institutionally says and does seem disconnected from the world around us and current events. We're all for Science Fiction and alternate universes, but we prefer STRS to stay in ours.
We are in the midst of an unprecedented world-wide economic crisis. You know this. STRS has lost $30+ billion in assets. You know this also. It is very, very disturbing to get the sense that STRS is "treading water" until things get back to "normal." Public statements issued talk about "difficult times," as if this is a temporary inconvenience, soon to go away. My sense is the last twenty years are, like the movie, Gone With the Wind. The landscape has changed, and my best guess is it'll be a long, long time before even a resemblance of what we considered "normal" returns. If ever.
Given that, my expectations are: (1) some realistic acknowledgment that things are different, and less wishful thinking that "This, too, shall pass away" because it's not going to; (2) a change in attitude from "let's wait this out" to proactive policy changes which reflect the new conditions; and (3) an abandonment of the Wall Street mentality which insists on bonuses and other business-oriented practices now as outmoded as the Southern society of 1860.
The current public furor over outrageous bonuses paid to investment counselors, whether at STRS or AIG, needs to be understood. It is not a temporary spike of irritation soon forgotten; what it has done is shake the faith people have in institutions which are supposed to manage financial affairs. Speaking for retirees I am in contact with, nobody trusts the board anymore to honor its duty of fiduciary responsibility. In short, we think you blew it. Somehow you were captured by the Wall Street mind-set that massive excesses in pay and bonuses could be excused away as "normal business practice" and "industry standard," an illogical fiction which has eroded severely our belief you have acted in the best behalf of STRS (and, by extension, active and retired members).
We now question what is the real condition of STRS? Do you have enough assets to continue with the current pension and retirement guidelines? If not, what are the options? What is going to happen to health care for retirees? Without affordable health care, there is no retirement. We would like real answers, not just platitudes to keep us happy until "things turn around." We're all adults and we can take bad news; not cheerfully, but we can take it. What we cannot take is being treated like children who must constantly be reassured mommy and daddy will take care of everything, and all will be well. We believe even if the economy makes a miraculous upturn, STRS has now been so damaged it can never again be business as usual and, that being the case, want to know what adjustments will be made to accommodate the ugly new world we live in.
We also believe STRS is grossly overstaffed; if you look at the personnel which STRS had ten years ago and the numbers it has today, there seems to be no justification for the increase. If I am incorrect, please correct me.
To make a long story shorter, what we would like to see is a new approach rooted in reality, however brutal, along with options being considered to deal with STRS's diminished capacity. We do not want to hear about "industry standard," bonuses, or how we must pay salaries which amount to extortion to keep our investment counselors. We recognize this as utter nonsense, the same drivel AIG uses to justify its recent spate of "retention" bonuses to the same people which created this economic disaster. We have nothing against our investment counselors and our best guess is most of them are quite competent, but they are not gods to be worshipped, which is the reaction we always seem to get when hard questions about their compensation are asked. They, too, must live in the ugly new world the rest of us must live in.
The truth, however unpleasant, has a way of oozing to the surface no matter how industriously papered over. If we're teetering on the edge of insolvency, say so. And then tell us what the options are. This is our lives and we very much give a damn.
Rich DeColibus

Thursday, March 19, 2009

Dennis Leone: They are still coming in............

From Dennis Leone, March 19, 2009

As of 10:00 p.m. today (3-19-09), I have received a total of 110 emails from STRS members (in the past 48 hours). The overwhelming majority of these have come from active members. Of the 110, all but one have expressed opposition to bonuses being paid when we are losing money.

Labels: , , ,

Shirlee Zerkel: Comments on today's Board meeting

From Shirlee Zerkel, March 19, 2009
Subject: About today's meeting
I am very concerned about what I saw as lack of fairness in the Board meeting.
Why was the vote concerning staff benefits moved to tomorrow? Was it because CORE members were there today or maybe that one of the Board members will not be present part of tomorrow?
I know that there is the 3 minute rule for public speakers. Mr. Stoll was stopped at 4 minutes, yet Mr. Leibensperger was allowed to finish his speech and remarks that were over 5 minutes. He was not asked to stop. That has happened before at Board meetings over the past few years. All speakers should be treated equally.
Board members, I am asking you to question, think and vote in the way that best benefits the retirees. That is why the retirement system was created. I know that a few of you do really see what is happening and I want to thank you for the stand you have taken. But the majority of you need to wake up and think for yourselves. Just because it is presented to you by the staff at STRS does not mean it has to be accepted.
The management staff is interested in what helps and protects them more than they are in meeting the pension and health needs of the retirees. We are in crisis financially; the cuts made so far for the STRS system operation is not enough. We need reduction of staff, NO PBI, No bonus or NO wage increases for any staff as long as retirees are hurting and facing still bigger hits in the near future. Retirees are told by STRS that major cuts to subsidies and benefits is necessary. We could understand that if we saw the same cuts and attitude in other areas of operational spending. Cuts as deep should be made in all aspects of the STRS operation.
Board members who are elected, your vote will definitely affect your future. Thank about that!
Shirlee Zerkel

CORE members: We need to write to our Congress(wo)men NOW to rescue HC for all

Alice Faryna, M.D. to Dave Parshall, March 19, 2009
Subject: lobby letter
Dave, here is a sample letter for CORE members to use as a template. The key points are to be brief and follow the structure of a personal story, a statement of the problem, a solution and the "ask".
Write a Letter to Your Member of Congress
Your members of Congress need to hear from you. They depend on you to educate them about what is happening in their district and what legislation is most important to their constituents. Writing a letter and making a follow-up phone call only takes a few minutes of your time, but it ensures that your representatives know how you want to be represented. Be sure to include all of your contact information so your member of Congress' office can reply.
[Click image to enlarge.]

