Robin Rayfield's report on the March, 2021 STRS Board meeting (and more)

From ORTA Newslietter

April 28, 2021

STRS News

The STRS Board met in March for their monthly meeting. There was some good news from the investment staff as the market continues to add value. If things continue to trend in a positive way STRS is poised to earn over 20% for the year. So far, STRS has added $12 billion to our portfolio! The controversial topic of ‘performance incentives’ was discussed, and policy changes were discussed in some detail. When we learned that STRS performance people were not really measured against any benchmark, many retirees and some STRS Trustees expressed great concern. The proposed policy would require that all investment personnel be measured against some fixed benchmark to be eligible for any bonus. The new policy, if adopted would begin next fiscal year  (July 2021). It would not be fully implemented for a few years, as STRS measures its performance over a longer period. The proposed budget for next year was presented. Highlights include a line item for salary increases based by department and merit. STRS offered justification for salary increases by reminding everyone that STRS employees do not receive ‘step increases’ like ‘teachers do’. Trustee Wade Steen reminded everyone that not all teachers receive a salary step increase and that often steps in the salary schedule are frozen and many teachers are not eligible for a step increase every year. I mention this because I find it interesting that NONE of the former teachers or active teachers on the board of trustees spoke up about step increases for teachers and that not all teachers receive an automatic salary increase each year. Why would a non-educator be the one to remind people attending the meeting of this fact?

Gary Russell (Deputy Executive Director at STRS) provided an update on health care. An increase in the drug deductible was discussed, but no action was taken. The health care fund is in excellent shape at 188% funding. Premiums will be established for the following year at the June meeting.

Something interesting to note is that there was no discussion of the Panda Power loss that was recently revealed. STRS reported last month that the alternative investment people had ‘lost’ over half a billion dollars in an investment into Panda Power. This revelation came after a question to STRS about this investment. STRS responded that the loss of $525,000,000 was not significant and that the alternative investment program was performing quite well. For more information on this matter you should read John Damschroder’s article here. It appears that the loss reported on Panda Power might just be the tip of the iceberg.

STRS Elections

As most retirees know, the election for seats on the STRS board is underway. If you have not received your ballot, there is still time. Call 866-720-4357 to cast your vote.

Forensic Audit

ORTA has copies of Ted Siedle’s book Who Stole My Pension. We will gladly send any ORTA member a copy, free of charge. All we ask is that you pay the shipping cost. We can mail you a copy for the price of postage ($5.00). Call our office and we will send you a copy! 614-431-7002.

ORTA has been in received periodic updates from Mr. Siedle since he began the forensic audit during the first week of February. He has requested a great deal of information from STRS. Unfortunately, STRS has not provided the necessary information in a timely fashion. Specifically, STRS has not shared the information related to STRS’s investments in alternative investments. Mr. Siedle is attempting to determine how the alternative investments are performing. ORTA would like to know how much STRS has invested in each of the 135 hedge funds that we have invested in and how much those investments are worth. One reason this is so important to know is related to the information on Panda Power noted above. STRS ‘lost’ over ½ billion dollars in the Panda Power investment 4 years ago that was just discovered last month. STRS is also invested in Infinity Q, another hedge fund that just announced it was being liquidated. With over $15 billion invested in hedge funds and other risky investments STRS needs to share the status of these investments with the people whose retirement is at risk. STRS claims that they do not have to share this information. Mr. Siedle and his legal team disagree; Ohio law requires the pension fund to disclose investment information. Mr. Siedle is preparing a legal action to compel STRS to provide this information. I’m told this legal action will not cost ORTA any additional money.