Saturday, May 09, 2009

Election results

From STRS, May 9, 2009
On Saturday, May 9, 2009, the results of the State Teachers Retirement Board election were certified by tellers designated by each candidate and a representative of the Secretary of State.

The result of the election for the contributing member seat on the Retirement Board is as follows:
...Carol L. Correthers, 19,478 votes
...James A. Stoll, 10,599 votes
...Write-Ins, 117 votes
The result of the election for the two retired member seats on the Retirement Board is as follows:
...James McGreevy, 25,567 votes
...Bob Stein, 24,506 votes
...Ralph Roshong, 12,737 votes
...David Preslan, 10,881 votes
...Write-Ins, 271 votes
The term of office for Carol L. Correthers, James McGreevy and Bob Stein begins on Sept. 1, 2009, and ends on Aug. 31, 2013.

A 'Thank You' from newly elected Board memberBob Stein

From Bob Stein, May 9, 2009
Subject: Thank You -- STRS Election Results
I was just informed that I have been elected to a retiree seat on the STRS board. I will take office on September 1.
The results were:
Jim McGreevy 25,567
Bob Stein 24,506
Ralph Roshong 12,731
Dave Preslan 10,881
I was pleased that the space between the successful and unsuccessful candidates was nearly double. A squeaker election doesn't show a clear decision either way.
My web site will begin a transition from a campaign site to one more appropriate to a board member next week. One of the goals is to use the site to encourage larger membership understanding and participation. Please continue to visit.
Even before I have a vote I would like to begin to influence decision-making methodologies. The first issue for me is to see if we can remove a few cognitive biases from the selection of our new investment advisory firm and from our expense decisions. Even making the board and membership aware of them would be helpful. This common shortcoming takes many forms but has been at the root of most of STRS's major expense and investment problems. It is important to start this now because the board will reach decisions on many of these issues before the end of the fiscal year (June 30) and may not functionally revisit them for at least another year.
Thank you for whatever you may have done on behalf of my candidacy.
Also, thank you for your participation in the election at whatever level.

COLA Calculator

From Mario Iacone, May 9, 2009
Below is a sample annual COLA (Cost of Living Adjustment) calculation based on an original $30,000 retirement benefit. This was put together by Mario Iacone, a Mahoning County retiree (Youngstown area). If you would like a copy of the original spreadsheet so you can calculate your own COLA amounts, e-mail him (ike1@zoominternet.net) and he will send it to you.
Click images to enlarge.

Labels: , , , ,

Friday, May 08, 2009

Pension Scandal Now Includes 36 Attorneys General

From John Curry, May 8, 2009

"California Attorney General Jerry Brown is one of 36 attorneys general from around the country who have agreed to participate in a task force that Cuomo organized to fight pension-fund abuse."

Editorial: Pension scandal migrates west
The Sacramento Bee, May 8, 2009

State and local governments, now bracing for expected big increases in the bills for their retirement funds, should keep a close watch on the unfolding national investigation of corruption in public pension funds.

The probe began in New York two years ago when state Attorney General Andrew Cuomo teamed up with the Securities and Exchange Commission to begin looking into alleged bribery, fraud and kickbacks involving that state's pension fund. At $122 billion, it's the third-largest such fund in the country.

Cuomo has filed several criminal indictments in his probe so far. Most involve pay-to-play schemes in which so-called "placement agents" are alleged to have paid public officials to steer pension-fund money to certain investment firms.

California Attorney General Jerry Brown is one of 36 attorneys general from around the country who have agreed to participate in a task force that Cuomo organized to fight pension-fund abuse.

In recent weeks, the investigation has drifted west to California. That is hardly surprising.

This state is home to the country's largest and second- largest public pension funds, the California Public Employees' Retirement System, or CalPERS; and the California State Teachers' Retirement System, or CalSTRS. Two of the firms under scrutiny by Cuomo are headquartered in California: Gold Bridge Capital LLC of San Francisco and Wetherly Capital Group of Los Angeles.

As The Bee's Dale Kasler reported this week, the two firms represented money management companies that secured $525 million in investments from CalPERS and CalSTRS since 2004.

Spokeswomen for the California pension funds downplayed the significance of placement agents in influencing investment decisions.

Nonetheless, last week, California Treasurer Bill Lockyer, a member of both the CalPERS and CalSTRS boards, sent letters to top officials at the two pension funds requesting that they "review any prior or pending … deals involving investment managers and/or placement agents identified in indictments filed" in New York.

He also asked the pension-fund staffs to provide a list of the "identities, fees paid and services provided by placement agents seeking" pension fund investments and to make their findings public to the extent possible.

Finally, Lockyer has asked the retirement boards to consider requiring placement agents to register and disclose their clients, a system of disclosure much like the one currently in place for lobbyists who contact elected officials on behalf of clients.

CalSTRS and CalPERS combined have lost more than $100 billion in the last 18 months. It will be difficult, if not impossible, to determine the extent to which those losses can be attributed to imprudent investments pushed by placement agents.

Still, the information the treasurer seeks will go a long way toward creating the kind of openness and transparency that retirement fund managers have long demanded from corporations in which they invest.

It will also provide reassurance to taxpayers who must back-fill pension funds when investment returns falter, as they have spectacularly this year.

