Saturday, July 11, 2009

STRS Flashback - 6 years ago - The day that Herbie started to seriously look back over his shoulder!

From John Curry, July 11, 2009
Controversy surrounds STRS’s awarding of bonuses
Canton Repository, July 13, 2003
By PAUL E. KOSTYU
Copley Columbus Bureau chief
Click image to enlarge.

COLUMBUS — The people who run the pension system for Ohio’s teachers got millions in bonuses for attending workshops, talking to parents and keeping spreadsheets of expenses. The bonuses are just one of the controversies swirling around spending by the State Teachers Retirement System. Critics blast the payments as an example of excessive spending. The system paid nearly $19 million in bonuses to its investment and non-investment staff from 2000 to 2003. During that same period, health care costs for retired teachers skyrocketed, and the pension fund’s portfolio plummeted. By comparison, the larger Ohio Public Employees Retirement System gives only its investment staff bonuses, and those bonuses totaled just $2.06 million from 2000 through 2002.
The controversy about the teachers system’s spending has led nearly 80 percent of Ohio lawmakers and Ohio Auditor Betty Montgomery to call for Executive Director Herbert Dyer to resign. The system’s board met for nearly five hours behind closed doors Thursday to talk about “staff performance, compensation and other terms and conditions of employment;” many think the discussion focused on the terms under which Dyer will leave.
Meanwhile, the teachers pension board has temporarily suspended all bonuses as it reconsiders its policy.
Documents from the last full year for which bonuses were paid — the fiscal year that ended in June 2002 — showed at least 42 supervisors reached 100 percent of their bonus goals. Records for another eight employees did not make it clear if goals were met.
Of the 15 who did not meet all their goals, 10 were in the 90 to 96 percent range. For example, Damon Asbury, deputy executive director of administration, reached 96 percent of his goals and got a $49,728 bonus. That was on top of his $148,000 salary.
Shun Koizumi, supervisor of the copy center, was the least successful at reaching planned goals, 60 percent, but that was good enough for a $1,367 bonus tacked onto a $45,580 salary.
According to retirement system officials, the performance-based incentive program was set up so organizational goals could be achieved cost effectively.
“The goals are to expand beyond the associate’s regular assignments, representing additional initiatives and increased workload outside the normal scope of responsibility,” says one document.
Each employee develops and assigns a weight to his or her own goals. They’re approved by the employee’s immediate supervisor, the deputy executive director overseeing that department and Dyer.
At the end of the year, the employee reports whether he or she met the goals and by what percentage. That assessment is approved by the same three officers.
Teachers retirement system officials say the program is one reason member satisfaction with their pension system exceeds 95 percent.
What are some of the bonus goals that were above regular assignments and workload?
• Fifteen percent of Jodi L. Wells’ goals as director of the system’s child care center was to “continue to maintain open communication between parents and staff.”
She also was supposed to “stay abreast of latest research dealing with the Information Technology field as it relates to children’s use.” In other words, she read about Internet filters and talked to parents and staff about them.
Wells also was to “maintain awareness of budget and continue to explore options to increase efficiency.” To reach that goal, she created spreadsheets and monitored monthly spending.
All told, Wells achieved 93.8 percent of her goals and got an $8,639 bonus on top of her $61,400 salary.
• Carol Hamilton, supervisor of food services, achieved 100 percent of her goals in 2001-2002 and received a $1,965 bonus. Her goals for 2002-2003 were nearly identical. For example, in both years, four of her six goals were maintaining her dietary manager’s certification, performing employee safety training, assuring technical training for the food service staff, and making sure the staff was certified.
• To help earn his $13,462 bonus as the supervisor of business systems analysis, David Donithen participated in “a minimum of three formal activities to enhance technology and/or investments related knowledge.” In doing so, he met 20 percent of his incentives for the 2001-2002 fiscal year.
For the fiscal year that ended June 30, Donithen proposed going to two formal activities, counting toward 15 percent of his bonus.
Not reaching the goals has no effect on regular salaries or cost-of-living raises that supervisory staff receive.
According to the system’s spokeswoman, Laura Ecklar, any employee who gets a negative annual review or a “needs improvement” notation is not eligible for a bonus.
The number of non-investment employees eligible for bonuses increased from 46 in 2000 to 66 this year.
Retirement system officials and their consultants defended the incentive plan to the Ohio Retirement Study Council last week.
Lawmakers questioned why the STRS bonuses are “so vastly different” than those at the state’s four other pension funds.
Deborah Scott, chairwoman of the teachers’ board, said the program is based on the advice of consultants, Dyer and staff, who said the bonuses generally follow those at similarly sized pension funds in other states.
But council Chairman Sen. Lynn Wachtmann, R-Napoleon, called the bonuses “extraordinary” and said he was “extremely upset” by “a lot of misjudgment.”
“Help me out here,” said Rep. John Boccieri, D-New Middletown, addressing Peter Gundy with Buck Consultants, who was hired by the pension fund. “How do you justify bonuses for the copy center supervisor, the day care director and the maintenance supervisor?”
Gundy said his firm did not address incentives for those positions when it advised the board.
Boccieri asked if his firm consulted the retirement system members about the bonus policy.
“No,” Gundy responded.

Representative Wachtmann, did you flip and then flop?


