Friday, July 23, 2010

Another Beacon Letter to the Editor on OH newspapers' attack on STRS

From RH Jones, July 23, 2010
To all:
Newspapers have foolishly attacked educators are hurting we educators who buy their publications. See and read the editorial below .
RHJones, retired Akron teacher
Series on pensions did a hatchet job
I did not read every word of the series on double dipping. Nor did I read the entire June 22 editorial on the subject. However, the front-page graphic clearly forecast a hatchet job on some group or individual.
Are we to be shocked that a school superintendent might be the highest paid employee in the district or that, upon retirement, he or she might still be in demand since the state's more than 600 public school districts exceed the number of younger, certified, qualified and willing candidates?
Unlike many organizations, school districts cannot continue business as usual with the office staff, a board member or the PTA president serving as the chief officer. In time, we might consolidate our schools into 88 county districts, or find a new way to increase the number of superintendents. Currently, we are using the typically American method of enticement by compensation — a practice not unique to schools.
If the prime concern is earned income on top of pension, where does one stop? No public employees work after retirement? Do you stop with public employees?
Unable to participate in Social Security, public workers have had to craft their own system. You used big numbers to show the dollars going into the State Teachers Retirement System, but that's under $10,000 per worker. Like Social Security, payments come from employees and employer, roughly one-half from each.
Unlike Social Security, consider teachers have contributed 20 percent to 25 percent of their salaries toward the pension fund over the length of their careers, making up for the loss of Social Security benefits. Instead of criticism, maybe public systems should be models for a federal plan.
Hopefully, the series was not written to imply that public employees should be reined in at the first sign that they (and the services that they provide) might be costing us. In that case, we would attack the hands that serve. Reporter David Knox admits that many superintendents manage ''multimillion-dollar enterprises — dwarfing most private businesses.'' I would be most uncomfortable turning that responsibility over to the lowest bidder.
Gene Ewald
Cuyahoga Falls

Wednesday, July 21, 2010

STRS FLASHBACK - 7 Years Ago - Hey, Lynn, the bonuses were stopped but investment staff didn't 'leave in mass,' did they?

From John Curry, July 16, 2010
And besides that...........where else could one work and get fired for malfeasance or non feasance AND GET A YEAR'S SALARY?
But if the teachers pension fund fires Mitchell for malfeasance or nonfeasance, either wrongdoing or not doing his job, it must pay him a year’s salary at his base pay at the time.
[Click image to enlarge.]
Sen. Lynn R. Wachtmann, R-Napoleon and chairman of the study council, said he wants to see the incentive program for the investment staff return in some form “sooner rather than later” because he doesn’t want “the investment staff to leave in mass.”
Canton Repository, July 17, 2003
Bonuses adding up for man who steers STRS investments
By PAUL E. KOSTYU Copley Columbus Bureau chief
COLUMBUS — The man who oversees the investment portfolio of the State Teachers Retirement System has a contract that gives him three opportunities each year to increase his total compensation.
Most recently, those three chances brought his total pay up to nearly $285,000.
Stephen A. Mitchell, deputy executive director of investments, is one of two STRS employees who have a contract with the teachers pension fund board. The other is Executive Director Herbert Dyer.
Like Dyer’s contract, Mitchell’s covers multiple years and has a bonus based in part on the bonuses his staff gets.
It also has a buyout clause that pays Mitchell’s even if he’s fired for wrongdoing.
Mitchell’s contract covers Jan. 1, 2001, to March 31, 2005. His initial base salary was $215,000. But he got a $7,525 raise six months later because he gets a raise each July equal to 3.5 percent or the change in the Consumer Price Index, whichever is greater. The index has not been higher than 3.5 percent since 1991.
Mitchell’s base salary is now $238,376.
But he gets more.
• At the end of each calendar year, he is eligible for a performance bonus of 20 percent of his base pay. He got $46,063 this past March for his work in 2002.
Mitchell gets that 20 percent bonus if more than half the staff that reports “to or through” him qualify for bonuses, according to his contract.
In other words, if enough of his own staff get bonuses, he gets one, too. In the past three years, all his staff got bonuses except one employee last year, according to pension board records.
• Mitchell’s annual pay also can get a boost of up to $50,000 a year at the “sole discretion” of Dyer. That money comes through a reward and retention program to keep its investment staff in place. The pay is based on how well staff manage the pension fund’s portfolio.
• The state teachers fund also pays both the employer and employee share of Mitchell’s contributions to the Public Employees Retirement System, and makes contributions to the Ohio Deferred Compensation Fund on Mitchell’s behalf. Together, the contributions are capped at $18,307 each year.
• To end his contract, Mitchell must provide the teachers system with a three-month notice. If he doesn’t, he owes the system $100,000.
But if the teachers pension fund fires Mitchell for malfeasance or nonfeasance, either wrongdoing or not doing his job, it must pay him a year’s salary at his base pay at the time.
That’s cheap compared to the cost of getting rid of him for any other reason. Absent malfeasance or nonfeasance, it must pay him the remainder of his contract as long as Mitchell remains available as a consultant, lives within 35 miles of the Columbus headquarters and does not get another job that pays him more than $100,000.
Teacher’s retirement system officials have said the bonus program for the investment staff meets industry standards and is necessary to keep qualified and trained money managers at the pension fund. The fund handles most of its $47.2 billion portfolio in-house.
Deborah Scott, chairwoman of the STRS board, recently told the Ohio Retirement Study Council, that the bonus program follows recommendations by consultants hired by the board. That program has been suspended pending review by the board. But the suspension does not affect Mitchell because of his contract.
Sen. Lynn R. Wachtmann, R-Napoleon and chairman of the study council, said he wants to see the incentive program for the investment staff return in some form “sooner rather than later” because he doesn’t want “the investment staff to leave in mass.”

