Robin Rayfield to STRS Board: You will be remembered as failures or heroes based upon what you do next.

From Robin Rayfield

September 15, 2022

My name is Robin Rayfield and I serve as the Executive Director of the Ohio Retired Teachers Association.

There has been significant media attention over last month’s granting of nearly $10 million in staff bonuses. STRS staff have repeatedly claimed that last year they added $1.8 billion in net value over their benchmark. I find this claim to be inaccurate.

The majority of this fake outperformance stems from an accounting gimmick which pushed illiquid alternative investment performance from Fiscal 2021, when the alternatives benchmark was their actual performance, into Fiscal 2022.

I encourage Board members to confirm this accounting gimmick by comparing the Alternatives Investments valuation in the 2021 GIPS Report with the Alternatives Investments valuation in the 2021 Annual Comprehensive Financial Report.

This accounting gimmick is separate and distinct from yet another accounting gimmick in Fiscal 2022 which likely delayed the valuation of private equity investments until after bonuses were paid. We will be able to calculate the magnitude of this second accounting gimmick once Crowe completes their annual financial statement audit in the coming months.

Lastly, I would like to provide the new board some clarity around the complex issues facing our pension. STRS has three problems. The first problem is STRS does not have enough money. The second problem is STRS currently bleeds $15 million per day in cash outflow as benefits paid are roughly twice the size of current contributions. The third and most disturbing problem is, the current staff have no plan to fix problem #1 or problem #2. Hope is not a strategy, and the staff’s behavior suggests they don’t think any problems exist except retirees like me drawing attention to these cold brutal facts.

Double digit inflation is ruining retired members’ lives. Being on this Board is not a social activity and these people sitting in front of the glass are employees, not your friends or colleagues. I trust that the board will listen to the membership that voted for change in the election last May.

There is no other room of people coming to solve STRS’s problems. The members expressed You eleven (11) board members will be remembered as failures or heroes based upon what you do next.

Thank you for your time.