Thursday, May 07, 2009

Wally World vs. Express Scripts & a new Wally 3 month test market in Michigan

From John Curry, May 7, 2009
"A key example is Wal-Mart's announcement Tuesday that it is launching a pilot program in Michigan through which it will offer a 90-day supply of 300 generic prescriptions, each for $10 via free mail delivery. The free home delivery program requires no memberships and no enrollment fees."
Express Scripts merger comes as Wal-Mart threat rises
By
ST. LOUIS POST-DISPATCH, May 6, 2009
Talk about good timing. Express Scripts' plan to buy WellPoint's NextRx comes as Wal-Mart Stores grabs for a bigger portion of the prescription drug business, particularly in the profitable area of generics.
If the merger is completed, it will give Express Scripts more clout to negotiate with drug suppliers and compete with Wal-Mart's biggest selling point — low prices.
"You need to be big and getting bigger if you're going to compete with Wal-Mart," said Bob Buchanan, adjunct professor of finance at St. Louis University and former retail stock analyst at A.G. Edwards.
"Express Scripts' planned merger with NextRx should give it more heft to deal with a Wal-Mart that ever so clearly is determined to be an increasingly large player in the overall field of health."

Express Scripts, based in north St. Louis County, administers prescription drugs for private employers, unions and governments through chain pharmacies and independent drugstores. It also manages delivery programs that ship drugs directly to patients' homes, a popular cost-effective option for people who need steady medications to deal with chronic conditions.
Such pharmacy benefit companies are seeing greater competition from pharmacy retailers trying to take a bite of the drug plan business by offering consumers and employers low-priced deals.
A key example is Wal-Mart's announcement Tuesday that it is launching a pilot program in Michigan through which it will offer a 90-day supply of 300 generic prescriptions, each for $10 via free mail delivery. The free home delivery program requires no memberships and no enrollment fees.
For now, the Wal-Mart program doesn't pose much of a problem for Express Scripts because the program is focused primarily on price rather than management services and is fairly limited, said Steve Shubitz, an analyst with Edward Jones. However, that could change if Wal-Mart expands its program to offer more services and newer generic drugs, he added.
"It's a longer term threat," he said.
Last month, Express Scripts agreed to buy NextRx for $4.68 billion. The deal is expected to close later this year after the antitrust waiting period ends. Express
Scripts gets about half of its profit from the home delivery of generics, Shubitz said.
In addition to the $10 generics, Wal-Mart's home-delivery program provides access to more than 3,000 brand and other generic prescriptions. As it launches the free home-delivery service in Michigan, Wal-Mart hopes to expand a pilot program it started with Caterpillar Co. in September through which it provides prescription drugs to 70,000 employees and dependents.
"We haven't announced any companies beyond Caterpillar, but we are in discussions with several others," said Christi Davis Gallagher, a Wal-Mart spokeswoman.
Although Express Scripts wouldn't comment on Wal-Mart's free home-delivery service to consumers, it dismissed Wal-Mart's Caterpillar program as a way to draw customers to their stores.
"While our business model focuses on improving health outcomes while reducing wasteful spending, Wal-Mart's program appears to be designed to build store traffic," Express Scripts said in a written response.

Cookin' the books the Ohio charter school way....creative bookkeeping can be fun, at least..... 'till the auditor comes a knockin'!


From John Curry, May 7, 2009
"Auditors found Nu Bethel:
• Withheld from employees, but did not remit, $34,000 in federal income taxes, $9,500 in Medicare taxes and $8,200 in state income taxes. It also failed to remit premiums to the Ohio Bureau of Workers’ Compensation.
• Hired Shye in July 30, 2005 but wrote nearly $24,000 in checks without an accounting system before Shye began his duties that September.
• Wrote numerous checks that cleared the bank but weren’t posted to the books, and recreated transactions so its books would reconcile with the bank."
Audit finds illegal spending, tax troubles at Dayton charter school
daytondailynews.com, May 7, 2009
By Anthony Gottschlich
Staff Writer
DAYTON — A local charter school illegally spent nearly $28,000 in fiscal 2006 and 2007, withheld taxes from employees but didn’t pay the government and failed to properly document thousands of dollars in expenditures, according to a state audit released Thursday, May 7.
“As a result, our office cannot determine if these expenditures were for a proper public purpose,” Ohio Auditor Mary Taylor’s office wrote in a 60-page audit of Nu Bethel Center of Excellence, 3560 W. Siebenthaler Ave.
The audit issued $27,708 in findings for recovery, but noted they’ve already been repaid by Nu Bethel founders James and Johnnye Willis and Treasurer Carl W. Shye Jr., who oversees the books for two other fiscally troubled charter schools in Dayton.
The bulk of the findings for recovery appear to involve expenditures related to undocumented loans the Willises made to the school, which was $70,000 in debt last year.
Johnnye Willis, principal of the 54-pupil school for kindergarten through sixth grades, said she was upset by the audit and couldn’t explain all of its findings.
“God knows we’ve been honest and we’ve tried to do the right thing,” she said. “Some things happened beyond our control.”
Auditors found Nu Bethel:
• Withheld from employees, but did not remit, $34,000 in federal income taxes, $9,500 in Medicare taxes and $8,200 in state income taxes. It also failed to remit premiums to the Ohio Bureau of Workers’ Compensation.
• Hired Shye in July 30, 2005 but wrote nearly $24,000 in checks without an accounting system before Shye began his duties that September.
• Wrote numerous checks that cleared the bank but weren’t posted to the books, and recreated transactions so its books would reconcile with the bank.
Shye said he made some mistakes, but attributed most of the troubles to transactions that occurred prior to his joining the school, a computer system that crashed and a high turnover in administrators. But stronger controls are in place today, he and Johnnye Willis said.
“We’ve set up a repayment plan to repay past-due taxes and we are paying currently for all taxing authorities,” Shye said. Still, the audit “raises a flag” with the Ohio Department of Education, which is on track to provide $383,000 in funding to Nu Bethel this school year, ODE spokesman Scott Blake said.
“Our standard procedure is to request an investigation by the sponsor and have the school follow up with a corrective action plan,” Blake said.
Leonard Harding, executive director of sponsor Education Resources Consultants of Ohio, said Nu Bethel will have to “show proof they’ve corrected those findings.”
Shye, treasurer for nine Ohio charter schools, also serves as treasurer for Arise Academy at 1 Elizabeth Place and New City Community School at 1516 Salem Ave. He attributed similar causes for the financial troubles at those schools.
The Dayton Daily News reported last month that Arise is $330,000 in debt, owes $595,000 to vendors and has struggled to make payroll and provide benefits for its employees.
A 2006-07 audit for New City, the most recent audit available, found the school $202,000 in debt and riddled with accounting errors, undocumented purchases and troubles with payroll records.
Contact this reporter at (937) 225-7408 or agottschlich@DaytonDailyNews.com.
Should you like to read the actual audit ( in an Adobe download version) click on this link which will take you to the Ohio Auditor's office for some more recipes from this charter school!
Also, today's release from the Ohio Auditor featured two other Ohio charter schools who had findings for recovery; they are the Columbus Humanities Arts and Technology Academy in Franklin County and the Victory Academy of Toledo in Lucas County. Their audits can be found by clicking on these Adobe downloads from the Ohio Auditor's office:
Former State Representative Sally Perz (R-Toledo), the "Mother of Ohio's Charter Schools," gave birth to charter (community) schools in Ohio back in 1997 when she sponsored House Bill 215 which allowed charter schools to be established . Mother Perz, you might want to watch your children a little closer. Maybe you can persuade them to take up a new hobby like the culinary arts, after all...some are pretty good at cooking!
John