STRS makes the WSJ!

From John Curry, July 21, 2010
[View article here.]
Pension Funds Hope to Lead BP Suit
Wall Street Journal, July 21, 2010
Public pension funds in New York and Ohio have said they hope to be the lead plaintiffs in what could be a class-action lawsuit against BP PLC, whose share price has plummeted because of its months-long oil spill in the Gulf of Mexico.
Click image to enlarge.
The funds allege that BP, the oil giant in which they had invested, made "false and misleading statements" about its safety protocols and record, as well as its ability to respond to a major oil spill—causing its stock to trade at "artificially inflated prices," according to a news release.
Public pension funds in New York and Ohio have said they hope to be the lead plaintiffs in what could be a class-action lawsuit against BP. Journal Community More U.S. Drills Into BP as Drama Drags On BP Sells Assets | BP Says Photo Altered BP's live feeds | Complete Coverage Financial Impact Weighs on BP The funds filed documents Tuesday in U.S. District Court in the Western District of Louisiana requesting that two cases with similar issues and any other similar actions be consolidated.
A spokesman for BP said the company doesn't comment on lawsuits.
When the Deepwater Horizon rig exploded in the Gulf of Mexico in April and a massive oil leak ensued, BP's stock dropped sharply. Its American depositary shares are down about 40% over the past three months. The company has only recently been able to stanch the flow of oil into the Gulf.
The group of funds, which invest more than a combined $275 billion, say BP "misled investors with false and misleading statements about the safety of its drilling operations and its ability to fix events like the oil spill," said New York State Comptroller Thomas DiNapoli.
The funds say they have lost more than $200 million from their transactions in BP between June 30, 2005, and June 1, 2010.
The New York State Common Retirement Fund, one of the funds that is part of Wednesday's announcement, had announced plans to sue the company in June. The Ohio funds consist of the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, the School Employees Retirement System of Ohio and the Ohio Police & Fire Pension Fund.
In afternoon trading Wednesday on the New York Stock Exchange, BP's American depositary shares were up 2.6% to $36.10.
Write to Nathan Becker at

Some of you have asked about ORSC member Lynn Wachtmann and if he is pro public servant.........

Wellllll........let's see what he had to say about public servants:
From John Curry, July 21, 2010
Click images to enlarge.
Rep. Lynn Wachtmann, a Napoleon Republican who also sits on the Ohio Retirement Study Council, dismissed as outdated the argument that government employees deserve better retirement packages than their private-sector peers because they receive less pay. "The taxpayers of Ohio, who are footing the bill for all of this in the end, need to realize how generous the public-pension systems - all of them - are compared to private-sector retirement plans," he said. "Most of our private-sector employers would go bankrupt if they had to pay the kind of money into employee retirements that our public-sector employers do."
Mr. Wachtmann is one of nine voting members of the council, which includes three state senators, three representatives, and three governor appointees. It considers changes to the five public pension systems and makes recommendations to the legislature.
Does that answer your question? : ) John
Article published January 3, 2010
Government cutbacks spare public pensions
Ohio trend signals rising taxpayer burden
First of two parts
COLUMBUS - At a time when budget cuts are forcing Ohio schools to lay off teachers and cities to raise taxes, eliminate jobs, or both, one expense government leaders have not cut is pensions for their workers.
The pension cost to local governments in Ohio now stands at $4.1 billion a year. If current trends continue, the pension costs will grow by a range of $604 million to $768 million during the next five years, according to a Columbus Dispatch computer analysis done as part of a project by the Ohio News Organization, a cooperative of the state's eight largest newspapers including The Blade. The cost of pensions is directly related to the size of government payrolls.