Note: There is no senate version of this bill at this time. All mail sent to congressional offices in Washington is now screened for anthrax, so we suggest you fax a copy of your handwritten letter to Congress, send them to the local district office, or contact your members of Congress via e-mail (which is still less effective than a handwritten letter). You can find all the necessary contact information for congressional offices on the website: or

Find your Congress(wo)man here.

From Dave Parshall, March 20, 2009
CORE members it is time to write to your State and Federal Congressional Representatives and Senators to support a single payer plan and true healthcare reform. This may be are only hope.
There is a group of supporters here in Ohio including educators, doctors and others trying to influence the Obama Administration. The Insurance lobby and Big Pharma are out in force to kill true healthcare reform and to make sure that Insurance companies continue to make your medical decisions for and your doctor. Their only goal is to continue to fleece Americans and American businesses---Profit.
Please copy this attachment as a template [template for writing Congressmen is posted above] for you to use to start a letter campaign. Several educators joined us on Thursday and shared this template with us for you to use. The CORE members approved this move on our part.
It is clear that a new version of HR 315 is all but dead in the waters even if is re-introduced. It is unlikely that it will be re-introduced anytime soon and we can’t wait. So let us make our voices head at all levels. We can’t wait for others to solve our problem.
Dave Parshall, Pres. CORE

Labels: ,

June Hughes: Thousands would jump at their jobs [at STRS] for half the pay

From June Hughes, March 19, 2009
Subject: Re: Bailout
After downsizing the STRS employee numbers, those still employed (skeleton crew) should have to take a 20% reduction of salary. There are thousands who jump at their jobs at half the pay. What is Nehf making and how much was his bonus? I don't recall seeing that information. Or, is he hiding that too?

Nancy Boomhower's speech to the STRS Board, March 19, 2009

Good afternoon. My name is Nancy Boomhower. I am a retired first grade teacher from Medina County. I am presently employed, on a part time basis, as a GED teacher at the Medina County Jail.
"Nero Fiddled While Rome Burned." That phrase keeps going through my head. Why, you ask? The reason is that I keep seeing our money dwindling away and nothing seems to be being done to put out the fire.
We had $80 billion in assets as of October, 2007. As of January 30, 2009, our assets were $49.7 billion and shrinking. Our assets are down about 40%. This is cause for the fire alarm to be ringing and something to be done!
When my investments started to dwindle away, I did something. I pulled back and put my money in the credit union at 4.5%. I may not be making as much interest as I was but my money is not continuing to shrink.
In the public sector, at least half of the investment staff would be gone along with the billions. Is that happening here at STRS? No, it is business as usual. Yes, PBIs were frozen but big raises were on the horizon.
It seems to me that it is time for a reality check here at STRS. I keep hearing the term that the investment staff needs to be in the 25th quartile. Maybe, instead, they need to be grateful to have a job. And a good, well paying one at that.
Our staff does not need to look for funds to invest. The funds are handed to them. They receive many perks: such as the ability to live where the cost of living is decidedly less than in the big cities. They have free parking, inexpensive lunches, excellent child care facilities on site, PERS retirement, a Cadillac healthcare plan and so on. These perks need to be considered as part of their salaries. A word of advice to our retirement staff. Be careful that you don't kill the golden goose with your huge salaries and raises.
The people who need to wake up are you people sitting on the Board. You are the ones who vote for or against these items. You are the people who just might be doing away with not only our health care and endangering our pensions but also your own. Think about that!