Wednesday, May 06, 2009

CORE's Donna Seaman alerts her state Senator and invites him to an STRS Board meeting...you can too!‏

From John Curry, May 5, 2009

She also sent other letters to her state representative. Why not invite your rep./senator (of a staff member) to an STRS meeting. I'm sure Donna won't mind if you use her letter as a form letter....just change the names of your politician and you are "in business."
John

From Donna Seaman, May 3, 2009
Subject: STRS

Dear Senator Harris:

My husband and I are retirees of the State Teachers Retirement System (STRS). Many of us are alarmed and incensed that the STRS board is still considering paying out over $3 million dollars in bonuses (STRS calls them "performance based incentives!") to investment staff even though the entire portfolio value is down 42% currently.

This payment cannot be allowed to happen! I have written today to Governor Strickland and Representative Jay Goyal, and am asking them, as well as you, Senator Harris, to please intervene on behalf of Ohio's retired and active teachers, to insist that bonuses to investment staff be abolished.

May I suggest you ask someone from your staff to attend the next STRS meeting, May 14 and 15, when bonuses and health care issues will be on the agenda. Usually on the Thursday part of the meeting, there is time for public speaking (3 minutes are permitted) about 1 to 1:30. At that time, I know there will be other retirees who feel as we do that performance based incentives should be totally eliminated.

Public pension systems in other states (Missouri, Pennsylvania) have abolished bonuses in light of our nationwide economic crisis. I believe Ohio should follow suit. Will you please intervene on our behalf? Ohio's retired educators need your help! The STRS board continues to spend OUR money extravagantly and inappropriately. Thank you.

Donna Seaman, 2002 retiree and Dean Seaman, 1986 retiree

STRS Flashback - 5 years ago - Incumbent loses spot on State Teachers Retirement System board‏

From John Curry, May 6, 2009

Canton Repository, May 9, 2004
By Paul Kostyu

Incumbent loses spot on State Teachers Retirement System board

COLUMBUS — In a stinging rebuke to the leadership of their unions, Ohio teachers elected Superintendent John Lazares to the board of the State Teachers Retirement System.

Lazares, who leads the Warren County Educational Service Center, defeated incumbent and current board chairman Eugene Norris of Columbus. He won by just 274 votes among the 44,976 that were cast by mail during the past several weeks.

The Ohio Education Association and the Ohio Federation of Teachers had endorsed Norris and reportedly spent tens of thousands of dollars on his re-election campaign.

Lazares, on the other hand, was supported in large part by retired teachers, who were not eligible to vote because the seat belongs to an active teacher. Supporters stuffed teachers’ mailboxes at schools with fliers when they were not blocked by local union representatives.

The hotly contested election was prompted in part by news media accounts late last year about questionable spending at the pension system on artwork, staff bonuses, expenses and travel.

“I have to give credit to Ohio’s retired teachers,” Lazares said. “I knew it would be difficult to beat an incumbent, but teachers have always been my biggest supporters over the years.”

Lazares said he called Norris last week to wish him good luck and to thank him for running a clean campaign. “I can’t say that about OEA or OFT,” he said.

Norris said he accepted “the will of the people,” but didn’t have an explanation for his defeat. He said the board faces “complex issues with no simple solutions.”

He said he would continue to work on health-care issues and engaging system members during his remaining months on the board. “The system is in sound and good shape,” he said.

The closeness of the vote prompted one official and multiple unofficial recounts by 56 STRS employees who were paid $80 each to come in on Saturday to count the ballots in a very deliberative process, overseen by representatives of Norris, Lazares, the Ohio secretary of state and an internal auditor from STRS.

Ballots were mailed to 302,453 STRS members, but just 14.9 percent voted. After the first count showed Lazares ahead by 260 votes, Pamela Ennis, who represented Norris, asked for a recount. Lazares picked up four additional votes and Norris lost 10. The final vote was Lazares, 22,625, and Norris, 22,351.

Throughout the day, questionable ballots were pulled and sent to STRS Executive Director Damon Asbury, the candidates’ representatives and Cheryl Stewart from the secretary of state’s office. Of those ballots, 214 were rejected, many because no vote was cast. One ballot was ripped in half, and others had votes cast for write-in candidates including Daffy Duck, Yogi Bear and Gov. Bob Taft.

