Kathie Bracy's Blog: September 20, 2009

Debbie Roush on bonuses

Debbie Roush to John Curry, September 26, 2009
Subject: Note to Swartenberg: STRS Differed Bonuses

John,

I sent the note below to Steve Swartenberg; I think I read, at one time, that some employees in OPERS receive employer contributions of 17%. But even if the rate is 14%, that's still a large contribution coming from our STRS fund. Bonuses would be considered income and receive an employer (STRS) contribution unless the investment staff agreed it was miscellaneous income....received a 1099, and paid their own $$ toward retirement.....NOT! ; )

Does anyone know the rate paid for the investment staff.....

I received a card today inviting area retirees under 65 to attend the healthcare meeting in Athens...why??? What could they possibly tell me? We know what we're getting, how much it will cost in 2010, etc...more wasted money...travel expenses, paper, postage, renting OU Inn, meals, passing out junk pens, bottled water with STRS logo, and other "do-dads".

At my last RTA meeting, I told the membership I wouldn't believe a thing that STRS puts in the newsletter...there's still so much that I just can't understand about the deceitfulness of not just this STRS board, but of the previous one also; their corruption and the later punishments (not nearly strong enough) should have sent a message to this STRS board that their entitlement attitude, their flagrant dishonesty with our group, their wasteful spending, and how about not taking a risk with retiree money...was not going to be tolerated....and where did I read that investments were to be prudent. Well, they are still doing exactly as in the past, and are our hands tied?

The sad thing about it is they know they can make their own rules and nothing will be done. What are we able to do about it...nothing unless we change the law... Surely, the membership has to know that the board is not really working for them. Sociopathic tendencies...feel no emotional connections to others and have zero regard for the rules and regulations of society; they know the rules, but they just choose to break them; they are egocentric, callous and as manipulative as any criminal; their intelligence allows them to construct a facade of normalcy to get what they want; corporate sociopaths have the ability to present themselves as the dream employee...sound like anyone we know??

OK, too much anger on my part, but think about it...these people learned early how to take advantage of others and have passed these terrible attributes on to their families...a vicious circle. We've all had a few students with these characteristics. Debbie

From Debbie Roush, September 20, 2009
Subject: STRS Differed Bonuses

Steve Wartenberg,

After STRS has voted to award $3.4 million in bonuses to the investment associates, I wonder if anyone has questioned how much STRS will have to pay to the OPERS retirement fund for these employees. I believe that some OPERS rate is 17% vs 14% teacher contributions to STRS from school systems. If so, when the STRS investment staff receives $100,000++ in salary, that sum must receive a 17% contribution to OPERS. This is worth checking out...so if the employee receives $100,000 in salary and $100,000 in bonus then, STRS must pay 17% on $200.000.

At one time it was mentioned that in order to raise the contribution rate from 14% to 16.5% for a teacher, the Legislature would have to vote on it and pass it as law. But there seems to be no problem for STRS Board to suggest to the legislature to cut the 3% COLA. This would also call for a vote and passage to change the ORC which states 3%. Did anyone ever think about the salary difference in the state?

Teachers in southeastern Ohio do not and have never made the salary that other sections of the state has made. The starting salary today in Southern Local School District is about $21,000. Can the retiree in this district afford to lose the COLA? How about the cost of health care...it is the same if the retiree makes $30,000 or $60,000. I, personally, make around $29,340 from retirement after taxes, and many teachers in this area make less, I am sure. This is based on 32 years...with a master's degree ++. My COLA is $75.15, and this amount does not change from year to year. STRS has wasted more than this just trying to convince us that decreasing this amount will save our benefits. The $100,000 @ 17% can't compare to my $75.15.

How about their health care that STRS provides to them and their families? How about the 37.5 hour work week that is paid at 40 hours? How about the reply from the STRS Board, "in order to keep a good investment staff"; I am tired of that lame excuse...Wall Street is full of unemployed investment staff that could do the same job...and probably with just the same conscience.

I think we need to change the ORC that states how and who will make up the STRS Board. The composition should be retired teachers and only two active teacher seats...instead of the OEA-filled seats of active teachers and only 2 retired teacher seats. Who would better look out for our retirement system than the retiree?

