Saturday, May 02, 2009

NY Times: Social Security not expected to increase in 2010

From John Curry, May 2, 2009
Subject: Fw: [SeniorNews] SOCIAL SECURITY IS NOT EXPECTED TO RISE - Noteworthy Senior News from Suddenly Senior
What Frank doesn't tell the readers is that, unlike STRS, Social Security does NOT tax any income over $102,000 (2008 cap - it changes yearly). So, millionaires love it because, once their annual wages exceed $102,000, they QUIT paying into Social Security. I'll bet the majority of workers who pay into Social Security don't know that. I'll bet if they did...they would become "steamed," wouldn't they?
Want to "shore-up" Social Security? Seriously raise the "cap" or eliminate it altogether! Of course, those with "deep pockets" would scream bloody murder, wouldn't they? Our President has suggested a strong upward adjustment of this cap but some in Congress don't want to touch this idea "with a 10-foot pole." They don't want to suffer the wrath of their wealthy campaign contributors, do they?
More info on the Social Security wage "cap" can be found by going to the Social Security link:
I am surprised by the number of STRS retirees who don't realize that there is a "cap" on Social Security taxed wages. I guess many of them believe that Social Security taxes apply to all income...just like all educators' incomes are assessed at a 10% STRS rate but...not so with SS.
From Frank Kaiser, May 2, 2009
Subject: [SeniorNews] SOCIAL SECURITY IS NOT EXPECTED TO RISE - Noteworthy Senior News from Suddenly Senior
NY Times, May 3, 2009
WASHINGTON — For the first time in more than three decades, Social Security recipients will not get any increase in their benefits next year, federal forecasts show.
The absence of a cost-of-living adjustment, calculated under a formula set by law, will be a shock to older Americans already hit by plummeting home values, investment losses and rising health costs. More than 50 million people receive Social Security.
“Most seniors have never been through a year in which there was no Social Security COLA,” said David M. Certner, legislative counsel at AARP, the lobby for older Americans. Beneficiaries have received automatic cost-of-living adjustments every year since 1975. The increase this year was 5.8 percent.
In theory, low inflation is good for people on fixed incomes. But it is creating political and policy problems for Congress, which is just learning of the implications for Social Security and Medicare.
The forecasts, by the Obama administration and the Congressional Budget Office, indicate that Social Security beneficiaries will not receive any cost-of-living increase in 2010 or in 2011. The COLA is intended to preserve the purchasing power of Social Security, by increasing benefits to keep pace with consumer prices. In the last year, overall inflation has been low, largely because of the economic downturn and a decline in energy prices.
A freeze in Social Security benefits would have major implications for Medicare because the COLA, in effect, puts a cap on premiums for Part B of Medicare, which covers doctors’ services.
If there is no cost-of-living adjustment for Social Security, about three-fourths of beneficiaries will not see any change in their basic Part B premiums, federal officials said. But some beneficiaries do not have this protection and could face substantial increases in their Part B premiums.
In addition, millions of beneficiaries could see higher premiums for drug coverage, provided under Part D of Medicare.
Social Security and Medicare trustees will describe the outlook for benefits and premiums in their annual reports this month.
Officials have already said the condition of Medicare’s hospital insurance trust fund is deteriorating because of the recession, which has reduced payroll tax revenues, the main source of money for the fund. Spending on Social Security and Medicare totaled more than $1 trillion last year, accounting for more than one-third of the federal budget.
Most people on Medicare have Part B premiums deducted from their monthly Social Security checks. These premiums have historically increased much faster than Social Security benefits.
Under federal law, most Medicare beneficiaries have some protection. Their basic Part B premiums cannot rise more than the dollar amount of the cost-of-living increase in their Social Security checks. So if there is no COLA, their basic Part B premiums will not increase.
But one-fourth of Medicare beneficiaries are not protected by the law, and their premiums could increase.
Most Medicare beneficiaries pay a monthly Part B premium of $96.40. The Congressional Budget Office estimates that the basic premium will rise to $119 next year and $123 in 2011 for those who are not protected under federal law.
Douglas W. Elmendorf, director of the Congressional Budget Office, predicted that inflation would remain low for several years, so Social Security might not pay a cost-of-living increase until January 2013. President Obama’s budget assumes no increase in 2010 or 2011, then a 1.4 percent COLA in 2012.
Mr. Certner, from AARP, described the outlook for consumers: “If, as expected, there is no COLA in Social Security next year but premiums for drug coverage increase, as expected, millions of beneficiaries will see their Social Security checks reduced for the first time.”

Linda Meinelt re: Keep Your Hands Off My COLA

From Linda Meinelt, May 2, 2009
Subject: Re: Charlie re. Keep Your Hands Off My COLA
I must "weigh in" on this elimination of COLA. Whoever came up with the idea of eliminating it needs to rethink long and hard just who put the money into STRS and about all the "hits" retirees have taken on our pension, the most notable being that of health care costs.
Let's remember STRS is for the members.
Money needs to be saved and a good starting place is eliminating the Investment Staff bonuses, and making the STRS employees health care more on a par with the coverage of retirees.
When the real estate market improves, STRS needs to consider selling its building and either buying a less expensive building or leasing space, whichever is cheaper. I have heard many comments from both retirees and current teachers about the excesses of the building and that they would be happy to go to a storefront for as often as they "visit" STRS.
Eliminate our COLA -- start looking elsewhere!!
Linda Meinelt

