William Boone to STRS Board: I hope some of these lingering issues can be addressed before the end of the year

William Boone's speech to STRS Board

May 16, 2019

My name is William Boone and I am the Chairman of the Ohio Federation of Teachers Retirement Committee. I am also an active teacher who is in my 20th year teaching American History at Berea-Midpark High School. I have taken a day off from my duties at the high school to outline the major concerns of the committee and the active and retired members of OFT overall.

I will begin with an issue that has been brought to the attention of this body at every meeting by numerous teachers since the COLA was eliminated. I do not have time to make the case for immediately bringing back some form of COLA right now. I have studied the issue and the members of this body have made their positions very clear. What our committee DOES ask for is shared sacrifice and fairness. At the last STRS [Board] meeting, it was agreed that there would be a 4.8 percent STRS compensation INCREASE for 2019-2020. The mission statement of STRS Ohio is posted on your website. It says that STRS Ohio will PARTNER with our members in helping to build retirement security. With this type of increase as a whole and some of the very generous bonuses of over half a million dollars for the Directors of Investments in particular, it doesn't FEEL like a true partnership. We offer a very simple proposition. There should not be any future raises for STRS employees until there is an adjustment made to the COLA. This is reasonable and simply acknowledges that there should be shared sacrifice across the board.

Next, the OFT Retirement Committee is committed to keeping the actuarial rate of return at 7.45 and believe it should not go below this current rate except in unforeseen circumstances. We believe this is also reasonable, based on the performance of our pension investments over the past decade.

In addition, we urge the STRS Board to review and change "smoothing" policies for the final years of an active member's career as it pertains to pension. Members of the committee that are much smarter than I have pointed out inconsistencies that should be addressed in this area. Slight adjustments in this area can go a LONG way.

Finally, the main reason I am here is to focus on the issue of transparency. True partners are transparent, open and accessible with each other. If you are to live up to your mission statement, some reforms need to be implemented as soon as possible. The good news is they are easy to put in place and do not cost much.

Number one, elected members of the board should have their e-mail addresses available on the STRS website. Active teachers are contributing 14% of their earnings towards a pension fund that is being run by STRS Board Members. With investment assets of over $77 billion, STRS Ohio is one of the largest public pension funds in the country. Consequently, these elected members of the STRS Board have a duty to be more accessible to the people who have put an immense amount of trust in them.

Next, the hedge fund model of "2 and 20" needs to be cut in half to "1 and 10" in order to reverse a transfer of wealth to billionaires, especially since the rate of return has been less than favorable. The OFT encourages the Ohio STRS to conduct an asset allocation review to examine less costly and more effective diversification approaches. There is a need for public disclosures related to the fees for these private equity investments. Illinois and Rhode Island have recently passed bills that require public disclosures related to fees and other expenses tied to private equity investments. The Ohio legislature should follow their example.

Finally, STRS [Board] meetings should be broadcast on the Ohio Channel so that interested members can stay informed more easily. I will conclude with a personal story to explain my frustration in this matter. My father, in the final chapter of his life, has become a devout Baptist. He faithfully attends Sunday service at the Berea Baptist Church EVERY Sunday. This church has less than 100 members whose average age is about 70 years old. The annual budget is less than $100,0000. It is a modest organization. Imagine my surprise last weekend when my father excitedly told me that his church now streams video of their services online so that members of the church who cannot physically make it to church on Sundays will never have to miss a service. I couldn't believe it. The State Teachers Retirement System of Ohio is one of the nation's premier retirement systems, serving nearly 494,000 active, inactive and retired Ohio public educators. It has investment assets of over $77 billion. STRS Ohio has an annual communications budget of nearly $2 million. Yet, the Berea Baptist Church can offer a service that STRS Ohio cannot? There is no need for an educator like myself to drive to Columbus every month to stay up-to-date on my pension plan that I pour 14% of my earnings into. I honestly can't fathom why this has not been addressed yet. It is 2019. Give us the same opportunity afforded to the members of the Berea Baptist Church.

Thank you for allowing me the time to speak on behalf of the OFT Retirement Committee today. I truly hope that some of these lingering issues can finally be addressed before the end of the year.