Robin Rayfield's STRS report to ORTA members in August, 2021 newsletter following August 19 STRS Board meeting

STRS News

By Robin Rayfield,

Executive Director

Ohio Retired Teachers Association

August 27, 2021

The STRS board met on August 19, 2021. The meeting began at 8:00 and lasted until about 5:00 PM. There was an abundance of retirees in attendance. Due to COVID 19 social distance measures the people in attendance were split into the board room area and an overflow room 4 floors below the board room. The crowd was present to observe and, many to voice concerns about the situation at STRS. All 15 public participant spots were filled with people that wanted to voice concerns with the leadership at STRS. Of course, many of the comments voiced concern over the reduction in benefits retirees have experienced over the last 5 years. Some asked the question, ‘Since the system has met the 85% threshold for COLA reconsideration, when can we expect our COLA?’The board acted in a predictable and expected manner throughout the day.

Biggest takeaways:

1. The board responded to the Edward Siedle Forensic Audit As expected, STRS disagrees with everything in the report. As Mr. Siedle commented, people that have been allowed to behave in a manner that rewards themselves for poor performance for decades will not stop that behavior just because someone objects.Consider that STRS has spent millions hiring companies that only say nice things about STRS. When STRS pays companies like Callan, CEM, Cliffwater, and ACA the amounts they pay, of course those companies say positive things. Remember the story about the emperor and his clothes? ORTA will offer a response to the STRS report soon.

2. The board also awarded bonus payments of nearly $7,000,000 to its investment staff. These payments were approved even though the report from the group charged with evaluating whether the benchmarks were met has not been completed. The crowd was very unhappy with the decision to pay bonuses to the staff.

3. The board also selected Rita Walters to serve 1 year of the term Bob Stein was elected to in May of 2021.You may recall that Bob Stein ran for re-election and resigned shortly after winning his seat.

4. One thing that was reinforced was that the board does not provide any level of oversight to the STRS staff. Outside of Wade Steen none of the STRS board members question the actions of the staff. The OEA-backed members of the STRS board simply approve any measure proposed by the STRS staff. If you get the chance check out the ORTA YouTube channel recording of the first part of the meeting. Of specific interest to retirees, you will notice that board member Wade Steen asked several questions with the remainder of the board asking very few questions.

5. Something else that was obvious to all who attended is the fact that the active members of the STRS board vote for any proposal that the STRS staff present. They ask few questions, only questions that strengthen the proposal. Consider Mr. Rhodes (active OEA member) who informed everyone that STRS does not pay bonuses to its investment staff. Mr. Rhodes let everyone know that the investment staff are paid what they have earned, it is not a bonus. Unfortunately, for Mr. Rhodes, Executive Director Neville made a comment about the bonuses. He said that ‘No bonuses would be paid until the ACA report had been completed and submitted’.Then he apologized to Mr. Rhodes for using the term bonus. Even the Executive Director understands that receiving extra pay for a job that some consider exemplary is a ‘bonus’. Webster’s defines bonus this way:money or an equivalent given in addition to an employee’s usual compensation.

Forensic Audit

Now that the preliminary report of the forensic audit has been released and the STRS board of trustees have responded, some folks have asked ‘What happens now’? The answer is that ORTA will continue to advocate for retirees seeking changes at STRS that will restore the benefits to the level promised.

The fact that STRS did not accept the report is not surprising? When you consider that STRS staff have mismanaged and poorly performed for decades and the STRS trustees have paid bonuses for that poor performance each year for decades, it is not strange that they would disagree with Mr. Siedle’s assessment. If you consider that STRS brought in the best witnesses money can buy to support their response to Mr. Siedle’s report, it is somewhat surprising that the response was not sharper. After all, STRS has 20 plus managers bragging about their own performance, along with the highly paid consultants at Callan, CEM, Cliffwater, and ACA who are paid a great deal to say nice things about STRS. Millions are paid so that everyone involved can get paid again, and again.Everyone associated with this get paid a great deal, except for the people that paid into the system. Actives pay in 14% for a 10.5% benefit. Retirees have had benefits reduced from promised levels. STRS fails to meet benchmarks, but still receive bonus pay. Where are the trustees? Where are the unions? ORTA will be in this fight to the bitter end. Mr. Siedle is not done.

We have two legal actions seeking records that STRS refuses to provide. Last week, again the STRS board was asked to provide simple information:

• How much is invested in each of the 135 alternative investment external accounts?

• What are the total costs (fees, expenses, and other costs) associated with those investments?

• What are those investments worth today?

We are optimistic that the courts will require STRS to provide investment information to the investors (the STRS members, active and retired). As I mentioned in my comments at the meeting, if STRS will simply provide the information related to our investments and the costs of making those investments, much of the controversy will be settled and some level of trust between STRS members and the STRS pension system can be reestablished. If STRS continues to hide information, members will continue to ask, ‘What are they hiding?’

STRS Appoints Rita Walters to STRS Seat

The STRS board voted to fill the vacancy left when Bob Stein resigned his seat after winning reelection this spring. Ms. Walters is a strong supporter of STRS staff and opposes all measures or proposals suggested by board member Wade Steen. ORTA intends to identify and support candidates for retiree seats beginning with the election to be held next year.