Charlie Seipelt re: Keep Your Hands Off My COLA

From John Curry, May 2, 2009
I agree, Charlie. The last Board meeting contained cuts for retirees' healthcare benefits only!!! At the April meeting they were eyeballing the possibility of cutting our COLA as a cost-saving measure!!!!!! The retirees take the hits and they take the bonuses! This has got Dennis steamed and I don't blame him. It should "steam" every retiree but, many retirees (like sheep) either don't care, don't want to know or don't want to speak out!
From Charlie Seipelt, May 2, 2009
Subject: Re: STRS, keep your hands off my COLA!
Wait a minute! I can't get over the fact that this issue is even being considered. It appears everyone is forgetting what STRS is supposed to be about.....the retirees. Am I missing something or is the exercise intended to help us or give credit to some the STRS staff's thinking that the only way to save our retirement system is to find a way to cut benefits to us and let the paid guns go wild with ways they can feather their nest prior to retiring with the benefits of PERS.
Maybe it would be more interesting to me if Mario and his group were to figure out how much we would save for the retirees if all of the bonus stuff, special health benefits beyond what we retirees get, parking costs, child care, and whatever other special benefits beyond the high salaries that is going out to the paid help was charted. If he and Steve Mitchell were to figure that one out I'm sure we would all be better off in the long run. I would guess that the numbers would be astronomical. Since our board is ALWAYS looking out for our welfare I would think this would be a project well worth investigating. Please advise me before I blow a gasket.
Charlie Seipelt
Milford, OH

Duane Tron: They view us as worthless and a bunch of baggage who just keep hanging on

From Duane Tron, May 2, 2009
Subject: Re: STRS, keep your hands off my COLA!
Wow! I'm impressed! You mean there are people getting $45,000.00 + pensions from STRS??? Must be really nice compared to those of us in the poverty zone who're getting $29,000 to $35,000 and paying nearly $12,000.00 for health insurance premiums! Sheesh!
There really are two classes of retirees in STRS aren't there? There are those who're getting the really big bucks and all of us poor people who're making less today than we were 11 years ago when we retired in 1998! Darn! It's nice to know that there are many among our profession who're living the "good" life and have plenty of money to fund their "Golden Years!" I'd hate to think we're ALL suffering in misery and poverty!
It's great to know our OEA "brothers & sisters" are making out quite well in this downturn of an economy! I mean I look at Big Bill's house in Upper Arlington and I now know how he can afford a house that my house would fit in his garage. I'm sure he earned all of that as I KNOW he worked much harder for the children of Ohio than all of the rest of us. I know he made the kind of sacrifices that those of us made who used to bail out of bed at all hours of the day and night, and volunteer our time fighting fires, saving lives, going out on horrendous car accidents, and much more, and we did so for nothing because we were so stupid that we volunteered our time to help our fellow community members.
Golly, and to think that our leadership at STRS would even consider messing with our COLA's. My COLA's for the past eleven years haven't even equaled my increases in health insurance premiums from our wonderful STRS management during the same period. My actual annual pension is lower than it was eleven years ago when I retired and we have people figuring their retirement incomes at twice what the rest of us are getting?
It's good to know that the managers of our pension fund believe in equality, justice, integrity, and doing what's right. Oh! I keep forgetting they've forgotten about all of us at the bottom of the pot. Our management at STRS have given me a fuller appreciation, and understanding, of what it was like for African Americans back in the 1960's and prior!
We mean nothing to any of them and they view us as worthless and a bunch of baggage who just keep hanging on. One day they're going to grow old and I pray they get their just dues.
From a member of the STRS poverty level of retirees!
Mr. T

Mario Iacone: a 'COLA conversation' with Steve Mitchell

From Mario Iacone, May 2, 2009
Subject: COLA Impact On Retirees
Have also attached Word file in case text gets messed up among different email protocols.
Thought the following might be of interest. Information sent to STRS Board Members and distributed to my email contacts indicating the substantial financial impact of COLA for retirees. The response I sent follows.

COLA came up in a conversation I had with Steve Mitchell. He said removing or reducing COLA would go a long way toward fixing financial problem when amortized over a 30 year period. After we hung up, my first reaction was well that would not be too bad considering the situation.

Then, it hit me. I subtracted my original retirement benefit from my current retirement benefit and that gave me the first clue that COLA is no small thing. We did various calculations to obtain the financial impact for a single retiree.

We calculated it three ways: a mathematical partial sums formula; a year by year spreadsheet calculation; and a year by year paper and pencil method. It was calculated for twenty five years and we about fell over when we saw how much it would cost a retiree. Had several others verify the results.

Our reaction was that it would be terribly unfair to put a substantial burden of fixing the financial problem on the retirees through COLA sacrifices when we have already suffered substantial loss due to the increases in health care premiums.

COLA does not compound, but it does accumulate yearly.

Please bear with me as I do best I can to explain. It is so hard to do on an email. Would do much better job in person with a chalkboard.

As an example, consider an original retirement benefit of $40,000 and a COLA of $1,000.

That $1,000 COLA is not correct because 3% of $40,000 would be $1,200 but it will be easier to follow and save me a lot of calculating to use $1,000.

Year 1, you would receive $1,000 COLA and now get $41,000. That is $1,000 more for Year 1.

Year 2, you would receive $1,000 COLA and now get $42,000. That is $2,000 more for Year 2.

But, if you add additional amounts for Year 1 and Year 2, you have received $3,000 more to date for the two years..

Year 3, you receive $1,000 COLA and get $43,000. That’s $3,000 over your original $40,000 for Year 3.

So after 3 years of COLA, I have received $43,000 + $42,000 + $41,000 for a total of $126,000 instead of $40,000 + $40,000 + $40,000 for a total of $120,000. Over the 3 years, addition of COLA has added $6,000 to my lifetime benefit.

Year 4, you receive $1,000 COLA and get $44,000. That’s $4,000 over original $40,000 benefit for Year 4.

So after 4 years of COLA, I have received $44,000 + $43,000 + $42,000 + $41,000 for a total of $170,000 instead of $40,000 + $40,000 + $40,000 + $40,000 for a total of $160,000. Over the 4 years, addition of COLA has added $10,000 to my lifetime benefit.

