Rudy Fichtenbaum exposes The Big Lie OEA has been spreading far and wide about that $65 billion

The Myth of Turning Over $65 Billion to Wall Street

Dr. Rudy Fichtenbaum

March 30, 2022

The OEA leadership and Board members running for reelection are desperate because they know that members are upset. Active members are finding out the truth that they have the worst deal in the country, paying $1 to get a pension that is worth $0.77. Retired members can see through the scam that is being run on them when they are given a one-time 3% “COLA” and told that the Board will look at another “COLA” next year i.e., 2024. The truth is the Board just approved an investment allocation that is expected to earn 6% while approving a discount rate – that’s the expected return on investments – of 7%. Why is this important? It is important because to reduce and eventually eliminate the unfunded liability, STRS needs to earn 7%.

The truth is that to fully restore a real COLA, one that gets paid every year rather than just once, the pension needs more money. When I campaigned for a Board seat, I recognized that the pension needed more money, so I said that I would support an increase in the employer contribution. None of the incumbents running or the OEA leadership have ever campaigned on raising employer contributions. When they get backed into a corner, they might say they don’t oppose an increase in employer contributions, but they have done nothing to try to make that a reality. What could they have done? For starters, they could have had the Board vote on a resolution calling for an increase in employer contributions and directed the STRS staff to start lobbying for an increase in employer contributions.

They could have directed the staff to tell the truth: without more money there will never be a restoration of a real COLA. Instead of going around the state telling everyone what a great job they are doing, they could have started meeting with active teachers and retirees and telling them that if they want a real COLA and a pension that is at least worth what they are contributing, they need to start organizing and putting pressure on the legislature and the Governor. Active teachers and retirees vote. Their family members and friends vote, too. If teachers and retirees were showing up by the busload at the statehouse, organized by OEA and STRS working with ORTA, the Watchdogs, OFT, and AAUP, we could start creating the kind of pressure that is needed to get an increase in the employer contribution and make sure it is funded by increasing taxes on the wealthiest Ohioans who have been getting tax cuts for years.

But we should never put all our eggs in one basket. If there are other ways the pension could earn more money, we should explore them openly and honestly. That is why Wade Steen, former board member Bob Stein, and I tried to make a proposal at the November meeting to explore an option that we thought was promising and could earn more money for STRS.

We never got to make our presentation because the staff and STRS consultants, with the complicity of the Board, lied and disrupted our presentation. Then they started telling the big lie that we proposed to give $65 billion to a firm without a track record.

What did we propose? We proposed hiring a specialty law firm to negotiate a contract to create a partnership that would implement a pilot program, a proof of concept that would start with $250 million. Once the partnership agreement was negotiated, we proposed it would come back to the Board for a vote. That is what we proposed.

We never proposed -- as leaders of OEA and incumbent Board members constantly repeat -- that we turn $65 billion over to a firm without a track record. That is lie. But we all know the power of a big lie. If you say it repeatedly, some people begin to believe it.

None of these OEA leaders, incumbent Board members, or staff seemed to have a problem when STRS lost $525 million on Panda Energy, a company that used our money to buy a professional wrestling league. None of these people thought it was a problem when STRS invested $50 million in Infinity Q, whose former CIO and founder was just charged by the SEC with overvaluing its assets by $1 billion, while pocketing tens of millions in fees. None of them were outraged or thought it was a problem when Ted Siedle found widespread failures and mismanagement at STRS. In fact, when an STRS staff member was asked recently about the Panda loss, he said “STRS absorbed it.” What does that mean? It means the members paid for it with our money.

So why the problem with negotiating a contract that the Board would have to vote on before it was implemented for $250 million? That was our proposal! I believe that OEA leaders, incumbent board members, and STRS staff were afraid it would be successful. That would have meant that instead of us continuing to pay an investment staff to send billions of our dollars to Wall Street, Wall Street might have been sending STRS members a check that could help pay to restore a real COLA and help give active members a pension that is worth what they are contributing.

Dr. Rudy Fichtenbaum is Professor Emeritus of Economics at Wright State University and an elected member of the STRS Ohio Board since September, 2021.