From John Curry, July 11, 2009
"It is in the best interest of all if you allow the board to offer bonuses to investment people," Wachtmann said, because that is how investors expect to be paid.
~ Rep. Lynn Wachtmann quote in the July 9, 2009 Lima News re. STRS bonuses
But, in July 9, 2003 (Canton Repository) the very same Lynn Wachtmann said, in reference to STRS bonuses:
But council Chairman Sen. Lynn Wachtmann, R-Napoleon, called the bonuses “extraordinary” and said he was “extremely upset” by “a lot of misjudgment.”

Linda Meinelt to Ann Hanning re: ORTA support for STRS retirees

From Linda Meinelt, July 9, 2009
Subject: Support for STRS Retirees
Dear Ms. Hanning,
I have not seen any support from ORTA for STRS retirees as they are faced with the possibility of having their COLA cut or eliminated. According to the information promoted in urging individuals to join ORTA, one of the reasons is that it "promotes cost of living increases." Well, the time has come to put your support behind this policy statement and get the STRS Bd. and Mike Nehf to preserve the COLA. Urge them to eliminate the 35 yr./88 rule which is sucking the lifeblood from STRS.
Linda Meinelt
Retiree

CLARIFICATION OF RESEARCH


From Mario Iacone, July 11, 2009


I have submitted and circulated quite a bit of information regarding STRS Asset Allocation

I can see how it is possible to draw two conclusions from that information.

INVEST ALL IN TREASURY BONDS and such would by its nature lead to the conclusion that the STRS Investment Department should be severely reduced or perhaps, eliminated.

Neither is my intent. Advocating an Asset Allocation minimizing the risk of huge losses is.

My response to Rich should clarify my position.

I am not advocating investment in all Treasury Bills although that would give us a very stable fund. However, a substantial percentage would be wise.

The payroll of the Investment Department is small compared to the fees that are paid for purchases, etc... About 135 million in fees during 2008 fiscal year. Treasuries have none or little in the way of fees unless the yield drives up the price and it would be a good move to sell on the secondary market.

I have attached an investment model from a seminar I attended many years ago, circa 1969. It protects from drastic downturns and yet gives you the opportunity to make money when times are good.

Please review.

The Investment Department would not have to be eliminated. Reduction could take place through attrition and retirement. And, if a model such as I have attached were used, they might be more effective with a smaller workload.

It is not what we pay the Investment Department that has endangered pension benefits, it is huge Investment Losses.

Mario

Below is listed a sample model which utilizes True Diversification and proactive Risk Management

If you would let me share my limited knowledge on diversification, I would appreciate it. I am not presenting this information to win a debate with STRS or anyone else, but doing so to provide input that may help the situation and possibly get STRS to consider a possible defect in diversification of STRS asset allocation.

Looking over the performance of the STRS fund value since 1998, all the investments go up together and all of them go down together. That would indicate a problem in the diversification of their assets. It is not true diversification to buy stocks of different risk level because when serious economic downturns occur, all stocks go down.

The information below was a lesson in a seminar many many years ago.

The instructor was attempting to show that true diversification to protect a portfolio in serious economic downturns or even “depression like” circumstances, the investments must not be interconnected or interdependent. Because if they are, they will all go down together. He provided the following simple example to illustrate his premise.

TRUE DIVERSIFICATION must have mutually exclusive investments so that not all go down together in tough times.

He presented the following simple portfolio. (Click image to enlarge.)




  • Gold is never traded short term. Only to be used as a recovery asset or to raise capital in disastrous circumstances.
  • Stocks are liquidated at 20% loss, either collectively or individually. His premise was that a general market decline of that magnitude signaled a problem, even if it is not evident. Depending on original purchase value, such a policy would produce two good results, limit loss or protect profit.
    • If stocks are liquidated, WAIT. The waiting period could be extensive, even several years. Wait until the situation allows you to risk 25 cents to make a dollar, rather than risk a dollar to make 25 cents. Small short term returns are preferable to large losses.
    • Portfolio is constantly adjusted to maintain the above percentages.
      • Stocks become 65% of the portfolio, reduce back to 50%.
      • Gold falls below 10%, increase it back to 10%.
      • Maintain Treasury Bonds at 40%. They are the base of the structure.
        • Such is the best form of Risk Management because it is a proactive approach rather than a reactive approach.

He also commented that the percentage of Risk Equities should be governed by what you can afford to lose. Only risk an amount, that if totally lost, would not change your lifestyle. In my opinion, that advice would apply even more so to a pension fund because losses in a pension fund can alter the lifestyle of tens of thousands.

Let’s look at the current value of STRS when the fund was valued at 80 Billion according to the above guidelines.

THE CRASH OF 2008 OCCURS!

Stocks are liquidated after 20% loss, current value is 32 Billion.

Treasury Bonds, at worst, stay the same or increase in value due to the yield factor, current value is 32 Billion or more.

Gold has more than doubled, current value is 16 Billion.

STRS current asset value would be 80 Billion.