Year 5, you receive $1,000 COLA and get $45,000. That’s $5,000 over original $40,000 benefit for Year 5.

So after 5 years of COLA, I have received $45,000 + $44,000 + $43,000 + $42,000 +$41,000 for a total of $215,000 instead of $40,000 + $40,000 + $40,000 + $40,000 + $40,000 for a total of $200,000. Over the 5 years, addition of COLA has added $15,000 to my lifetime benefit.

Year 6, you receive $1,000 COLA and get $46,000. That’s $6,000 over original $40,000 benefit for Year 6.

So after 6 years of COLA, I have received $46,000 + $45,000 + $44,000 + $43,000 +$42,000 + $41,000 for a total of $261,000 instead of $40,000 + $40,000 + $40,000 + $40,000 + $40,000 + $40,000 for a total of $241,000. Over the 6 years, addition of COLA has added $21,000 to my lifetime benefit.

After 25 years of receiving $1,000 per year of COLA, I will be receiving $65,000 instead of my original benefit of $40,000. The year before, I received $64,000 instead of $40,000. The year before that I received $63,000 instead of $40,000 etc.

Working backwards, lifetime COLA benefit would amount to 25K + 24K + 23K + 22K + 21K + 20K + 19K + 18K + 17K + 16K + 15K + 14K + 13K + 12K + 11K + 10K + 9K + 8K + 7K + 6K + 5K + 4K + 3K + 2K + 1K

The TOTAL IS $325,000.

Sorry for all the text, I am doing the best I can to explain it.

I don’t have access to all the STRS statistics but from the website financial information, a 1% reduction of COLA for the number of retirees we have would be huge over 30 years.

We estimate approximately 10 billion and if you consider that amount would stay invested instead of paid out to the retirees and if it only returned 3% or 4%, it would probably be at least 15 billion. It’s only numbers and there are 3 or 4 of us that if we have access to all the information, we could probably figure it out much more accurately.

We are not financial experts, but we are math guys. As you well know, projections for a situation such as a retirement fund are based on formulas and actuarial data. If we had the statistics, it’s only a matter of plugging them into the correct formulas to obtain the results. The problem is that those formulas can make it look worse or better dependent on the data used.

Furthermore, you could present different conclusions from the results.

If someone wanted to downplay the financial impact of COLA, he could make the statement, the average retiree would only lose $1,000 per year and ignore the accumulating effect.

If someone wanted to emphasize the long term effect of COLA, he could make the statement that a retiree could lose $325,000 by presenting the lifetime impact.

I hope I have clarified the issue. Please send me any questions you may have concerning any confusion I have may have caused.

Once again, thanks ever so much for your time and consideration. I truly appreciate it.


Mario Iacone is a retiree from Youngstown who is involved with a group of about 50 (and growing) retirees who are sending out e-mails around the state to educate other retirees about what is happening with their pension funds at STRS. They are just now hearing about CORE. More power to you, Mario!! We're all in this together. KBB

Friday, May 01, 2009

Mario Iacone: STRS must not invest itself into a worse problem

From Mario Iacone, May 1, 2009
The following information and comment is submitted to the STRS Board for consideration and review of the risk level of STRS investments. Also, it is hoped that the Board would consider allocating a much greater percentage of assets to low risk fixed assets to reduce future risk level.

Please review the chart shown below. It shows STRS Asset Value from 1998 to Present. The asset values were obtained from p3 of the October, 2008 newsletter and p1 of the March, 2009 newsletter.

There are years that show substantial returns, but such returns have been lost in subsequent years. It is also obvious the fund has been highly susceptible to the up and down swings of the economy and investment markets.

Click image to enlarge.

The 2009 asset value of 46.4 Billion does not include approximately 18 Billion paid out over that period of time to supplement the deficit resulting from member contributions amounting to less than benefits paid and STRS operating expenses. Considering the 18 Billion paid out, STRS investment return from 1998 to Present would average slightly over 3%.

Low risk guaranteed Fixed Income investments would have performed better, at least a 5% return, over that same period of time.

Low Risk Fixed Investments such as Treasury Bonds, Municipal Bonds, etc would not have been subject to the tremendous losses caused by the unprecedented 2008 downturn in the economy and investment markets.

Fixed investments would also be far less costly than the current 165 million, or so, currently spent in Investment Expenses, Advisory Fees, and fees to External Money Managers. Such investments would probably allow at least a cost reduction of 75 million per year, which when amortized over the 30 Year Funding Period would substantially help to stabilize the fund.

Several times, I have heard the comment “STRS will not be able to invest itself out of this problem.” I agree. But, I would also make this appeal, “STRS must not invest itself into a worse problem.”

The value of reviewing the past may provide information to set a more stable, consistent investment direction for the future. The past investment direction of the fund has clearly shown the ability to make more, but it has also demonstrated the reality of keeping less.

Mario Iacone: STRS Performance Overview from ORSC

From Mario Iacone, May 1, 2009

Ohio Retirement Study Council (ORSC) oversees all of Ohio’s Public Pensions

ORSC Investment Review of STRS Performance.

(Click image to enlarge.)

Ten Year Return is 3.30%. Would probably somewhat lower if Fixed Income had not returned 5.37%.

During that period of time STRS has spent approximately ONE Billion dollars on expenses for investment staff, advisory fees, and fees to external money managers.

TWO CONCLUSIONS can made from the ORSC Performance Review.

STRS investments are at too high of a risk level and subject to volatile swings in the markets and economy.

STRS does not have a good RISK MANAGEMENT POLICY in place.

The concept of Risk Management is actually very simple. Applied to the stock market, risk management simply means you sell out and stop losing when you cannot afford to lose more.