On top of that, two of the five public pension systems are asking taxpayers to dig deeper to cover shortfalls, potentially adding $400 million more to the tally by 2020. All told, the taxpayer tab easily could top $5 billion a year by the middle of the next decade.
Those tax dollars will help ensure that retired teachers, local police officers and firefighters, state workers, and other government employees receive retirement benefits that many workers in the private sector can only envy - although direct comparisons are difficult.
Retirement incomes for the most experienced government
employees top out at 88 percent of their active-duty pay. Unlike most private-sector workers, whose retirement is driven by the strength of the stock market and their 401(k) plans, government employees are guaranteed to receive pensions.
Chart: Ohio's pension system
In addition to higher average retirement incomes, government retirees in Ohio also get government-sponsored health care, can retire as young as 48 for police and firefighters, and have the opportunity to "retire" and collect a full pension while going back to work, often at full pay for doing the same job. Such "double-dippers" were paid more than $741 million by the State Teachers Retirement System last year and $240 million by the Public Employees Retirement System, records show.
In Toledo, the mayor is a double-dipper.
Since starting his current term in January, 2006, Carty Finkbeiner has drawn his annual salary of $136,000 in addition to a state pension, for more than two decades in elected and unelected positions. He leaves office tomorrow.
And because he is already receiving a Public Employees Retirement System pension, Toledo taxpayers have paid $75,221 into a state pension annuity as an additional retirement fund for Mr. Finkbeiner.
Some are questioning whether local governments' budgets can handle higher pension premiums given that libraries, school districts, and cities are receiving less tax revenue.
Lucas County government units and school districts spent $168 million in 2008 to satisfy pension obligations. That's an increase of 15 percent from four years ago, when pension costs were $145.2 million.
Increases in pension costs will mean cuts elsewhere, warned John Mahoney, executive director of the Ohio Municipal League, which represents cities. "I can't pay that and still employ 1,700 police officers," he said. "The money's just not there."
A historic shift
For decades, nearly all government workers have been in traditional pension plans that pay fixed amounts at retirement - usually calculated as a percentage of their highest annual salaries multiplied by years of service.
At the same time, private employers have moved dramatically away from such defined-benefit plans. In 1974, 71 percent of private retirement-plan assets were in defined-benefit plans. By 2008, that number had decreased to 24 percent, according to the nonpartisan Employee Benefit Research Institute, although some private employers still offer a combination of defined-benefit and 401(k)-type plans.
Despite that historic shift in the private sector, many government leaders say public pensions are all but untouchable. "The goal should be to continue the defined-benefit plan," said state Rep. Todd Book, a Portsmouth Democrat who is chairman of the Ohio Retirement Study Council. "It's good for the employees of the state. It's also good for the economy of the state. You have retirees pouring billions of dollars into the economy."
But with pension plan investments faltering in a rough economy and costs increasing because Ohio's pension funds also pay for retirees' health care - a benefit not mandated by state law - taxpayers may have to pour millions more into the retirement systems just to keep them afloat.
The State Teachers Retirement System and the Ohio Police & Fire Pension Fund are in violation of state law requiring them to have enough money to cover their pension obligations for 30 years. Thus, they are asking school districts, cities, counties, and other local units of government to contribute more toward employee retirements. And they are asking more of the employees.
Under the proposed changes, an amount equal to 29 percent of teacher salaries - 16.5 percent from school districts and 12.5 percent from teachers - would go toward pensions. An amount equal to 37 percent of police and fire employee salaries - 25 percent from municipalities and 12 percent from employees - would be earmarked for retirement income.
A source of friction
The increase doesn't sit well with some private-sector retirees whose plans have all but vanished.
"I think it's ridiculous," said Larry Rausch, 71, of Lancaster, Ohio, who retired from Sears in 1998 before the owner of Kmart purchased the retailer and slashed retirement benefits. "I don't know how they can expect guys like me to pay their retirement." ABOUT THIS PROJECT This project is the work of the Ohio News Organization, a cooperative formed in 2008 by the state's eight largest newspapers:
The Blade, the (Cleveland) Plain Dealer, the Cincinnati Enquirer, the Columbus Dispatch, the Dayton Daily News, the Akron Beacon Journal, the Canton Repository, and the (Youngstown) Vindicator.
After reporting locally about extensive cuts in services in their communities, the editors of the newspapers decided to examine the state's pension policies. The objective: to explore the impact of state-mandated pensions and retiree health insurance on local communities and whether potential increases can be absorbed.
Many government retirees say pensions are part of their compact with their employers and, by extension, the public. "We're trying to get away from calling it taxpayer money to calling it deferred compensation," said David Parshall, a retired Southwest Licking Local School District science and math educator who heads a statewide group of retired teachers.
Donna Seaman, who retired in 2002 from a 30-year career as a teacher and elementary principal in Shelby City Schools in Richland County, sees both sides of the issue. School districts are hard-pressed to absorb increases in retirement costs without harming educational quality, yet teachers have come to rely on their pensions, said Ms. Seaman, whose daughter is a teacher.
"I don't expect that they will be able to have the same comfortable retirement that we have now - not that it's that comfortable," she said. "I'm very concerned about the stability of the system."
In some parts of Ohio, cities and schools pick up part or all of their employees' share of retirement costs, increasing the cost to taxpayers.
Columbus, for example, absorbs the full 10 percent city-employee share of retirements - at a cost of $43 million a year to the city. Faced with a budget crunch, Columbus officials are attempting to scale back that benefit.
The same is true in Toledo, where generous city labor contracts over the years shifted millions of dollars of pension payments from city workers to city taxpayers. The projected cost to Toledo taxpayers of the pension "pickup" for city workers will be $13.9 million this year, out of the total $40.2 million in city pension costs in 2010.
Preserving the plan
The requests for more money from local governments by the State Teachers Retirement System and the Ohio Police & Fire Pension Fund are expected to go before state lawmakers early this year. But there's already resistance to sacrificing textbooks, police cars, and staffing levels today for the long-term security of retirees tomorrow.