Bill Leibensperger's speech to the STRS Board, March 19, 2009

March 19, 2009
State Teachers Retirement System of Ohio Public Testimony
Dear Executive Director Nehf, Chairperson Cervantes and Distinguished Board Members:
[Self introduction as representing the Health Care Advocates and some spontaneous remarks here.]
Our purpose in writing is two-fold, first to acknowledge the funding challenges facing the System and commend you for your commitment to a structured and reasoned approach to long-term contingency planning; and second, to remind the Board of the Health Care Advocates' commitment and willingness to provide broad, well-reasoned constituent input to your deliberations. As you know, HCA is a coalition of stakeholder professional organizations and through one or more of our member organizations HCA represents all of the 400,000+ members of STRS. A hallmark of our coalition is consensus decision-making. When HCA offers its support on an issue, you can be assured it speaks from a position of broad inclusiveness, not narrow interests.
In the seven years since HCA was formed a foundation of trust has been built between HCA and the System. As a result of the partnership between HCA and STRS, a base of bipartisan support for the funding initiative has been established in the Legislature, an extensive grassroots network of Health Care Champions has been built, and prior to the economic downturn, 13 years of solvency had been added to the HCSF. A key ingredient in the partnership between HCA and STRS is open communication. Having HCA at the table sharing in the discussions, deliberations, and recommendations concerning the health care program has proven to be a successful model.
At the March HCA meeting, our member organizations agreed via consensus to expand HCA's scope of concern to include pension funding and benefits. For HCA to remain singularly focused on health care, while the System grapples with a wider array of funding and benefit design issues would be less than responsible on our part. We ask that you revive and continue your tested, successful model of partnership with HCA and invite us to be a fully participating partner in the Board's long-term contingency planning initiative, as well as continue our participation in Special Health Care meetings as needed. There are unprecedented challenges before us, and we are committed to sharing the weight of accountability for conceptualizing and supporting responsible solutions. As always, we are very clear about what we can bring to the table in an advisory capacity. We honor and respect the Board's decision-making authority, but hope we have proved ourselves as worthy partners in pursuing our shared interests. Thank you for your consideration.


From Kathie Bracy, March 19, 2009
Subject: Bailout

To the STRS Board:
To those of you who PERSIST in the mindset of bailing out millions of dollars of OUR pension money into the pockets of the already-rich investment managers at a time when our STRS pension fund is losing BILLIONS and BILLIONS of dollars and the Board Policy Manual CLEARLY gives you the authority to do otherwise at any time: WHY? Are you independently wealthy and it doesn't matter to you? Are you drugged with the thrill of power your position gives you? Are you getting kickbacks from somebody? Is somebody twisting your arm? I don't get it; but those reasons sound pretty plausible to me!
PLEASE wake up and STOP THE BLEEDING NOW! This is NOT the time to put thousands of lives at risk (yes, that's EXACTLY what you are doing) for whatever reason when you HAVE the power and the authority to help those who need it the most, especially in these difficult times. In case you haven't heard, these are NOT normal times with our ailing economy. You are making the rich richer at OUR expense. YOU are part of the culture of GREED that brought the nation's economy to its knees. Is THIS what you want to be remembered for long after you have served your term on this Board? Do you look forward to telling your grandchildren you hurt thousands of people because you gave their money away to rich people?
A HUGE thanks to those of you who "get it" and are doing all you can to wake up your somnambulistic colleagues. Your bonus will be our eternal gratitude, because that's ALL we have left to offer you, and we know you have the integrity to be satisfied with that. I know you can sleep tonight.
Kathie Bracy
STRS Retiree

John Bos to STRS Board: The sailor spends his OWN money

From John Bos, March 19, 2009
Raises, Bonus, and The STRS Retiree

Ladies and Gentlemen of the STRS Ohio Board,
Obviously many of you do not understand the feelings of the taxpayers and STRS participants. Have any of you (or Mike Nehf) asked the Investment Staff to return their inappropriate raises? Have any of the STRS Investment Staff offered to refuse their "bonus" for the 7/12 of this fiscal year? Has anyone decided to run a simple member survey that asks 2 questions? I support the bonus system when the economy is in the tank? I approve of the raises that were recently awarded to the STRS staff? Please do not tell me that Laura Eckler can not run this simple survey..
A cartoon in the paper this week tells the story best!!! What is the difference between an AIG bonus baby and a drunken sailor? The sailor spends his own money. Perhaps this is a joke that many of you do not understand.
It was also interesting to read in the paper that Ms. Eckler stated that it was not your intent to grant raises to certain staff members to compensate for their loss of bonus money. I did not realize that she was trained to be an interpreter of your thoughts. You may wish to call this PBI, but to the members that are suffering, it is still a bonus.
How much do you expect the older retirees to suffer before you are willing to tell Mike Nehf and the staff that you will no longer support the "entitlement attitude", but rather will work to assist the STRS retirees.
John Bos
A 1989 Retiree with a wife that is disabled.
Looking for work, Can you provide a list of potential positions?

Wednesday, March 18, 2009

Dennis Leone: Members are speaking

From Dennis Leone, March 18, 2009
Subject: Members are speaking..................
Today -- as of 9:30 p.m. -- STRS board members received 60 emails from STRS members who spoke out on the topic of bonuses. Of the 60, a total of 59 wrote that they oppose such bonuses when we are losing money.
D. Leone

Labels: , , ,

Click image to enlarge.


CORE meeting to be held Thursday, March 19, 2009

Click here for details.