I suggested once to an ORTA VP that STRS sell the building, move to southeastern Ohio into one of our old school buildings without AC, hire people from our population who has never received $100,000 and try asking for money to spend foolishly......

Thank you,
Debbie Roush

--------

Steve Wartenberg's reply:

Thanks … whether STRS has to pay the 14% to OPERS on the bonuses is an interesting question – I will check it out.

Steve Wartenberg
Business reporter, Columbus Dispatch
34 S. Third St.
Columbus, OH 43215
614-461-5518
614-461-5107 (fax)
swartenberg@dispatch.com

Molly Janczyk to Treasurer Kevin Boyce re: STRS appointee

From Molly Janczyk, September 26, 2009
Subject: Treasurer: 092409 Appointment Of STRS Board Member

Treasurer:

Have you even contacted Prof Tom Hall whose contact info was sent to you? He has all the expertise and background needed and is a published author on investments, market trends, business cycles, economics as well as having a vested interest in STRS as an educator. I have NEVER so much as gotten a response from you.

Molly Janczyk
STRS Retiree

[Click here to view Tom Hall's 2006 vitae.]

Tom Curtis to State Treasurer Kevin Boyce re: Appointment of STRS Board member

From Tom Curtis, September 24, 2009
Subject: 092409 Appointment Of STRS Board Member

Treasurer Boyce,

On 8.1.09 I received correspondence from your office indicating that you would be appointing someone to the STRS board with an investment background, other then Dr. Dennis Leone, as many others and I requested.

It is nearly 2 months since that correspondence, yet I have not heard of any such appointment to date.

Our pension system is in the worst situation of all 5 systems in Ohio. Why have you not found it necessary to make such an appointment to date?

I look forward to a timely response.

Tom Curtis - 1998 STRS Retiree
N. Canton, OH

Kathie Bracy and Molly Janczyk: Questions for the Board

From Molly Janczyk, September 23, 2009
Subject: Re: The PBI vote last week
I, too, welcome open dialogue on this.
Please explain:
1. Can the staff sue? Wasn't this time period one of such poor returns making a suit unreasonable and legally improbable ?
What justifies bonuses as a result?
2. Isn't it true that investment staff are not contractual and can't STRS plead extreme economic loss stating no bonus as a result as corporations have done across America?
These are legitimate questions from membership to STRS Board members.
Membership has the right to hear reasoning for voting on their behalf.
It is lack of duty to ignore membership and that is a reason why it builds anger.
Molly J.

From Kathie Bracy, September 23, 2009
Subject: The PBI vote last week
To the STRS Board:
This message is directed at the seven Board members who voted last week in favor of paying $3.4 million in bonuses to the investment staff.
To date I have seen no sign of an explanation from any of you as to why you voted the way you did. If no one has asked for such an explanation, I am respectfully asking now. [Correction: I inadvertantly included Bob Stein in "The Seven" in this paragraph, when I had actually spoken with him earlier and he went to great lengths to explain his position (basically what Molly Janczyk had related in an earlier post); I still hope he will submit a statement that I can pass on to you. KBB]
As you know, there has been a huge furor over the outcome of that vote, mainly from the retirees since most of the actives are not kept well informed on what's really going on. From what I see in my e-mail, that furor does not show signs of letting up any time soon.
There's a lot that I have NOT posted on my blog, as I prefer to give you a chance to explain and defend yourselves. Open communication with the members of STRS could go a long way toward establishing trust and support for you. Right now it's deja vu -- people are saying we've got the "old board" back. I'm sure you know what I mean; it is not a compliment. Many are also wondering if there is an element of intimidation that caused you to vote as you did. Fear of lawsuit. What is your take on that?
I hope I receive explanations from all seven of you to pass on to the membership. They are stunned at the outcome of the vote and deserve to know what's going on.
Thank you.
Kathie Bracy

Jim Stoll: A judgement

From Jim Stoll, September 23, 2009
Subject: Re: Fw: Bob Stein: PBI Vote

To: All From: Jim Stoll

Re: Bob Stein's Vote on PBI

Since Molly won't pass judgement I certainly will. In my opinion Bob's vote was a travesty for all STRS Members and another example of the status quo of entitlement at STRS.