Rep. Lynn Wachtmann, a Napoleon Republican who also sits on the Ohio Retirement Study Council, dismissed as outdated the argument that government employees deserve better retirement packages than their private-sector peers because they receive less pay. "The taxpayers of Ohio, who are footing the bill for all of this in the end, need to realize how generous the public-pension systems - all of them - are compared to private-sector retirement plans," he said. "Most of our private-sector employers would go bankrupt if they had to pay the kind of money into employee retirements that our public-sector employers do."
Mr. Wachtmann is one of nine voting members of the council, which includes three state senators, three representatives, and three governor appointees. It considers changes to the five public pension systems and makes recommendations to the legislature.
So far, the panel is not discussing the idea of following the private sector into 401(k)-type plans. But Tom Ash, lobbyist for the Buckeye Association of School Administrators, said the idea is being floated informally in some circles. He labels it a nonstarter. "Our goal is going to be to preserve the defined-benefit plan because, as a matter of public policy, we think it makes sense," Mr. Ash said.
'Significant issues'
House Speaker Armond Budish (D., Beachwood) acknowledged that the pension systems have "significant issues" but said the state should strive to protect benefits for retirees.
Few local government officials are chafing at how much they contribute to employee pensions - in part because many of them will receive the same pensions - but they're not thrilled with the prospect of an increase.
Parma Superintendent Sarah Zatik said her school district could ill afford raising payments for retirees. The suburban Cleveland district cut $6.5 million from its $150 million budget and slashed 50 high school teachers after voters rejected four tax-increase requests in a row.
But underscoring the political sensitivity of the issue, Ms. Zatik wouldn't say whether existing retirement costs are too high. If she backs the pension plans, a district spokesman explained, the district would take heat over the costs. If she suggests trimming the plans, she would alienate teachers already facing cuts.
The Municipal League's Mr. Mahoney said his group will fight the proposed increases in pension costs. "They want to take both police and fire up to 25 percent of payroll," he said. "In these times, well, good luck with that."
Organized labor
Politically powerful labor unions representing government workers figure to be influential players in the debate. They reject the idea of a fundamental crisis in the pension funds, saying the funding shortfalls can be remedied with a few tweaks - raising retirement ages, boosting contributions from employers and employees - and by counting on investment markets to rebound.
Ohio pension systems are relying on year-over-year investment growth of 7.5 percent to 8.5 percent. "All classes of investors suffered during the market decline of 2008 - the largest downturn in 70 years," five unions representing the majority of government workers in Ohio said in a joint statement. "The long-term strategy and design of our retirement systems smooths gains and losses over a longer period of time, so [defined-benefit] plans are better able to reduce volatility. The same cannot be said of [defined-contribution] plans."
But the assumption of average 8 percent investment growth - without which the pensions may have to come back and ask for more tax money or slash benefits - seems overly rosy, said Leo Kolivakis, a pension consultant and writer.
AFSCME Ohio Council 8, OCSEA AFSCME Local 11, the Ohio Education Association, the Ohio Federation of Teachers, and Service Employees International Union District 1199 say it would be folly for government employers to follow the lead of private companies into less-secure 401(k)-type retirement plans.
The unions cited statistics from the National Institute on Retirement Security that 357,234 retired government workers in Ohio received a total of $8.41 billion in pension benefits from state and local pension plans in 2006, with most of that sum going back into the state's economy via purchases of medications, cars, and other products and services. "These dollars are vital to fuel Ohio's economic engine," the unions said.
That argument is less persuasive among private employers. In 1996, investments in 401(k)-type defined-contribution plans overtook traditional pensions, and the trend has accelerated since then, according to the Employee Benefit Research Institute.
The consulting firm Watson Wyatt reported in October that the value of retirement benefits as a proportion of income had declined from 7.8 percent in 2002 to 6.9 percent in 2008 among the 183 corporations it surveyed. Much of that decline was attributed to companies switching from guaranteed pensions to defined-contribution plans. In contrast, retirement benefits account for at least 14 percent of payroll for all of Ohio's locally funded public pensions - topping out at 24 percent for firefighters in the Ohio Police & Fire Pension Fund.
The issue of pay
Mr. Book and other defenders of public pensions say that government employees trade lower wages for more generous retirement plans. But that's not necessarily the case. According to U.S. Department of Labor statistics, there is virtually no difference between private-sector and public-sector pay in Ohio.
But there is a difference in the willingness of private employers to take on the risk of having to bail out pension plans if investments go sour or costs rise sharply, said Alan Glickstein, a senior retirement consultant for Watson Wyatt. Still, traditional pension plans generate more bang per investment buck because of the economies of scale of handling billions of dollars in retirement assets for tens of thousands of retirees, Mr. Glickstein said. Traditional pensions can offer the same level of benefits at 30 percent less cost than 401(k)-type plans, he said.
Holding the line
Leaders of all five state pension systems say they're committed to keeping retiree health care and full pension benefits, even if some terms become less generous.
Michael Nehf, head of the State Teachers Retirement System, said keeping pensions for teachers is "extremely important." The alternative is welfare for some retirees.
The other major school pension system is taking a different approach. The School Employees Retirement System, which represents nonteaching employees, is not asking school districts to contribute more toward its employees' retirements, which average $879 a month - far lower than their counterparts in the other state pension systems and below the federal poverty level. Some of the nonteaching employees are part-time.
Forcing school districts to boost their contributions would invariably mean cuts elsewhere, such as eliminating busing, said James Winfree, executive director of the School Employees Retirement System. "We understand the financial stress that school districts are under," he said.
Blade politics writer Tom Troy, Columbus Dispatch reporter Doug Caruso, and (Cleveland) Plain Dealer reporter Patrick O'Donnell contributed to this story. Dispatch Public Affairs Editor Darrel Rowland performed the data analysis.

