Message from Dan MacDonald: Public Participation

From Dan MacDonald

April 14, 2021

Tomorrow, April 15, is the STRS April Board meeting. Public Participation is acknowledged at each meeting. When meetings can be attended, I monthly have participated in the Public Participation. Now that meetings are being held virtually, boardwebinar@strsoh.org is a way to allegedly tell the Board what I am thinking. Since letters to the Board for Public Participation aren’t shared even when Board meetings can be attended in Columbus, I want to share what I sent a couple of days ago. Here’s my Public Participation that you would not otherwise know was sent. Dan MacDonald 

April 13, 2021

Dear STRS Board Chair Rita J. Walters and Board members:

The loss of 524 million dollars is a pittance when compared to our total STRS fund. This is true, around 0.00597. Blend this loss with everything else happening and it should be a concern for the STRS Board and staff. Panda declared bankruptcy in 2017. Performance Based Incentives were issued for 2017, 2018, 2019, 2020. Did the loss effect anyone’s PBI? Do we have the right to know? Board member Steen brought up transparency recently when the Board Policy’s manual was being discussed. The STRS lawyer pooh-poohed the idea of adding the word “transparency” where Steen suggested with the comment that transparency is contained throughout the document. The Board hires Cliffwater, Callan, Cheiron and others to reassure itself and, I hope, actives and retirees, that all is going in the right direction. Yet nary a word from anyone about a half billion-dollar loss until the March Board meeting with a 90 second announcement. The investment department response, we will do better “Due Diligence.” What happened with the Panda due diligence? After the fiduciary presentation at the STRS March meeting, I, for one, question the presenter’s push for “loyalty” and “prudence.” To quote the Power Point slide – “Fiduciaries are held to the ‘highest standard of conduct’ known to law … A trustee is held to something stricter than the morals of the marketplace..” I would say the overall silence of the Board and staff over the past 4 years regarding Panda is exactly the morals of the marketplace. Steen continues to ask “who is accountable for these numbers;” the answer I continue to hear is that no one is. Steen moved to table for a month the pay for the PBI at the August STRS meeting to go over the numbers for PBI payout; the motion lost. What did the Board know and when did they know it? What did our consultants know, and when did they know it? At the December Board meeting CliftonLawsonAllen presented the audit report of STRS Ohio’s financial statements for the year ended June 30, 2020. CliftonLawsonAllen issued “a clean, unqualified report. The firm indicated there were no significant issues…” Common sense tells me the staff and Board are acting legally behind closed doors in executive sessions and sharing negative information and that our consultants are also acting legally not commenting on the investment department glitches, “oops” so to speak. What’s a half billion-dollar loss? It’s insignificant; the members don’t need to know. Is this transparency? Does the silence build trust?

The Board Chair should acknowledge the loss and share why it was not reported, or for that matter, why there is no need to share until March, and a then only a short comment, the loss to actives and retirees.

In closing, April’s Board meeting addresses the proposed STRS Budget for 2021-22, I would hope there would not be a proposed merit-based pay raise figure based on the lack of COLA, the harsh benefit markers for actives, AND the loss of a half billion dollars. As Jack Reacher would say, hope for the best but plan for the worst.

Dan MacDonald, STRS Retiree