How about making a statement and support the "members" who ELECTED you. His vote is a total lack of leadership. Who told Mr. Stein that STRS investment staffers would have grounds to sue and be successful? Probably an STRS staffer himself, in legal counsel Bill Neville?

Did Mr. Stein take the time to lay out the facts to independent lawyers or some retired judges and get their opinion. I think not! If he had, he would have been told that according to Board Policies, the investment staff, if the Bonuses were terminated or rescinded, don't have the law on their side. (I for one, would have welcomed a legal challenge from the staff - that would have shown their true color of greed.)

This is simply an extreme disappointment and I trust all current and future retirees will ALWAYS remember this vote. Mr. Stein, regardless of your explanation - and Trust me - your FEAR of a lawsuit doesn't fly out here with the members - you have disappointed us all, BUT even worse, you have lost our vote.

Jim Stoll
Director of Athletics
Sycamore H.S.
Cincinnati, Ohio 45242

John Curry re: Suing over bonuses

From John Curry, September 23, 2009
Subject: Bob Stein - PBI's
Molly and others..we have been here before (5 years ago). Same topic (bonuses) same situation (threat to sue). Paul Kostyu also addressed this situation at that time. Please read what Kostyu said back then and contemplate it. Anyone can sue anybody for any reason.....but winning, especially considering our financial difficulties, will weigh heavily upon the minds of the jurors or, should it go to a panel of judges, on their minds also! Being kowtowed is becoming to be a national sport, isn't it?

STRS employees should sue
By PAUL E. KOSTYU
Copley Columbus Bureau chief
Canton Repository, May 28, 2004

COLUMBUS -- The noninvestment employees of the State Teachers Retirement System should sue the pension fund. Doing so would tell us something about them.

Last week, the pension board rejected paying bonuses to 268 employees despite the recommendations of Executive Director Damon Asbury and Assistant Attorney General John E. Patterson. Both said the pension fund risked a lawsuit that it would likely lose. The employees should sue.

Asbury said the board had a legal obligation to pay the employees for completing their “stretch goals” in the 2002-2003 fiscal year. It wasn’t a stretch to see that those goals were really little more than what many considered the employees’ regular duties.

Paying the bonuses would perpetuate an STRS culture of entitlement, which flourished under former Executive Director Herbert L. Dyer. His undoing came from publicly proclaiming that the money flowing into STRS from members and investments was the board’s money to spend as it wished.

But the culture enveloped more than employees. The so-called 13th benefit check was sent to retirees for years while investments were good. They depended on the extra monthly payment, which they felt they deserved and had been promised. That entitlement ended when investments soured in the early 2000s. Nobody sued the system.

Health care is another STRS entitlement. The system is not obligated by law to provide health care coverage, but it does. Asbury has said there is no retirement without affordable health care. Sounds like a promise. But the care is no longer affordable for many retirees and their spouses. Nobody sued the system.

The bonus plan for noninvestment employees was abolished last week in the wake of questionable spending at STRS for travel, artwork, expenses and salaries. Surely employees are entitled to just one more bonus. They should sue.

STRS culture fits with an American culture based on greed. That’s the only way to explain why employees would sue. All those eligible for a bonus are the most highly paid STRS employees. We’re not talking about the janitors, secretaries, security guards or any of the hundreds of other dedicated STRS workers.

We’re talking about their bosses, those who rake in high five- and six-figure salaries annually. We’re talking about many bonuses in the neighborhood of $30,000 and $40,000. The irony shouldn’t be lost on anyone that the person eligible for the lowest bonus — less than $200 — is a teacher.

The staff members receive regular compliments from the board about how wonderful they are, how hard they work, how dedicated they are to retirees, actives and the system.

The employees should sue. Let’s see how dedicated they really are. Do they work for a more-than-decent paycheck and the satisfaction of being STRS employees, or are they in it for every dollar they can grab in bonuses, even if they haven't done much to earn them?

Let’s not be too surprised if greed is the answer. We’re living in an era of corporate greed — Enron, Martha Stewart, Tyco and others. It’s a long list.

There was a time when people were satisfied with having a job. There was a time when people took pride in their work. There was a time when “nice job” was a sufficient bonus. Not anymore.

The employees should sue.