Tom Curtis: Complaint to the Ohio Attorney General's Office

Tom Curtis to Robert Morrmann, March 18, 2009
Subject: 031809 Public Records Request
Hello Mr. Morrmann,
I wish to file a complaint against the executive director of OSTRS, Mr. Michael Nehf, for the failure to provide a stakeholder with what I believe to be public records.
On February 19, 2009 I made a written request by email with Mr. Nehf for the month by month employee counts from 1990 to present, both full and part-time.
I requested this budgetary information in hope that I might determine at what period(s) the staff at the OSTRS grew to the large number that it stands at yet today.
Mr. Nehf's first response was that he would have the staff prepare the information and it would be forthcoming. After a few weeks and no results, I made my request with Mr. Nehf again. He apologized and said he had been out of the office and had forgotten about it, but that it would be forthcoming.
The next day I received an email of a document that he had presented to the entire board at the February board meeting. This document listed the employee counts for full-time employees for the past ten years, but made absolutely no mention of the part-time employee counts.
I responded by email and again made it quite clear as to what I desired.
His response:
[From Mike Nehf, March 6, 2009
Subject: RE: Employee Counts]
STRS Ohio does not have this information available to copy for you. It would have to be compiled. I apologize that I cannot comply with your request. I reiterate that STRS is working diligently during these difficult times to serve our members’ most important needs. Tom, I hope you understand. Is there any additional information we can provide that we may already have developed?
Mike Nehf
My response to the above was that I had no thought the information I requested would be something that could simply be copied and encouraged him to comply.
Mr. Nehf followed with the information I requested on all full-time employees for the time period I requested, but indicated that he could not provide the information I requested on all part-time employees. I continued to request that information but his final response was:
[From Mike Nehf, March 13, 2009
Subject: Re Part-time Payroll Counts]
STRS Ohio has attempted to provide you with records that included the information you requested, but I’m sorry that STRS Ohio does not maintain records in a form that is exactly responsive to your request. Tom, you might recall that under Ohio Public Records Law, a public office is not required to create new records to respond to a public records request, even if it is only a matter of compiling information from existing records. As I had earlier indicated, it would require hours of a programmer’s time to create a new report for you going back 18+ years, month by month.
I apologize that I cannot comply with your request. I reiterate again that STRS Ohio is working diligently during these difficult times to serve our members’ most important needs and I hope you can understand. I look forward to continuing to work with you in the future.
Mike Nehf
I have followed with two more communications, to no avail. I indicated that I would file a complaint for the information I requested with the attorney general's office. He has been clear that he will not provide the information.
Mr. Morrmann, many other retirees and I feel that the management and board of the OSTRS is very unresponsive to making cut-backs and reducing budgets in these very difficult times. Recommendations for such by one board member, Dr. Dennis Leone, met with strong opposition in November 2008. However, by February most had finally agreed to the wage freeze and the stoppage of the PBI's until the end of the fiscal year on June 30th, 2009.
As you are probably aware, the OSTRS management and board not only approved raises from 6-15% and the continuation of PBI's last April, but then paid out $6 million in PBI's recently for 89 investment staff, at a time when the OSTRS had lost $30 billion dollars.
In my opinion, I have made a reasonable budgetary request of the OSTRS and feel that Mr. Nehf should be required to provide all of the information I requested.
I was told you are the specialist in this area and would respond to my complaint. I will thank you in advance for expediting my complaint in a timely fashion.
Thomas Curtis
OSTRS Stakeholder

Tom Curtis and Mike Nehf re: Part-timers employed by STRS

From Mike Nehf, March 18, 2009
Subject: RE: 031809 Curts To Nehf, Re Part-time Payroll Counts
Apology accepted. When I’m in Stark County I’ll be glad to meet with you. It might be good for us to talk by telephone in the meantime. Bless you and your wife.
Mike Nehf
From Tom Curtis, March 18, 2009
Subject: Re: 031809 Curtis To Nehf, Re Part-time Payroll Counts
Hello Mike,
Yes, after a few requests you did provide me with half of the information I requested, however I hope to receive the other half soon. What is interesting to me is that you have not even offered and alternative. You simply tell me that information is not available, when it is.
Mike, I have been concerned about the large number of staff the STRS has had since I first obtained that information in 2003. I am interested in finding the time period(s) when the STRS increased staff counts significantly to try to determine the reasons for such. I cannot determine that without the employee counts for all full and part-time employees for that period. This is a budgetary question and I see absolutely no reason why you should withhold the information. The cost of preparing that information is totally insignificant.
I will contact the Attorney General's office today and make a request for the appropriate forms.
Mike, I really do not like having to go this route, but you obviously feel I do not deserve to see the part-time counts.
Please understand, that once Dennis Leone's term expires at the end of August, retirees may no longer have someone on the board that will be truthful with us concerning the true operation of the STRS. After that time, you will be receiving many more requests for information that you can simply not copy, but you will be required to supply. I guess this is as good a time as any to find out if you will be required to provide the information I have requested of you many times for a month now.
I appreciate your invitation to sit down and talk with me. I would be glad to do so, and would enjoy meeting you. However, I will not drive to Columbus to the STRS building. It takes 2 hours and fifteen minutes door-to-door (one way) for me and about $40 in gasoline. I made that drive on the average of 2 times a month for two years. Attending the board and CORE meetings on Thursdays meant a full eight hour day. The STRS/CORE meetings I drove down for only took about 6-7 hours. I have already spent far too many hours and too much money driving to Columbus attempting to bring about change. Besides, I normally left far more frustrated then when I arrived.
Nearly 2 years ago my wife was diagnosed with vascular dementia. This has many similarities to Alzheimer's. I am her only caretaker and I cannot be away from home for that lengthy of a period of time. I am sure you will be speaking to an RTA, or some other group in the Northeastern Ohio area sometime this year. I would be glad to meet with you and sit down and talk, if that could be worked into your schedule. I live in Stark County and my phone number is [xxx].
May I offer an apology for my angry tone and comments in my emails to you. That is inappropriate on my part.
Tom Curtis
From Mike Nehf, March 17, 2009
Subject: RE: 031709 Curtis To Nehf, Re Part-time Payroll Counts

