ORTA Executive Director Dr. Robin Rayfield's Message in February 2022 ORTA Newsletter

February 24, 2022

ORTA Newsletter

STRS News 

There seems to be some movement at STRS related to our COLA. Several options were discussed, in depth, January 27th at a special meeting of the STRS board. The basic ‘concepts’ that have emerged include: 

● Providing a one-time COLA of 2% to retirees. This increase would be provided to each eligible retiree and would remain in effect each year. To be clear, each retiree would receive a 2% increase (on their base retirement) for the remainder of their life. That 2% increase would be a one-time increase. 

● Reducing the contribution rate paid by active teachers. Currently our active teachers pay the highest rate of contributions in the nation. Their contribution rate is higher than the value of their pension. 

● Reducing the 'age requirement’ for full benefits. Maybe allowing full retirement after 35 years of service. 

I am of the opinion that the hard work and advocacy done by ORTA, and members of the Facebook groups have had an impact on this issue. Between the forensic audit, the special audit by the auditor of state, the recent activity on ORTA’s YouTube channel, and ORTA’s work with legislators in Ohio, STRS has determined that some form of COLA is in order. Is it a coincidence that STRS is thinking about a COLA and reducing the burden on actives at the same time as STRS Trustees stand for election? Where do things stand with regards to our pension and our benefits? Well, we learned a great deal about STRS because of our grass roots funded Forensic Audit. Mr. Siedle confirmed what many people had suspected for a long time. There are serious problems at STRS. What problems you may ask? 

● STRS remains cloaked in secrecy with regards to their investments. The fees paid to outside firms are not reported and often the returns are reported inaccurately. Investors (STRS members active and retired) are not allowed to know how much is invested in each of the 135 alternative investment accounts. Further we are not allowed to know what the fees, expenses, and costs associated with each of these 135 alternative investment accounts are. Finally, we are not allowed to know the value of any one of the 135 alternative investment accounts are. With over $15 billion in the alternative investment category, we should know where our money is and what fees we are paying. Benchmark Financial has requested information from STRS but has been stonewalled for over a year. The Ohio Supreme Court is currently reviewing the request for information regarding our pension’s investments. 

● STRS continues to ignore findings from the 2006 fiduciary audit and pay bonuses to the investment staff based upon actual performance instead of using an external benchmark. 

● STRS continues to take on a high level of risk when compared to the level of return. 

● Other findings of concern identified in the Siedle Report include; payment of committed capital fees, carried interest fees, and failure to monitor consultant conflicts of interest.

ORSC Audits 

Many retirees know about the ORSC [Ohio Retirement Study Council] and what this body does. For those that do not know what the ORSC is and what its function is I offer the following explanation. ORSC is a group of legislators and political appointees that are charged with oversight of the 5 public pension systems in Ohio. One way the ORSC conducts this oversight is through ‘audits’ of each pension system. By law, ORSC is required to conduct an actuarial and a fiduciary audit of each system at least once every 10 years. STRS last audits by the ORSC were in 2006. Our audits are going on 6 years overdue! This lack of oversight by our elected officials has costs the pension significantly. For example, in 2006 STRS was advised not to use ‘actual performance’ of the investment staff as a benchmark for earning bonus pay. STRS ignored that recommendation and has used ‘actual performance’ as the measuring stick to determine bonus pay for investors. As of 2021 actual performance was used to determine bonus pay. I guess what this tells us is, ORSC utterly failed in its responsibility to provide oversight to the public pension systems.

Local 

Many local chapters of ORTA have scheduled meetings for the spring of 2022. I have a busy spring of visits to chapters all across Ohio. Please contact the ORTA office if you would like to have someone from ORTA visit your chapter. 

ORTA to Engage in STRS Trustee Elections 

ORTA has arranged a committee to sit down with candidates for STRS trustees seats. In early March those candidates that wish to be considered for ORTA’s endorsement will be interviewed. After interviewing candidates, those that earn an endorsement will be endorsed. ORTA will announce these endorsements in March, well before the election in late April early May.