They need to do so soon, before tort reform kicks in and limits the amount they can recover. It’s hard to see how employees could collect punitive damages. There was no purposeful intent to harm them. They’ll ask for damages any way — attorney fees, too. They’re entitled.

Here’s what employees ought to do. If they really are dedicated to STRS and not driven by greed, prove it. Do they want the system to escape the scandalous morass of the last year and move forward? Stipulate in their lawsuit that if they win or settle, all the money received — the bonuses, attorney fees and punitive damages — goes into the STRS Health Stabilization Fund for retirees. If employees want to show they deserve the bonuses, then the money shouldn’t matter. Why punish the employer they supposedly love just to prove a point? Or is it really about greed?

Employees should sue so we can find out.

I got a big bonus at the board’s meeting last week for doing my job. Several retirees, whom I’d never met before but who had been reading my stories about STRS, shook my hand.

“Thank you,” they said.

Molly Janczyk: conversation with Bob Stein on 9/18 PBI vote

From Molly Janczyk, September 23, 2009
Subject: Bob Stein: PBI Vote

Bob Stein called today. He still has his website just FYI which may in the future have points of interest. www.bobstein.us

Per our conversation: My impression of why he voted as he did.

Bob felt paying the PBIs as stated in the minutes was saving retirees money in the long run. A court action was likely if not paid which would have cost STRS much more than paying the past PBIs.

He felt his vote saved the system more money and allowed looking to the future for areas of improvement for membership. He knew he could have voted NO and looked good to the retirees because his vote did not change the outcome. But, he would not have voted what he felt was correct resulting in what he believes to be overall cost saving for retiree best interests.

I am merely sharing the bottom line of our talk as I understand what he told me.

I am not offering opinion.

Bob Stein bobstein@bobstein.us

If you wish to comment

STRS: Mission and Vision

http://www.strsoh.org/about/6.html

Mission and Vision

The mission of STRS Ohio is: To partner with STRS Ohio members in providing financial performance and member service that assures financial security for current and future retirees.

The vision of STRS Ohio is: To be a premier retirement system as evidenced by:

Comprehensive member benefits: Providing retirement planning, benefits and health care coverage to enhance the quality of life for members, and

Quality service: Striving to exceed the service expectations of members, employers and associates,

through

Fiduciary responsibility: Safeguarding members’ financial retirement security using ethical and professional business practices, and

Financial performance: Improving funding through prudent investments and resource management,

by

Empowerment of associates: Enabling associates to act through the delegation of authority and the acceptance of accountability, and

Organizational renewal: Enhancing STRS Ohio’s future by continually acquiring, sharing and implementing new knowledge.

Guiding Principles

To achieve our mission and vision, we will:

1. Make decisions that produce the greatest possible net benefit for members.
2. Be proactive rather than reactive by anticipating and dealing with change and growth.
3. Attract, develop and retain a highly competent and motivated workforce.
4. Build an organizational culture that inspires a high level of professionalism and performance — distinguishing STRS Ohio as a workplace now and in the future.
5. Provide an open environment for associates to generate new methods or practices to achieve our vision.
6. Provide associates with authority commensurate with their responsibilities for efficiency in decision-making and leadership development.
7. Continually improve through research, development and evaluation.

~ROTFL~

Some people probably haven't read this one yet.....

From John Curry, September 22, 2009

From STRS:

News Items & Reports

Originally posted June 23, 2009

Correction to June Board News

http://www.strsoh.org/past_news/09_June_Board_News-1.html

The June Board News contains an article titled “Health Care Program Changes Approved for 2010.” There is a typographical error in the story. The maximum annual out-of-pocket costs for the Aetna Medicare Advantage Plan will be $1,500 per individual versus the $500 stated in the article. This $1,500 includes all copayments, the $500 deductible and coinsurance. We apologize for any confusion this may have caused and regret this error.

Lloyd Knudsen (after the dust has settled): Winners and Losers

From Lloyd Knudsen, September 21, 2009
Subject: STRS Winners and Losers
CORE leaders,

Now that the dust has settled on the STRS Board's decision to "overpay" our investment staff and their ORSC recommendations, let's examine the Winners and Losers in all this.