Lazares, who will take office Sept. 1, said he plans “to make sure STRS money is used efficiently. I will be very fiscally responsible.”

He said the effect of the retirees on this election should serve as a warning to incumbents or others who seek election to the board in the future. “They’re a very important force,” he said.

Lazares also said active teachers are more aware of how the pension system is operating. “They used to take it for granted,” he said. “I was one of those. Now they know they can’t be complacent.”

Labels: , , , , , , ,

CalPERS and CalSTRS rethinking bonuses

"CalPERS and CalSTRS have been at the forefront of the shareholders' governance movement, raising tough questions about excessive executive compensation and other issues in recent years. Now they need to answer some tough questions of their own. As governments cut vital services and trim salaries and lay off workers, the millions in bonuses paid out to retirement fund executives are difficult to defend."

Editorial: Pension funds go tone-deaf on bonuses
sacbee.com, Apr. 23, 2009

The California Public Employees' Retirement System, CalPERS, and the California State Teachers Retirement System, CalSTRS, have already put state and local governments and school districts on notice. Public employer contributions to pension funds will rise by 2 to 5 percent of payroll over the next two years. That's a huge increase. It amounts to millions of dollars in increased costs from some local governments and billions more from the state annually, beginning next year.

The new higher retirement bills come due just as local and state governments are reeling from the economic downturn. And yet at the same time the retirement funds are demanding more from government employers, they are awarding big bonuses to their top executives, the same people who made the investment decisions and the earnings projections that turned out to be so wrong.

Together, CalPERS and CalSTRS have lost more than $100 billion in assets over the past 18 months. Nonetheless, they paid out nearly $7 million in bonuses to top employees last year. As The Bee's Jon Ortiz reported in a recent article, the biggest check, $322,953, went to Christopher Ailman, chief investment officer for CalSTRS. It almost doubled his $330,000 annual salary.

Webster's New World Dictionary defines bonus as "payment over and above salary given to an employee as an incentive or reward." What exactly is being rewarded here? Representatives for the retirement funds defend the bonuses, arguing that they are needed to attract top-flight talent. The public and local governments that will struggle to pay those bonuses have reason to be skeptical.

CalPERS and CalSTRS have been at the forefront of the shareholders' governance movement, raising tough questions about excessive executive compensation and other issues in recent years. Now they need to answer some tough questions of their own. As governments cut vital services and trim salaries and lay off workers, the millions in bonuses paid out to retirement fund executives are difficult to defend.

Shirlee Zerkel and Sandy Knoesel re: LifeMasters

From Sandy Knoesel, May 5, 2009
Subj: RE: Question about LifeMasters
You asked what the cost was per year. The cost is $3.25 million. For every dollar spent on LifeMasters, they guarantee a $1.80 in return. The savings is based on the previous claims projected forward and then compared to the actual claims incurred. The program started in July 2002. All expenses for health care come out of the HCSF, including LifeMasters.
From Shirlee Zerkel, May 5, 2009
Subject: Re: Question about LifeMasters
You say that the total expenditures for LifeMasters is 3.25 million. Is that per year or the total since you have used that service? How many years has STRS used LifeMasters? How do you figure the savings and what is the savings per year and then the total savings so far. Does the cost of LifeMasters come out of the HSF?
Shirlee

Lois Razzano to Mike Nehf and STRS Board: Remember who you are supposed to be working for

From Lois Razzano, May 2, 2009
Subject: bo•nus
bo·nus
Pronunciation: \'bo-n?s\
Function: noun
Etymology: Latin, literally, good — more at bounty
Date: 1773 : something in addition to what is expected or strictly due
What are you thinking…that’s it…you are only thinking about lining your own pockets…NOT about doing the job that all the STRS contributors voted you in to do. Years ago I had total confidence in STRS and the people working to keep our retirement system in good standing. Unfortunately, STRS has taken a total U-turn. I’m really tired of the cover-ups or omissions to the membership concerning some of the illegal actions taken by people we put our confidence in.
How in the world can you justify obscene pay raises and bonuses when STRS assets lost $33 billion dollars? What about $39,500 raises being given to two investment associates in 2009…most teachers don’t earn that much for years. If the vote was to suspend the bonus plan in February, why would those same bonuses be paid in September…should I include the definition of suspend? I think eliminate would be a much more intelligent term. How many “financial advisers” have been let go? With the loss of so many assets, a reduction in staff would be totally justified…not rewarding them for failure to secure our assets.
It is time to get back on track and get back to work for the people who have entrusted their money to STRS. One step in the right direction would be to eliminate the 7/12 bonuses. Another would be to give modest bonuses for a job well done, not huge bonuses for poor performance. Remember who you are supposed to be working for…all those who have dedicated their lives to educating the children of Ohio, many being underpaid for the time and resources they put back into their job…and the closest thing we get to a bonus is a personal day 1-3 times a year.
Lois Razzano

STRS Board meeting May 13 - 15

From STRS, May 6, 2009
PUBLIC MEETING NOTICE
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, May 13, 2009
...11:00 a.m. Disability Review Panel (Executive Session)
...2:30 p.m. Investment Committee
Thursday, May 14, 2009
...9:00 a.m. Retirement Board Meeting
Friday, May 15, 2009
...9:00 a.m. Resumption of the Retirement Board Meeting
The Retirement Board meeting will come to order at 9:00 a.m. on Thurs., May 14, and begin with a report from Member Benefits regarding health care, followed by the Executive Director's Report. Public participation is expected directly after the lunch break, followed by Long-Term Fiduciary and Financial Contingency Planning. When the Retirement Board meeting resumes at 9 a.m. on Friday, May 15, the Board will receive a report for the Investment Department, followed by routine matters, old business, new business and any other items requiring the Board's attention before adjourning.