So, just who are the voting and non-voting members of the Ohio Retirement Study Council?

From John Curry, July 21, 2010
I have included the email addresses of those Representatives and Senators on this commission just in case you would like to drop them a line.
88 E. Broad St., Suite 1175
Columbus, OH 43215
Phone: 614-228-1346 Fax: 614-228-0118
(March 2010)
Voting Members
Todd Book, Chair
Dan Dodd
Lynn Wachtmann
Kirk Schuring, Vice-Chair
Governor’s Appointees
Doug Gillum
Rich Murray
Dale Van Vyven

Non-Voting Members
Chris DeRose, Public
Employees Retirement System
William Estabrook, Ohio Police &
Fire Pension Fund (OP&F)
Mike Nehf, State Teachers
Retirement System (STRS)
Dan Weiss, Highway Patrol
Retirement System (HPRS)
James R. Winfree, School
Employees Retirement System
Aristotle L. Hutras
ORSC Background

Once again AG Cordray fights for pensioners

From John Curry, July 21, 2010

Ohio, NY pension funds seek recovery from BP

By William Hershey | Wednesday, July 21, 2010,

Pension funds in Ohio and New York on Wednesday, July 21, announced that they’re seeking lead plaintiff status in a securities class action lawsuit against BP and the British company’s officers and directors.

In filing in U.S. District Court in Louisiana, attorneys for the states’ funds said that the funds lost from $181 million to $229.4 million from BP investments.

The filing comes with efforts continuing to contain and fix the spill at BP’s well in the Gulf of Mexico.

“Institutional investors and the Ohio funds in particular have been greatly harmed by BP’s alleged misconduct,” Ohio Attorney General Richard Cordray said in a press release.

“By forming a partnership between Ohio and New York, we aim to compensate investors for what we believe was securities fraud and effect real change in the way BP and other companies do business.”

The group seeking seeking lead plaintiff status includes: the Ohio Public Employees Retirement System; the State Teachers Retirement System of Ohio; the School Employees Retirement System of Ohio; the Ohio Police & Fire Pension fund and the New York State Common Retirement Fund.

The combined funds invest more than $275 billion, the press release said.

The funds alleged that BP made materially false and misleading statements about the company’s safety protocols and record as well as the ability to respond to a major oil spill.

BP is working on a response, a spokesperson said.

So now he wants retirees' votes?