The Winners, it's the same old, same old. The BIGGEST, BIGGEST winner is the STRS management and staff itself. They cut little or nothing from their magical kingdom. In fact, I would not be surprised if within a year or two of our most recent "catastrophic investment losses", STRS wage freezes, employee head count freezes, longer work week, no PBI's for investment losses, etc., etc., etc. will be a thing of the past. The good times will most surely return for the STRS management and staff. I think our OEA-backed Board will make sure of it.

The second BIGGEST winner is the OEA. They saved some face with their membership by preserving for their 30 year plus teachers the sacred "35-year/88%" golden parachute until 2015. However, they sold out their younger actives to achieve it. Attempting to quell the anger from younger active teachers, OEA leader Bill L. has the nerve to say OEA did not support STRS's recommendations. OEA was not only actively involved in helping craft the ORSC package but his OEA-majority Board insured its passage. I don't think actives are going to buy Bill's attempt at the "innocent bystander" defense. If I were an active today, OEA would have received its last dollar from me.

Mr. Brooks suggested that IF "time was of the essence" in STRS's financial crisis that perhaps the changes for actives should not wait until 2015. That plea fell on deaf ears. My pessimistic side believes that the STRS staffs' "gift" of the 2015 implementation date coincides conveniently with the OEA-backed Board's lack of demanding STRS staff cuts and approving PBI payments. Just my opinion.

And now for the losers. The BIGGEST, BIGGEST loser is any active teacher who can't retire before 2015. They are going to have to teach longer, pay in more and get less for their service than their "grandfathered" brethen. Unlike retirees, their problem is not that they "lived too long", their problem is they started teaching too late!

The second BIGGEST loser is the already retired teacher who loses 1% of his annual COLA and the accumulated earnings that represents. Our STRS Board in their wisdom didn't "grandfather" retirees did they? Also, the STRS Board made no financial safety provision for the older retiree or the retiree with the least income. That truly is a slap in the face to the teachers who helped build our STRS system.

Lloyd Knudsen

June Hughes: Suggestions of How Bonuses Could be Given

From June Hughes, September 21, 2009

Subject: Suggestions of How Bonuses Could be Given

............They are designed to reward employees for fulfilling their responsibilities and for delivering superior results........

Range of bonus payouts

Annual incentive bonuses are meant to be motivational. They are designed to reward employees for fulfilling their responsibilities and for delivering superior results. Bonus targets and their associated payouts reflect a range of expected levels of performance. Just think of a star baseball pitcher who has an incentive clause in his contract based on the number of games he wins. For winning 15 games, he will get $1 million; for 20 games he will get $3 million; and for 23 games he will get $7 million. This is what an annual incentive bonus plan looks like. As a bonus plan participant, you are that star athlete who is rewarded for performing at a level appropriate to your ability. You are also rewarded for having a great year. If the goals given to you are unrealistic, you and your boss can be in for disappointment and trouble. Annual incentive programs are built around the expectations that the company has of itself and of you. Bonus plan participants can expect to achieve minimum acceptable performance (i.e., for their boss to remain happy with it) and receive a bonus payment 90 percent of the time and achieve target level of performance or better at least 60 percent of the time.

Expected performance level Level of difficulty Likelihood of achievement Payout as a percentage of target opportunity Minimum (acceptable) 80% of target 90% 50% Target -- 60% 100% Maximum 120% of target 15% 200%

Source: Salary.com.

Suppose that your target bonus is 20 percent of a base salary of $100,000 and you performed at the maximum performance level. That means you would earn 200 percent of that 20 percent bonus, or 40 percent. This would result in a $40,000 check ($100,000 x 20%(your target bonus) X 200% (payout level)). In most industries, the target bonus percentages are similar, and depend on salary. Exceptions include the high-technology and investment banking industries. In nonprofit organizations and healthcare, bonuses remain rare.

Typical bonus levels as a percentage of salary (Click image to enlarge.)

*Bonuses for this range are not typical, and if rewarded, are usually discretionary.
- Dwight Ueda, Salary.com Contributor

September Board News

From STRS, September 21, 2009
Subject: [News] September 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 September report follows.