Pension Board Members Gone Wild....a story that even "Travelin' Jack" would love!

From John Curry, May 6, 2009
Remember when Senate Bill 133 (Ohio's Pension Reform Bill) was enacted back in 2004 because of Dr. Leone's 2003 investigative report re. Ohio STRS misspending, mismanagement and entitlement mentality? I do! Dr. Leone was even asked to attend the signing of the bill into law when the Governor of Ohio signed it.

Part of that bill dealt with the globetrotting on STRS's dime by former OEA endorsed active teacher STRS board members Jack Chapman, Hazel Sidaway and others. Today, because of that reform bill, Jack and Hazel aren't allowed to return to the board because of their spending of our monies in their travel ventures as STRS board members. Well, Jack and Hazel, meet your modern day counterparts - the board members from the Detroit's two pension funds. Buckle your seat belt and adjust your seat to an upright position because if you don't, you're liable to fall out of your seat when you read this one! Do you think we could spare Doc Leone so that he could take a sabbatical to Motown? Our loss would be their gain!
John
Click images to enlarge.

Detroit pension trustees travel globe as funds lose billions
Some trips were lavish, but full records not released
BY JENNIFER DIXON AND TINA LAM
FREE PRESS STAFF WRITERS
Freep.com, May 5, 2009
Detroit's public pension trustees approved trips last year to more than 100 conferences around the globe, even as the city's two pension funds were losing billions.
And trustees weren't the only ones allowed to travel. The funds' executive secretary, assistant secretaries and one or two attorneys also were approved routinely for trips.
It's not clear how many of the 21 trustees, and their staffs, attended these conferences, or what they spent. The public pensions -- one for police and fire, the other for general city workers -- have yet to turn over most travel records sought by the Free Press last year under the state open-records law.
One pension lawyer said the funds destroy travel records after a year or two because of space limitations.
The newspaper was given some records for a recent conference in Dubai. They show that trustee Barbara-Rose Collins, also a city councilwoman, spent more than $9,000 for a business-class seat on her flight alone.
Limited records from 2007 show then-trustee and current City Councilwoman Alberta Tinsley-Talabi was approved to spend four nights in a $710-a-night New York hotel. It's unclear if she used the rooms; the pensions still were seeking her receipts earlier this year.
Political consultant Sam Riddle, former chief of staff to now-Council President Monica Conyers, traveled with Conyers when she was on the general retirement board, including meetings in Portugal, New York, Hawaii and Hong Kong.
"There's no better place than these exotic locales to cultivate a relationship," he said.
Trustee trips often lack disclosure
Last fall, Barbara-Rose Collins, a trustee on Detroit's police and fire pension fund, decided she wanted to learn more about investing in the Middle East and North Africa.
So she plunked down $6,840 to register for a pension conference in Dubai.

And she booked a business-class plane fare for $9,238. By contrast, the Rev. Wendell Anthony, a trustee on the city's general retirement fund, flew to the same conference for just more than $1,000.
Collins, also a city councilwoman, spent another $485 with Royal Luxury Transport of Dubai, which offers chauffeured sedans and rental cars.

Collins said she opted for the driver because she wanted to see the city and she said unescorted women in Dubai, in the United Arab Emirates, risk being called whores or sluts, or having stones thrown at them.

In all, Collins spent more than $20,000.

Although her tab represents a sliver of the funds' budgets, the Dubai conference offers a glimpse into the closely guarded, globe-trotting practices of Detroit's two public pensions, where trustees cross continents even as the world financial crisis -- and shaky investments -- have led to more than $2 billion in losses for city workers since mid-2007.

The Free Press is suing the pension boards to obtain a broad range of travel documents under the state Freedom of Information Act. The pensions have attempted to charge thousands of dollars for many records, which the newspaper is disputing.

Other travel records have been denied to the Free Press; pension lawyers, citing a lack of storage space, say they destroy travel receipts as a matter of policy after closing the books on a given year.

The lack of disclosure makes it impossible to say how often trustees and staff travel. The funds' longtime attorney, Ronald Zajac, won't comment.

Collins concedes her airfare was costly, but blames the high fee on her chief of staff.

"I will just have to pay better attention -- not just get on an airplane and go," Collins said. "I agree that's a lot of money. I'm glad that I went business class, but I bet I could have found a cheaper fare if I had tried."

Miami, Mumbai and more
According to meeting minutes, trustees for Detroit's two pensions, representing about 20,000 retirees, approved travel to more than 100 conferences around the world in 2008.
Trustees for the general retirement fund approved trips by 13 people to attend 84 conferences in cities such as London, Dubai, Singapore, Miami, Las Vegas, Key West, Ft. Lauderdale and Mumbai, India.
The police and fire fund approved trips for 15 people to attend about three dozen conferences in places like Palm Springs, Calif., New York City and Scottsdale, Ariz.

Geoffrey Hirt, a finance professor at DePaul University in Chicago, said it makes no sense for trustees, whose concern should be protecting retirees' assets, to approve so many conferences for so many people.

"People should be allocated a certain number of meetings a year, for budgetary reasons," Hirt said.

"Any time you spend a dollar on a meeting, that's not going into a rate of return," Hirt said. "The question becomes, how much should you spend to keep these people well-educated? They haven't been well-educated on corporate governance because they're not practicing good corporate governance."

The pension funds have been accused of excessive travel for at least 15 years.

