Governor Strickland, in ten words or less, 'Keep your paws off our pension funds!'

A retiree and benefits recipient in the STRS system with a pension annuity still in OPERS.

John Curry
6/27/09

Associated Press

Pension cut proposal is Ohio budget sticking point

By STEPHEN MAJORS , June 27, 2009

COLUMBUS, Ohio -- A proposal by Gov. Ted Strickland to cut the amount Ohio contributes to a pension fund for government employees has emerged as a major sticking point in budget negotiations, as lawmakers worked Saturday to meet an impending budget deadline.

The governor's proposal has strained the traditional alliance between Democrats and government employee unions, who have found an unlikely ally in Republican lawmakers who say the proposal is foolish.

Strickland has suggested that lawmakers cut the state's contribution to the Ohio Public Employees Retirement System from 14 percent to 8 percent over the next two years to shave $256 million off the state's $3.2 billion budget gap. To offset the drop in state contributions, the governor wants to reimburse the pension fund, which has assets of $60 billion and serves about 936,000 members and retirees, over a 10-year period.

Click here to read entire article:

http://www.forbes.com/feeds/ap/2009/06/27/ap6594473.html

Tom Curtis and Mike Nehf re: Cost reductions at STRS

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

Mike,

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

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

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

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

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

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

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

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

Tom Curtis

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

Tom,

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

Respectfully,
Mike Nehf

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

Mr. Nehf,

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

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

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

Thank you for a prompt reply.

Tom Curtis
STRS Stakeholder

Shirlee Zerkel: Another question for Sandy Knoesel

From Shirlee Zerkel, June 26, 2009
Subject: Thank you

Dear Ms. Knoesel:

Thank you for sending me the health care report from the last Board meeting. I have another question. I remember there was information in one health care report to the Board a few months ago that if a retiree left the health care program of STRS, they would no longer receive their reimbursement for Medicare B. Has that been voted on by the Board and if so, what was the decision?

Thank you,
Shirlee

RH Jones Re: Interesting OH STRS statisitcs

From RH Jones, June 26, 2009

To all active & retired educators:

As related to me by Dr. K. Fluke, at the last STRS board meeting Sandra Knoesel supplied this statistic: 72% of members with 30-yrs. service retire before age 60. This statistic tells me that actives retire at 30-yrs more than likely due to the terrible strain and are in bad working conditions. What legislature, parent, or student would want a “burned out” teacher working past age 60? If the job were such a “gravy train”, why would they not stay longer and retire with a higher pension?

Dr. Fluke says: The COLA reduction would have the biggest impact on member’s future benefits after 20-yrs. into retiree retirement years. Then he said: Dir. Hutras of the Ohio Retirement Service Council (ORSC) will make funding a primary focus and the legislation will be made soon. And, further, Dr. Fluke said that STRS Director Nehf mentioned that a decision will be made by August, and there will be an extra board meeting.

Everyone, we are volunteering hours, and hours, of our time. We get no pay for doing our homework. Some, who do get paid by our dues, seem to not be representing STRS members. Just look at the history since the year 2000. Had they done their homework would not STRS be in much better shape financially today? They were in power then. Do our various organizations represent us, or not? We are members and have a right to service. And, we have a right to try to make positive change by working at home rather than wasting volunteer hours on the highways. Most certainly after 30-yrs. in the classroom, and school offices, members have been at enough time wasting meetings.

Also, the 30-yrs. has made many of us not to be people persons. I am afraid that those who wish to educate our beloved students “on the cheap” have wiped the smile off our faces. Just one case in point: as many students took their mandatory final year end tests did so in super hot rooms in the new schools that are finally being constructed but: no money has been set aside to run, or repair, the air conditioners! Teachers were bringing in their own fans, and some brought in small window air cons (Russian spelling for air conditioners – a much better word!). Some systems were having trouble paying the consequential increase in electricity costs. Most of you readers know of such cases this spring. I am quite sure the legislators meet in buildings with working air cons. It is time that they provide proper funding to our P-U-B-L-I-C- schools. Charter schools have drained too much funding and has the legislators noticed that they are unionizing?

The above brief message is not meant to be critical. It is written in the spirit to move education forward. I think my new CORE organization may be that open wave of the future. It is an idea whose time has come. They are creating the proper changes that we educators need. I am quite sure CORE is also happy having organizational competition.

RHJones, my opinion, and a proud CORE member

STRS FLASHBACK -- 6 years ago -- The day the Governor turned off the sunlight!

From John Curry, June 26, 2009
Canton Repository, June 27, 2003

Taft says no to probe of STRS by inspector

By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — Gov. Bob Taft shut down an investigation of the State Teachers Retirement System by vetoing budget language that would have allowed the Ohio inspector general to pry into the practices of pension fund boards.

The governor’s veto did not sit well with Sen. Kirk Schuring, R-Jackson Township, who had asked Inspector General Thomas Charles to investigate STRS in light of reports in the past three weeks about excessive spending on salaries, bonuses, artwork purchases and travel.

Charles, who had pushed to have the language inserted in the budget, was preparing to start an investigation Tuesday, when the budget goes into effect.

Taft said the retirement systems already are subject to Ohio ethics laws and oversight by the Ohio Retirement Study Council.

But Schuring called those oversight functions “empty and hollow,” and suggested that the governor “better read the statute.”

Dennis Leone, who dug into the spending habits of the STRS board and its executive director, Herbert L. Dyer, was scheduled to meet with Charles next week to brief him on what the Chillicothe superintendent discovered. Charles began collecting information by attending a press conference Wednesday of lawmakers who have demanded Dyer’s resignation.