Rich DeColibus: The donkey's not paying attention

From Rich DeColibus, July 11, 2009
Subject: Re: Read this eight
(Written in response to an e-mail from Mario Iacone, which I don't have at the moment. KBB)
Mario,
Your research seems impeccable and your argument irrefutable. I need to think about this, not in terms of the facts, but in terms of the facts becoming relevant to STRS, which they obviously aren't at this point in time. Like you, I have tried logic and reason, and have gotten exactly as far as you have. My brother (unrelated to education but a wise market observer) nailed it on the head when he said STRS's first priority was preservation of capital, the exact responsibility they failed completely on.
One of the problems is our viewpoint eliminates the need for the investment staff (or most of it anyway), something you've made excruciatingly crystal clear and I agree with. It seems obvious management isn't going to throw 80 people it has worked with for years out onto the street, even though that's what needs to happen (or severely restrict their ability to put our money in risky stuff). At this point, I'm not sure what dents their castle wall; certainly nothing I have said seems to have mattered much.
Hard to understand how the OEA and OFT seem oblivious to the obvious, but it's clear we're not getting any institutional support, and that seems to me to be a malfeasance of their obligation to watch out for their members' interests. The active teachers are assuming somebody's looking out for them and I'm not convinced much besides Kathie's blog (thank heaven for that) is airing any worthwhile data which impugns STRS's disinformation. It isn't hard to disseminate absolutely true facts and have it completely envelop an issue in fog. Whoever writes STRS's updates belongs on the national scene writing scripts for whomever is running for Senate or President; I admit a grudging admiration.
I sense the root issue and highest priority is the employment of the investment department; what it should be is the preservation of our capital. STRS can probably afford them, but what we can't afford is for them to keep on doing what they're doing, namely attempting to maximize their bonuses by hoping to get lucky with risky investments (risky relevant to the preservation of capital rule). They like to point to the exceptional nature of the current recession and if it hadn't been for that, it would have been all sunshine and roses. What they neglect to take into account is the fact we live in a very dangerous world. Who knows what natural or intentional catastrophe will happen tomorrow or the next day? The market does indeed outperform bonds, BUT only when things are going swimmingly well. Is there someone in STRS who is sure there's not another housing-like bubble ready to burst and carry the market to new lows?
But, I'm preaching to the choir. We'll keep in touch. Again, congratulations on outstanding research; what we need is a 2 X 4 to hit the donkey in the head with, because it's deliberately not paying attention.
Rich D.

Headlines from the Ottoville (Putnam County) RTA "workshop"

From John Curry, July 11, 2009
Options for teacher pensions still ‘under consideration’
Lima.com, July 9, 2009
By Nancy Kline
OTTOVILLE - "Under consideration" were the two big words Thursday during a workshop for retired teachers.
Hosted by the Putnam County Retired Teachers Association, more than 150 teachers and administrators from Putnam and surrounding counties attended the workshop for an update on plans for the long-term pension plan for teachers and health care funding.
Laura Ecklar, director of communications for the State Teachers Retirement System of Ohio said "everything is on the table" as the retirement board looks at options to address the reduced value of the STRS.
Options under consideration include increasing contributions, instituting a minimum retirement age, increasing the number of years used to calculate final average salary, changing cost-of-living adjustments, and changing the formula for calculating pensions.
"The state retirement system has been around for 89 years and this is the first time we have had to cut benefits," Ecklar said, attributing this to declining investment returns and increased longevity for people using the retirement plan.
Two state representatives at the meeting defended their opposition to legislating limits on bonuses paid to investors.
"I don't like the idea of paying people to lose money, but you need to keep legislatures out of it," said Rep. Bruce Goodwin, R-Defiance, referring to the proposed House Bill 177. "You don't want legislatures managing your retirement."
Rep. Lynn Wachtmann, R-Napoleon, agreed with Goodwin. Wachtmann sits on the Ohio Retirement Study Council. The ORSC helps form pension policies.
"It is in the best interest of all if you allow the board to offer bonuses to investment people," Wachtmann said, because that is how investors expect to be paid.
Ecklar said the retire-rehire practice does not affect the pension fund.
"Those who are re-employed still pay into the retirement pension with a match from their employer," she said.
Goodwin said he has introduced legislation that limits the amount an administrator could make if he retires then is rehired.
"It gives a bad perception to the public when this happens," he said, "and can be part of the reason some would vote down a school levy."
Goodwin and Wachtmann opposed Ohio Gov. Ted Strickland's proposal to use slot machines as a way to help balance the state budget and education.
"The people in this state have spoken four times during elections," Wachtmann said. "And they voted against gambling."
He also said there is a question about how much the slot machines would actually help education.
Rita Schnipke, co-vice president of the Putnam County Retired Teachers, said the workshop was planned as an informational meeting to provide updated information to teachers regarding their pensions and health care coverage.

SAMPLE STRS COLA CUTS


From Mario Iacone, July 11, 2009
If anyone wants the spreadsheet that calculated the following tables, please email me and I will send it so that you may calculate your own. ike1@zoominter
net.net
[Click images to enlarge.]


















































............................................................................

Friday, July 10, 2009

Shirlee Zerkel: Some questions for Tim Myers

From Shirlee Zerkel, July 10, 2009
Subject: Saw you on TV
Dear Tim,
I saw you on the evening news Thursday evening. I noted that you said in the interview that the active teachers will bear the brunt of the cuts. Can you please explain how that can be? Any cuts to those of us who are retired and unable to work will be deep and terrible cuts. We retirees have already suffered many cuts over the last 7 years. You also mentioned at the meeting that only 79 retirement systems out of 109 use the cola benefit. Tim, that is over 3/4 of the systems and STRS is among the 3/4. Isn't being in the majority a good place to be?
Shirlee Zerkel