In 2007, the Free Press reported that 13 trustees were planning to attend a conference in Hawaii, among them then-Mayor Kwame Kilpatrick and then-Police Chief Ella Bully-Cummings, making it the second-largest contingent nationwide. The mayor and police chief eventually canceled.

Details edited out
The Free Press obtained the Dubai records under the state open-records law, even as other travel records were denied.
Many details of Collins' $2,931 stay at the Al Murooj Rotana, the conference hotel, were edited out by the police and fire fund, without explanation as the law requires.

In a phone interview Thursday, Collins said she rented a car and driver to have a male escort, at the hotel's recommendation, and covered some costs herself.
"Women don't walk the streets," she said.

Actually, though Dubai is Muslim, it has a large, cosmopolitan tourist population, with luxury shopping and a hedonistic club scene. Women commonly appear on city beaches in bikinis and wear Western garb in public.

Collins said she used the driver to take her out to eat and see the city. "I would have opted for a tour, but the concierge didn't recommend it because of my age," said Collins, 70.
Collins' chauffeur costs were separate from her trips between the airport and the hotel, which cost $41 each way.

The $10,000 version
The Rev. Anthony, a trustee on the city's general retirement pension fund, made the trip with his wife, Monica Anthony. His Dubai trip cost $10,622.
While Collins flew business class, Anthony and his wife flew economy. His flight cost $1,070. The fund did not pay for his wife's ticket.

Anthony's hotel bill was $2,742 and, like Collins', many details were edited out.

Anthony did not return repeated calls seeking comment.

Failures to account
Only a trickle of travel documents has been made public by the pension funds.
In January, the funds released records showing that some trustees had failed to document advance payments for travel in 2007 and 2008.

The funds said former trustee Monica Conyers, now City Council president, had failed to account for thousands of dollars for hotel stays and airline travel.

Conyers disputed that, saying the pension funds had lost some receipts and she had repaid the rest.

Former trustee Alberta Tinsley-Talabi, a member of City Council, was cited for failing to submit receipts for four nights in a New York City hotel in late 2007, where her room rate was $710, and for four nights in Las Vegas at $544 a night. Her office said it was gathering receipts.

Daniel Cherrin, spokesman for Mayor Ken Cockrel Jr., who has representatives on each board, said pension travelers should "exercise common sense and good judgment when using taxpayer dollars."

Retirees respond
Ed Wertz, a retired Detroit cop, called the trip to Dubai "absolutely ludicrous ... particularly at a time when the economy is the way it is."
The pension trustees "have a fiduciary responsibility to the retirees, not themselves," said Wertz, 64.

Dan Pauley, a retired Detroit police sergeant, said he does not support pension trustees "having a grandiose time" with retirees' money.

"Is it really necessary?"

On the road again
Last week, Collins was on the road again, attending a conference in New Orleans, blocks from the French Quarter.
Collins said the New Orleans conference was "very intensive," and she came home with so much literature her baggage exceeded airline weight limits.

She could not say the same about Dubai.

The seminars were complex, with 60 speakers on arcane topics such as the growth in infrastructure investing, deal flow in the secondaries market and sovereign wealth funds.

The Dubai investment environment was so different, Collins took away little of value.

It was "not information that I would use," she said.

Contact JENNIFER DIXON: 248-351-2993 or jbdixon@freepress.com

Minutes of April CORE meeting

Minutes of the Friday, April 24, 2009 C.O.R.E. Meeting
After attending the extended morning portion of the STRS Board meeting on the seventh floor of the STRS Building in Columbus, 24 members relocated to the second floor for the monthly meeting of Concerned Ohio Retired Educators (CORE). At 2 p.m. President Dave Parshall opened the meeting by asking for acceptance of the March CORE minutes, which were available on-line and in hard copy in the Sublet Room. Ryan Holderman moved that they be accepted and Mary Ellen Angeletti seconded it; the minutes were then approved by members present.
Treasurer Herman Fisher read a thank you note to CORE from a retiree in Medina. He then noted that the treasury has had an increase of over $2000.
Following the treasury report, President Dave talked about a recent health care program he attended. This program stressed the value of a single payer system; there will be a follow-up program soon, which he’d like to attend. To that end Mary Ellen Angeletti moved that CORE pay the $30 registration fee for Dave to be able to attend the “You Can” conference. Nancy Hamant seconded the motion. The motion unanimously passed.
The upcoming health care conference was the impetus for a lively and lengthy discussion on health care and retirees’ urgency to contact legislators about what retirees’ wants and needs are.
The group also discussed problems with some of the recently sent out ballots. One retiree received an active ballot. Another got the glossy OEA promotion card in with her official STRS ballot.
President Dave reminded the members to ask for a copy of the CD of the STRS Board meetings. It’s vital that all retirees keep apprised of what is going on (especially those who are unable to regularly come to Columbus to the monthly meetings). Remember that there’s no cost to retirees for the CD! (It’s a good way to help yourself keep informed.)
Board members and trustees will be e-mailing President Dave dates in May when they’ll be available to meet with Mike Nehf, executive director. (One item we might want to bring up is the possibility of simulcasting board meetings. Another is the likelihood of offering the Public Participation at the board meetings on both Thursday and Friday. A third topic might be having the health care portion on Thursday and investments on Friday. ) Please let Dave know if you have other issues, which might need to be addressed at that meeting.
For those who were unable to attend Thursday’s meeting, active nominees, Jim Stoll, spoke. His comments are available via Kathie Bracy as well as CORE president Dave Parshall’s address to the board.
Before President Dave closed the meeting, he reminded all that our next CORE meeting will be Friday, May 15th. We adjourned at 3:10 p.m.
Respectfully submitted,
Marie M. Fetters
CORE secretary

Monday, May 04, 2009

Shirlee Zerkel re: Question about LifeMasters

Shirlee Zerkel to Sandy Knoesel, May 4, 2009
I asked you a couple of weeks ago about the savings you mentioned that LifeMasters brings to STRS. You stated that is was larger than what LifeMasters costs STRS. What is that savings and how is it figured?
Shirlee Zerkel

Are you a little bit worried, Express Scripts? Will you waive co-pays also?


