Joe Lupo: A message to the new STRS Board members Steve Foreman, Julie Sellers and Elizabeth Jones

On behalf of all the MOF moderators and members, I would like to welcome our three new STRS Board members, Steve Foreman, Julie Sellers and Elizabeth Jones, and thank them for their courage in becoming a voice for ALL STRS members during a most difficult time. Because of the prior 30-plus years of OEA-endorsed majority boards and STRS leadership, we the members, through no fault of ours, have been put into a very difficult situation. As new Board members, your challenges are many and the time for change is now. We hope that you realize, as we do, time is not on our side.

The landslide May 2022 STRS Board election is clearly a mandate from both retired and active members, and clearly validates our concerns for a much needed major change in the management and operation of STRS. MOF was proud to endorse each of you and we will continue our support in helping you to fulfill your campaign promises. We are also very aware, that you will be exposed to an abundance of internal and external pressure in making decisions as the fiduciaries representing ALL STRS members. When you know you are doing the right thing but are being pressured to do otherwise, do the right thing anyway. 

We are also aware that you recently attended a new Board member orientation by Bill Neville and certain STRS staff members. We know from past experience, there was probably a well rehearsed "dog and pony show" of indoctrination packed with an abundance of bought-and-paid-for STRS propaganda and misinformation. We hope you will rise above all the STRS past and present rhetoric and be key players in insuring that we the members get the facts...and nothing but the facts.

Those of us who have been a part of this mission since May 2017 have seen things we never would have believed or dreamed possible with OUR retirement system. No member I am aware of, understands how our trust could be so violated by Board members that we had previously put our full faith and trust in. The trust level is now at a all time low, and for good reason. The Board has continued their purge on the members while at the same time continuing their frivolous and unnecessary spending on expenditures, which all are of no direct benefit to members. The Board has continued approving annual staff salary increases and outrageous bonuses to an investment staff who are responsible for negatively impacting our pension fund by losing almost 12 billion dollars during a period of only 6 months (12/31/2021 - 06/30/2022). Why should active and retired members have to continue to subsidize a retirement system that is clearly out of control?

Our concern has been and continues to be the present and future welfare of ALL STRS Members. If STRS continues on its current path to possible insolvency, we know there is no safety net for members by the State of Ohio Legislature. We will be on our own. Currently we have retired members who cannot meet their monthly expenses...even before inflation reached an all time high. Active members are paying a higher employee retirement contribution and a reduced final average salary calculation for their pension. These two factors are impacting their current finances and their future retirement which they have to work longer to be eligible for.

As new members we believe that you understand us, because you are one of us. It is now common knowledge that the STRS director, administrators and staff in the majority of cases make six figure annual salaries, and a large investment staff that makes even more, not including the millions they receive in annual bonuses. They can hardly relate to what STRS members are going through in today's economy. That is why you must right the STRS ship before it becomes financially unsustainable and sinks. 

It is our hope that each of you will be a shining light in bringing about the necessary changes at STRS. If not you, then who? And when?

OEA salaries in 2004

Boy, those dozena of LRCs (Labor Relations Consultants) didn't do too badly back then, either, did they? Check out the rest, too.

From John Curry

September 10, 2022

Rudy Fichtenbaum takes on the STRS propaganda machine

From Rudy Fichtenbaum

September 9, 2022

The STRS Propaganda Machine

by

Rudy Fichtenbaum

September 9, 2022

The STRS propaganda machine on Facebook and with its E-News has been hard at work trying to mislead members and the public. One of their tried-and-true methods is by making a straw person argument -- an argument that misrepresents or distorts someone’s position followed by an attack the distorted position thus created.

During and after the STRS elections, several people pointed out that STRS was the only major public pension in the U.S. with a negative normal cost. Specifically, members were paying in 14% of their salaries but receiving a pension benefit that was worth only 10.86% of their salary. Thus, active teachers are getting a pension that is worth less than the actuarial value of their contributions.

What is normal cost? Normal cost is: “the cost of the benefits earned in a current year.” A more technical description is “the actuarial present value of benefits accrued in the year.” These costs are stated as a percentage of salary. If the normal cost was 10.86%, then the cost of the benefits earned in a year were equal to 10.86% of that member’s salary. How much did they contribute? The answer is 14%. Therefore, the contribution the teacher made was worth more than the cost of the benefits earned.

How has STRS responded? Their response is the average career teacher contributes $215,000 and has a projected total benefit of $2 million. “This number is based on the average single life annuity for a member retiring at the end of the 20-21 school year with an unreduced benefit, average PLOP payment, and factoring in periodic COLAs. The average age at retirement for Fiscal Year 2021 was 59 with a life expectancy to 87.” The implication is the benefits received are substantially greater than what this teacher contributed.

The above-quoted STRS response is problematic – an understatement – in several respects.