From John Curry, July 21, 2010

Josh Mandel is now running for Ohio Treasurer. Do you remember Josh Mandel? I do. This might help refresh your memory with a "flashback" from Kathie's blog from two years ago. Does he deserve your vote after doing to our retirement system, as well as the other Ohio retirement systems, what his divestiture stance did?
Please remember to forget Josh Mandel at election time!
P.S. I know, Kevin Boyce (current Ohio Treasurer) drug his feet a long time before appointing an STRS board member but.....he didn't cost our retirement system millions by kowtowing us into divestiture!
From John Curry, July 3, 2008
Subject: Josh Mandel "taking the high road?" You be the judge!
Retirees, remember the guy who rammed divestment down our throats with the threat of passing a mandatory divestment law (HB 151) that only affected Ohio public retirement systems and not banks, brokerage houses, investment houses, and private individuals? You know...divestment was the right thing to do with our monies but not with anyone else's? Remember how Ohio's 5 pension executive directors cowed (under pressure) to House Speaker Husted and signed onto an agreement of divestiture without the approval of at least one board (the STRS Board) before doing such? Well, apparently the godfather of Ohio's divestment is traveling the globe and some of his backers are taking the "poor mouth" route! Will we be hearing more out of Mandel in the future? I think so...let's hope, if we do, that he only travels the "high road!" John
...from Jill Zimon's blog (Writes Like She Talks)
Josh Mandel faces “tough odds”? Needs $400,000 to win 17th? Who knew.
Posted By Jill Miller Zimon On July 3, 2008
Huge sigh.
First, less than two weeks ago, I came across a local news item in which a clergyperson stated the belief that [1] Ohio State Rep. Josh Mandel (R, Lyndhurst, 17th), had succeeded in passing legislation that would force certain Ohio pension plans to divest from investments in companies with ties to Iran or Sudan.
No such legislation passed, no such law exists. The pensions signed a voluntary agreement and, from what we know, continue to work on plans that would be in compliance with that written agreement. However, no Ohio law was ever passed requiring them to divest.
I contacted Rep. Mandel and I contacted the news outlet. The news outlet issued a correction (it had previously reported on the fact that the bill was getting tabled) and Josh and I had a lengthy conversation about the situation.
(Click here to read entire post.)
Note from John...and now, has Josh Mandel actually invested in those "forbidden companies" that he forced our divestment from? Here's what the Dayton Daily News has to say:

So, how much will STRS get from the class action against AIG and....

From John Curry, July 21, 2010
....who will Rich Cordray target next? Remember, it was a class action suit so others will also benefit from Rich Cordray being the lead in this case.
If you click on the link below and watch this 5 minute clip you'll find out!

Tuesday, July 20, 2010

Healthcare Champions Flashback - 1 year ago - remember the Healthcare Champions? You don't suppose the Healthcare Champions retired, do you?

From John Curry, July 21, 2009
Subject: Some of you have asked about spousal subsidy dropping by OPERS as compared to STRS's trashing of all subsidies for spouses..
Here, in a nutshell, is how OPERS is doing it........of course, OPERS (long ago) found that dedicated stream of revenue that Bill L. and the OEA have long been searching for, haven't they?
The words below were taken from the OPERS website:
"New Eligibility Rule for Spouses Effective 2011
OPERS has an on-going strategy in place (unlike words - John) to preserve our ability to subsidize retiree health care premiums amid rising costs and a rapidly growing retiree population. As part of this strategy, the OPERS Board of Trustees has adopted a modification to our health care plan eligibility rules affecting covered spouses.

Effective Jan. 1, 2011, OPERS will no longer subsidize the monthly health care premium cost for spouses of retirees who are under the age of 55. This change will affect spouses of retirees who are currently retired and those who will retire in the future. Retirees may continue to cover their spouse under the OPERS health care plan, but they will be responsible for the full health care premium. Once their spouse reaches age 55, OPERS will again subsidize their health care coverage premium.

To clarify, below is a detailed list of those spouses who are and are not affected by the new policy:

Who is affected:
  • Spouses of age and service retirees who are under the age of 55 as of Jan. 1, 2011
  • Spouses, under the age of 55 as of Jan. 1, 2011, of retirees who converted from a disability benefit to an age and service benefit and,
  • Spouses, under the age of 55 as of Jan. 1, 2011, of survivor benefit recipients whose health care coverage subsidy has been grand-fathered
Who is NOT affected:
  • Spouses of disability benefit recipients
  • Any spouse who is receiving a benefit as the surviving spouse of an age and service retiree (joint and survivor annuity) or as the surviving spouse of a deceased active member (receiving a survivor benefit)
  • Spouses with early Medicare
  • Dependent children"
P.S. Where's all that talk now about the OEA's pet project - HB 315 (additional funding for STRS's healthcare stabilization fund) that was introduced into the last legislature (still to be reintroduced) and...those "Healthcare Champions?" Don't hear much about a reintroduction, do you? In fact, you don't hear much about the "Healthcare Champions" either!

STRS benefits recipient looking forward to highest standards of trust, care and skill!