  • One has a $1,000,000 invested in stocks.
  • One must keep $800,000 to maintain life style.
  • When losses approach $800,000, one sells out and limits losses to $200,000 or less.

The RISK MANAGEMENT concept also applies to PROFIT when one does not wish to risk the profit.


  • One has a $1,000,000 invested in stocks.
  • One must keep $800,000 to maintain life style.
  • When investment reaches $1,200,000 one sells out and removes the risk of losing $200,000 profit.
Current value of STRS assets (as of March 31, 2009):
......$47.65 billion
As of mid May, 2009: $51 billion
Peak value (October 2007):
......$80.1 billion
Lowest value since October 2007:
.....$46.3 billion (February 28, 2009)
Current (4/09) projection on when the healthcare fund
will run out of money (it's been funded from
the principal since 2008):

......2018 (if we're lucky)
Number of associates employed by STRS (4/09):
Peak number of employees at STRS (2003, before Dennis Leone made a hard pitch for cuts in his INVESTIGATIVE REPORT of May 16, 2003):
Number of job openings at STRS on 4/30/09:
......1 .....(Click here for updated listing(s)
How much STRS spends to support our health insurance plans (based on 2008 figures)
......Per year: $544,448,203
......Per day: . $1,487,563
Approximate number of stakeholders/members in STRS (4/09):
......175,000 active members (teachers, administrators, college professors & college administrators)
......125,000 retirees
......100,000 inactive teachers (neither retired or active in STRS; they have money in the pension fund from previous service over the past 80 years, which has not been drawn out)
......Total: 400,000
Some March 31, 2009 numbers at STRS:

May 2009

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The bonus situation explained.....

From Dennis Leone, May 1, 2009
Most of the confusion surrounds the fact that the board votes each spring to adopt a new bonus plan for the upcoming fiscal year (which begins each July 1), but then 6 months later the board votes to approve the cash bonus payments for the PREVIOUS fiscal year (which is 12 months after the work is done).
This means: The board voted 8-1 to adopt the fiscal year 2009 bonus plan in March of 2008, then voted 8-1 in September of 2008 to approve the actual $6 million bonus payments for the previous fiscal year (fiscal year 2008, which ended 6-30-08). This is when the firestorm really started.
But instead of stopping the bonus plan for fiscal year 2009 at this time (September, 2008), everything went forward (with only me complaining). A Columbus Dispatch article in December of 2008 said I was the ONLY board member who was pushing to have the bonuses suspended.
Then in January of 2009, the board voted 6-3-1 to approve my motion to suspend the fiscal year 2009 bonus plan effective 2-1-09. This meant two things:
...(1) No one would get bonuses for their work in the final 5 months of FY 2009; and
...(2) The board would at some point have to vote yes or no on the cash bonus payments for the first 7 months of FY 2009 (which will be $3.3 million).
The board has itself in a real pickle now. If the board votes no, the door will be open for staff to sue and argue that they have already done the work for the first 7/12 of the fiscal year.
If the board votes yes on the 7/12 cash payments, board members will look stupid because they chose NOT to stop the bonus plan last September when they could have.
STRS Board policy permits the board to modify or terminate the bonus plan at any time, and all investment staff members received a letter early last summer that explains this. The comments by board members Tim Myers and Mary Ann Cervantes that appeared in the Columbus Dispatch after the board voted 6-3-1 to suspend the bonuses effective 2-1-09 were dead wrong. Both voted no on the suspension and were quoted as saying that board was “breaking a promise” by suspending the bonuses. No promise was broken. It was dishonest to make such a statement, and they both know it.
Between the years of 1995 and 2004, approximately 350 non-investment staff members at STRS (in addition to approximately 100 investment staff members) also got big bonus checks every year. This was a major component of my 2003 report. The board finally voted to end bonuses permanently for non-investment staff in 2004. Another elimination I pushed for, which was adopted in 2005, was the STRS practice of basing bonuses paid to investment staff, in part, on SUBJECTIVE factors. It’s gone now. How stupid was that past practice? Very Wall Street.
"The PBI program may be interpreted, amended, rescinded and/or terminated at anytime by the Board."
~ STRS Board Policy Manual, page 33

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Thursday, April 30, 2009

STRS assets no doubt peaked at more than $82 billion, not $80.1 billion.....

From Dennis Leone, April 29, 2009
Yes, it was $46.3 billion on 2-28-09………..and the peak was $80.1 billion on 10-31-07. (Had an official asset tabulation been taken 3 weeks earlier [which it wasn't], when the DOW topped 14,100, our total assets clearly would have been above $82 billion.)
And by the way, the number of employees at STRS peaked at 734 in 2003, when I said in my 13-page report that 135 needed to be cut. No official staff reduction plan was put in place. The reductions of the past 6 years have occurred through attrition, except for a dozen IT Dept employees who were laid off last year due to the new computer system at STRS.

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How come we aren't seeing THIS at STRS, especially with a near-zero turnover rate?

