Thursday, April 15, 2010

Ralph Roshong's speech to STRS, April 15, 2010

TO: STRS Board Members
XC: State Legislators
FROM: Ralph Roshong
RE: General Comments
I am a 1991 retiree into the STRS having retired with 30 years of service. I would like to provide the following comments for you to consider as you conduct our STRS business:
1. I have grave concerns for the strategic long term well being of our pension fund. I have expressed these before, But I will express them again:
a. Every public pension fund in the country is either bankrupt or on the brink of it. I do feel that our system is better off than most, but needs immediate and serious adjustments. These funds all have been guilty of giving away the funds too quickly rather than being prudent stewards. It is always easy giving the money away in good times, but almost impossible to get it back when the fund absorbs large losses. We have an ethic of just thinking someone else will replenish the fund.
b. I still remain confused in the investment fund?s long range planning using a goal of 8% avg. growth/yr when the past 10 years reflect only approximately an average of 6% growth/yr.
c. When the Board, back in 1999, instituted the 35 year/88.5% retirement benefit, where was ORSC, supposedly the fund?s oversight for us(STRS) and supposedly, the Legislature? Implementing that benefit while having a temporary large balance, was similar to a teenager being given a couple dollars. They cannot wait to get to a store fast enough and spend it. This displayed the Board?s ABSOLUTE LACK OF STRATEGIC PLANNING AND RESPONSIBILITY.
2. As I have commented before, I support a bonus program for our investment staff. However, I am not in favor of our current program. There is too much differentiation in the bonus percentages which are then added on top of an already highly differentiated base salary schedule. The extreme differentiation of the salary schedule is to reflect responsibility. A flat bonus percentage across the salaries would differentiate the bonuses and no need to be differentiated a second time. It is difficult to swallow your goal of an anticipated 8% gain in our investments and then our investment personnel are scheduled to receive up to 90% bonuses applied to their base salaries. Our country, and rightly so, is overwhelmingly unhappy with exorbitant and inappropriate bonuses, exemplified by Wall Street greed, which has been characterized as ´poker players playing a $100,000 card game every day and if they win, they keep the pot, but if they lose, the government (taxpayers) pays the bill¡. The process of granting bonuses and paying them ´later¡ after other parameters occur, is ´absurd¡. If they are earned it, pay it, if not, don?t pay it now or later.
3. I feel the legislature should seriously consider allowing the pension systems provide the benefit of health savings accounts(HSA) for their retirees. I would encourage STRS to pursue this plan.
4. Again I ask you to consider holding all or a portion of your scheduled executive sessions at the start of the meeting in the morning rather than an elongated lunch hour during which your guests have to sit for 2-2.5 hours with no Board business to witness. I believe this was a topic at your recent work meeting, but have not heard of any decisions or thoughts. I do appreciate your discussing it.
5. I request the amount of square footage of the STRS building again. We appear to have a lot of space that could be utilized for potential income by making office space available to rent to other groups. (other groups could conceivably be other pensions systems, ORSC, or small governmental type groups). The market may not be great for this now, but we should explore the potential. I first made this request, I believe, last October or November. I have received nothing other than a comment that it is being considered. Six or seven months deserves a little more than that, I would think.
Thank you again for listening to my concerns and we retirees are very appreciative of your efforts in directing our STRS pension system.
Larry KehresMount Union Collge
Division III
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