I appreciate you giving me another opportunity to respond. I wish I could provide another response for you. Maybe we could meet sometime and talk further. As you know, I’ve met with many of our CORE members and have had positive discussions with them about many matters. I look forward to that opportunity with you.
Mike Nehf
From Tom Curtis, March 17, 2009
Subject: 031709 Curtis To Nehf, Re Part-time Payroll Counts
Hello Mike,
Thank you for your response of 3.14.09 to my request of the numbers of part-time employees per month for the past 18 years, in which you stated,
"I apologize that I cannot comply with your request. I reiterate again that STRS Ohio is working diligently during these difficult times to serve our members’ most important needs and I hope you can understand. I look forward to continuing to work with you in the future."
After discussing my request for employee counts with a school law professor, he felt that my request cannot be legally denied. He explained it this way.
If you asked for information about how many part-time employees at STRS weigh more than 175 pounds, I could understand resistance. The key in the school law classes I teach is whether the information exists or is easily retrievable. I suspect if you asked your school district how many of each teachers graduated from Ohio colleges, the district could legally refuse your request even IF the information was technically retrievable. However, if you asked how many teachers in your district had at least a master’s degree, I suspect the district would produce it.
Therefore, I will ask you once more to supply the remainder of the information I requested.
A timely response is requested.
Tom Curtis
From Mike Nehf, March 13, 2009
Subject: Re Part-time Payroll Counts
STRS Ohio has attempted to provide you with records that included the information you requested, but I’m sorry that STRS Ohio does not maintain records in a form that is exactly responsive to your request. Tom, you might recall that under Ohio Public Records Law, a public office is not required to create new records to respond to a public records request, even if it is only a matter of compiling information from existing records. As I had earlier indicated, it would require hours of a programmer’s time to create a new report for you going back 18+ years, month by month.
I apologize that I cannot comply with your request. I reiterate again that STRS Ohio is working diligently during these difficult times to serve our members’ most important needs and I hope you can understand. I look forward to continuing to work with you in the future.
Mike Nehf

What Wisconsin teachers have to look forward to.....could we be far behind?

Click images to enlarge.

STRS March 2009 Board Meeting

From STRS, March 11, 2009
The State Teachers Retirement Board and Committee meetings currently scheduled at the STRS Ohio offices, 275 East Broad Street, Columbus, Ohio 43215, are as follows:
Wednesday, March 18, 2009
...11 a.m. Disability Review Panel (Executive Session)
...2 p.m. Staff Benefits Committee
Thursday, March 19, 2009
...9 a.m. Investment Committee
...10:45 a.m. Retirement Board Meeting
Friday, March 20, 2009
...9 a.m. Resumption of the Retirement Board Meeting
The Retirement Board meeting will come to order at 10:45 a.m. on Thurs., March 19, and begin with a report from the Investment Department. The Executive Director's Report is expected directly after the lunch break, followed by public participation, a report from the Member Benefits Department regarding pension benefits and routine matters, old business, new business and any other issues that may require Board attention. When the Retirement Board meeting resumes at 9 a.m. on Friday, March 20, the Board will receive a report on Long-Term Contingency and Financial Planning, as well as a report from the Member Benefits Department regarding health care.

STRS Flashback 5 years ago (5/28/2004): 'STRS culture fits with an American culture based on greed'

From John Curry, March 17, 2009
These weren't the words of a CORE member .....they were the words of an investigative reporter who was a nominee for a Pulitzer Prize in newspaper journalism for his 2003/2004 STRS investigative series with the Canton Repository -- Paul Kostyu. Five years ago we were also dealing with another STRS "bonus issue"...some things just don't change much, do they? John
"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?"
STRS employees should sue
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.

Tuesday, March 17, 2009

You are now entering the "Spin Zone"

Click image to watch the circles do a slow spin!

From John Curry, March 17, 2009
"While the pension can't match Wall Street salaries, it needs to stay competitive to attract and retain top talent, she said." (STRS "spokeswoman" Laura Ecklar - Columbus Dispatch - March 16, 2009)

" attract and retain top talent?" Well, Laura, there are thousands of unemployed Wall St. investors who would just love to work at Ohio STRS AND draw an OPERS retirement with OPERS bennies (including affordable healthcare rates for themselves and their spouses), wouldn't they?
…but the board minutes from March of 2008, then again from September of 2008, show that Dr. Leone told the board members how wrong they were to adopt the bonus plan and eventually approve bonus payments. They felt they knew better!