SEPTEMBER BOARD NEWS

OHIO'S FIVE PENSION SYSTEMS PRESENT THEIR PLANS TO THE ORSC

On Sept. 9, all five Ohio public pension systems - STRS Ohio, Ohio Public Employees Retirement System, School Employees Retirement System, Ohio Police & Fire Pension Fund and the Highway Patrol Retirement System - presented their plans for achieving or maintaining a 30-year funding period to the Ohio Retirement Study Council (ORSC). This council serves as the legislative oversight body for the five systems.

At the beginning of the ORSC meeting, Rep. Todd Book (D-Portsmouth), who is chair of the council, noted that it was clear that none of the systems would be able to "invest" their way out of future funding challenges. The systems' plans call for changes in contributions and/or pension plan design to strengthen their funds. This month's Legislative News, developed by STRS Ohio's Governmental Relations Department, includes a chart detailing the major components of each system's plan. (The newsletter can be accessed via STRS Ohio's Web site (http://www.strsoh.org/quicklinks/legislative.html); a paper copy can be obtained by calling 614-227-2913.)

Because of the differences in each system's funding situation, demographics and current plan design, there was wide divergence among the five proposed plans. Several council members expressed their distaste for proposed increases in employer contributions, citing the burden this puts on taxpayers. This sentiment was echoed in a major daily newspaper editorial that morning. This same editorial called for the public sector to move to defined contribution plans and away from defined benefit plans.

In the coming weeks, ORSC staff will be working with the systems to assess the five reports. It is anticipated that eventually legislation will be drafted and introduced; then the normal legislative process will begin. Almost all the changes proposed by the systems require legislative action by the Ohio General Assembly and the governor before they can be implemented. ORSC is scheduled to meet on Oct. 14, where additional details of the next steps are expected to be presented.

RETIREMENT BOARD DEFERS PAYMENT OF PBI PAYMENTS

Earlier this year, in January 2009, the Retirement Board voted to suspend the Performance-Based Incentive (PBI) Program for eligible Investment Department associates as of Feb. 1, 2009. With that suspension, it was noted that any earned PBIs for that fiscal year would be limited to 7/12 of the performance results for July 1, 2008-Jan. 31, 2009. PBI payments are calculated on the performance of various portfolios and asset classes against their respective benchmarks for multiple-year periods, total fund performance and absolute return. While the value of STRS Ohio's investment fund has dropped significantly during the recession, the net value added from active management over the total fund benchmark return for the time period of July 1, 2004, through June 30, 2009, was more than $1 billion. This means that investment assets were higher at June 30, 2009, by $1 billion than if STRS Ohio had invested only in index funds. This number takes into account all direct investment costs , including earned PBIs, during that period. The benchmark annualized rate of return over the five-year period was 2.30%; the return on STRS Ohio's total investment fund was 2.69%.

At its September meeting, the board voted to not pay the earned $3.39 million in PBIs for fiscal year 2009 in fiscal 2010, but instead, defer their payment as well as spread the payment over future fiscal years. One-half of the payment, or about $1.7 million, will be paid only when: (1) STRS Ohio investment assets total $60 billion or higher at the fiscal year-end; and (2) the total investment fund has a positive return. This latter provision is in keeping with an earlier board action that stated no PBIs would be paid in the future (beginning July 1, 2009) when the total investment fund has a negative return - regardless of the performance of individual investment associates against their respective benchmarks. The first payment of $1.7 million cannot be made before July 1, 2010.

The remaining $1.7 million in PBIs can only be paid when: (1) STRS Ohio investment assets total $65 billion or more at the fiscal year-end; and (2) the total fund has a positive return. This second payment cannot be made until at least July 1, 2011.

As of Aug. 31, 2009, STRS Ohio's total investment fund has a preliminary market value of $56.8 billion.

In related action, the board approved a compensation study for investment associates. Currently, total compensation - base pay plus maximum PBI - for most STRS Ohio Investment Department associates is targeted at the bottom 25th percentile of total compensation levels in the private market. STRS Ohio benefits from the lower cost of internal management by STRS Ohio associates compared to paying fees to external money managers. The savings from internal management totaled more than $100 million in calendar year 2007 alone. The compensation study will include public and private sector data and will include a recommendation for the mix and amount of base pay versus variable pay for all professional Investment Department positions. The study will be completed in November.