First, how can STRS factor in a periodic COLA when the Board has not approved a program of periodic COLAs – when in fact the annual COLAs that STRS members were long-promised have been cancelled since 2017 with the exception of a one-time COLA in 2023. Evidently, the STRS propaganda machine will go great lengths to mislead members and the public. Second, of course, the average career teacher, who retired in 2021, will of course get more than they contributed to the pension. To pretend or claim that STRS critics claim otherwise is a classic straw person argument. Over the 35 years they were working and contributing to the pension, STRS was not putting that money under a rock, although at times it feels that way. STRS was investing that money, and the contributions made by our average career teacher were compounding. Also, when teachers retire and start collecting their pension, most of the money they contributed is still earning a return. After all, pensions are not paid out as a lump-sum.

Using an example of annuity can help illustrate how the STRS propaganda machine tries to mislead members and the public. Assume that each pay period a person works, a certain amount of money is taken from their paycheck, and it gets invested. Suppose the person has a starting salary of $50,000 a year at age 24, gets a 2% raise each year, contributes 10% of their pay to fund an annuity (aka retirement fund), earns a 6% rate of return, and finally retires after 35 years at age 59. Further assume they live to be 92.

At retirement, they can begin withdrawing $49,092.94 each year and have $0 left at age 92. Over their career they would have contributed $249,972 and the annuity would have paid out $1,669,160. So, the annuity would have paid them approximately 6.7 times what they contributed. They received 6.7 times what they contributed because of investment earnings. They received all the money they contributed plus investment earnings.

Now suppose the company holding their savings says, we made some bad decisions, and we owe money to someone else that we hadn’t anticipated when we told you that you were going to get $49,092.94 every year. Therefore, we are going to reduce that amount by $5,000 per year. In that case, our teacher would have still contributed $249,972 but would receive a total of $1,499,160.

That teacher would certainly be justified in saying I did not get what was promised. My contributions were supposedly going to be worth $1,669,160, but you cut my payments to $1,499,160, so I am getting less than the value of my contributions, which includes investment earnings. Upon hearing this complaint, the company issues a press release saying that it will still pay the annuitant 6.0 times what was contributed, so they should not complain about the cuts.

This is exactly what STRS is doing when it puts out misleading statements to try and distract attention away from the fact, that it is the only major pension in the country with a negative normal cost. A negative normal cost means they actuarial value of the benefits earned in a year as a percentage of salary is less than the percent of salary paid to fund those benefits in a year.

To quote Dolly Parton and Kenny Rogers “you can’t make old friends” but you sure can lose them when you break your promises and use straw person arguments to deflect criticism and avoid accountability.

Our members have spoken, and it is time for a change!

Hmm...did they or didn't they try to buy the 2022 STRS Board election? You be the judge.

From John Curry

September 9, 2022

Hey, OEA, it didn't pay off, did it? You didn't try to buy the last election, did you? You certainly paid a lot of money to lose an election, didn't you?

Here it is in writing, folks -- the COLA you were promised, in writing!

From Joe Lupo

September 9, 20

John Curry: We lost closer to $12 billion, not $3 billion, over 6 months!

From John Curry

September 8, 2022

Some, at STRS,  SAY we lost only "3 BILLION DOLLARS." To me that is "Fuzzy Math." I think it is also Fuzzy Math to Rudy.  On August 16, 2022 Dr. Rudy Fichtenbaum sent this spreadsheet to me with the following words:

"The figures in the spreadsheet I sent you are for the last 6 months December 31, 2021 (aka January 1, 2022) and June 30, 2022. The stock market started plummeting in January."

I did highlight several important areas of this spreadsheet in red which are pertinent. My fellow actives/retirees, WE LOST ALMOST 12 BILLION DOLLARS (over a 6 month period) as of  June 30, 2022!

You Be The Judge!

John Curry

P.S. It all depends upon what time periods one is talking about!!!! 

James Carr: I don't envy the job the new board members are walking into. They will need our help and support to deal with the resistance that they will undoubtedly encounter.

From James Carr

September 5, 2022

As I read the post by Thomas Curtis concerning the STRS cash flow it made my head spin. I am, to put it mildly, not very good at math, but the numbers are pretty plain. STRS is losing 15 million dollars a day.

Part of the problem is perception. STRS has created an optical illusion and it doesn't look like it's losing 15 million dollars a day. It certainly doesn't act like it, either. If a private corporation was bleeding 15 million dollars a day, would the board of directors give the employees a 6% raise and a generous boost of their fringe benefits? Would it reward middle management with millions of dollars in bonuses? Would the stockholders be expected to sit by idly as the value of their investments plummeted or would they demand action to remedy the poor performance?

The STRS hasn't been fulfilling it's financial obligations for a long time (and yes, I do consider the promised COLA to be a financial obligation).