Ryan Holderman: Letter from Senator Sherrod Brown

From Ryan Holderman, July 9, 2009
Subject:
Reply from Senator Sherrod Brown
Dear One & All:
Senator Brown responded to my letter as he always has. Senator Voinovich, on the other hand, has not!
The underlining and emphasis are mine.
Later,
Ryan
From Sen. Sherrod Brown, July 9, 2009
Dear Ryan:
Thank you for expressing your concerns regarding the state of the American health care system. Since first coming to Congress in 1993, I have refused to enroll in the coverage offered to members of Congress until every American has access to high quality, affordable health insurance. When our nation achieves this goal, I would be pleased to enroll.
Health care reform is desperately needed in this country. While costs mount for those with health care plans, 50 million Americans remain uninsured and millions more are underinsured. I strongly believe that our health care system is in need of reform that reduces the long-term growth of health care costs for business and government; protects families from bankruptcy or debt because of health expenditures; guarantees choice of doctors and health plans; invests in prevention and wellness; improves patient safety and quality of care; assures affordable, quality health coverage for all Americans; and ends barriers to coverage for people with pre-existing conditions.
The Senate is currently examining many issues relating to health care reform. I appreciate the input I have received from you and other Ohioans on this issue.
One promising solution to the problems of cost, quality, and access that plague our health care system is to increase competition in the health insurance market. If the private insurance industry was truly competitive, then there would be strong incentives to provide coverage to as many Americans as possible and to build customer loyalty through cost savings and quality improvements. Unfortunately, insurers do not truly compete against one another; instead, they make use of the same basic strategies to earn significant profits. These tactics include selectively insuring the lowest risk enrollees, slow-walking claims payments so they can earn interest on every premium dollar, and denying as many claims as possible.
What the insurance industry needs is some healthy competition from a public insurance option. This option would not replace employer-sponsored coverage; it would simply give uninsured or underinsured Americans the choice of enrolling in an insurance plan that does not engage in the same cost-avoidance tactics as private insurance plans do. The public insurance option would also be a vehicle for quality, coverage, and provider access improvements that set the bar higher for private insurance plans.
Thank you again for getting in touch with me on this matter. As work on health care reform continues in Congress, I will be sure to keep your views in mind.
Sincerely,
Sherrod Brown
United States Senator

STRS FLASHBACK - 6 years ago - Laura becomes 'testier'

From John Curry, July 9, 2009
"STRS spokeswoman Laura Ecklar is getting a bit testier every time I ask for more public documents. I suggested that she get a bonus for having to deal with me all the time. She laughed, but it hasn’t helped speed the time it takes to fill my requests.
Here’s what I don’t understand: Ecklar was quick to point out when I misspelled her name in a story, which has since been corrected. But getting the figure right for the amount of bonuses awarded to STRS staff in 2000, 2001 and 2002, never resulted in a call. “It’s always been wrong,” she said Wednesday of the $14 million figure we reported for two weeks.
The correct figure is $16.76 million. When the $2.1 million awarded this year is tacked on, maybe it’s easy to understand why she wasn’t in a hurry to correct it."
~ Paul Kostyu (Pulitzer Prize nominee)
All STRS, all the time
Canton Repository, July 11, 2003
By PAUL E. KOSTYU
Copley Columbus Bureau chief
COLUMBUS -- Problems crop up when a reporter spends time on one story like the State Teachers Retirement System, putting in more hours than he cares to count, day after day and, now, week after week.
First, because he’s not home much, he may tend to forget what his kids look like, nevermind their names.
Second, trying to help the team out in the church softball league is difficult when he can’t make the games. Of course, maybe he is helping the team.
Third, it’s really hard to write a column about something else.
Last week, I didn’t write a single story about STRS after two weeks of nonstop material. Some of you probably thought I was holed up in a garage somewhere talking to the STRS version of Watergate’s Deep Throat, collecting information for a blockbuster story.
Dare I say it? I was in Michigan. OK, for some of you diehard Buckeye fans, Michigan may compare easily to a smelly, decrepit garage.
I was on vacation, which is sure to get me in trouble with Gov. Bob Taft because I wasn’t spending money in Ohio. But Republicans should be happy to know that I had a chance to read a novel by Christopher Buckley, the son of conservative columnist William F. Buckley. The satire takes a humorous slap at Washington politics, lawyers, the Clintons, the press and various other subjects. I actually may read one of his other books.
After a break, a reporter hopes either that the story he has spent so much time on has gone away or that he hasn’t missed anything. By the looks of things this week, there’s plenty more going on with STRS.
Here’s some of the stuff you haven’t heard.
There was a resignation in one of state retirement systems. No, it’s not Herbert Dyer, executive director of STRS. Instead, Thomas R. Anderson, executive director of the School Employees Retirement System, is retiring after 32 years in Ohio public service and as the SERS leader since 1979. His resignation is effective Jan. 1, 2004.
STRS has put Sen. Kirk Schuring, R-Jackson Township, in situations he doesn’t often find himself. First, he called a press conference to show off all the lawmakers, at last count 105, who backed his call for Dyer’s resignation. He rarely calls press conferences, and he even showed up late after getting stuck listening to a Senate debate.
Second, he’s helping organize a march on STRS headquarters on Aug. 15, the next regularly scheduled meeting of the board. He’s checking out a permit from Columbus City Hall; he has to decide a route (this should not be difficult because STRS is just three blocks from the Statehouse); he might have to arrange for security; and he’s trying to figure out which other lawmakers may be going along and how many people are actually going to show up.
If nothing else, the STRS debacle has provided Schuring with all sorts of exposure and name recognition. That could be particularly helpful if he gets a chance to run for Ralph Regula’s congressional seat whenever the powerful longtime congressman from Bethlehem Township retires.
I get dirty looks from the people at STRS. Board Chairwoman and first-grade teacher Deborah Scott refused to answer questions Wednesday and looked as if she wanted to smack my knuckles with a ruler. She probably wanted to send me to detention like Professor Delores Jane Umbridge did to Harry Potter in the latest J.K. Rowling book.
When Scott left the hearing room of the Ohio Retirement Study Council, several reporters followed her all the way to the women’s restroom. I suggested the only female reporter with us follow Scott into the restroom for a pool interview, but she declined.
STRS spokeswoman Laura Ecklar is getting a bit testier every time I ask for more public documents. I suggested that she get a bonus for having to deal with me all the time. She laughed, but it hasn’t helped speed the time it takes to fill my requests.
Here’s what I don’t understand: Ecklar was quick to point out when I misspelled her name in a story, which has since been corrected. But getting the figure right for the amount of bonuses awarded to STRS staff in 2000, 2001 and 2002, never resulted in a call. “It’s always been wrong,” she said Wednesday of the $14 million figure we reported for two weeks.
The correct figure is $16.76 million. When the $2.1 million awarded this year is tacked on, maybe it’s easy to understand why she wasn’t in a hurry to correct it.