“I hope they don’t sweep this under the rug,” Leone said.

Charles said “officially” he stands by an earlier statement that his office “could provide needed oversight to the pension systems.” He would not comment further.

Leone said Charles told him just days ago that he expected Taft to keep the oversight language in the budget bill.

Schuring said he may ask Ohio Auditor Betty Montgomery and Attorney General Jim Petro to conduct investigations of STRS. He also said he will consider legislation to give the retirement study council more power to control pension boards.

Leone said Montgomery and Petro may face conflicts of interest because both are members of the retirement board.

“Is (Montgomery) going to audit herself?” Leone said. “How can they deal effectively with an issue on a board they serve.”

Laura Ecklar, a spokeswoman for STRS, said the system did not lobby Taft to veto the budget language. She said STRS officials maintain there is legislative authority now “to look at everything that has to do with the pension plans.”

Taft said he would work with lawmakers to “provide additional, reasonable oversight and enforcement tools” to the council.

“I’m disappointed with the governor, given the current state of affairs at STRS,” Schuring said. “Considering the waste, fraud and abuse, the inspector general would have been perfectly suited to do an investigation.”

Click image to enlarge.

Brown County RTA president: A call to action for retirees

From Carolyn J. Carr, June 26, 2009
Subject: letter for Retirees

FROM BCRTA TO RETIREES:

We are asking that you take time to write a letter by July 13, 2009 to the following people and addresses pertaining to STRS Pension Monies:

1. Governor Ted Strickland
....Governors Office
....Riffe Center:
....10th Floor
....77 South High St.
....Columbus, Ohio 43215 - 5108

2. State Representative Danny Bubp
....77 So. High St.
....10th Floor
....Columbus, Ohio 43215 - 6111

3. Senator Tom Niehaus
....Senate Building
....Room #200, Second Floor
....Columbus, Ohio 43215

Following is the purpose for needing you to write these letters and be concerned with what STRS is doing with our monies. We need you to ask that STRS quit mistreating Retirees with discussion of reducing COLA. This is a step that takes an act of legislation to be done correctly.

We also ask that they terminate ALL bonuses for STRS employees. If this continues, our pension fund will be depleted, meaning that there could be no funds to pay our pensions. Are YOU interested in your pension?? And IT NOT being reduced or no pension at all?????

STRS Retirees should be the Board's principle focus in their decisions and plans. We feel there should be a change in Board members attitudes or resignation of Board members and possibly a mass resignation if business continues being conducted as it has been.

NO RETIREE WANTS THEIR PENSION CHECKS CUT. Many retirees are upset because they are afraid of losing their pension. The way the STRS Board is going this could possibly happen.

PLEASE,,,,,,Write your letters and bring them to a meeting, Monday, July 13, We will mail the letters on that day. We plan to have the meeting at the Veterans Home. PLEASE! PLEASE! Contact any fellow Retired friends to come to the July 13 meeting and if they can not attend that they write a letter and mail it that day to the above three (3) names/addresses. A mass mailing would be of great benefit.

Thanking you for your interest and participation! BCRTA

Carolyn J. Carr
Pres. BCRTA

6/28/09

John...We added Deborah Newcomb to the list of names....so we have 4 letters. to write. We are hoping that this will let them know in Columbus that we are concerned and not just sitting a doing nothing.

Carolyn J. Carr
Pres. BCRTA

State Representative Deborah Newcomb
77 S. High St
13th Floor
Columbus, OH 43215-6111

Molly Janczyk to State Superintendent Deborah Delisle: Time to replace Steve Puckett

From Molly Janczyk, June 26, 2009
Subject: State Superintendent Delisle

State Superintendent Delisle:

I am an STRS Retiree of 10 years and a career educator serving Ohio students. I have been long involved in the rights of retirees beginning 3/2002 fighting for changes and the removal of all the former STRS Board members involved in Ethics Violations.

It is shocking to me that Steven Puckett remains on the STRS Board being the only Board member from the old board and its politics, mishandling of money and violations. It is clear Steven voted with those former Board members to approve their misspending and I have personally witnessed him in action. He shows little enthusiasm for retirees and most always sides with the union positions regardless of oversight and responsibility towards membership. Steven is not an example of positive change or prudence or oversight on behalf of retirees, both current and future. He is embedded in old practice and it seems to me that he is outdated and obsolete in his position.

Please consider his long overdue replacement with an interested representative sporting new enthusiasm and earnest oversight on behalf of STRS membership with no bias or interest other than the ORC. Steven displays no real objectivity or creative thinking towards solutions or compassion for retirees. He seems only there to back OEA and STRS.

I would appreciate your reply and sincere consideration of this matter.

Sincerely,
Molly Janczyk
STRS Retiree

deborah.delisle@ode.state.oh.us
steven.puckett@ode.state.oh.us

The GPO/WEP rip-off addressed......