Unfortunately, you'd never know that STRS is in deep financial trouble by looking at the stately palace they reside in and the business-as-usual routine they continue to maintain. STRS management and staff just keep humming along, getting generous raises, huge bonuses, and fantastic perks while teachers hang on by the skin of their teeth.

I don't envy the job the new board members are walking into. They will need our help and support to deal with the resistance that they will undoubtedly encounter.

Tom Curtis gives us an idea of how badly STRS is bleeding

From Tom Curtis

September 5, 2022

2021 STRS Net Cashflow - edited

The left column information is taken directly from the FY20-21 Comprehensive Annual Financial Report published by STRS last December (2021). These numbers reflect an enormous daily shortfall of the STRS pension system.

The left column lists all contributions and deductions, which indicate that the STRS had a negative cashflow for the FY20-21 of (-$3,949,340,000). Divide that negative cashflow by 365 days (one year) and the results show STRS is bleeding ($10,820,109,589) per day.

The right column numbers represent business day numbers. There are 252 business days per year. The right column is simply the annual column divided by 252. Again, the negative cashflow for the FY20-21 is (-$3,949,340,000). Divide the negative cash flow by 252 business days and the math shows STRS in bleeding (-$15,671,984) per business day.

This graphic indicates just how much the investment staff must profit to make up the shortfall. Are they doing that, NO.

The OEA-controlled Board has always believed the staff deserves to be the highest paid staff in the nation and have awarded raises and bonuses to the investment staff every year since 2004. The red bar chart listing the bonuses per year, posted elsewhere on MOF, totals over 110 million dollars, excluding this year’s 10 million in bonuses.

The OEA control is gone from the Board. We need new management TODAY, not in a month or a year, but TODAY! Neville and the corruption culture need to be removed from the building ASAP! Neville is the only employee that has a contract, all others are "at will" employees. Make your voices heard members.

As you can plainly see, STRS is bleeding 10-15 million dollars per day. Retirees have not received their promised 3% COLA since 2013. Those that retired after July 1st in 2012 have never received a COLA

Mr. William Siegferth, 2nd vice-president of the Summit Co. RTA, educate yourself, for you know not what you say in the newspaper.

Mr. William Siegferth, 2nd vice-president of the Summit Co. RTA, educate yourself, for you know not what you say in the newspaper.

Some insights and observations about our illustrious STRS Board from one of our MOF members (Ohio STRS Member Only Forum) on Facebook

From James Carr 

August 21, 2022

Every teacher I've talked to over the past several years has shared the same concerns about the STRS. They don't want a fancy spacious building with exotic works of art. They don't want a parking garage adorned with golden pavers. They don't want heated sidewalks. They don't want a bloated staff of employees that are paid far higher wages and salaries than they ever earned during the long course of their careers. They don't want a crew of greedy investors risking their money as they are drawing huge bonuses for achieving mediocre returns. They don't want to provide an array of fringe benefits that are far and above anything that they ever received during their careers.

What they do want is simple. A retirement system that behaves frugally and treats them with the respect they deserve. Most of all, they want a retirement system that is committed to keeping past promises. They understood when they retired that they would receive an annual COLA to help them survive comfortably in their old age. They want a retirement system that will do what it promised to do, nothing more, nothing less.

September 2, 2022

A while back one of my acquaintances told me that I was really coming down hard on the STRS Board members. Here's the thing, I don't know any of them personally and even if I did, it would make no difference. I don't care who they are; I don't care what political party they belong to; I don't care about their religious affiliations; I don't care about their sexual orientations; I don't care about their ethnic backgrounds; I wouldn't even care if they are my brothers or sisters. If they are sitting on the STRS Board the only thing I care about is this: That they are there for the right reason. That their number one priority is to fulfill the promises and commitments that have been made to past, present, and future generations of teachers.

Right now there are 2 members on the Board who are there for the right reason. Hopefully, in a couple more weeks there will be 3 more who are there for the right reason.

As for the remaining Board members, nothing personal, you need to find some other way to spend your time and stop wasting ours.

September 4, 2022

As our group continues to expand, people might wonder what motivates us,  and while there are many sources of motivation at play, I believe the most prominent bond is simply this: Each of us is a victim of robbery.  To make matters worse, each of us is a victim of robbery on an ongoing basis. 

It's not a normal type of robbery because each of us knows the exact day the robbery will occur. It happens every year on the date we retired. For me, the date is June 1st. It's the date that we were promised, in writing that we would receive our annual COLA.

One of the things that makes this ongoing robbery particularly galling is the sad fact that the perpetrators are not anonymous thieves; they live among us and they work for us.

To make matters worse, these robbers possess legal immunity because a few years ago our state legislature gave them the legal authority to rob us.

Fortunately, we have one legal recourse. We can't prosecute the people who are robbing us but, in due course of time we can vote them off the STRS Board. If we don't, our calendars will continue to mark the date each year the robbers return.