Two Kentucky STRS retirees: Letter to Board

From Debbie Reinhart and Sharyn Wiehe, July 8, 2009
To All Retirement Board Members:
As retired Ohio school educators, we are writing to voice our concerns regarding long- term contingency planning that pertains to the STRS Ohio investment funds. Our trepidations focus on the boards’ exploration into cutting any benefits that retirees currently have including the COLA.
Ohio retired educators are already at a deficit because of legislative action prohibiting us from contributing to Social Security. Additionally, Ohio educators are adversely affected by the windfall and offset penalties of Social Security. Realize that by not being able to collect our spouses Social Security should he/she pre-decease us we lose that portion of our income immediately. This compounded with the proposed COLA reduction has a double impact on Ohio retired educators.
In addition we have the following recommendations:
• Final average salary based on 5 years
• Mandatory retirement after 30 years (teachers may re-enter the work force, however those salaries would not figure into retirement benefits)
• A retirement formula that would provide 2.2% up to 30 years
• No more 38 years and 88%
• Increase member/employer contributions
• Generate additional funds by selling STRS art work
• Freeze and or reduce salaries and/or bonuses for STRS employees (educators do not receive bonuses and many have had their wages frozen)
• Shut down day care services (unless operating at a profit and again no educator was afforded this luxury in their schools)
• Shut down STRS cafeteria (unless operating at a profit)
• At a minimum keep COLA at 3%
We strongly urge you to consider our recommendations. In today’s economic environment, retirees are being impacted more than any other socio-economic group. It is unconscionable for the board to consider let alone recommend taking any benefits away from those educators currently retired.
We respectfully request a response in writing to our concerns.
Debbie Reinhart and Sharyn Wiehe
Covington, KY