Investment officers for teachers' pension system reap boosts in base pay
Raises took effect months before bonus policy tempered in response to outrage
Monday, March 16, 2009
James Nash
Although dozens of investment officers for the State Teachers Retirement System of Ohio will see their bonuses slashed because of the recession, some are making up part of the difference with higher base pay.
The pension system serving 458,500 current or retired teachers boosted the base pay of investment officers by as much as $39,500 last year, putting two of them over the $300,000 mark.
Early this year, the pension's board voted to sharply reduce annual performance bonuses in down years and increase them in boom years. The move came after pressure from retired teachers outraged over six-figure bonus checks awarded to 21 investment officers in 2008, even as pension investments foundered in a tough economic climate.
Some retired teachers now say that the increases in base pay -- though they took effect months before the new policy on bonuses -- represent another slap to working-class retirees.
"It's just very difficult when seniors are splitting medications and dropping medications," said Molly Janczyk, a retired Columbus teacher who is active in retiree circles. "Even the superintendent of Columbus public schools turned down a raise. Where's the sensitivity?"
In April 2008, the board of the State Teachers Retirement System approved raises for 89 investment officers averaging 6.1 percent. The raises took effect in July. The top raises went to the two assistant directors of investments, who gained $39,500 on top of their $270,000 base salaries. That's an increase of nearly 15 percent.
Both also got bonuses of more than $250,000.
Officials from the teachers' pension system expect to complete their 2009-10 budget next month, but it will not include raises, as the pension board voted to freeze employee salaries in February.
The State Teachers Retirement System tries to pay its investment officers so that they earn as much as at least a quarter of their peers in public and private investment houses around the country, pension spokeswoman Laura Ecklar said. While the pension can't match Wall Street salaries, it needs to stay competitive to attract and retain top talent, she said.
Ecklar said that when the pension board boosted salaries, it did not know that, months later, it would pare back bonuses.
"This is not something that was done to circumvent the changes in the (bonus) program at all," she said.

Bob Stein: Why we need to fix STRS investment policy, not just control expenses

From Bob Stein, March 16, 2009
Subject: WSJ Article

This is why we need to fix STRS investment policy, not just control expenses.

Pension funds' investment policies are all still on cruise control and depending on "The Market" to "turn around" and save them from the problems described in this Wall Street Journal Article.

It is unreasonable to depend on "The Market". The gains would have to be astronomical and abrupt to recover in even a few years. And we have still not stopped losing. Total STRS assets for 2/27/09 were $46.4 billion. Even if we were getting our "8% projected return" on $46.4 B we would have about $3.7 B/year -- far less than the $5 billion STRS pays annually in current pensions.

STRS pensions are NOT guaranteed by law -- just the fact that there will be a pension system. (Check Ohio Revised Code section 3307.50)

Bob Stein

WSJ Article below (3/15/09)
Many state and city governments reeling from financial woes are about to get whacked again, this time by an unforeseen increase in their pension bill thanks to market declines.

In an effort to stave off tax increases, New Jersey lawmakers on Monday will consider a bill that would allow municipalities to defer payment of half their annual pension bill, due April 1, for one year. Those towns, counties and schools that opt to defer would face a higher pension bill for years to come.

Other states and municipalities are facing similarly difficult choices. In Pennsylvania, the state employees and public teachers pension funds both have warned that employer contribution rates could surge seven-fold from about 4% of payroll to 28%, starting in 2012. The Detroit police and fire pension plan might have to double employer contribution rates to 50% of payroll by 2011, according to the fund's outside actuary.

Two of the nation's biggest public pension funds, New York State Common Retirement Fund and the California Public Employees' Retirement System, also have warned state employers to brace for future rate increases.

"It's going to be huge showdown" between taxpayers and public employees, said Susan Mangiero, president of Pension Governance Inc., a consulting and research firm in Trumbull, Conn. "The anger is more acute today when people are feeling economic hardship."

The specter of higher pension bills comes as many states and cities are struggling to balance their budgets or, in some cases, avoid drastic measures, such as filing for bankruptcy protection, amid falling tax revenue, foreclosures and rising unemployment costs.

In most states, retirement benefits for public employees are guaranteed by law, so governments have little choice but to pay them in full. During bull markets, that wasn't a problem. But with the median rate of return for a public plan of negative 25% in 2008, according to Wilshire Associates, many plans now may be unable to meet their obligations without further injections unless markets rebound significantly, analysts said.

The Detroit police and fire pension plan, where employees are ineligible for Social Security so the benefit plan is more generous and costly, employer contribution rates could double to 50% over the next three years unless the markets turn around, said Norman Jones of Gabriel, Roeder & Smith in Southfield, Mich., the fund's outside actuary.

For future New York City police and firefighters, Gov. David Paterson and Mayor Michael Bloomberg have proposed a minimum retirement age of 50, where no minimum currently exists. They also want to raise to 25 from 20 the number of years these employees must serve before they can collect full benefits.