RETIREMENTS APPROVED

The Retirement Board approved 502 active members and 141 inactive members for service retirement benefits.

ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR MICHAEL J. NEHF

IMPLEMENTATION OF 2010 HEALTH CARE PROGRAM UNDER WAY STRS

Ohio staff members continue to work collaboratively among all departments to prepare for the 2010 health care program. Open-enrollment packets are scheduled to begin mailing on Oct. 23. Targeted postcards are being mailed this month to enrollees, advising them of the "Health Care Program Highlights Meetings" being held in their area. These meetings are scheduled to begin Oct. 19 and will run through Nov. 13. The meetings will be tailored to the differing needs of enrollees; Medicare and non-Medicare enrollees will attend different meetings. Additional information about the meetings, as well as registration information, can be found on the STRS Ohio Web site (http://www.strsoh.org/resources/2k.html), or by calling toll-free 1-888-227-7877. Advance registration is required.

BENEFIT COUNSELORS RETURN TO THE ROAD STRS

Ohio benefit counselors are on the road for fall counseling. The fall season includes 28 locations around the state. Scheduling for the available appointments began in July with nearly 1,000 members setting appointments at one of the first seven locations. Internet scheduling is still popular, with half of the appointments scheduled through the STRS Ohio Web site. Counselors will meet with more than 4,000 members at various locations in Ohio during the next three months.

Rich DeColibus challenges STRS Board to poll the membership re: the PBI program

From Rich DeColibus, September 21, 2009
Subject: A Challenge

Dear Board Members,

Well, you just had a highly controversial vote on the PBI program. I, and a lot of other activists, believe you have made a huge loss-of-confidence and financial error in continuing a program destined for the dustbin of history, for the simple reason it now fails any reasonable test of rationality (and, for STRS, probably always did). Y'all believe you're acting in the best behalf of us doddering old fools, despite our stubborn refusal to acknowledge your superior wisdom.

But, it's our money, not yours. You're only supposed to be the fund administrators, charged with preservation of capital; you are not supposed to be the Royal Court of France, totally unresponsive and totally uninterested in the hoi polloi. If we activists are a small, insignificant group of whiners, why don't you find out? It's as simple as it can be. You poll the membership (active and retired) to see what EVERYBODY thinks of your PBI program. Then, you'll know for sure if we're just a tiny group of malcontents, or whether y'all are so far out of touch with the majority of contributors you should resign in shame. And, make it a real referendum; opposing views presented equally for all to see.

Don't want to spend a million for a real vote? Excuse me. You just threw away three million on an investment incentive program whose major outcome is to encourage investment counselors to take excessive risks with our money to maximize their performance bonuses. One does not whimsically conduct referendums; they should be reserved for very important issues. But, if there is one supremely controversial program STRS runs, it is surely the PBI. If you do not know what the majority of your members think about it, and you don't care to know because you are so much wiser than the rest of us, then you don't have to do a thing. If you're serious about representing the STRS membership, then make an effort to find out what the people you are supposed to represent think about what you propose. If, GASP!, our current FINANCIAL CRISIS just COULDN'T allow STRS to SQUANDER funds for a referendum vote, tell you what, just wait until the next STRS election and include it in the ballot envelope. I'm willing to bet the furor the PBI program creates will be even more controversial by then.

Rich DeColibus
[Former president, Cleveland Teachers Union]

RH Jones and Linda Meinelt re: Covering STRS employees under STRS retirement

From RH Jones, September 21, 2009
Subject: An ORC crafted to change STRS employee retirement

Linda & my OH Rep. Brian Williams:

I cannot speak for CORE, but as I recall, we have been trying for years to get the legislature to pass an OH Revised Code (ORC) that would switch the OH STRS employees' retirement to our STRS. The problem is: the legislators get their retirement checks from the OPERS; so, they are not about to send the lucrative STRS employee/employer retirement contributions back to the STRS. We can only hope that the Honorable OH Legislators would be statespersons -- who would be unselfish enough to craft a ORC -- and subsequently pass it into law. Can this happen? I doubt it.

Note: in the past, as far as I know, the ORTA, nor OEA-R has never aggressively tried to get our legislators to craft such a law.