From John Curry, June 25, 2009
http://calpensions.com/2009/06/25/social-securitys-massive-rip-off/Calpensions
CalPERS, CalSTRS and other government pensions
Social Security’s “massive rip-off”
By Ed Mendel
Become a teacher — and lose the Social Security benefits you paid for while holding other jobs!
A good recruiting slogan it’s not.
But a pair of three-decade-old federal laws, aimed at preventing “double-dipping” in government pensions, are penalizing some Californians who take public service jobs in teaching, firefighting and law enforcement.
U.S. Sen. Dianne Feinstein, D-California, who has been trying to get the federal laws repealed, estimated two years ago that the penalty could affect nearly one million persons nationwide, about 200,000 in California.
It’s called a “heroes’ penalty” by Assemblyman Tom Torlakson, D-Antioch. He is carrying yet another resolution in the California Legislature, AJR 10, urging Congress to repeal the penalty.
“This comes under a couple of possible labels,” Torlakson told an Assembly committee last month. “It would be a ‘Catch 22’ or it would be a massive rip-off.”
Torlakson told a Senate committee this week about Margaret “Peg” Cagle, a “wonderful, brilliant architect” who paid into Social Security for two decades before becoming a teacher in the Los Angeles Unified School District.
Cagle became an outstanding math teacher. Among her awards: LAUSD Teacher of the Year; the USA Today All-USA Teacher Team; and the Presidential Award for Excellence in Math & Science Teaching.
“She went to retire and found out she had lost about half of her Social Security because she was in STRS (the California State Teachers Retirement System),” said Torlakson.
In another example, said Torlakson, a woman whose husband died could have begun receiving about half of her husband’s $1,600 a month Social Security payment. But she was a member of CalSTRS.
“When she went in to reconcile she was surprised to learn she would only get a $225 death benefit to bury her husband,” Torlakson said.
As an Assembly committee heard Torlakson’s resolution last month, Rhoda McFarland of Sacramento told how she had taught for 25 years before working for 15 years in other public service jobs, this time paying into Social Security.
“When I got ready to get my Social Security, I was told I couldn’t have the whole thing because I had taught in California,” she said, which forced her to continue working and delay retirement until five years ago.
McFarland said it took her two years and four trips to a Social Security office to learn that her payment of $272 a month ($185 after a Medicare payment) would have been $568 if she hadn’t been a teacher.
“Even though I paid what someone else paid I’m told you can’t have it because you taught in California,” she said. “It’s so devastating to feel that way. I could not believe it.”
In a survey of its members last year, CalSTRS found that many are unaware of the penalty or “offset,” as it is formally called. About 32 percent of active members expected to have between 10 and 30 years of Social Security credits.
The survey found that 29 percent of those with Social Security credits were unaware of the income offset. In addition, 44 percent of active members were unaware of the spousal benefits offset.
A law that took effect in 2005 requires employers not covered by Social Security to tell new hires about the offsets. And the new hires are required to sign a statement saying they are aware of possible reductions in their Social Security benefits.
“Until recently, many educators were told they would not be affected by these penalties when they retired,” Dave Walrath, a lobbyist for the California Retired Teachers Association told the Senate committee.
“But when they did retire, when they did need the income, all of a sudden they were told, ‘No, we will penalize you. We will reduce your benefits that you paid for and earned,’” he said.
Why did Congress impose the penalties or offsets? Social Security replaces a greater percentage of the income of a lower-paid worker than of a worker who earns a higher income.
The theory is that if benefits such as CalSTRS are not counted, a higher-wage worker could be regarded as a lower-wage worker and receive a Social Security payment based on a greater percentage of the income.
In 1977, Congress passed the “government pension offset,” which reduces a spouse’s Social Security benefit by two-thirds. In some cases, such as the one cited by Torlakson, the result is that the benefit is totally eliminated.
In 1983, Congress passed the “windfall elimination provision,” designed to prevent workers from receiving higher benefits than they would if all of their earnings were covered by Social Security.
Once again legislation has been introduced in Congress to repeal these two Social Security penalties or offsets, S 484 by Feinstein and HR 235 by U.S. Rep. Howard Berman, D-Los Angeles.
A major budget problem is that repealing the two laws would be costly. Recent estimates range from $61 billion to $80 billion over the next 10 years. And Social Security is already projected to run short of money in the decades ahead.
A major political problem is that California is one of only 15 states where some or all of the public employees are not covered by Social Security. So most states, including many of the big ones, do not have a problem with the penalties or offsets.
Legislation in 1961 allowed most California state workers to coordinate their pensions through what is now the Public Employees Retirement System with pensions they receive through Social Security.
Nearly two-thirds of the 800,000 active state and local government workers in the CalPERS system are also covered by Social Security. Among those not covered by Social Security are the California Highway Patrol and state firefighters and correctional officers.
In addition to teachers, other public employees in California not covered by Social Security include judges, University of California employees, and the employees of more than 450 cities, counties and special districts.
State and local governments are in a deep fiscal crisis now. But if repeal continues to fail, California might think about avoiding the devastating impact of Social Security penalties for future public employees by putting them all under Social Security.
The current Social Security contribution rates are 6.2 percent of payroll from employees and 6.2 percent from employers. For the uncovered public employees in California, that’s a lot of money that might be welcomed by Social Security.
A CalPERS analysis of Torlakson’s resolution said that repealing the offsets “could further exacerbate” the fiscal problems of a Socail Security program projected to run out of money in about 30 years.
“In addition, the greater the funding imbalance of Social Security, the greater the likelihood that lawmakers will consider other alternatives, such as mandatory coverage of newly hired state and local public workers to shore up the program,” said the analysis.

OPERS to the Governor....You cut our funding, we sue you!

