Robin Rayfield minces no words regarding the November STRS Board meeting*

*Note: Robin may be running a little behind right now due to his busy schedule addressing ORTA chapters around the state and the loss of ORTA's valuable Publications and Communications Coordinator, Alissa Burton, to her new job in California.

From the December 17, 2021 issue of the ORTA Newsletter:

STRS did meet in November on the 18th. The meeting was not a typical STRS meeting, but instead was more of an investment seminar. Each of the consultants STRS hires to provide advice presented what to expect over the next year. The sessions contained significant information and a review of the many audits that are taking place at STRS was provided. Most of the audits that are ongoing or scheduled should be completed by March of next year. Audits scheduled include actuarial audit, fiduciary performance audit, and an asset liability study. What I am learning about these audits is that the organization being audited receives a positive report, provided they pay the appropriate fee.

Board members Rudy Fichtenbaum, Wade Steen and former board member Bob Stein attempted to make a presentation about ways to increase the amount of money STRS makes each year. Everyone agrees that the current status quo requires STRS to take on higher and higher risk to earn the level of returns necessary to balance the books. Rudy and his group wanted to demonstrate an alternative to the constant need to increase risk and pay high fees to a system that allows STRS to reduce risk and earn fees on our balance sheet. I was really looking forward to the presentation. Unfortunately, Ms. Correthers, who was acting as chair for the meeting, allowed the STRS investment chief Mr. Worley and the highly paid consultants from Callan and Cliffwater to hijack the meeting and treat the presenters with rudeness and contempt. I guess I understand why Mr. Worley and his paid consultants were so rude and disrespectful, after all the discussion was about how this change would eliminate the need for Mr. Worley and his staff of 110 investors. He is very protective of his $8 million bonuses that he pays to himself and his employees. What I was surprised about was that Ms. Correthers allowed the reprehensible behavior and that other board members did not step in and say, ‘Let’s hear from the presenters not the staff.’ It was clear that board members had been coached on how to react to the presentation. It was never to be allowed.

The bottom line is this: Rudy Fichtenbaum, Wade Steen, and Bob Stein all agreed that the proposal needs to be vetted and investigated. Although many were calling this an investment strategy, it is not an investment strategy. It is leveraging our balance sheet, charging fees, and reducing risk. This approach is estimated to provide $4 BILLION each year. Dr. Fichtenbaum suggested that STRS use $250 million to demonstrate that the leverage approach works. Remember, that is less than ½ of what Mr. Worley’s investment staff lost in one deal (Panda Power). It seems like this is something that should be investigated. And not investigated by the investors that have a personal stake in the matter as they have an obvious conflict of interest.

After the board refused to seriously consider the proposal the matter was dropped. And with that, our pension system walked away from an opportunity to increase revenue by $4 BILLION.

Later in the meeting Dr. Fichtenbaum made a motion to pay a 2% COLA to all retirees for 2 years. The motion also included language to reduce the contribution rate of active contributors by 2% for 2 years. Mr. Steen seconded the motion. Before a vote could be taken Mr. McFee (active contributor) moved to table the motion. Rita Walters seconded the motion. The vote on the motion to table indefinitely was 8 – 3. Rudy, Wade, and Yoel Mayerfeld voted against the motion to table, Lard, Rhodes, Walters, McFee, Correthers, Price, Herrington, and Hunt all voted to table the measure killing any chance at COLA or a reduction in the contribution rate. With thousands of STRS retirees that have died since STRS reduced our promised pension, and more dying each year it is sad that the people on our board are only interested in the interests of STRS staff and do not care about any of the membership.

Investigations at STRS

Perhaps a bit of positive news concerning our pension. The Auditor of State, Keith Faber, has recently announced a special audit of STRS. You can read about the special audit here:

https://www.statenews.org/government-politics/2021-10-20/special-audit-planned-into-ohio-teachers-pension-fund

The Ohio Securities Commission has also announced an investigation into STRS. This organization is responsible for licensing security traders and trades like what the SEC in New York does.

Recent Media Stories

I am often asked why there is not more reporting on the problems at STRS. I can only speculate, but my suspicion is that the media outlets that are owned by Gannett Publishing (20 of the largest twenty-eight papers in Ohio and several local radio and TV stations) will not publish ‘bad press’ for STRS. If you follow the money, STRS has significant investment in the hedge fund that own Gannett. We have received tremendous coverage from media that is not owned by Gannett such as:

Toledo Blade, Forbes, Bloomberg, Newsweek, Fremont News Messenger, NBC News, PBS, Ohio Statehouse News

Here are three examples of the national coverage we are getting:

https://www.newsweek.com/secret-everybody-gets-rich-except-people-who-put-money-1651592

https://www.nbcnews.com/business/personal-finance/private-equity-hedge-fund-firms-invested-pension-cash-retired-ohio-n1269885

https://www.newsweek.com/secret-everybody-gets-rich-except-people-who-put-money-1651592

Know this… ORTA will continue to voice our concerns and advocate for all STRS members!