Sondra Stratton: Letter to Senator Tom Niehaus

From Sondra Stratton, July 9, 2009
July 9, 2009
OH Senator Tom Niehaus
Senate Bldg.
Columbus, OH 43215
Dear Mr. Niehaus,
I am responding to your letter, dated May 28, 2009, in which you responded to the concerns I voiced about State Teachers Retirement System and the problems which have occurred since the aftermath of 9/11 in a previous letter. Actually, the problems to which I referred have been long standing but came to light after our national disaster.
Mr. Neihaus, I know for a fact that Duke Snider, Al Rhonemus, and myself (and I am 99% positive others from Brown County also contacted you) asking for your help in getting some of these problems resolved. You asked to be kept informed and acted as though you knew nothing about the state pension systems. I know that over time I have heard Duke, especially, state that he had written, called, or talked to you with additional concerns/information.
Your response to my concerns was condescending and you still don’t seem to understand about STRS and the way in which change MUST to be made. Mr. Niehaus, I was among the first group of retirees to get involved in trying to instigate change at STRS and I can assure you that I do not nor have I ever taken lightly, ignorantly, or flippantly anything I have asked to be done at STRS.
STRS is an institution that teachers have paid money into and we were told…No…. GUARANTEED that we would receive a decent retirement with, “a Cadillac” healthcare plan. Now you may understand that STRS is working under costs but when people are making more in a year than teachers with a college (Plus) education, made in 10 years, there is something drastically wrong. Those who run and are employed at STRS exert the attitude that the pension system is there for THEM not the retiree. This is just plain wrong……and I believe addressed in ORC 3307.15.
You seem to think I have asked you to support a bill that would STOP the tremendous bonuses at STRS in a negative year as a passing fancy. I can assure you with all the HUNDREDS of HOURS I have spent dealing with this situation that where I am concerned, this is no passing fancy & certainly no whimsy. I fully comprehend what I have asked of you. Retirees would not ask politicians to intervene if there was any other way. There is, however, unfortunately NOT. All other venues have been exhausted! Mr. Niehaus, have you been in the OH senate for 8 … years and not understand that change in the public retirement systems has to occur through legislative action?
You say that STRS has agreed to stop the bonuses this year. If you have faith in STRS to live by their word and to continue this policy once the subject dies down, then you are not educated enough about the situation and the actions that are needed to see that it STOPS permanently. WHY HAS STRS WAITED FOR SO LONG???? THEY HAVE BEEN ASKED OVER AND OVER TO STOP THIS PRACTICE!!!! Retirees travel to STRS meetings month after month from all over OH and STRS has yet to hear, listen, or have any level of empathy for retirees!!!!! We have asked, and asked for change. The majority of decision makers at STRS have been deaf and dumb!!! The only way to declare retirees' needs and wants are by legislative measures. If retirees stood a ghost of a chance to get the changes that are needed without asking for legislation, it would have happened in 2002, not still be ongoing in 2009, and be a moot point!!
I again ask of you
• Support HB 177 to take the decision to give bonuses to employees on years when they have LOST money from STRS (So far all we have heard is that they DID NOT lose as much as others. Sorry, I worked damned hard for 30years (plus) and that is just NOT GOOD ENOUGH. Teachers in OH, past and present deserve better!) We worked for pennies compared to other professions with a college education, we paid in to support those who have gone before us and then are told, “Sorry, but we have to think of those who are to come.” Well, I am here and I can tell you living is not great!!! Please do not let this bill be buried!!!!! It makes more sense to make changes to those who have not retired than to try and change the situation for those who have retired, many of whom are no longer able to work.
• There needs to be measures that prevent huge salary increases in years when bonuses are not given.
• Make necessary changes for STRS employees to pay INTO STRS instead of OPERS. That would give them incentive to work FOR the system they bleed dry. At present they have absolutely NO INCENTIVE to do anything other than rape our retirement savings!
• STOP STRS from ENDING or REDUCING the 3% COLA!!! The COLA needs to be compounded or raised, not lowered!
• END the 35 years/88% rule.
It is unfair to teachers who taught longer but because they were already retired, did NOT get the increase percentage. It is also a drain on STRS!! It should have never been enacted in the first place as it was done by STRS board members in order to pad their own retirement with no consideration as to what it would cost or do to the retirement system! The same people who were criminally charged for over-indulgence and self entitlement of our funds. Again, YOU are our elected official, (you can be assured that knowledgeable teachers/retirees in your district are in agreement) to enact legislative measures to assure retirees that action is being taken to stop STRS abuses and assure the pensions that we paid into and for which we worked! (I believe I mentioned one person getting a $39,500 raise for one year. I don’t know about you but to those of us who sacrificed to teach Ohio’s children that is criminal)!
When retirees see STRS putting retirees first, employees receive the exact same HC insurance, benefits and costs, take a pay reduction, stop raises until STRS is once again solvent, employees take a pay reduction in addition to NO BONUS, then I believe retirees would be willing to talk. However, I imagine you will be able to skate in a very hot place long before that ever happens.
Retirees have already lost the 13th check yet employees lost or gave nothing. They continue to get ridiculous raises and bonuses and now discuss taking the small raise that we get?? I honestly don’t know how they sleep at night! The 3% COLA does not even begin to keep up with cost of living. Each year retirees are getting further and further behind. It is not right and MUST STOP!
In closing, we have asked for, needed your help and support for 6 years and you have turned your back on us the entire time. It is an INSULT to tell me what you understand when you have been so useless in STRS matters. The only legislator that has sincerely/consistently tried/helped us is Representative Danny Bubp and he was even away supporting our country for part of time.
I am sure you do not appreciate this letter. We have not appreciated your lackadaisical attitude nor your lack of support and effort on our part. Your time is about up and you seem to be coasting the rest of the way. I just hope that you do not run for any further public office as I will not support you in any future endeavors. As the area representative in my place, it your duty to support or vote the way that I ask. I anticipate that you will readjust your opinion of the problems and solutions to STRS and do the right thing.
An unhappy retiree,
Sondra K. Stratton

Rich DeColibus to STRS Board re: COLA

From Rich DeColibus, July 10, 2009
Subject: COLA
Gentle(wo)men:
I understand eliminating the current 3% COLA for retirees is under consideration. Just so you know what the real effect of that would be, please take a look at the chart below. It assumes an individual retires with a pension of $40,000 and lives twenty years. The chart shows the current COLA-adjusted value of the pension. Of course, without the COLA, the value remains at $40,000 all twenty years.
Year..........Pension
..1............$41,200
..2..............42,436
..3..............43,709
..4..............45,020
..5..............46,370
..6..............47,762
..7..............49,194
..8..............50,670
..9..............52,190
10..............53,756
11..............55,369
12..............57,030
13..............58,741
14..............60,503
15..............62,318
16..............64,188
17..............66,113
18..............68,097
19..............70,140
20..............72,244
As I believe is obvious, there is a lot of difference between $40,000 and $72,244, especially when health care costs start to mount at that stage in life. In short, that little 3% amounts to $307,059 over twenty years (based on a $40,000 pension) and when you start to talk about reducing someone's future income by close to a third of a million dollars, methinks you need to be very, very careful of what you do.
Rich DeColibus

Shirlee Zerkel: Lima TV news report from Ottoville meeting

From Shirlee Zerkel, July 9, 2009
Subject: A little news from the Ottoville retiree meeting
Dear all,
Our very own Tim Myers was on the six oclock news stating that the "actives will bear the brunt of the cuts." Then in the online story ( that I can't bring up again to email to you at the moment) stated the following: Rep Goodwin and Rep Wachtmann are again [opposing] HB177.
There also were some interesting quotes from Laura Ecklar,"The state retirement system has been around for 89 years and this is the first time we have had to cut benefits," Ecklar said, attributing this to declining investment return and increased longevity for people using the retirement.
My opinion: That strange that this will be the first ever benefit cuts;
1. What about the lost 13th check?
2. the lost spousal premium subsidy?
3. lost health care benefits.
4. higher and higher premiums and
5. others I can't think of now, because I am stressed.
Shirlee

