Letter from Tom Curtis to Attorney Terry Mutchler about problems at STRS

Letter from Tom Curtis to Atty. Terry Mutschler

Sent April 7, 2022

Posted June 23, 2022 on Facebook:

Ohio STRS Member Only Forum

Dear Terry Mutchler,

I just read an article in The Lever, Apr 6, 2022, by Matthew Cunningham-Cook, "A Pension Official Blows the Whistle" [https://www.levernews.com/a-pension-official-blows-the-whistle/] which in part stated, "Terry Mutchler, a prominent transparency lawyer who Muth has retained to assist with her lawsuit, said, “It’s a very special case. You have a board member being put into position to have to file suit to obtain records to do her job. We believe this is the first time in the nation where a sitting board member on a public fund has had to take such action.” This is my reason for writing you.

Terry, we have exactly the same scenario occurring at Ohio STRS. The staff and current Board Chair Robert McFee and prior Board Chair Rita Walters have refused to provide investment documents requested by elected retiree Board member Rudy Fichtenbaum and Governor DeWine's appointee to the Board, Wade Steen, CPA. The Board of 11 consists of 5 active teacher seats, 2 retiree seats and 4 appointed seats that are supposed to have investment and finance expertise. How can a Board chair and the majority of the rest of the Board get away with this failure to fulfill their fiduciary responsibility? Steen and Fichtenbaum, two STRS Board members are constantly bullied by a Board that is and has been controlled by the Ohio Education Association (OEA) for 30+ years. The OEA has held all 5 active teacher seats on the Board, with the exception of 2 OFT members for 30+years.

The article mentions OSTRS is currently under investigation by the Ohio Auditor's Office, after a forensic audit was performed by Ted Siedle, a former attorney for the Securities and Exchange Commission (SEC) and pension whistleblower. The $75,000 forensic audit was paid for by donations from STRS retirees, the Ohio Federation of Teachers (OFT) and The Ohio Retired Teachers Association (ORTA). The OEA has held all 5 active teacher seats on the Board for 30+ years, with the exception of 2 OFT members. Retirees wanted a second opinion concerning high risk investments, fees and wild misspending by management and the Board.

This is about as brief as I can be. The corruption at OSTRS is beyond belief. The membership has been suffering financially since pension reforms in 2012, due to mismanagement and misspending at OSTRS.

If you have time to check into this, you will find a corrupt pension system that is likely worse than Pennsylvania's. I am most concerned at this time about the Board's refusal to provide documents to Siedle and two Board members that would be considered whistle blowers, just like Katie Muth. They have the credentials to back up their concerns.

I hope to hear from you.

Sincerely,

Thomas Curtis

OSTRS Retiree and Advocate for Change since 2003

Robin Rayfield explains about that 77 cents

From the June 2022 issue of the ORTA Newsletter

By Robin Rayfield, Executive Director

STRS News

The May meeting of the STRS board was the first since the election of three new board members. The STRS staff presented investment information that did not paint a rosy picture. As we all know, the markets have not been kind to investments. As of the meeting in May the total fund was down 4%. One thing that received a little back and forth was the claim that retirees are only receiving .77 cents on the dollar that they contribute.

Executive Director Neville was asked a few questions from board member Hunt that were clearly intended to give Mr. Neville an opportunity to state that such a claim is patently false. As one person that has made claims that STRS members are only receiving .77 cents per dollar contributed I feel compelled to clarify my statements. You may have heard statements from me such as:

    • Members contribute 14% of salary but only receive a benefit of 10.8% as described by the normal cost. If you do the math 10.8 divided by 14 is .77. I have been told by people that tout STRS’s excellence in investing that it is ‘wrong’ to do the math the way I have done. Normal cost is a pension term that is calculated by the system and their highly paid consultants. My understanding of the term normal cost is the ‘value of contributions earned in a year’. So, if I put in 14% of my pay and my value of benefit earned is 10.8%, my contribution was greater than my value accrued.  The 10.8% normal cost figure comes from STRS and was the level of benefits earned in the 2020 fiscal year. In the last fiscal year the normal cost was 12.2%. Better, but not equal to the contribution rate.

    • Sticking with the normal cost thoughts… My understanding is whenever the normal cost is less than the contribution rate, the members are receiving less benefit earned than the contributions they are making. Since STRS is the only pension system with a negative normal cost, the statement ‘STRS members have the worst deal in America’ seems to fit. Certainly, this is an opinion statement. Some people may actually prefer paying more and getting less. I don’t know why someone would want that arrangement, but I will accept that someone may feel that way.

I want to apologize if my .77 cents on the dollar created confusion or caused undue stress on ORTA members. That was not my intention. My intent was to inform people that, despite the claims that STRS makes about its top tier performance and its awards for transparency, our pension system is in desperate need of reform. The trustees on board are not capable of leading the necessary reform. That is why ORTA endorsed three challengers. We are optimistic that the new members can bring about a cultural change at STRS.