Do we REALLY need 87 investment associates? What do you think?
~ ~ ~ ~ ~
Employers Cut Back on Benefits and Perks This Year, March 27, 2009
By Rosemary Haefner, vice president of human resources for
Ever since the big banks started tumbling last year, the economy started on a downward trend that looks to continue for the foreseeable future. Although many experts had wondered aloud if we were in a recession for the last year, the dour employment numbers and foreclosures answered their curiosity. As a result, we've seen a chain reaction of budget tightening work its way from the biggest corporations to the smallest households. Over the last few months, news headlines have been filled with layoffs and downsizing. Many employers reduced their work force in order to meet market demand, but many of them realize you can only make so many personnel cuts before you damage your own business. Still, they need to cover their costs one way, and an alternative to layoffs is to reduce benefits offered to employees.
Expect a reduction in perks
Employers have always watched their expenses closely, but they've grown even more attentive to spending these days. As they wait for improved economic conditions, 38 percent of employers will make administrative cuts in 2009, according to a February 2009 CareerBuilder survey. The survey asked employers what -- if any -- administrative cuts they intend to make in 2009. Administrative cuts involve only operating expenses and are not reductions in personnel.
In many companies, social events and business trips will be scaled back or eliminated this year. Of the employers who expect to make administrative cuts in 2009, 65 percent foresee holiday parties, picnics and other social occasions being scaled back or discontinued.
Employees might also see a change in how they meet with clients this year. Business travel is also likely to be reduced, say 61 percent of employers. This could mean you'll see an increase in conference calls and virtual meetings rather than day trips to another location.
Also feeling the pinch of budget tightening are health and wellness benefits. Twenty-five percent of employers intend to cut back health-care benefits and 11 percent will scale back wellness benefits, such as gym reimbursements. Even the smaller perks that employee have grown accustomed to -- such as coffee, ice machines and discounted vending in the break room -- might be disappearing, say 21 percent of employers.
Employers perform a balancing act
Employers are aware that they walk a tight line between helping finances and damaging talent retention. They know that each reduced or eliminated perk changes how employees view their jobs, and employers don't want to lose their best workers. Yet, in order to pay their staff, they need to cut costs somewhere. In response, employees are seeing a wealth of other, less traditional perks offered to compensate for the ones that are taken away.
Thirty-nine percent of employers have begun to offer more options for telecommuting and flexible work schedules. In addition to convenience, employees also save commuting costs as a result. Some employers even offer incentives for public transportation, mileage reimbursements and compressed workweeks. Although the economic situation forcing these perks isn't the most favorable, employees have shown an increased interest in working from home and having a flexible schedule over recent years.
Perhaps the silver lining for employees is that some of these workplace wishes are coming true.
Rosemary Haefner is the vice president of human resources for

Wednesday, April 29, 2009

OEA and a half-truth

From John Curry, April 30, 2009
Below is a March 20, 2009 memo from OEA President Patricia Frost-Brooks to OEA District Leaders and OEA Presidents stating (see the yellow highlighted area) Ms. Frost-Brook's apparent disagreement "with bonus payments to investment officers in years when STRS loses money."
Now, please read the two attachments taken from the "approved" STRS Board meeting minutes of March 20, 2009. These two pertinent pages are attached and labeled "XIV" and "XV" and show how three of the OEA's active teacher Board members actually voted on the first round in the voting to accept the "Staff Benefits Committee's recommendation dated March 20, 2009" to temporarily suspend the bonuses. You will notice that the OEA-endorsed active teacher Board members Tim Myers, Mark Meuser and Conni Ramser all voted "no!" The only OEA-endorsed active teacher Board member who cast a "yes" vote to temporarily quash the investment bonuses was Columbus Education Association's Tai Hayden. She is to be congratulated for her courage and insight.
After another vote (see the attachments) and the statement from STRS's Executive Director Nehf that the State Teachers Retirement System staff could live with the suspension of the bonuses did two of the OEA naysayers (Myers and Meuser) finally come around to vote to temporarily freeze the bonuses. Still, on that final vote, OEA's Conni Ramser cast an "abstain" vote. Ms. Frost-Brooks didn't mention, in her letter above, the whole story, did she? What she related was a half truth. Of course, most active educators will not know that, will they? I'm also sure the OEA won't go out of their way to present this documentation to their membership.
John Curry
P.S. Concerning Ms. Frost-Brooks reference to Dr. Dennis Leone as a "dissident board member"....he is "fearful about the financial future of STRS." Well, so is STRS Board candidate Jim Stoll and so should every reader of this email be "fearful about the financial future of STRS." Dr. Leone has curbed more entitlements at STRS during the past four years as a board member than I have fingers and toes. Ms. Frost-Brooks didn't go into specifics on that one either, did she?
From Michael Mahoney, March 20, 2009
To: OEA Board of Directors
OEA District Leaders
OEA Local Presidents
From: OEA Communications and Governmental Services
Re: STRS Bonuses, Investment
Performance and Board Elections
Relaying a message from the OEA officers:
STRS Board candidate James Stoll recently distributed an e-mail to many Ohio educators that seeks to further his election campaign by alarming members of STRS about the fund’s market losses and “outrageous” bonuses for employees. STRS lost $33 billion in market value in its most recent fiscal year. The STRS system also paid bonuses to 83 employees for outperforming the market - losing less than comparable funds.
The Ohio Education Association is deeply concerned about STRS market losses. OEA does not agree with bonuses payments to investment officers in years when STRS loses money. As a result, OEA commends the recent vote by the STRS board to suspend 2009 bonuses, as well as formation of a board committee of the whole to address investment performance. However, OEA feels strongly that Mr. Stoll’s recent e-mail was a cynical exploitation of the emotions of educators, including a quote from dissident board member Dennis Leone, in an attempt to make them fearful about the financial future of STRS and cast a vote for Stoll.
During comments to promote his candidacy during the public participation period at the STRS board meeting this week, another odd practice, Stoll boasted he has a list of 145,000 educator e-mail addresses, presumably to further his campaign. Earlier, he had sued to obtain e-mail addresses from STRS, but the Ohio Supreme Court declined to hear his case, upholding a policy to protect the privacy of member e-mail.
OEA has recommended the election Stoll’s opponent, Carol Correthers of the Lorain Education Association, to the active STRS board seat. We believe she has the temperament, qualifications and judgment to serve on the board.
Stoll never sought OEA’s recommendation and did not go to an OEA screening. Moreover his recent e-mail confirms our position. OEA must address this situation, but we apologize for any inconvenience our e-mail to you may cause. If you do not want to receive further e-mails on this subject, please click here or send your request to
Cc: All OEA Staff
Click images to enlarge.
And OEA insists they legally do not and cannot tell STRS Board members what to do and how to vote: yet we know they do from STRS Board members -- though fearful of even saying it publicly.
~ Molly Janczyk

