A message from ORTA Executive Director, Dr. Robin Rayfield

From ORTA Newsletter

August 2023

           

Greetings ORTA Members!

Wade Steen Update

A great deal has taken place over the last few months. As I updated you all in July, Governor DeWine has moved to replace Wade Steen as a member of the STRS board. As you may recall, Wade Steen has been the foundation for reforming STRS in an effort to bring back benefits that were promised to retirees and to ensure that active teachers receive a value that is commensurate with the contributions they are paying. When it became clear to the STRS staff that reform minded members would have a majority of the board, the governor intervened by ‘firing’ Wade Steen from his position as an STRS board member.

Although the governor’s reasons for this move have changed over the months since he removed Mr. Steen, there appears to be no legal avenue for him to make the move he made. Mr. Steen is fighting what he believes to be an illegal and politically motivated move by DeWine. Knowing that teachers, retired or active, have no better friend associated with our pension system, ORTA has pledged to assist Mr. Steen in his legal challenge. To date the Pension Defense Fund has raised approximately $30,000 to support Mr. Steen’s challenge. STRS has over $90 billion dollars to use in a fight to maintain control of the pension system that so richly rewards their poor performance, so the fight is an uphill battle. When one considers that the governor, with his political friends, and STRS with so much money (our money!) will do anything to remain in control of our pension, we certainly have our work cut out for us. I have talked with Mr. Steen recently and he informs me that his legal team is confident that the law is on his side. Mr. Steen is totally committed to seeing this battle to its conclusion. He is counting the days until he is able to get back to his work of fighting for educators in Ohio.

But we are EDUCATORS!

We are used to doing the impossible with little to no resources. We intend to EDUCATE Governor DeWine that he is not the Emperor of Ohio and that even he must follow the laws of Ohio! We intend to EDUCATE the management of STRS that they are no longer able to loot our system and take lavish bonus payments for mediocre performance! If you have not contributed to ORTA’s Pension Defense Fund, please do so now.

You may go online at https://www.orta.org/defense-fund and make your donation via credit card. Any amount helps. If you prefer to send a check to ORTA simply put Pension Defense in the memo and send it to: 

ORTA

250 E. Wilson Bridge Rd. Suite 150

Worthington, Ohio 43085

ORTA Officers for 2024

ORTA’s year begins each August and this year the ORTA Executive Committee welcomes a new member as says good-bye to a member that has served her term. Kara Mendenhall has served on the ORTA Executive Committee for the last 4 years. She began as the President Elect, moved into the President’s position, then served as Past President. ORTA thanks Kara for her service to its membership and wishes Kara the best!

Steve Seagrave moves into the President Elect position for 2024. Steve comes to ORTA from Delta, Ohio and is a member of the Henry Co. Retired Teachers Association.

Chris DeMarco from Portage Co. Retired Teachers Association completed his term as ORTA President and remains on the Executive Committee as Past President. Chris has been an outstanding member of the Executive Committee and his leadership is greatly supported by our membership. Dean Dennis has taken over as the ORTA President. Dean is well known to any STRS members that have followed the fight to restore benefits to retirees and restore the contribution levels and service requirements for active teachers. Dean has attended every meeting of the STRS board for several years and offers public participation comments each month. His understanding of how pensions work is nearly unmatched, even by the highly paid consultants STRS employees. Dean also offers an introductory message in this newsletter.

ORTA’s Endgame

I am often asked ‘What does ORTA hope to accomplish with its advocacy?’ I guess the answer is something like ‘We want what we were promised’. In order to get there, we need several changes at STRS.

First, we need transparency. It may surprise you to know that one board member (Wade Steen) asked fellow STRS board members to make changes in STRS policy that included language to increase transparency. STRS staff and a majority of the board refused to even include the word transparency in its policy book. Many of the problems at STRS that ORTA has brought to the table would be eliminated by STRS being more transparent. For years ORTA had asked STRS to video tape and make available the proceedings at STRS meetings. STRS management refused to do so for years. Just recently, STRS finally gave in and now broadcasts and makes available the proceedings at all STRS meetings. ORTA conducted a forensic audit of STRS investment operations. We wanted to know where our money was invested, what the fees, costs, and expenses associated with the investment program area, and what the actual value of our investments are. In other words, we wanted transparency in our investment program. STRS has refused to provide this information. STRS refuses to provide information on our ‘alternative portfolio’ which amounts to nearly $20 billion in assets. The same is true of our real estate portfolio which holds another $10 billion in assets. The loss of $550,000 in one alternative investment (Panda Power) was bad enough, however, STRS hiding this loss for years is unconscionable. ORTA has bemoaned the Performance based Incentive Program (bonus payments). No one can explain the payments of tens of millions of dollars to staff regardless of whether or not the investment program makes money or loses money. For example, last year the investment staff was paid about $10 million in bonus payments despite losing $3.3 billion dollars of our money. That was bad enough, but it gets worse. Using an accounting gimmick, the staff hid the real losses until after the bonus payments were made. The very next month, the actual losses of $5.5 billion were reported. Too late, the bonus payments were already paid! Board member Dr. Fichtenbaum has repeatedly pointed out that the bonus payments are made using ‘contrived’ benchmarks. It doesn’t seem to matter to the people looting our pension system.

Second, we need shared sacrifice from the people that work for us. Paying exorbitant salaries to so many people, while cutting benefits to retirees is inexcusable. Making active educators work 5 years longer and pay in more than the value of their retirement is inexcusable. Every teacher in Ohio began work understanding what they would receive when they retired. We all made the contributions as required, worked our careers and were promised a retirement benefit that would protect our purchasing power throughout our retirement. After retirement, however, STRS simply reduced our benefit. Many people decided to retire (on the advice of STRS counselors) based upon receiving a promised benefit only to have that promise broken. Active teachers taught for 2 decades and were making preparations to retire, only to find out that they would have to work 5 more years before they could retire. STRS needs to reduce expenses, period. Subsidized lunches, subsidized childcare, and health benefits for part time employees are a few of the more obvious things that could be reduced.

Paying ANY bonuses when he assumed rate of return is not achieved is out of the question.

Third, we need to change investment strategies. Repeatedly attempting to beat the market but failing to do so has cost STRS billions. Noted pension investment expert Richard Ennis recently wrote a paper that clearly stated that STRS investment ‘lost’ to a passive investment strategy 13 out of the last 21 years.

Overall, these losses, since 2009 have cost the pension fund over $12 billion. That amount lost to a passive strategy is greater than the amount taken from active contributors and retirees! Stop trying (and failing) to beat the market and invest passively. Eliminate most of the 125-investment staff and invest in the same asset classes through passive investment strategies.

STRS needs more money. Instead of trying to invest its way out of the mess they have created, STRS needs to put forth an effort to raise the employer contribution rate. At last count, STRS has the highest individual contribution rate and the lowest employer contribution rate in the nation. That is not a position to be in.