Proposals pending elsewhere would move new public employees to a 401(k) plan. Some state lawmakers believe they would save money with a 401(k), which requires employees to pay a higher percentage of the contribution rate than they do under defined-benefit plans, said Alicia Munnell, director of the Center for Retirement Research at Boston College.

Municipal unions said they would oppose such a shift, and note that such efforts have failed in the past, including four years ago in California. "It's not a program that is attractive to state employees," said Richard Ferlauto, director of corporate governance at the American Federation of State, County and Municipal Employees. "It's doesn't work because you wouldn't be able to hire people."

But soaring pension costs are emboldening critics of public plans. They said local governments cannot afford to pay what are often perceived as generous benefits to government employees when the 401(k) plans held by others have shrunk, and as taxpayers already are looking at higher taxes and fewer services.

The pain is about to start in Wisconsin. The state has an unusual policy of adjusting the amount of benefits paid based on the pension fund's performance. Now, for the first time in 25 years, the majority of retirees will receive a benefit reduction.

This month, Wisconsin officials said that beginning in May nearly 150,000 retirees will face at least a 2.1% decrease in benefits, after the pension fund had a 26% negative return in 2008.

About 35,000 of retirees who held a portion of their retirement savings in an optional fund that invests entirely in stocks will be hit harder. Depending on how much of their savings they earmarked for the all-stock fund, their overall retirement income could be cut by up to 40%, according to a spokeswoman for the State of Wisconsin Investment Board.

Jim George, a 64-year-old retired elementary-school teacher in Milwaukee, estimates that his $3,700-a-month benefit check will be slashed by about $600. He is talking with his wife about where they will have to cut back: their annual January vacation to Florida, eating dinner out, maybe their high-speed Internet connection. "It's going to make things tight," he said.

His brother John George, a retired teacher in Madison, Wis., faces the 2.1% benefit reduction. But with the markets reeling this year, he is worried about what future cuts might look like. "The stock market and my pension fund are a daily worry," he said.

Optimism, in part, contributed to this quandary: Legislatures from Pennsylvania to California boosted employee benefits after the stock market boom years of the 1990s, which has added to their burden now.

Most pension funds also took the step of enacting smoothing policies, in which the benefit determination is based on average returns over five years. This was intended to dilute the impact of a particularly bad year. For the most part, this policy has worked to limit sudden or severe rate increases at most pensions.

"But these policies weren't meant to accommodate losses as big as pension funds suffered last year," said Ms. Munnell of Boston College. The college's Center for Retirement Research estimates that the average public plan's liabilities, if based on year-end 2008 market prices, now exceed its assets by 35%. For public funds in worse financial shape, including funds in Connecticut, West Virginia and Indiana, due to stock-market declines liabilities exceed assets by 50% or higher, according to the center.

Some states may decide it is easier to cut public employee benefits than it is to raise taxes, especially during hard economic times. In the Virginia General Assembly, a bill would freeze the current pension plan starting in July and replace it with a 401(k) plan for all future hires.

A state senator in Pennsylvania introduced a similar bill in 2007, and it went nowhere. But this year it is attracting attention.

If employer contribution rates in Pennsylvania jump as high as 28%, "the pension system is just not manageable," said Pat Browne, the Republican state senator who sponsored the bill. He said he expects it to be voted on this year. "We need to get it passed quickly if we are to phase out the existing plan in time to make an impact."

RH Jones to actives: You need to know the score with STRS: the STAFF is reaping the rewards, NOT the beneficiaries

From RH Jones, March 15, 2009
Subject: Fw: Investment Balance Feb.28th
To all actives:
Most likely, all of you enjoy the benefit of dental care(DC). Do you realize that after you retiree you get NO DC benefit? Sure, you can purchase it, but a heavy price. Like in my case, my spouse who depends on me is having $4,000 worth of dental work done; and, my dentist just informed me that I have to have $3,000 worth of work done -- a total of $7,000 out of my pension check! And, on top of that, my wife has to have eye care (EC) costing $3,000! Not counting all the other medical bills, that's $10,000 in one year!
Before I retired, I had both DC & EC insurance, so I had both of our teeth and eyes treated just before retirement. BUT, it does not take long and one needs care again. AND, you are on your own to provide the ever increasing costs of ALL health care (HC). Next year, I am required to pay ALL of my spouses HC, including DC & EC. When I retired, I was promised Ohio STRS HC but not DC, or EC. I am not crying; I am a teacher and feel a need to let my brother and sister teachers "know the score" before retiring. If our STRS board does not get it better, you too will be shorted.
As you contemplate your retirement, just remember that in a few years into it, you will need an ad hoc raise from the legislature. Presently, it has been a long time since retired educators have received one. And, be informed that, it is an extremely hard political fight to get one; the little 3% simple COLA helps; but, also, remember that it does not compound, as your active teaching pay now does. Your retiree purchasing power will go down with each passing year.
Perhaps, this is the reasoning behind the "powers to be" who pull the strings of our legislators: I wonder, could it be that the legislators and STRS leaders pay into OPERS for their retirement? It is, therefore, in the best interest of the STRS employees to get as much money as possible out of the STRS funds, while at the same time working to keep retired member benefits low.
They would also benefit by you having to work longer. You, therefore, pay more into the STRS, and are less likely to live long enough to use it up. However, in the final analysis, our STRS boards in the last few years has made the hurt for both actives and retired teachers possible. They "hold the purse strings of the STRS funds." The STRS staff is reaping the rewards; we are not. You have to accept more responsibility for your STRS now; and,also, you will in your future. Because of the shortcomings of the present STRS system, you will not be retired unless you can acquire full HC, DC, EC and bi-annual compounded COLAs.
This is as I see it,
RHJones, retired teacher