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Superintendents getting a heads-up re: Bonuses

From Jim Stoll, April 29, 2009
Subject: RE: STRS - State Teacher Retirement System - Outrageous Bonuses 2009
Thanks to you and other Superintendents for getting involved. You are absolutely correct in that taxpayers foot 14% of this bill and that 8 - 10 % of every School Districts budget goes to STRS and they are going to pay the (ATTACHED) 7/12 Bonuses despite losing 33 billion in the past 18 months. Additionally, they continue to send out email responses which you've already received trying to defend this nonsense, which they themselves, by suspending then changing the PBI plan have recognized as extremely flawed. You are the fifth Superintendent that has contacted me today so you are not alone. Many thanks for taking action. I would agree that we need to move our efforts to legislators to stop these bonuses as the Exec. Dir. and Board are not responsive to the members overwhelming desires to Eliminate these bonuses. I have met with my legislators here in Southwest Ohio and they are most interested in the issue of these bonuses. Will let you know of developments.
Jim Stoll
Director of Athletics
Sycamore Schools
7400 Cornell Rd.
Cincinnati, Ohio 45242
cell 513-615-4690
From Jerry Harmon, April 29, 2009
Subject: RE: STRS - State Teacher Retirement System - Outrageous Bonuses 2009
To All;
Below is the action I took with my staff – I sent it to all of them because I haven’t seen an announcement by STRS eliminating raises and bonuses for this year. My understanding is that it is within the power of the STRS Board to do this. This is my first action that did not just involve those directly involved with this baloney.
As I stated earlier, I am not going to sit by while we go down the toilet. If I don’t hear something by the 1st of May, I will send letters to major newspapers expressing my outrage and encourage them to investigate and report in depth. I didn’t believe it would go this far, but I am too old to abide stonewalling about anything like this. With aggressive action now, we all can avoid the dreaded questions in the aftermath that go something like this: Why didn’t someone speak up? How could you, as a Board, do this? What do you say to taxpayers who will foot the bill by way of larger employee and employer contributions? All of this as the reporters totally display the waste and abuse even in past years.
I am also sending this to my state Senator and State Representative.
I saw a good quip the other day & it fits somewhat in this situation:
Jerry W. Harmon, Superintendent
Jackson Center Local Schools
From: John Lazares, April 28, 2009
Subject: FW: STRS - State Teacher Retirement System - Outrageous Bonuses 2009
Please forward to your staff.
Thank you.
John Lazares, Superintendent
Warren County ESC
From Jim Stoll:
Dear Superintendents:
It may have been brought to your attention, and I am sorry to report, there are some serious problems with STRS, our State Teachers Retirement System.
Did you know that STRS paid 11 Investment associates total compensation exceeding $400,000 last year? The highest topped out at $529,000.
Did you know that two investment associates got RAISES from 2008-2009 of $39,500. (yes, that was their RAISE. (See links below for all 83 investment associate raises.)
Did you know that this September, in spite of losing $33 Billion in the past 18 months and exploring “CUTTING” member benefits, they are paying “7/12 BONUSES” to 83 STRS Investment Associates, – one bonus for losing 33 Billion is in excess of $160,000 !
See Below for entire details….Many thanks to Superintendents John Scheu, Jerry Harmon and Rod Russell for getting on board and leading the fight to hold STRS accountable for this waste of member contributions and taxpayer dollars. In most school districts 8 – 10% of your entire BUDGET goes to STRS. IS THIS THE WAY YOU FEEL THOSE DOLLARS SHOULD BE SPENT – for outrageous salaries and bonuses?
Please email STRS Exec. Dir. Mike Nehf and the Board and advocate for them to eliminate the 7/12 Bonuses for this year. Feel free to cc (copy) me at
Please feel free to call or email if I can be of further assistance. Upon request, I'd be happy to send the entire spreadsheet of salary, bonus and compensation totals separately, so you can share with your staff minus what may be construed as a political message below..
Jim Stoll
Director of Athletics
Sycamore Schools
7400 Cornell Rd.
Cincinnati, Ohio 45242
Cell 513-615-4690

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RH Jones: Hooray for the Ohio General Assembly

From RH Jones, April 29, 2009
Subject: Re: S.B. 3 - Enacted, OPERS reports
To all STRS members both active and retired:
My report: Ohio STRS employees now have to abide by the same rules as active educators.
Since OH STRS employees pay into OPERS, they can be made to forfeit their right to a retirement allowance or disability benefit or any other right earned by being a member except for the members accumulated contributions. They now have to “walk the walk” just as educators. I say “hooray” for the Ohio General Assembly. Please read the quote below!
RHJones, an OH STRS member’s opinion
At a recent OPERS luncheon meeting in Smithville, Ohio the following message was distributed:
127 General Assembly (2007 - 2008)
S.B. 3 – Enacted (Effective 5/13/08
• If a public employee pleads guilty to or is convicted of certain felonies while serving in a position of ‘honor, trust, or profit,’ the employee forfeits the right to a retirement allowance or disability benefit or any other right earned by being a member except for the members accumulated contributions.
• Applies to the following felonies: bribery, pattern of corrupt activity, theft-in-office, or a conspiracy to commit, or complicity in committing any of these offenses.
• Prosecutor notifies OPERS.