From Donna Seaman, July 20, 2010
Subject: news release
Mr. Nehf and Board members:
I am so relieved to read Mr. Nehf's response to the request from Ohio's eight major newspapers that "STRS Ohio must exercise the highest standards of trust, care and skill with respect to the interest of the system's members and beneficiaries." I'm looking forward to the changes/improvements that result from his statement!
Donna Seaman, 2002 retiree

STRS: 2009 Comprehensive Annual Financial Report

2009 Comprehensive Annual Financial Report

Each year STRS Ohio develops a Comprehensive Annual Financial Report that provides financial, investment, statistical and actuarial information about the system in a single publication. As noted in the publication, STRS Ohio works with the following professional consultants:

  • Independent Public Accountants — Clifton Gunderson LLP, Toledo, Ohio
  • Investment Consultants — Russell Investment Group, Tacoma, Wash.
  • Actuarial Consultants — PricewaterhouseCoopers, Chicago, Ill.

The most recent report, which covers the 2008–2009 fiscal year (July 1, 2008–June 30, 2009) is available in a Web version and a PDF book version.

Web Version
Click the section below to open a new window and view that section.

Note: The Web version of the Comprehensive Annual Financial Report displays the content in online-friendly snippets. For a complete copy of the Comprehensive Annual Financial Report, view or print the PDF version.






PDF Version
Click the section below to open a PDF of that section. Opening each file may take a few minutes depending on your modem and connection speeds.

small pdf icon Introduction (1 MB)

small pdf icon Financial (884 KB)

small pdf icon Investments (208 KB)

small pdf icon Actuarial (352 KB)

small pdf icon Statistical (484 KB)

Complete 2009 Comprehensive Annual Financial Report (2.2 MB)

Message to STRS Ohio Members from Executive Director Michael Nehf

From STRS, July 20, 2010
STRS Ohio was recently asked to provide information pertaining to our members and benefit recipients by the eight major daily newspapers in Ohio. STRS Ohio has declined the request, to the extent it sought personal information of individual members. The Ohio Revised Code prohibits STRS Ohio from releasing personal history information about individual members, such as their monthly benefit amounts, without the written authorization of the member.
The other four public pension systems in Ohio - Ohio Public Employees Retirement System, School Employees Retirement System, Ohio Police & Fire Pension Fund, and the Highway Patrol Retirement System - received the same request.
While STRS Ohio is unable to provide the individual information the newspapers have requested, we have referred them to STRS Ohio's Comprehensive Annual Financial Report (which is posted on the STRS Ohio Web site). It contains a significant amount of collective statistical data about STRS Ohio's members and benefit recipients, including benefit expenses by benefit type and amount, and a schedule of average benefits with average monthly benefit, average final salary and number of recipients.
As a fiduciary, STRS Ohio must exercise the highest standards of trust, care and skill with respect to the interests of the system's members and beneficiaries. Our response to this records request complies with that fiduciary responsibility and Ohio law.
Thank you.
Michael J. Nehf
Executive Director STRS Ohio

Monday, July 19, 2010

A question for the eight major Ohio newspapers that are trashing pensions

From RH Jones, July 19, 2010, July 15, 2010
Perspective on public pensions
The Beacon Journal recently published articles concerning public employee pensions. I would like to address the issue and offer some perspective.
State Sen. Jon Husted stated that he had backed a bill to mandate that state pension funds divest themselves of all investments tied to Iran to protect our troops in Iraq and Afghanistan. How would hurting my pension help the troops?
I have a question for the eight major Ohio newspapers that are trying to destroy the pensions of over 900,000 retirees and employees and the millions who depend on those employees: How would you feel if all of the public employees and retirees and their families suddenly canceled their subscriptions?
Jack Murphy
Deerfield Township
[Here's one retiree who canceled her subscription to her local newspaper six months ago:]

More from Laura

Laura Ecklar to John Curry, July 19, 2010
Subject: RE: Laura....a question
As you look at that comparative chart on the ORSC Web site, you will see that the other four systems will be making changes to their allocations to their respective health care funds as part of their proposed plans.

[See Updated Comparative Summary of Systems' Funding Plans, currently found on the ORSC Home page:]