Putnam County RTA workshop, Ottoville

Report on Putnam County RTA workshop
July 9, 2009, Ottoville, OH

By Mary Ellen Angeletti and Kathie Bracy
Following announcements pertaining to Putnam, Paulding, Van Wert, Defiance, and Henry Counties, introductions, and lunch, the first speaker at the Ottoville Teacher Workshop was State Representative Lynn Wachtmann representing the 75th House District and as a 10 year member of the Ohio Retirement Study Council. He praised this committee, which oversees STRS and provides governance that fosters the five pension systems. He shared that House Bill 177 (which prohibits bonuses to investment staffs when their respective fund loses money) will NOT be adopted since it takes away the STRS Board's responsibility for handling their system.
He said the HB 177 is "too restrictive". He bragged that STRS saves big bucks by having in-house investment managers. He reminded us that the ORSC has consultants that they hire to check on the five pension systems. His view is that it is in the best interests of the system to allow the Board to offer bonuses to the investment people; that the investment world lives and dies for bonuses. Wachtmann said that overseeing the pension systems is a real passion for him. (Rep. Goodwin later reinforced this and complimented him for his commitment to watching our pension system.)
Then Rep. Wachtmann switched from STRS to the status of the current state budget which he described as a very unpleasant environment at the Ohio Statehouse. He warned that House Resolution # 2 would put the poultry farmers out of business. He reminded us that the voters had turned down gambling and yet the Governor wants slots at the racetracks. He feels that it is the Governor's intention to grow welfare and warned that there would be a train wreck ahead and a doubling of the income tax in the next few years. He insisted that Republican tax cuts must continue and then warned of President Obama's recommended Cap and Trade bill which he said would increase our electric rates drastically ($4600/year for the average family) and would be detrimental to all of the midwest states. Our economy can't sustain doubling or tripling the electric rate, and that businesses would move to China. He reminded us that Senator Sherrod Brown is in favor of the Cap and Trade bill and strongly urged us to contact him to oppose it.
Representative Bruce Goodwin, representing Defiance, Williams, and Fulton Counties, spoke next. He also had no good words for the state budget under consideration at the present. He said there were NO answers for what was included and what was not included in the
4,000-5,000 page budget (the most poorly done budget he's ever seen). State government gave FEW ANSWERS -- why this but not that; how much something will cost down the road; how we would fund this, etc. The budget would cover 10 years and 5 general assemblies with each new assembly making changes. He said the budget has gone to the Senate, and they have made some reasonable changes so it is now close to a settlement. Casino gambling is now the big hold-up. Four times Auglaize County voted against gambling; how can legislators tell them "we're going to put in casinos"? On bonuses: "I don't like the idea of paying people to lose money."
Rep. Goodwin then explained that he had an education background with 36 years in the field. His only reference to STRS was "Vote out the STRS Board members if you do not like how they vote." Before concluding, he added that he thought the PERS move by Governor Strickland was dead for now (this news was released today). The library funding issue and the bed tax for hospitals and nursing homes which Gov. Strickland wants to include in the budget have sparked a great deal of voter interest and controversy.
Tim Myers, STRS Board member, spoke next and shared that he had just returned from NEA meetings in San Diego, where many states (Calif., Texas, & New Jersey) were having similar financial problems regarding their pension systems as was the case at STRS. The next thing out of his mouth was that only 79 out of 109 pension systems give COLAs (cost of living adjustment), that most COLAs were in the 1.5 - 2% range, and that the 3% COLA was virtually unheard of. We got the impression this was at the top of his list of considerations for cuts. He also added that State Treasurers do the investing for some pension systems.
He announced that our current pension fund's unfunded ratio now is at infinity, but also stressing "YOUR PENSIONS ARE SAFE." The unfunded liability must be brought to within 30 years by law, so STRS has started long term contingency planning (as we all know was suggested many months ago by Dennis Leone, STRS Board member). He said we're one of the first pension systems too start long term contingency planning and that "everything is safe now," but in the long term there may be a shortfall if we don't make changes. He said that two goals would be of utmost importance as this planning proceeds: preserving the defined benefit plan (as opposed to the defined contribution plan) and continuing STRS' contribution to our health care, currently 1%.
Myers reminded us that any changes that the STRS Board proposes must go to the ORSC for approval and then back to STRS. At this point, he suggests that we teachers get involved and share our suggestions with the STRS Board (It seems that this would be after approval and much too late). It then goes to the Legislature and any start time for putting most changes into effect would be 2015. He also reminded us that there might well be a public option for health care (Obama's) on down the road and that STRS would be looking at this federal plan as well as Governor Strickland's state health care plan.
He ended by sharing that the STRS employee number was now 605, as cuts had been made, and that the STRS budget was 11 million dollars less than last year's budget. He said if STRS cut every staff member and all of their benefits, it would save only 85 cents for every $1,000. He then shared the total monies sent from STRS to each of the seven counties whose residents were represented at the meeting today.
Laura Ecklar, STRS Communications Director, reminded the audience that there were other problems in addition to the down market which have affected the STRS pension system. Retired teachers are living longer and better benefit formulas are being given (certainly the 35 year 88% enhanced benefit is one). Both of these factors have strained the system she said. She said that 75% of STRS money comes from investments. Changes under consideration at STRS are:
1. increasing contributions (which are currently 10% from active teachers and 14% from employers)
2. establishing a minimum retirement age
3. changing the final average salary from the three highest years to the five highest years
4. changing a benefit formula (the enhanced 35 year 88% benefit)
5. changing the COLA, which she described as the most expensive lever
She reminded us that we are the object of "asset envy." Many Americans have lost their retirement and their health care. She said STRS is 89 years old and that the Health Care Advocates have recently changed their names to Health Pension Advocates. A STRS newsletter will be arriving in one week which will explain all of the new health care plans for 2010. We are living longer and STRS is paying out more than it had planned for. A higher minimum retirement age is needed. Final average salary (FAS) currently 3 years; proposal to change it to five. Proposal to change the formula for benefit calculation to 2.2% for the first 30 years, 2.5% for each year over 30. (Unspoken: get rid of the 35 year/88% rule.) She also mentioned that in STRS' 89 year history, this is the first time there's ever been any talk about losing benefits. The Board is trying different scenarios to preserve the pension. There have been many meetings around the state in the past; they plan to do it again.
Edna Hansen, ORTA President, shared that her organization has 36,000 members out of the 100,000 retired teachers in Ohio. She said that ORTA has been working behind the scenes regarding STRS issues. Quote: "ORTA IS working for you." In response to a question about why ORTA isn't more vocal at STRS Board meetings regarding retiree issues, she said she is obligated as state president not to speak on behalf of everyone if she doesn't have all the facts. (The impression was that this is true for ORTA officials in general, causing us to wonder when WILL ORTA get "all the facts"?) Hansen said "your elected ORTA officials are working for you and are working as hard as they can." We were told ORTA communicates with the members via the ORTA Quarterly and another publication which goes only to the RTA presidents and the legislative chairs.
Laura Ecklar added that in the eleven years she's been in her job that the communication between the retirees and STRS has never been stronger, citing ORTA and chapter presidents for this. Back then, the executive director wasn't going to RTA meetings (but he did speak periodically at Franklin County RTA meetings), that he wasn't invited and didn't ask to be invited. Laura complimented all the ORTA organizations for helping STRS to understand where they were coming from.
Karen Butt, ORTA Vice President, said that "ORTA IS working for you" and that "Ann Hanning works very hard for us every day". She mentioned the quarterly newsletter which ORTA sends out as well as a Leadership Bulletin which is sent only to ORTA leaders.
Written questions from the audience were then read and assigned to one of the speakers. Laura Ecklar was asked if the mortgage on the STRS building in Columbus was paid off, and she answered that it was. Tim Myers was asked if the STRS Board was looking into any other suppliers for prescription drugs, and he answered that the Board members are always looking for new suppliers. He volunteered that the two biggest considerations are formulary concerns and ___?.
Representative Goodwin was asked what percentage of the lottery has actually been received by schools. He said whatever amount the lottery gives to a school is then taken away by the state funding. The question was how are STRS funds affected by the rehired retired teachers? Laura Ecklar's answer was that 70% of rehired teachers are substitute teachers who pay 10% to STRS and their employers pay 14%. Thus, they do not affect STRS funding. (However, until this occurred in 2009, rehired retired teachers did drain STRS health care. Thanks to Dennis Leone, STRS Bd. member, this practice was changed and rehired retirees must now get their health care from the school system for which they teach.)
Another question was read and directed to Rep. Wachtmann but he had left early and was not able to answer it. The question was whether he was in favor of the 35 year/88% enhancement. Tim Myers answered for him saying that he was in favor of the enhancement. Tim said he himself is neither in favor of nor opposed to it. In other words, he is sitting on the fence of this most important benefit formula change.
Addendum: One of the Lima area retirees reported this evening (7/9/09) that she saw Tim Myers on Lima TV tonight (we're guessing he may have been interviewed after today's meeting) and that he told the interviewer that the active teachers were taking the brunt of the cuts at STRS!! This was NOT mentioned at the meeting today!