Monday, April 27, 2009

Report from STRS: April Board meeting

From STRS, April 27, 2009
Subject: [News] April Board News Details Retirement Board Actions and Discussions
Last week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The April report follows.
At its April 23, 2009, meeting the State Teachers Retirement Board received its first look at the proposed system budgets for fiscal year 2010 (July 1, 2009-June 30, 2010). The proposed operating budget totals $87,920,000, which represents a $10.9 million, or 11% decrease, over the current year budget and is the lowest operating budget in four years. It also represents a 2.5% reduction (almost $2.3 million) from projected expenditures for this current year. The proposed capital budget for fiscal 2010 totals $1,418,900. Additionally, the system expects to spend $2,755,000 on the project that is under way to replace STRS Ohio's obsolete pension management computer system.
Contributing significantly to the reduced operating expenditures are: (1) the current associate head count freeze; (2) associate salary freeze effective through June 30, 2010, and (3) lower Performance-Based Incentive (PBI) Program payments to eligible Investment Department associates due to the suspension of this year's PBI program beyond Jan. 31, 2009. (These PBI payments are not usually voted on by the board until September, which is why estimated payments are included in next year's budget.) Current restrictions on out-of-state travel for STRS Ohio associates also contributed to the decline, as did significant reductions in expenditures for outside professional and technical services.
The Retirement Board will be asked to approve the budgets at its June meeting.
When the Retirement Board and staff began looking at options for addressing future liabilities of the pension fund in March, it was noted that "everything was on the table" and that no singular change by itself could improve the funding of the pension fund significantly -- but combinations of changes could have an impact. Board members reviewed examples of how a combination of changes would affect the pension and health care funds during the April meeting.
Sample scenarios included an overall 4% increase in contributions, raising the minimum retirement age to 60, calculating final average salary based on five years versus the current three, reducing the cost-of-living adjustment for retirees to 2% along with delaying its start until the retiree is age 65, and putting a flat 2.2% formula in place for all years of service. The staff noted that these are not the only options the board may consider and not all these scenarios may be included in a final package. Future discussions may also take into account possible "grandfathering" for members close to retirement, as well as the possibility of phasing-in plan design and/or contribution increases. The sample options presented to the board were designed to give some sense of the cumulative effect various combinations of changes can have on reducing the liabilities of the pension fund and also possibly allow additional contributions to go toward the STRS Ohio Health Care Program. The board asked for a number of additional variations to be looked at during subsequent meetings.
At the April Ohio Retirement Study Council (ORSC) meeting, the Council heard a review of the semiannual investment performance of the five retirement systems through Dec. 31, 2008. (ORSC is the legislative oversight body for the Ohio systems.) Paul Morgan, senior consultant and director of capital markets for Evaluation Associates, recommended to ORSC members that, due to the low investment returns over the past 10 years (which includes the down market period of 2001-2003), coupled with the economic outlook, all five systems should reevaluate their investment, funding and benefit policies. In response to this, ORSC Chair Todd Book and the Council passed a motion to have ORSC staff work with the Ohio Public Employees Retirement System, School Employees Retirement System and Highway Patrol Retirement System in the same manner they are currently working with the Ohio Police & Fire Pension Fund and STRS Ohio. The goal is to develop proposals that would reduce the systems' respective funding periods for meeting their long-term obligations. With all Ohio systems now engaged in conversation with the ORSC staff, it is possible that any future proposed pension legislation could include changes for all five pension systems.
The preliminary value of STRS Ohio's investment assets increased slightly in March -- to about $47.6 billion from $46.3 billion at the end of February -- due to a positive return for the month. While it is difficult to predict if the worst is over in the markets, there are some positive signs. Credit markets are slowly beginning to function, interest rates are low, energy prices are low, and inflation is very benign. The U.S. stock market has risen 25% from its low point on March 6, 2009.
The steep decline in both U.S. and international stock markets has caused some STRS Ohio members to suggest that the pension fund should move the majority of its assets to more "conservative" investments until the stock markets recover. However, it is difficult, if not impossible, to time the markets. And, just missing a few days of market upturns can have a significant impact on an investment fund, as illustrated in the accompanying chart. (This chart can be viewed at:
As the Retirement Board nears the completion of its current Asset Allocation Study, Russell Investments, the board's investment consultant, is recommending some modifications to the overall asset allocation. However, achieving the needed 8% return over the long-term on the investment fund requires that a diversified portfolio be maintained, with more than half of the funds being invested in domestic and international stocks. The board is expected to vote on the recommendations contained in the Asset Allocation Study at its May 2009 meeting.
During April's meeting, STRS Ohio staff and the board continued to review proposed changes to the STRS Ohio Health Care Program to stem the loss of principal in the health care fund until additional funding can be found to sustain the program on a long-term basis. Following the staff's presentation, the board approved several changes.
The first group of changes will begin this calendar year (2009) and focus on the Express Scripts prescription drug program used by enrollees in the Aetna, Medical Mutual and Paramount health care plans. These changes are:
- Eliminate pre-addressed, postage-paid envelopes for mail-order prescriptions and replace with pre-addressed-only envelopes.
- Require exclusive use of CuraScript (a subsidiary of Express Scripts) for purchasing specialty medications. More than 8,400 enrollees already use CuraScript; however, 3,600 individuals will be required to move their specialty medication prescriptions they receive from a retail pharmacy to CuraScript.
- Provide approximately 230 generic medications through mail order, up to a 90-day supply, for a $9 copayment versus the current $25 copayment. (This program will be similar to those offered at retail chain pharmacies.)
For calendar year 2010, the Retirement Board approved the following:
- Continue STRS Ohio's participation in the Medicare Part D subsidy program. This means that individuals who are participating in STRS Ohio's Health Care Program do not need to enroll in a separate Medicare Part D prescription drug plan.
- Continue the Health Care Assistance Program with the same coverage level, eligibility requirements and $0 monthly premium.
- Continue the 2009 premium reimbursement amounts for Medicare Part B in 2010. The maximum amount of reimbursement from STRS Ohio remains at $52.83 per month for the 30-year retiree; the minimum amount of reimbursement is $29.90 per month.
Finally, the board also approved several modifications to the Express Scripts prescription drug plan for calendar year 2010, as follows:
- Provide a single drug plan for the Aetna and Medical Mutual Plus and Basic Plans, as well as Paramount health care plans, that includes a $150 deductible (generics are excluded); a $3,000 out-of-pocket maximum; and changes Tier 3 drugs (non-forumulary brand-name drugs) to 50% coinsurance, with a maximum of $100 for retail and $200 for mail order. The retail and mail-order copayments for Tier 1 and Tier 2 drugs will remain the same.
- Implement step therapies to new users of applicable drugs in six drug classes.
- Create a Tier 4 level of coverage, where program enrollees will pay the full cost of the drugs, but at the lower, negotiated discount rates generated by the contract between Express Scripts and STRS Ohio. Drugs in this category will include non-sedating antihistamines (e.g., Allegra and Clarinex); erectile dysfunction drugs; and drugs that are for cosmetic purposes, promote hair growth or treat male pattern baldness, depigment skin and for smoking cessation.
Additional details about changes for 2009 and 2010 will be provided to STRS Ohio members in future newsletters, on the STRS Ohio Web site and special mailings.
The Retirement Board approved 99 active members and 91 inactive members for service retirement benefits.