'They are robbing you of your retirement and security; somebody needs to stop them quick!'

To Molly Janczyk, March 15, 2009
Subject: Re: Investment Balance Feb.28th
Molly, thanks for sharing [Dennis Leone's 3/14/09 response to this subject]. Our daughter recently had dinner with 7 friends, all moms in their 30's and 40's. They were all discussing the economic situation and saying how they received no raises, no bonuses and some, like our daughter, have to take 2 weeks without pay before June 30. However, one said not only did she get a nice raise, but also a great bonus, guess what, she is an analyst in the STRS investment dept. So 1 out of 8 is on cloud 9 while the others are trying to cut expenses. Our daughter was outraged. She said to us "they are robbing you guys of your retirement and security, somebody needs to stop them quick". We are in our mid 60's and in good health, but what about those who aren't. We also both still work 20 hours a week. Now they are talking about charging us for trash pick up at $25/mo and to have our yard waste hauled is $15/mo. On top of that they want to raise the income tax and of course many of the school systems will have levies on the ballot in May. STRS needs a total overhaul, they need to do a major house cleaning just as businesses are doing now to cut costs and that doesn't mean giving them huge severance packages.
[Name withheld]

Monday, March 16, 2009

Molly Janczyk to state legislators and STRS Board: Where's the fairness?

From Molly Janczyk, March 16, 2009
Subject: Legislators, STRS:
Dear Legislators and STRS Board:
I am writing to question how a candidate is to be allowed equitable treatment regarding running for a public position while being unable to contact shareholders of the system for which they are qualified and willing to serve.
The organizations have access to every STRS member in their school mailboxes, home mailboxes, email addresses and phone numbers. They have the power and money to run expensive campaigns and attempt to block independent candidates from being heard. We are hit online, at home and in schools multiple times. I wish to ask how this is equitable for all candidates? Independent candidates can obtain names and addresses to pay for mailings from their own pockets which is impossible to afford.
STRS WILL NOT ALLOW INDEPENDENT CANDIDATES EMAIL ADDRESSES so that they can at least contact voters that way YET OEA, OFT, OEA-R hit us regularly with email info about their candidates. James Stoll went to the Supreme Crt. to obtain email addresses and was denied disallowing him the same access as other candidates enjoy.
I feel a law or position should be established to treat all candidates the same and allow them to stand on their credentials and qualifications. STRS should be the ONLY source circulation these qualifications to ALL its shareholders.
Unions have no place endorsing candidates to create voting blocks to benefit themselves. We have seen this over the years and have suffered its consequences. While unions state they do not interfere, we know from history, their Board members do follow the union mindsets.
Independent and highly qualified candidates have no opportunity to earn a seat based on experience vital to the Board. We have seen the unions fight against candidates who were much more highly qualified, and had investment expertise. One was an Economic Professor and a published author on market trends, business cycles, investments and economics but did not agree with the union positions. Instead, we have candidates who by their own admission was void of knowledge on these subjects, had to spend years training and still makes decisions only supported by OEA and OFT. Now OEA states its candidates go through a 3 or 5 day inservice for Board candidates. 3-5 days vs. careers of background and experience which some independent candidates have..
Where is the equal access to membership who will vote on candidates? Attorneys say every candidate has an equal right to be heard but the system has created an impossibility for that to occur. Do we want the best candidate of the ones who follow union thinking? Seems only the latter is supported.
We face another OEA mandate on the STRS Board. 4 STRS Board members are currently backed by OEA: Meuser, Ramser, Myers and Hayden. Leone is leaving this Aug. 31, 2009.
3 union backed candidates are running with the unions, (OEA and OFT), working together for them. Lots of votes. That will bring to 7 out of now 10 but supposed to be 11 STRS Board members. Either way-A CLEAR MAJORITY OF UNION BOARD MEMBERS which brought about the previous poor decisions, lack of long term planning for health care and spending abuses. When no one is there to question or fight for membership, retirees become numbers on pages and only actives are priority: precisely what happened to us in 2003. Reasons are not debated and decisions are self serving.
We need candidates who hit the ground running with expertise in investments vs. 3-5 days of pension system workings. We need every candidate heard and researched with candid and informational statements published for all to read.
Where is the fairness??
Molly Janczyk
Independent STRS Retiree
Larry KehresMount Union Collge
Division III
web page counter
Vermont Teddy Bear Company