From John Curry, June 25, 2009
I wonder if the administration at STRS would have this kind of courage? John
Dayton Daily News
Ohio workers pension fund may sue if contributions cut

By Laura Bischoff , June 25, 2009
The Ohio Public Employee Retirement System would likely sue the state if it reduces state workers pension contributions to help balance the budget, the pension system director told lawmakers.
In a move designed to help balance the upcoming budget, Gov. Ted Strickland has proposed writing an IOU to 60,150 state workers, promising to pay back contributions to the OPERS down the road. Reducing the contribution rate from 14 percent to 8 percent over two years would save the state more than $250 million, according to the Strickland administration.
But OPERS Director Chris DeRose said this move would cut into the fund’s ability to provide retiree health care benefits and erode the system’s financial solvency.
And DeRose said OPERS would consider suing the state if it follows through on Strickland’s proposal. Similar lawsuits in other states, such as California and North Carolina, were won by the pension systems when the courts found the state was obligated to pay and make up for lost investment income, according to OPERS.

STRS FLASHBACK -- 6 Years Ago -- The heat gets turned up on Herbie!

From John Curry, June 24, 2009

Schuring puts pressure on STRS chief to resign

Canton Repository, June 25, 2003
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — In the wake of a spending spree at the State Teachers Retirement System, Ohio Sen. Kirk Schuring wants to know who is investing the money of the state’s five retirement systems.

And pressure continues to build on the teacher’s pension fund director, Herbert L. Dyer, to resign. Schuring will hold a press conference today to release the names of at least 25 of the Senate’s 33 lawmakers who have joined him in calling for Dyer to step down.

Rep. Michelle G. Schneider, R-Cincinnati, also is expected to attend. She is leading a similar campaign against Dyer in the House, and says more than 60 of the 99 representatives also think Dyer should go.

Schuring and Schneider are members of the Ohio Retirement Study Council, which has legislative oversight of the state’s public retirement systems. Schuring has asked the Ohio inspector general’s office to investigate the teachers fund’s spending. Schneider has introduced legislation to change the makeup of the board.

Schuring, R-Jackson Township, sent a request for co-sponsors to his Senate colleagues Tuesday. He plans to introduced legislation to require financial disclosures of anyone, including each retirement system board member, with authority to make investment decisions.

“I want to know where they have invested their money,” he said. “I want to know what additional income they receive, where and from whom. I want to know who’s giving them gifts and paying their travel and who’s buying them dinner.”

The teachers pension’s members, lawmakers and others have accused Dyer and the board of going on a spending spree over at least the past three years that used more than $15 million on bonuses, artwork and travel. That was while the system’s investments plummeted by $12.3 billion and health-care contributions by retirees jumped significantly.

Schuring said some activity at the teachers retirement system has been “arrogant, but I don’t know of anything improper.”

Still, he said, a financial disclosure law will be a “better way to track” investments. He wants to make sure employees do not benefit personally from information not shared with members or the public.

The financial statement would have to be filed with the Ohio Ethics Commission.

Senate Minority Leader Greg DiDonato, D-New Philadelphia, announced Tuesday that he is joining Schuring in asking Dyer to step down.

“I have lost all confidence in the ability of ... Dyer to lead STRS,” DiDonato said. The system “needs an executive director ... more concerned with protecting the investments of teachers than securing extravagant bonuses for himself and his employees and purchasing art work for his office.”

Dyer has steadfastly refused to resign.

At last week’s board meeting, he was chastised by the system’s chairwoman for his behavior and comments that the system’s money belongs to the board and not retired teachers.

Later, Dyer was quoted as saying, “I think they need me. I have an understanding of what’s expected” of a leader.

Damon F. Asbury, deputy executive director of administration, said late Monday he was unaware of any plans by Dyer to resign. He said the subject did not come up during meetings Monday.

Adding up some of the expenses

One criticism of the State Teachers Retirement System board is its spending on trips ranging from Boston to Honolulu.

Executive Director Herbert Dyer, who earned $266,810 in 2002 and got a $41,052 bonus, also spent tens of thousands of dollars over three years on travel.

His expenses included:
• $18,403 in 2002, $33,010 in 2001 and $16,590 in 2000.
• $3,767 for a three-day January 2001 board retreat in Cleveland. That does not include what each board member and staffer charged the retirement system for individual expenses. Room costs alone were $601 each.
• $1,090 for dinner with the board and staff after a real estate presentation in central Ohio.
• $543 to attend a January 2001 dinner honoring U.S. Rep. Rob Portman, R-Cincinnati, in Washington, D.C.
• $691 to attend a reception honoring U.S. Sen. George Voinovich, R-Cleveland, in Washington, D.C.
• $1,037 for a March 2002 dinner in Columbus with 15 people including STRS board members.

OEA, don't look back!

Click image to enlarge.

Gee, you don't think they took their cue from STRS, do you?

Citi boosting salaries to offset lower bonuses

By STEPHEN BERNARD, AP Business Writer

NEW YORK – Citigroup Inc. is increasing base salaries for many of its employees — reportedly by as much as 50 percent for some workers — as it restructures its compensation program amid new restrictions on bonus payments.

The increased salaries will offset lower bonuses, according to a person familiar with the matter who requested anonymity because the plans have not been made public. The higher salaries are not the equivalent of annual raises, the person added.

Citi faces restrictions on bonuses as part of a new government compensation oversight plan because the bank received bailout funds from the Treasury Department.

By shifting the mix in compensation packages, it will allow Citi to pay most employees as much as they received in 2008 while adhering to bonus caps.

"Citi continues to examine ways to ensure its employee compensation practices are competitive in this very challenging market environment," Citi said in a statement Wednesday. "Any salary adjustments are not intended to increase total annual compensation, rather to adjust the balance between fixed and variable compensation."

A New York Times report published Wednesday said some employees salaries will rise by as much as 50 percent because of the change in compensation structure.