From John Curry, May 4, 2009
"One big PBM, Express Scripts, told the WSJ that what Wal-Mart is really doing is trying to increase foot traffic in its stores."
So, a pretty good business decision isn't it, Express Scripts?
Wall Street Journal, May 4, 2009
Wal-Mart Tries to Step on Pharmacy-Benefit Managers’ Turf
Can Wal-Mart eliminate the drug-coverage middleman?
The retailer’s $4 generic-drug program has already prompted lots of pharmacies to follow suit. Those programs are especially attractive to the uninsured, who pay for their drugs themselves. Now Wal-Mart is testing a program with an employer that offers insurance to its workers, heavy-equipment maker Caterpillar.
Here’s how the WSJ describes the program: Wal-Mart gets a fixed markup over its cost for the drugs it sells to Caterpillar employees. Though Wal-Mart doesn’t reveal the costs to Caterpillar, they are verified by a third party. The markup guarantees a profit for Wal-Mart, while reducing the cost to Caterpillar. The employer has waived co-pays on generic prescriptions bought from Wal-Mart.
This sort of thing sounds simpler than many of the arrangements that employers make with PBMs, in which the PBMs pay pharmacies one amount for drugs and turn around and charge the employer a different, higher amount, often without telling it what the pharmacy got paid. Those types of opaque arrangements have sometimes resulted in huge mark-ups. Wal-Mart is essentially eliminating the middleman and negotiating the prices of its drugs with employers directly.
One big PBM, Express Scripts, told the WSJ that what Wal-Mart is really doing is trying to increase foot traffic in its stores. And some analysts question whether this type of program will gain much traction.
Deutsche Bank analyst Ross Muken, for instance, in a note to investors pointed to PBMs’ benefit-management programs that encourage patients to switch from branded drugs to cheaper generics. The firm sites PBMs’ aggressive efforts to get patients to switch from Pfizer’s branded cholesterol-lowering drug Lipitor to the generic version of Merck’s Zocor back in 2006, including significant publicity efforts with both patients and prescribers.
“CAT’s strategy assumes that it can promote brand to generic switching, similar to what a traditional PBM does,” Muken writes. “We believe that this assumption is at fault for two reasons.” Getting patients to change their behavior takes “a significant amount of time and expertise to interact with doctors, encouraging them to prescribe generic drugs,” he says. Plus, many PBMs have mail-order programs that are especially useful for encouraging switching.

Dennis Leone responds to the rhetoric

From Dennis Leone, May 4, 2009
Subject: Thank You
Jerry – Thank you for writing what you did to Meuser. I am sick-to-death of the Meuser/Myers/Ramser/Cervantes/Chapman/Nehf/Mitchell rhetoric of the bonuses being justified because the investment staff is providing “value added” (which means that our returns for the first 9 months of FY 2009 were -32.1% in comparison to Wall Street average market loss of -32.2%).
The union block on the STRS Board simply do not want to hear that base salaries averaging $156,000 for the investment staff (and spectacular fringe benefits) certainly pays for the so-called “value added.” No, they say it justifies giant bonuses on top of that.
I am also tired of hearing the age-old argument that the bonuses also are justified because we’d be spending more money using external money managers instead of our own internal money managers. Everyone could make an argument that it would cost him/her more money if they did things in a different way.
I guess I should have told my school board that I deserved a bonus check because I never recommended that my district hire a 2nd assistant supt, and therefore I was “saving” my district money by never recommending such. Maybe my wife and I are “saving” money by not buying a Florida condo that we can’t afford anyway.
Dennis Leone

Labels: , , , , , , , , , , , ,

Sunday, May 03, 2009

NY Times journalist clarifies point in article 'Social Security Benefits Not Expected to Rise in '10'

Original article posted below (May 2 posting)
From Robert Pear, May 3, 2009
Subject: thank you
thanks for your note..... Here's some additional information.....
One-fourth of Medicare beneficiaries are not protected by the law, and their premiums could increase. This group includes new Medicare beneficiaries, those with higher incomes (over about $85,000 a year) and low-income people whose premiums are paid by Medicaid. To help finance the increase in Part B costs, the government says, Medicare will have to collect all of the additional premium revenue from just one-fourth of the beneficiaries, meaning that each person will have to bear more of the cost.
Kathie Bracy to Robert Pear, May 3, 2009
In your May 3 article "Social Security Benefits Not Expected to Rise in '10," you wrote "But one-fourth of Medicare beneficiaries are not protected by the law, and their premiums could increase." Can you tell me which 1/4 of Medicare beneficiaries are included in this group and why? Thank you.

Donna Seaman to Governor Strickland: End the bonuses!

From Donna Seaman, May 3, 2009
Once again, I ask you to intervene with the State Teachers Retirement System board (STRS) to abolish/terminate performance based incentives/bonuses for 80+ STRS investment staff. When I asked you several months ago to intervene, your staff wrote back urging me to instead contact the STRS board directly! This, after I've sent literally dozens of e mails to the board, to the STRS executive director (copies to the Columbus Dispatch) and many retired teachers, imploring the board to totally eliminate bonuses for staff in the face of current 42% loss of portfolio value, continued mismanagement and overspending, and little if any regard for the well being of retired teachers! This time, please
do something! I suggest you have a staff member present at the next STRS board meetings May 14-15 when bonuses will be discussed further, as will changes to retirees' health care. Retired teachers of Ohio need your intervention. This problem is not going to go away! Look at how other states/governors have abolished public pension system bonuses in the light of current economic crises! Ohio should follow suit!

