Today's Siedle Court Case Release: Edward Siedle v. STRS Ohio

From John Curry and Mario Iacone

Magistrate Orders Ohio Teacher Pension To Release Investment Documents--Finally

For over 3 years, the Ohio Pension has fought hard to keep its dealings with Wall Street hidden from public scrutiny.

July 26, 2024

Here is the link for all 39 pages! Pages 1 and 37  are shown below.

Edward Siedle v. STRS Ohio_Magistrate's Decision_July 26, 2024.pdf

Edward Siedle v. STRS Ohio_Magistrate's Decision_July 26, 2024.pdf

STRS Board Indemnification/liability Insurance

From John Curry

July 25, 2024

Chapter 6 of David Pepper's novel "2025" is now out!

"2025": Mass Deportation

Chapter 6: History Tells Us that Deporting 15 Million People Guarantees a Humanitarian Nightmare; Here's What It Could Look Like

David Pepper
July 25, 2024

One of the clearest commitments being made by Donald Trump on the campaign trail is to unleash the largest mass deportation in history—which he says will involve deporting 15-20 million. History tells us that any operation of that massive scale, fueled by the type of rhetoric he uses (that blood is being “poisoned") will create both a dangerous humanitarian nightmare as well as a broader upheaval of the nation. The deportation camps being described, patrolled by reservists and the military, would take us back to some of America’s darkest days.

Chapter 6 of “2025” takes place at one of the countless deportation camps that they are pledging they will create:

Introduction and Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Toledo Blade: STRS reformers flinch

Toledo Blade Editorial: STRS reformers flinch

July 25, 2024

The top STRS legislative goal has gone nowhere in the General Assembly because the teachers retirement system has turned itself politically toxic by putting staff before beneficiaries.

THE BLADE EDITORIAL BOARD

The State Teachers Retirement System of Ohio has apparently cornered the market on indispensable men. The suggestion that investment staff at the teachers pension would resign was enough to restore performance bonuses, which reform board members had blocked in a June vote.

The reform majority lost their nerve when STRS fiduciary counsel George Vincent told them ending the bonus system would be a violation of their fiduciary duty. So another year of six-figure bonuses is all but guaranteed with the votes to approve the gravy train supplied by board members who campaigned on the promise to run the pension for Ohio teachers.

In the long run, STRS management and status quo board members have done more to set back the most important financial goal of the teachers retirement system than any of their critics.STRS has spent years trying to get Ohio lawmakers to mandate a 28 percent increase in employer contributions to the teacher pensions. That would add more than $500 million a year to STRS funds. But the only way for school districts to come up with more than half a billion dollars more every year is to raise taxes, cut staff, or some combination of both.

The state legislator dumb enough to force pain upon taxpayers to provide lavish bonuses to 69 investment staffers, who are routinely outperformed by a two-man department in Nevada that simply directs the allocations between index funds, deserves the harsh TV commercials and mailers that would come with their next campaign.

Voting for a massive increase in contributions to STRS without major reform at STRS is asking to get beat in the next election.

The top STRS legislative goal has gone nowhere in the General Assembly because the teachers retirement system has turned itself politically toxic by putting staff before beneficiaries. STRS paid their investment staff $10 million in bonuses last year despite a $5 billion loss. The benchmarks to earn a performance bonus is set so every year is a good year for STRS staff.

The majority of the STRS staff is paid more than $100,000 with bonuses taking the top investment staff over $750,000.

If the entire STRS investment staff left, STRS financial performance would improve. The $2.6 billion defined contribution program for STRS members who choose not to put their retirement funds in the $94 billion defined benefit program selects between index funds that beat STRS returns over 1, 3, 5, and 10-year periods.

STRS investment staff resigning is an opportunity, not a problem. The pension has an extensive menu of currently utilized options that bring better returns at lower cost. STRS is ripe for addition of funds by subtraction of investment staff.

The STRS reform board members who campaigned for the seats they hold told active or retired teachers they would switch the STRS portfolio to the lower cost, higher performance index funds.

It’s easy to promise reform to teachers who support big change, but following through is difficult for board members who become slaves to advice supplied by STRS consultants.The backsliding STRS board reformers demonstrated the truth of poet

Maya Angelou’s observation that “courage is the most important of all the virtues because without courage you can’t practice any other virtue consistently.”

Read the article online here.

Bob Buerkle and Dean Dennis: STRS Ohio has failed in its mission to provide "Intergenerational Equity"

From Bob Buerkle and Dean Dennis

STRS Ohio Watchdogs

July 23, 2024

STRS Ohio has failed in its mission to provide "Intergenerational Equity"

The two main reasons this has occurred are actuarial miscalculations and underperforming investment returns.