The New York-based bank has been among the hardest hit by the credit crisis and ongoing recession. Citi has reported six straight quarterly losses totaling nearly $30 billion. But, it would have posted a profit in the first quarter had it not been for dividend payments on preferred stock. In recent months, the bank has been reducing staff and selling assets in an attempt to streamline operations and return to profitability.

The bank has received $45 billion in loans from the government. A portion of those funds will soon be converted to common stock, giving the government a 34 percent stake in the bank.

Bonuses awarded to employees at financial firms that received government bailouts have come under heavy scrutiny in recent months. Earlier this year, American International Group Inc. came under fire for bonuses it paid to employees at one of its most troubled divisions. AIG was rescued from the brink of collapse by the government last fall.

The Obama administration has blamed compensation plans for encouraging excessive risk-taking that pushed the financial services sector into chaos last year.

The administration recently named Kenneth Feinberg a "special master" to oversee compensation packages awarded to the seven companies that have received the most government support, including Citigroup. Feinberg can reject pay plans he deems excessive and review compensation for the top 100 salaried employees at those companies.

Charlotte, N.C.-based Bank of America Corp., which received $45 billion in government support, is among those facing additional scrutiny about bonuses and executive compensation.

Bank of America was not immediately available to comment on whether it also is planning to alter its compensation program.

Ensuring compensation for employees by increasing salaries could be a move banks facing government restrictions take to avoid losing workers to competitors. Some banks that received government loans during the mushrooming credit crisis last fall have already paid back their debt, and are no longer subject to compensation oversight. That could allow them to offer lucrative deals to entice employees away from banks where restrictions are still in place.

Aside from the boost in salary to offset the lost bonuses, Citi is also planning to award new stock options to employees to help ensure they remain at the bank, according to the Times report.

Shares of Citigroup rose 3 cents to $3.04 in morning trading. Bank of America shares rose 12 cents to $12.35.

Click image to enlarge.

STRS FLASHBACK -- 6 years ago -- Herbie gets a grilling and rightfully so! Also some words of wisdom from Dr. Leone who must have had a crystal ball!

From John Curry, June 23, 2009
“Today, it’s our health insurance,” Leone said. “Five years from now, will it be our pension?”

Well, today the answer to Leone's question in 2003 is a big "YES." But then who would listen to Leone, he's just a dissident board member in the eyes of the OEA. The OEA has failed us in many respects. Tom Curtis

Board chair, teachers blast STRS director

Canton Repository, June 21, 2003
By PAUL E. KOSTYU Copley Columbus Bureau chief

COLUMBUS — The chairwoman of the State Teachers Retirement System board put Executive Director Herbert L. Dyer on notice Friday to clean up his act, though she stopped short of asking him to do what many others have — resign.

Meanwhile, an STRS employee who supports Dyer said morale was affected when staff learned through news reports that the retirement system executives received millions of dollars in bonuses, and they received none.

After listening for more than an hour to 22 teachers, superintendents and retirees complain about Dyer, the board and the system at a meeting Friday morning, Deborah Scott of Cincinnati said the STRS administration left her no choice but to publicly rebuke Dyer.

“Your remarks have been considered condescending and insensitive to the needs of members and in reckless nature,” Scott said. “Any and all lack of professionalism toward members, staff and the general public is unacceptable and will not be tolerated.”

The result, she said, is that the “credibility of STRS has been questioned.”

She ordered the bonus policy suspended and directed Dyer to justify the hiring of staff since 1998, including to management positions, and to improve the efficiency of the organization and hold the line on administrative costs.

Many speakers called for Dyer to resign. Others said the entire board should be removed.

Dyer said after the meeting that he would not resign. But “I’ve been chastised,” he said.

STRS members, lawmakers and others have accused Dyer and the board of going on a spending spree during at least the past three years, using more than $15 million on staff bonuses, artwork and travel while the system’s investments plummeted by $12.3 billion and retirees’ health care contributions jumped significantly.

Dennis Leone, superintendent of Chillicothe City Schools, told the board the price tag is closer to $22.7 million over three years when all staff bonuses and retirement benefits are considered.

“Today, it’s our health insurance,” Leone said. “Five years from now, will it be our pension?”

The board and Dyer listened passively and grim-faced as speaker after speaker accused them of ignoring members’ needs and wasting their money.

“You spent more money and lost more money than any of the other Ohio retirement systems,” said Susan Jacoby, a retired teacher from the Plain Local Schools.

Jacoby said she felt betrayed.

“The wasteful spending has sent a devastating message to the public,” said Thomas Curtis, another former Plain Local teacher.

He said Dyer should be sent packing without a severance package. Curtis also threatened a class-action lawsuit if changes aren’t made.

A third Plain Local educator, Marilyn Gibbs, said she has not been able to get answers from Dyer or his staff to questions about how “they have spent our money.”

Outside the meeting, Fred Thomas, a 12-year employee at the STRS facility, said he and other employees who didn’t get raises or bonuses felt betrayed when they learned about the bonuses for top administrators. Thomas makes about $29,000 a year. His boss, the director of building services, makes $75,800 and got a $14,402 bonus last year.

Still, Thomas praised Dyer, describing him as “awesome.”

“He’s taken care of me,” Thomas said, “but I can’t say that about everybody around here.”

In the meeting, however, Scott warned Dyer to change his ways.

“Any failure to comply with (the) directives and demands will result in appropriate actions,” she said, though she never detailed what that means.

Click image to enlarge.