Thursday, July 09, 2009

Sending bill to ContactUs?

From June Hughes, July 9, 2009
Subject: Re: Dennis re. STRS's 'Contact us' and ......."Why is this so darn hard for STRS to understand?
Egads, I'll even take the $35,000 salary!!!!!!!!!! I bet there are other retirees who would do the same. Saying 'more have their house paid off' is like the old excuse of men have families to take care of so women don't need to make as much money. DUKE energy just announced a rate increase starting next month. Shall I send the bill to Ecklar? I'm trying very hard to not turn on my A/C unless the temperature is absolutely brutal. *^()*&^)*!!!!!!!!!!!!
June
From Dennis Leone, July 9, 2009
Subject: RE: STRS Ohio COLA
Contactus@strosoh.org is primarily Laura Ecklar. Interesting, isn’t it, to read her saying “the system will be unable to pay members’ earned benefits unless changes are made.” This is NOT what she wrote month after month between September of 2008 and January 2009 when I begged STRS to stop saying “your pensions are secure.” (At the January retreat, I am on tape saying that monthly STRS communications was causing STRS to become “a public relations nightmare.”) I disagree with the rhetoric of how reducing the COLA will have a greater impact on future retirees than current retirees. How silly of me of to disagree……….I guess the STRS position is that a current retiree with a final average salary of $35,000 is impacted LESS (from a cash standpoint) than a new retiree who has a final average salary of $70,000. Sorry, but I’d take the $70K any day over $35K, irrespective of COLA. Why is this so darn hard for STRS to understand? An STRS staff member said to me the other day: “Well, more retirees have their house paid off than active members do.”
Dennis Leone
Larry KehresMount Union Collge
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