Since at least the early 1990s, STRS outside actuaries have introduced the importance of "Intergenerational Equity" at Board Meetings.  Conceptually, all retirees should receive the benefits they earned and paid for throughout their careers, and STRS retirement benefits should be similar for all retirees.

The 'Entry Age Normal' system, used by the STRS actuary, plays a crucial role in determining the NORMAL COST for all employees throughout their careers.  Until the pension changes in 2013, the NORMAL COST was consistently around 14.75% to 15.25% yearly.  However, since the “pension reform,” the NORMAL COST has been just under 11% for around a decade. This means that current teachers are paying 14% for a retirement benefit worth less than 11%, highlighting the disparity in contributions and benefits.

STRS has failed in its mission to provide "Intergenerational Equity."  The two main reasons this has occurred are actuarial miscalculations and underperforming investment returns.  Since STRS documents show that the original 3% COLA was supposedly funded at each member's retirement, and then to have that critical component removed, we must place the blame where it belongs.  Some of this could be the fault of the actuary, possibly when Substitute Senate Bill 190 raised formulas, made career longevity enhancements, etc., but the overwhelming blame must be put on the investment team's and their advisors' performance.

Intergenerational Equity:  Remember 30 and out?

Remember 30 and out?  Let’s compare the current pension income of 1992 retirees with our recent 2022 retirees. Clearly, 30 years apart qualifies as an entire generation. Teachers used to be able to retire after 30 years of service, so let’s examine the intergenerational equity, or inequity, of the two groups.

A typical 1992 STRS retiree had an FAS of only $43,500, with a 63% formula for 30 years of service. This person began with an annual pension of $27,405 and now receives an annual pension of $46,585. This is less than it should be due to the 2012 “pension reform,” which reduced the 3% COLA by a third and, since 2017, has only yielded two ad-hoc formula increases for a total of 25 years of COLA out of 32 years. There were seven years without COLAs. Still, these retirees are behind by over 24% of their original pension purchasing power.

Today's 2022 STRS retiree, with a final average salary (FAS) of $80,000, more than 70% greater than the 1992 retiree, can be worse off due to “pension reforms.” If they retired at 30 years, their FAS provided only a 33% pension formula, and they statutorily will not receive COLAs for 5 years. They will receive the same annual $26,400 pension they started with over this period without any promises of a future COLA.

Meanwhile, the 1992 Retiree pensioners are paid $46,585 per year.  They received a 3% COLA in 2023 and a 1% COLA in 2024. A pension plan without any inflation protection fails to be a pension plan.

Below is the simplified overview of the “pension reform plan” approved by legislators overseeing STRS Management.

1. Withhold the promised 3% of COLAs until 21 billion dollars are saved.

2. Implement an overly penalizing structure for retirement, where 30 years of service, which used to provide 66% of FAS, became reduced to 33% by August of 2021.

3. Force people to work a minimum of 4 more years for an unreduced pension. This saves STRS $210,000 per retiree.

4. Increase the Employee Contribution from 10% to 14% without increasing the Employer Contribution.

Is there any reason to doubt why the Public Plans Data - Center for Retirement Research at Boston College ranks STRS as the only pension plan in the US with a negative "Normal Cost?"

Bob Buerkle
Dean Dennis
July 23, 2024

What STRS reports vs. what I saw and heard at the 07/21/2024 Special Board Meeting

STRS says this: 

July 22, 2024

Revised Performance-Based Incentive Policy Approved

At the July special meeting, the State Teachers Retirement Board approved an amended version of the performance-based incentive (PBI) policy proposed last month. It includes potential reductions to the incentive payments for senior investment staff depending on certain metrics.

What I observed BEFORE the vote while attending the meeting:

An STRS-paid consultant, George Vincent (a lawyer from Cincinnati and a friend of Mike DeWine, so I'm told), told the board they would be violating their fiduciary duty if they didn't pay those bonuses (excuse me; PBIs, not bonuses (??) Hmm). 

Only TWO board members, Wade Steen and Julie Sellers, had the guts to vote against them. Again STRS got its way. Scare tactics, BIG time. Very FEW pension systems in this country even PAY bonuses, but STRS Ohio sure does -- HUGE, out-of-sight bonuses (at least $10 million worth, even in years when we lose millions, maybe billions) to about a hundred people. The teachers are stuck with paying for it, and we STILL don't get our COLA. 

What's wrong with this picture?

David Pepper: Public Service and Joe Biden; A Good Man Shows Us All How It's Done

“In the end, it’s not the years in your life but the life in your years.”

David Pepper: "I’ve seen this quote attributed to a number of historic figures, but at the moment, no one personifies it better than Joe Biden."

Read David's article here.