Medicare Advantage...from CORE member Ryan Holderman

From John Curry, June 23, 2009

Makes sense, Ryan. I still feel "O" back peddled on the Advantage "golden egg" to the insurance companies and, in our case, STRS. looks like their campaign contributions to his election tempered his temper. John

From Ryan Holderman, June 23, 2009
Subject: Medicare Advantage

Dear John:

In President Obama's press conference this afternoon he said, "If we're spending $177 Billion over ten years to subsidize insurance companies that are providing Medicare Advantage programs and the people are not healthier, then that's going to go away." He continued to explain that the money would be re-directed to pay for more effective health care reforms.

If retirees are moved to Medicare Advantage and then the programs are diminished because the insurance companies are no longer getting the lucrative subsidies they presently receive, guess who will be the loser....retirees, yet again!

Later,
Ryan

Click image to enlarge.

Mike Nehf responds to retirees

Linda Meinelt to Larry and Leslie Snyder, June 23, 2009

Great response to him. Notice in his letter he says everyone will be involved in the solution but does not say that STRS retirees will be involved -- he lists himself and the employees! Thought it was interesting also that he states work hours have been increased -- as one of the letter writers said -- who knew the employees were not working a 40 hr. week!

Linda

From Larry and Leslie Snyder, June 23, 2009
Subject: Re: your email

Dear Mr. Nehf,

We were surprised and delighted that you responded to our email and that it didn't just get thrown into a pile of complaints along with the masses of other emails you are certainly receiving.

We are, however, disappointed with your unwillingness to stop this year's PBI's while suggesting that STRS is "continuing to maintain our current levels and quality of member services." I just read the information sent by "news@lists.strsoh.org" that lists all sorts of reductions to the services of retirees and active teachers without mentioning any cost cutting in doing the business at the office. You and your staff should make some sacrifices like those facing the people you serve...certainly, that would make the reductions more palatable to active and retired teachers.

Please try to level the playing field for all those involved -- employees, retirees and active teachers. Again, we appreciate your responding even if the message you sent is not one with which we can agree.

Kind regards,
Larry and Leslie Snyder

From Mike Nehf, June 23, 2009

Thank you both for your thoughtful email concerning keeping STRS Ohio viable. You raise many questions and suggestions, most of which have been initiated. For example, salaries have been frozen, employee head counts have been capped, performance based incentives will be paid in 2010 and beyond only if the fund earns positive returns, work hours have been increased, and further cost reductions are in the plans – all while continuing to maintain our current levels and quality of member services. I cannot address all of your questions and comments specifically, as the Board is considering many of these as we write. We understand that our membership is concerned about the viability of the pension and health care plans, and we are studying ways in which to make this happen. Sample solutions have been presented to the Board over the last several months. Everyone will be asked to contribute to the solution, including, of course, myself and our STRS Ohio employees. Thank you, again, for your comments and questions. I wish you both and your daughter the very best.

Respectfully,
Mike Nehf

Molly Janczyk re: June STRS Board News

From Molly Janczyk, June 23, 2009
Subject: ****[News] June Board News Details Retirement Board Actions and Discussions

3% COLAS for 3 yrs and then to be cut to 1.5% for those over 65 while active educators to receive 88.5% at 38 yrs vs. 35 yr. 2% until 33 yrs. increasing to 88.5% at 38 and over years. Again, retirees lose 1 and 1/2% with absolutely no chance of increase for us while active teach 3 more years and get even more than before at 88.5%. We lose, active teach a bit longer. Is that equitable????

Let ACTIVES get a straight 2% increase to infinity or 2.5% increase for each year past 35 AND RETIREES WITH NO OPTIONS STAY AT 3%. We get no raises or step increases like actives do. The new plans alone will keep actives teaching until 35 yrs or age 60. That's called economics just as Soc Sec had to increase its years for full retirement. They didn't offer extra incentives along with it!!!!

***Punish those over 65 with more cuts while allowing actives options of working a bit longer for ever better benefits so they won't need to worry about 1.5%

Medicare Advantage to be imposed upon retirees over 65 with Parts A and B . They can opt out if they wish to MED MUT BASIC CATASTROPHIC COVERAGE.

Premiums and out of pocket max lower but no mention of deduc. or comparable coverages except for a few examples which are better.

Mr. Nehf may also CRUSH STRS COLA

From Mario Iacone, June 22, 2009
The Atlanta Journal-Constitution

Published on: 10/25/07

In 2007, Mr. Nehf, Executive Director of STRS Ohio, stabilizes the Employees Retirement System of Georgia by cutting COLA benefits.

Excerpt from the article.

………………….State retirees are up in arms because, faced with frightening projections about future liabilities, the system's governing board broke tradition this year and approved a cost-of-living adjustment for ERS retirees of 1.5 percent, half the customary 3 percent boost. After legislators started taking heat, the board added another half percentage point to raise the COLA to 2 percent. The cost of living, as measured by the consumer price index, has risen 2.8 percent over the most recent 12 months.

Over seven of the past 10 years, Nehf said, the rate of inflation has been less than 3 percent. Yet the retirement system has continued to pay 3 percent COLAs. Continuing that practice will lead to a $17 billion funding shortfall that another generation will have to pay. Currently, ERS expects to have 94.5 percent of the assets needed to pay promised benefits, leaving a manageable $781 million gap between assets and liabilities.

If 3 percent annual COLA increases continue into the future, however, assets will sink to 48.6 percent of the promised benefits by 2039.

At that time, Mr. Nehf was Executive Director of Employees Retirement System of Georgia

STRS June Board News

From STRS, June 22, 2009
Subject: [News] June 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 June report follows.