Laura responds to John's question

From John Curry, July 19, 2010
Subject: Re: Laura....a question
Thank you for getting back to me on this issue. I will pass this information on to others. Our 1% contribution rate pales to all the other systems' contribution rates dedicated to health care. It is a shame it can't be raised.
From Laura Ecklar, July 19, 2010
Subject: RE: Laura....a question
Dear Mr. Curry,
In response to your e-mail about health care funding, the Retirement Board first looked at increases in contributions to the separate Health Care Stabilization Fund more than five years ago as a way to strengthen fund solvency. As you know, a bill was introduced, but no committee hearings were ever scheduled. In 2009, the board began developing a plan to strengthen the pension fund. While it initially hoped to provide for additional contributions to go into the health care fund as part of the proposed plan, it determined in the process that any contribution increases and other plan design changes were going to be needed solely for the pension fund. Consequently, STRS Ohio is no longer pursuing increased contributions as a solution to health care funding. However, the board’s proposed plan does preserve the current 1% employer contribution for the health care fund. As noted in a number of recent STRS Ohio communications to members, long-term changes to the STRS Ohio Health Care Program are still needed to extend the life of the Health Care Stabilization Fund beyond 2021. The board will begin looking at its options this fall as part of the development of a long-term Health Care Strategic Plan, with a scheduled completion date of February 2011.
On the Ohio Retirement Study Council Web site at, there is a chart that you might find helpful. It can be found under “ORSC Reports” and is titled “Updated Comparative Summary of Systems’ Funding Plans.” This chart includes information about each system’s employer allocations to their health care funds. Thank you.
Laura Ecklar
Director, Communication Services

STRS FLASHBACK - 7 YEARS AGO - STRS & Spinning...... they didn't spin, did they?

From John Curry, July 19, 2010
"Another tactic is to spin the news in a more positive direction. On June 20, board Chairwoman Deborah Scott and Vice Chairman Eugene E. Norris sent a two-page, single-spaced letter to STRS members. The letter went to most of the 400,000-plus members, and several were willing to share the correspondence."
Click image to enlarge.
Canton Repository, July 18, 2003
Rest of the story sounds a lot like what we already know about STRS
By PAUL E. KOSTYU Copley Columbus Bureau chief
COLUMBUS -- Folks at the State Teachers Retirement System have been involved in damage control in light of reports about the pension fund’s operation.
The damage control has moved to at least two fronts.
First, it seems obvious the STRS board will get rid of Executive Director Herbert Dyer. The board held its second closed meeting in as many weeks Thursday to talk about personnel. This is just a guess, but the meetings are likely briefing sessions by the board’s attorney about his negotiations with Dyer’s attorney. In other words, both sides are trying to find an exit for Dyer that is financially palatable. Of course, we don’t know this for sure because the meetings are secret and board members are loath to talk about what goes on behind closed doors.
The obvious thinking, of course, is that if Dyer goes, then perhaps some of the heat on the pension fund and the board will evaporate as well. That remains to be seen.
Another tactic is to spin the news in a more positive direction. On June 20, board Chairwoman Deborah Scott and Vice Chairman Eugene E. Norris sent a two-page, single-spaced letter to STRS members. The letter went to most of the 400,000-plus members, and several were willing to share the correspondence.
“For 83 years, the State Teachers Retirement System has provided an exceptional level of retirement benefits to Ohio’s public educators,” the letter began. “As members of the Retirement Board, we have been entrusted with maintaining the quality of this system. This is a duty that none of us take lightly. We want you to know that your pension is secure and STRS Ohio continues to be financially sound.”
They continued, “Recently, there has been media attention in some parts of the state focusing on the spending practices at STRS Ohio. We understand that some of our members and the public-at-large have questions and concerns about these issues. ... While what has been reported in some papers has generated questions, it is by no means the whole story.”
Thus, the reason for the letter — to reveal the whole story.
The letter says it’s true that compared to other pensions funds “we do often have a larger investment staff and a larger operating budget than systems that have more members and/or assets.” But that’s because “we save millions of dollars each year by managing more than 80 percent of our investment assets in-house ...”
Of course, of the millions saved, $18.8 million since August 2000 through March this year didn’t help teachers but were given as staff bonuses.
“Our operating budget is higher because the compensation and benefits paid to these investment associates are included.”
The operating budget couldn’t be higher because of the cost of maintaining a $94.2 million building?
STRS recruits and retains “qualified, service-oriented and high achieving associates,” the letter said. “Associates receive the incentive award only for achievements over and above their current job responsibilities — and only if accomplished.”
The letter doesn’t say that some of those achievements sounded more like routine job descriptions than “push goals.”
As a result, the compensation package “has resulted in consistently high levels of performance and consistently high levels of member satisfaction. It also results in low employee turnover.”
Scott and Norris said the board suspended the bonus program because of the impact that the declining stock market had on STRS revenue. They don’t mention public pressure because of extravagant spending.
Instead, they said the administrative budget was reduced for the current fiscal year by $2.8 million while a way also was found to extend the health care program to 2014. Would that be by boosting members’ costs?
Laura R. Ecklar, a spokeswoman for STRS, said the letter was necessary in light of media reports. “We’re damned if we do and damned if we don’t,” she said.
That’s a fair assessment.
In other words, Ecklar was saying the STRS board could be criticized for not keeping members informed if Scott and Norris didn’t respond to media reports. And it could be criticized for responding.
Preparing, printing and mailing 325,650 letters cost STRS $129,779.
Larry KehresMount Union Collge
Division III
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