Why OEA will never engage in a public debate.....

From Molly Janczyk, April 27, 2009
Subject: Open Debate: Bonuses
Just as Bill Leibensperger will not agree to an open debate, neither will Tim Myers or probably any of the OEA-backed STRS Board members. Debating without prepared statements with unknown questions and audience is well outside their comfort zone. Speaking, like Dennis Leone does and Jim Stoll is requesting, interactively with audiences whether friendly or critical isn't where they want to be.
Interestingly, when Leone speaks with facts behind him, most audiences who were previously more closed minded change perspectives, but Dennis possesses the ability to face opponents or supporters without fear simply stating facts and presenting evidence. OEA likes to mail or gather their supporters in a room and bask in the glow of those who do not 'dissent.' They are not so quick or nimble on their feet as Leone and Stoll. Thus, that is a problem in imaging for them. Therefore, debate does not occur and public speaking on/in friendly territory or one in which no one is permitted to respond -- the-hit and-run arena.
Bill L.'s question to me of WHY does Dennis only wish to speak publicly with him is a perfect example of what I have said. There is no understanding of give and take, transparency, ability to prove accuracy, facing opponents who speak back with evidence to support them. It takes away the ability to take words out of context and throw out smears if someone is standing there ready to respond and prove otherwise. Not in their comfort zone.
Molly J.

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Jim Stoll to Tim Myers: 400 e-mails and an invitation to a debate

From Jim Stoll, April 27, 2009
Subject: Re: [QUAR] RE: Bonuses

I'll be happy to bring over 400 physical email responses as evidence of my position and would welcome for you to bring your positive responses to compare the positions and true feelings of your membership.... I'd love for the other Board members to weigh in on what responses they've received overall as well. My guess is that our responses may have some deviation and prejudice built in, but theirs would be more close to the norm.
Let's meet anytime, anywhere at a place of your choosing to debate the issue of these "7/12" Bonuses in an open forum and have Ms. Ecklar and Mr. Nehf use your email database to invite the membership.
Better yet, let's allow the membership to vote on this issue as a referendum.... I'm sure sending ballots out would not cost anywhere near the 3.3 million of the Bonus payouts.
I wonder if your positive respondees have any idea of the contingencies the Board is planning to their benefits in light of these bonuses. ie. Friday's Board discussions of possible 4% increase in contribution rates, raising of minimum retirement age to 60, changing the Final Avg. Salary Calculation, reducing Cola's for retirees, using flat 2.2% formula for all years of service etc. - Be assured, with my email database, if you don't share this with them - I will.
Regardless, I will bring my copies of all email responses to the next board meeting and share them with everyone in my allotted 3 minutes. Would welcome for you to do the same and share your responses as well.
Looking forward to you accepting my invitation to debate the Bonus issue - just let me know where and when - I will definitely be there. If you want to debate in a closed forum with no audience and then put the debate on "You Tube" for the membership to access, I'd welcome that if you were fearful of audience applause or emotion, coming into play.
Jim Stoll Director of Athletics
Sycamore Schools
7400 Cornell Rd. Cincinnati, Ohio 45242
From Tim Myers, April 26, 2009
Subject: Re: [QUAR] RE: Bonuses
Since I am mentioned in this email I will respond:
I have a completely different experience than the one cited below [See post immediately below: Ralph Graham to Mark Meuser: Now they have negative results and shouldn't be rewarded]. The members that have replied to my response are thankful that I have given them the information that they were missing when they sent the original email. One superintendent even told me to keep up the good work and that he was pleased that he voted for me last year! An Athletic Director apologized for sending out the earlier letter without checking the facts first. He then sent out my reply to the same list that he had previously used.
So, far from alienating members, it seems that the more members know, the less upset they are.

From Ralph Graham, April 14, 2009
Subject: Bonuses
Dear Mike Nehf and STRS Board:
I've just received an email from James Stoll and I must say as a member of STRS I am outraged at the lack of common sense. A bonus is something to be given when job performance exceeds expectations. That is not the case with our investment advisors. They are paid a very good salary to perform a job they were hired to do, unfortunately they didn't perform very well and DO NOT DESERVE a bonus. I am tired of hearing the same bogus response that started on Wall Street that these bonuses will help retain quality people. First, I'm not sure we want to retain people that underperform and second, I seriously doubt quality people will walk away from quarter million dollar salaries. I have no problem rewarding individuals that perform at an exceptional level, but that is not the case here. I can guarantee you that I will be voting for James Stoll to protect the investment I have in STRS. I strongly encourage you to ELIMINATE these bonuses that are currently on the table.
Ralph Graham
Southeast Local Schools

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