As a retired teacher & a long time monitor of my OH STRS, respectfully,

RHJones

From Linda Meinelt, September 20, 2009
Subject: Re: Decision to pay bonuses a bad one

I wish there were a way to have STRS employees covered by STRS for their retirement-- then, they would really be concerned about their futures. Right now, they have the best of both worlds -- OPERS for retirement and STRS benefits..

Linda

Minutes of CORE meeting September 17, 2009

CORE MINUTES ~ 9/17/09

The CORE meeting came to order @ 11:45 am during the STRS board meeting lunch break. 16 were in attendance.

Old Business:

• No minutes to be read from the August meeting.

• Treasurer (Herm Fisher) reported a total of $1338 collected to date for Dennis Leone’s parting gift. Contributions continue to come in along with membership checks. The CORE treasury total was reported.

• Donna Seaman made a motion to send a card and CORE check by registered mail to Dr. Leone. Motion was 2nd by Mary Ellen Angeletti. Motion passed unanimously. Dave Parshall will take care of this action with a check presented by the treasurer.

• No need for election of officers and trustees at this time.

New Business:

• Dave reported on the ORSC meeting which both he and Kathie Bracy attended. Though the fashion trend was black and the seating was most uncomfortable, Dave gave Michael Nehf kudos for a strong presentation compared to those of the other 4 pension funds. STRS has formulated a detailed and complete plan.

• Dave suggested that CORE’s next step should be formulating the “Talking Points” for the collaborative plan and resulting legislation to be developed by ORSC. Discussion followed Dave’s suggestion with several comments encouraging clear “Language” in describing our pension plan relative to 401K plans of the general public. We will need to carefully educate our legislators and community as well as our active and retired teachers.

• Jill Fetters offered a motion to form a committee to develop these “Talking Points / Position Paper” to be used by members in work with local legislators, in the writing to newspapers, and in conversations with active and retired teachers. Motion was 2nd by Mary Ellen and passed unanimously.

• Dave agreed to serve as advisor of this committee. Lou DiOrio and Carol DePaulo agreed to edit along the way. Other writing committee volunteers (so far) include Jill Fetters, Kathie Bracy, Mary Ellen Angeletti, and George Justice. Dave will invite additional CORE members to join in this process.

• The next ORSC meeting is scheduled for October 14th and legislation will hopefully be introduced before the year ends. This time frame gives CORE time to work on this position paper as a committee.

• Dave adjourned the meeting @ 12:30 to return to the afternoon Board session.

Respectfully submitted by Jill Fetters
(for Marie Fetters, who was unable to attend)

Tom Curtis to Aristotle Hutras re: Lack of response from Mike Nehf

From Tom Curtis, September 20, 2009
Subject: 092009 Request For STRS Employee Cutbacks

Mr. Hutras,

As a retiree stakeholder of the STRS, I am angered that Mr. Nehf has repeatedly failed to respond to my request for information concerning employee cutbacks at the STRS. This is unacceptable and rude on his part. We have a right to know just what the staff that supposedly represents us, is doing to share in the burden of reducing costs. Freezing salaries and not hiring any new staff means little to us. We want to see the staff share in the same burden that has been forced on the retirees backs since 2004.

I have written Mr. Nehf on 4 different dates, about 1 week apart and have received absolutely no response from him.

Since you are the head of the ORSC, the only oversight for the five pension systems in Ohio, I am asking you to kindly contact Mr. Nehf and ask him to make his cutbacks known to the stakeholders by responding to my email request.

The STRS has lost in excess of $42 billion dollars in this decade, but continues business as usual, as would be indicated by the vote to award $3 million in bonuses to the investment staff on 19th of this month. The spending of our funds is becoming absurd, to say the very least.

Sincerely,
Thomas Curtis

An STRS FLASHBACK DOUBLEHEADER - 5 years ago

From John Curry, September 20, 2009

The recent STRS board bonus vote, proceeded yet again by a lengthy "executive session," brings to mind what happened once before in the history of the STRS concerning "another" bonus issue. The following two articles were authored by (former Copley Columbus Bureau chief) Paul Kostyu back in May of 2004. Many who will read these moments in STRS history will be doing so for the first time as we now have many more actives and retirees who have suddenly become interested in the current and past actions of "our" retirement system.

John