August 19, 2021 STRS Board meeting: Summary by a retired stakeholder

August 22. 2021

The STRS Board meeting was held on August 19, 2021. The meeting was well attended: ORTA and OFT members, the public, attendees probably numbered over 100, plus all who attended virtually. Signs, and a live Facebook feed, thanks to ORTA, were some features of the day. STRS needed an overflow room to house everyone. Chair Walters had to chastise the crowd for reactions to some of the Board’s productions.

This meeting was a production. STRS had all its consultants present and accounted, in person, with more on line - ACA, CEM, Cliffwater, Callan, Crowe. No way was STRS going to take crap from a forensic audit report. Our STRS is a perfect organization that does everything correctly. From the beginning to the end, close to 9 hours after starting, the only negative came from outsiders, the attendees that spoke during Public Participation.

I hope all of you, wherever you live, can see the glow from Columbus, because our STRS staff and their consultants are enlightening. Board member Steen tried to poke holes, but the dam held; meanwhile Board member Jeffrey Rhodes played the clarifier at the end of each act, making sure the public, present and listening, fully understood that all questions were answered, and all finger pointing was heard and were wrong.

Promptly at 8 a.m. the Audit Committee met. STRS is in the process of having its financial statement “audited” by Crowe LLP. By Ohio law, this is to happen every ten years, but the last was in 2006. Of course, this was not STRS’s fault, the state allowed the delays.

Crowe will be performing substantive testing in the key audit areas such as “existence and fair value of investments,” “total pension liability,” “contributions,” “potential management override of controls.” Their report should be ready December, 2021. ACA then defended its “verifications” of the general fund over many years.

There was push and pull amongst the Board about questions asked now and in the future. Steen feels he doesn’t have the information he needs as a fiduciary. The audit committee lasted until 9:37 a.m. The Board meeting began at 9:45. The first major item was CEO Neville’s report, “STRS Ohio Response to BFS Report.” This response is available at www.strsoh.org.

Neville and his leadership team and the consultants then destroyed Edward Siedle’s Forensic Report findings until 11:19 a.m. Steen would point out inconsistencies, but staff and consultants always had an answer.

The Executive Director report followed with 13 accolades of services being provided or awarded to STRS.

During Public Participation 12 people spoke, almost all on the loss of COLA. One presenter, a Columbus retired teacher, pointed out that STRS changed its health plan and a PAP smear now is only covered once every 3 years effective 01/01/2021, retroactive to the last smear. Also, Bob Buerkle of Cincinnati pointed out that 37,000 members have died since the COLA was eliminated in 2017.

In the afternoon, the Investment Department reported FY21 closed at approximately $94.8 billion with a net asset increase of $17.7 billion dollars. It was pointed out that the investment department actually earned close to $21.7 billion, but that extra $4 billion went to benefit payments. Remember, about $7 billion in benefits are paid yearly but active/employer contributions add $3 billion to the general fund. July’s investment asset had the fund at $95.3 billion.

A number of other reports were presented, including Callan’s annual performance review as of June 30 and Cliffwater's annual review as of June 30, 2021. STRS Ohio came out glowing with these reports. An Asset-Liability study is starting with the study to be completed and adopted by March 2022. The Benefit Department then had a CEM Benchmarking report showing that amongst our peers we stand out above most of peers.

Routine Matters authorized $6.7 million to be paid for PBI's to the investment department [Performance Based Incentives]. [The public attendees went crazy with signs being held up against the glass wall. I must admit that I did not go crazy. Our investments department created $21 billion in additional wealth.] The Board meeting ended at 4:27 with no old or new business.

The next Board meeting is September 16, 2021. The Ad Hoc Committee for Board Education & Planning then commenced and ended about 4:45. This committee addressed the Board’s yearly training in ethics, fiduciary duties, self-assessment, and other topics for the November Board workshop.