JUNE BOARD NEWS

RETIREMENT BOARD CHAIR, VICE CHAIR NAMED; CERVANTES RECOGNIZED FOR SERVICE During its June meeting, the State Teachers Retirement Board elected Tim Myers as its vice chair for the coming year. According to Board Policies, Mark Meuser, who is currently serving as vice chair, automatically moves into the position of chair. Normally, both Myers and Meuser would be moving into these leadership positions on Sept. 1, 2009. However, Mary Ann Quilter Cervantes, the current board chair, has announced her retirement from her position in the Oregon City Schools, effective June 30, 2009, and thus is resigning from the Retirement Board. As a result, both Meuser and Myers will assume their new responsibilities on July 1.

During the board meeting, a resolution recognizing Cervantes' service to the board was presented. The board expressed its appreciation for her valuable and dedicated service to STRS Ohio since being elected to the board in 2005.

RETIREMENT BOARD ADOPTS ANNUAL INVESTMENT PLAN The board voted to accept the Annual Investment Plan for fiscal year 2010 (July 1, 2009-June 30, 2010). The plan details staff's investment strategy for each asset class comprising the system's investment fund.

STRS Ohio staff expects continued declines in economic activity over the remainder of fiscal year 2009. However, sluggish economic growth should return in the first half of fiscal year 2010, before giving way to a more sustainable growth pattern in the second half. A continued drawdown in the supply of new and existing homes should stop the home price decline. When home prices finally stabilize, it should set in motion a chain of events that could lead to further easing in key interest rate spreads, that then would improve the flow of credit and unleash the full force of the fiscal and monetary policy stimulus. Overall, STRS Ohio expects its total investment fund return to be slightly below the system's actuarial assumed rate of return of 8%. The Fiscal 2010 Investment Plan can be accessed on the STRS Ohio Web site (http://www.strsoh.org/pdfs/Invest_Plan_09-10.pdf) or obtained by calling STRS Ohio's Member Services Center toll-free at 1-888-227-7877.

FISCAL YEAR 2010 BUDGETS ADOPTED The Retirement Board adopted the proposed budgets for fiscal year 2010 (July 1, 2009-June 30, 2010). The adopted 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 2.3% reduction ($2.1 million) from projected expenditures for this current year. The approved capital budget for fiscal year 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.

LONG-TERM CONTINGENCY PLANNING DISCUSSION CONTINUES The downturn in the global financial markets has significantly reduced the value of STRS Ohio's investment funds. As of May 31, 2009, the preliminary value of STRS Ohio's investment assets stands at $53.4 billion, down from $70.4 billion at the start of the fiscal year on July 1, 2008. Further, changing economic and demographic trends, such as STRS Ohio members living longer, continue to impact the system's pension fund. Consequently, STRS Ohio will eventually be unable to pay members' earned benefits unless changes are made.

The challenge the Retirement Board faces is assembling a combination of changes that will restore the pension fund to a 30-year funding period in a reasonable amount of time, while also allowing additional employer contributions to go to the Health Care Stabilization Fund and extend the life of the STRS Ohio Health Care Program. In June, the Retirement Board continued to discuss available options for addressing future liabilities. For its August meeting, the board asked staff to run some additional models that would contain the following options:

- An increase in member/employer contributions of 5%, phased in over a five-year or 10-year period. The board also asked that models be run with only a 2.5% contribution increase.

- Eligibility for retirement at age 60 with 30 years (with an actuarial reduction in the pension benefit for retirement earlier than age 60) or with 34 or 35 years of service, regardless of age.

- A retirement formula that would provide 2.2% for the first 33 years and some additional percentage for subsequent years that would provide 88.5% of final average salary at 38 years of service.

- Final average salary based on five years.

- A 3% cost-of-living adjustment (COLA) for three years, then 1.5% annually for those who are age 65 or older.

The board also asked staff to model the impact of delaying some changes to three years versus delaying them for five years, as well as look at provisions for helping lower income retirees with 25 or more years of service (similar to how the Health Care Assistance Program is structured).

STRS Ohio, as well as the four other public pension systems in Ohio, must present their board-approved plans for ensuring the long-term solvency of their systems to the Ohio Retirement Study Council at its Sept. 9 meeting. (The ORSC is the legislative oversight body for the five systems.) In late May, the ORSC staff presented a list of options for the systems to evaluate -- most of which are already being looked at by STRS Ohio.

HEALTH CARE PROGRAM CHANGES APPROVED FOR 2010 During its June meeting, the Retirement Board approved several changes to the STRS Ohio Health Care Program, as well as approved premiums for all health care plans for calendar year 2010.

Beginning on Jan. 1, 2010, Medical Mutual will be the only administrator for STRS Ohio's self-insured Plus and Basic plans; Aetna will no longer be used. Results of an extensive review process conducted in conjunction with the Ohio Public Employees Retirement System (OPERS), School Employees Retirement System (SERS) and Highway Patrol Retirement System (HPRS) showed that Medical Mutual's significantly lower administrative fees and better provider discounts could save $8.7 million for the STRS Ohio Health Care Program. Further, Aetna's continually higher premiums for non-Medicare enrollees compared to Medical Mutual was resulting in fewer and fewer STRS Ohio members choosing an Aetna-administered plan before reaching age 65. Individuals residing in the Cleveland, Canton and Toledo areas will continue to have the option of enrolling in the fully insured plans offered in their respective areas (AultCare -- Canton area, Kaiser Permanente -- Cleveland area and Paramount -- Toledo area), as well as the Medical Mutual options noted previously. STRS Ohio's initial contract with Medical Mutual will extend to Jan. 1, 2015. Express Scripts will continue to provide prescription drug coverage.