Donna Seaman,
2002 retiree
~~~~~~~~~~~~~~~
Thank you for contacting the Office of Governor Strickland.

Due to the number of e-mails the Office of the Governor receives on a daily basis, we cannot always respond individually to each piece of correspondence. Please know that all e-mails are reviewed and sent to appropriate agencies.

Thank you again for writing.

Ted Strickland,
Governor

To STRS: Could you give us the coordinates, maybe?

From John Bos, May 3, 2009
Subject:
Value of STRS Investments April 1 on the STRS Website
Good Morning Mr. Slater,
Approximately 10 retirees and 2 board members have looked at the STRS website for the April 1 investment balance. No one has been able to find it.
Please direct us to the proper location. The amount was published by Laura (Everything is Wonderful) Ecklar in the board summary. This is a change from your recent email to me that this amount was not board action and would not be published. We all appreciate that this information was published.
As you are well aware, the number of "Malcontents" has increased by a significant number recently. More actives and retirees are monitoring the actions of the STRS Board and staff. The number of "active observer participants" in the retirement system will continue to increase until confidence returns. The recent suggestion by Mr. Mitchell that eliminating the 3% yearly increase (COLA) has REALLY ADDED TO THE DISCUSSION. His comment was MOST unfortunate to the retirees who have been forced to absorb the major impact of decisions regarding STRS financial concerns. The active participants and STRS associates have had minimal or no changes in their daily lives.
Thanks for your assistance in helping to locate where this information is published on the STRS website.
Sincerely,
John Bos

Molly Janczyk re: Threat to retirees' COLA

From Molly Janczyk, May 3, 2009
Subject: Steve: COLA Impact On Retirees
Again with only retiree solutions! What about raising age for retirement (no legislation needed), increasing contributions (legislation needed), IS LEGISLATION NEEDED TO INCREASE EMPLOYEE ONLY CONTRIBUTIONS? We get nothing but COLA to help with the already debilitating changes we have incurred to save HC.

Ryan Holderman: We must insist on fairness and equity; all must share the burden

From Ryan Holderman, May 3, 2009
Subject: Time to raise our voices!
Dear Kathie:
I read with interest the letter you posted from Patricia Knight. She is an active teacher who "gets" the current situation at STRS and how it will impact her fellow active teachers. I wish that we had more like her. Just imagine what CORE and reform minded STRS Board members like Dr. Leone could do if we could reach more actives.
The sad reality is that OEA and the board members over whom they hold influence seem willing to sacrifice near-retirement active teachers just as they have retirees. Grandfathering has not been practiced when changes have devastated retirees. They have seen their spendable pension income reduced by enormous health care costs, non-compounding COLAs, loss of the 13th check (which, in my opinion, would been better used to fund the Health Care Stabilization Fund) and now is threatened with the total cessation of COLAs.
Retirees, unlike those still in the work force, do not look forward to pay raises and do not have the option of staying on the job to compensate for the effects these changes will have. Those who are able could, perhaps, find employment if the economy were not so weakened and their health permitted but that is certainly not the "Cadillac" retirement they were led to believe awaited them. It is certainly not the retirement that awaits the well compensated investment staff of STRS!
Active teachers and retirees need to unite in the long forgotten "Together We Can" spirit of past teacher led movements and demand reform, at STRS, that serves its constituents first.
We must insist that the present problems with our pension funds are addressed fairly and equitably and that all parties (active teachers, retirees and STRS employees) share the burden.
Sincerely,
Ryan

Mario Iacone responds to Charlie Seipelt

From Mario Iacone, May 3, 2009
Subject: Response

Charlie, you may have misinterpreted my post on COLA.

First, I did not research the information with Steve Mitchell. I simply contacted him to verify that COLA cuts were “on the table.” When I found out that they were and began receiving feedback from teachers and retirees that COLA cuts would not be too bad, I researched COLA and produced that information to make it clear to all, the substantial financial impact of COLA.

Second, we are going to campaign that significant cost reductions in STRS operating expenses be made first, before any cuts are considered for the active and retired membership of STRS. However, the research and facts to develop a list of cost reductions is taking time because of our limited access to correct data. I, as you, am very angry over the situation. But, emotion and anger can be self defeating. Our material will be professional and business like.

Third. All of us must work to rid STRS of excesses in operating expenses. But, let’s not lose sight that it will be losses of billions of dollars in the fund that will cause all to endure substantial cuts. That issue must be addressed and rectified first. STRS investments are at a high enough risk level that the worst may not yet be over. An unexpected “shocker” in the economic situation may drive our pension fund value even lower. We must get them to implement a good risk management policy to prevent such huge losses in the future.

Fourth, any proposed cuts must be approved by the legislature. Therefore, this will eventually become a political issue. Actually, it may already be a political issue since four of the Board members are political appointees.

In order to have impact in the political arena, we are going to need massive numbers of well informed STRS members. And, in my opinion, the political approach will be most effective at the local level. All of our legislators went to school and have significant ties with many of their former teachers. That personal relationship at the local level will have much more impact with legislators than phone calls, emails, and presentations from strangers. Most important to a future political campaign will be the fact that we have accurate and substantial data to support our case.

Mario Iacone: STRS Long-term contingency planning

From Mario Iacone, May 3, 2009

Excerpt from Board news posted on April 27th.
LONG-TERM CONTINGENCY PLANNING DISCUSSION CONTINUES
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

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.

Mario

Larry KehresMount Union Collge
Division III
web page counter
Vermont Teddy Bear Company