For 2010, STRS Ohio will also provide a new STRS Ohio-designed Medicare Advantage Plan through Aetna. STRS Ohio benefit recipients who have both Medicare Parts A & B and are currently enrolled in the Aetna or Medical Mutual Plus or Basic plans will be automatically enrolled in the Medicare Advantage Plan. They also will have the option of selecting the Medical Mutual Basic Plan.

Medicare Advantage Plans have been used successfully the last two years by both OPERS and SERS members. The Aetna Medicare Advantage Plan that STRS Ohio is offering provides a number of benefits to its enrollees including:

- Lower premiums and a $1500 maximum in out-of-pocket costs [This $1,500 includes all copayments, the $500 deductible and coinsurance.]

- Low office copayments of $15

- Ability to see any physician who accepts Medicare

- Unlimited lifetime maximum coverage

- Administrative simplicity (no claims coordination required)

- Preventive services covered at 100%

- Value-based prescription program for diabetics

- Gym memberships

- Care management resources (including help for dementia and depression, as well as social service issues)

- Discounts for eyewear and hearing aids

- Vision and hearing screenings

To provide an idea of the premium savings to STRS Ohio enrollees, the monthly premiums for a 30-year retiree in the Aetna Medicare Advantage Plan in 2010 will be $58, compared to the 2009 Medical Mutual Plus Plan monthly premium of $73. The spouse premium under the Aetna Medicare Advantage Plan will be $231 in 2010 versus $336 per month in 2009 in the Medical Mutual Plus Plan. Overall, this change to a Medicare Advantage Plan could result in premium savings of $24.6 million for STRS Ohio benefit recipients and their family members, as well as $25.9 million less from the Health Care Stabilization Fund, if all Medicare Parts A & B enrollees stay in the Medicare Advantage Plan.

Individuals who prefer the Basic Plan can "opt out" of the Medicare Advantage Plan and choose the Medical Mutual Basic Plan or one of the regional options if applicable (AultCare, Kaiser Permanente or Paramount) during this fall's open enrollment.

The Medical Mutual Medicare Plus Plan option will only be available for Medicare Part A-only and Medicare Part B-only enrollees; non-U.S. residents; and "split family" accounts (accounts where the health care plan participants include both Medicare and non-Medicare enrollees).

Additional information about the 2010 STRS Ohio Health Care Program will be provided in upcoming newsletters and on the STRS Ohio Web site, as well as through personalized mailings sent to all STRS Ohio benefit recipients in October. Premiums for all plans for 2010 will be posted on the Web site by June 26. This year's health care plan open-enrollment period will run from Nov. 1-24, 2009.

RETIREMENTS APPROVED The Retirement Board approved 438 active members and 96 inactive members for service retirement benefits.

RH Jones re: ORSC recommendations for rollbacks (and guess who's in line for direct hits? Yep... the RETIREES!)

From RH Jones, June 22, 2009
Subject: Attempt now to exclude our STRS death benefit

To all active and retired educators:

Please see the attachment below. You will notice that in this part of the STRS Exec. Dir. Mike Nehf's report he mentions the (ORSC) Ohio Retired Service Commission's list of "rollback" recommendations. Three items in particular are of concern:

1) "changing the benefit formula".
2) "eliminating the lump-sum death benefit"
3) "looking at delaying or eliminating the cost-of-living adjustment"

For one: What would be your guess as to what Mr. Nehf means by "changing the benefit formula". If he means for us retired educators, it has never before been done downward. It would set a precedent for all members including present and future educators, as well as retired members.

We retired educators are protected by the U.S. Constitution's Bill of Rights concerning grandfathering. These 3 items are grandfathered. Hopefully, all officials involved in attempting to withdraw, or to lower retired educator benefits, will think again -- any negative publicity would be enormous, as well any court awards. For the perpetrators of this folly, think of the shame that such scenarios as these elderly "take always" would look like in the media.

These 3 items should not, and cannot, be a solution to restoring the Ohio STRS 30 year financial goal. Other sources must be found! The STRS has had enough bad publicity since the 2000 "tanking". Any more, and all of us STRS members, and employees, will be severely hurt -- retired educators the most. And, we are those who can least afford it.

This is my opinion,

RHJones, a retired STRS teacher member
Click image to enlarge.

35/88 - You be the judge!

From John Curry, June 22, 2009

On Wednesday, June 17, STRS's Bob Slater presented two slides in his presentation to the STRS board. He mentioned that the enhanced 35 year/88% payout, since its inception, has resulted in an additional cost of nearly one billion dollars to Ohio STRS's finances.

On Thursday I attended the board meeting and asked Mr. Slater for some documentation re. this cost factor. Mr. Slater then sent me these two slides that he presented during the board meeting which related this situation. His letter (and attached two slides) are included.

Please pay particular attention to slide #2. In the "Accrued Liability" line (of that slide) you'll see the amounts of $87.43 and $86.49. The difference between these two amounts is $0.94. One billion X $0.94 = 940 million dollars. Had STRS not adopted the "enhanced" (35 year/88%) formula this 940 million dollars would not have been paid out.

For years CORE members have asked for this information and told that it was available but neither Herb Dyer nor Damon Asbury produced a copy. CORE members were told that the difference made by the adoption of the 35 year/88% enhanced benefits was really not significant as compared to the original formula when used to calculate the payouts for the 35 year teacher. I'll let you be the judge....is 940 million dollars significant?

John
Click images to enlarge.