Why am I not surprised by Dave Yost's actions? Doesn't he take his cues from the governor? You figure it out.

Ohio AG Yost files subpoenas in teachers pension scandal; investment firm responds

"QED welcomes the opportunity to present the truth. It is unclear how the Attorney General’s office will prove that QED was involved in a breach of fiduciary duty when our engagement with STRS has been legal, ethical, and proper," he continued.

Yost didn't reach out to him to speak before filing the lawsuit accusing him of collusion, he said.

By: Morgan Trau

Aug 23, 2024

COLUMBUS, Ohio — Attorney General Dave Yost has filed a slew of subpoenas against individuals he has accused of bribery as a major scandal brews inside the retired teachers' pension fund. The investment firm at the center of the controversy is now speaking out.

A (somewhat long) recap

The State Teachers Retirement System (STRS) is in chaos. In summary, there has been constant fighting, two board resignations and allegations of both a public corruption scheme and mishandling of funds.

In May, Yost filed a lawsuit to remove two members of STRS, stating they are participating in a contract steering "scheme" that could directly benefit them. Yost started the investigation after documents prepared by STRS employees alleged that Wade Steen and Chair Rudy Fichtenbaum have been doing the bidding of QED.

We have been covering this controversy from the beginning, including a dozen recent stories dealing with the latest problems around the alleged corruption plot. To get a larger overview of the situation, we did a Q&A with viewers and readers.

QED was started by former Deputy Treasurer Seth Metcalf and Jonathan (JD) Tremmel. Metcalf worked under Josh Mandel in multiple capacities, including as deputy treasurer and general counsel. In 2020, they set their eyes on STRS, according to the main 14-page memo.

The documents claim that they — despite having no clients and no track record — tried to convince STRS members to partner with them.

They couldn’t impress the board members, mainly because of their lack of experience and also because QED was not registered as a broker-dealer or investment adviser. The men also didn't own the technology to "facilitate the strategy," the documents say.

Steen and Fichtenbaum had allegedly been bidding continuously, pitching QED's direct documents to board members and proclaiming the company's talking points to other staff.

The AG states that the pair should be removed because they broke their fiduciary duties of care, loyalty and trust when "colluding" with QED.

Click here to learn more about the lawsuit.

This fight began from a debate on how STRS should invest money — through the current system of actively managed funds versus an index fund. Active funds try to outperform the stock market, have more advisors and typically cost more. Index funds perform with the stock market, are seen as more passive, and typically cost less.

In short, "reformers" want to switch to index funding, while "status quo" individuals want to keep actively managing the funds. Recent elections have allowed the "reform-minded" members to have a majority of the board.

Reformers want a cost-of-living adjustment, or COLA. The COLAs were suspended for more than 150,000 retired Ohio teachers for five years starting in 2017. They were reinstated, but there has been a suspension of increases, significant for retirees who need this money and are dealing with inflation.

RELATED: Ohio educators upset with teachers’ pension board backtracking with millions in bonuses to be given to staff

The faction also believes that this is a "sham" investigation meant to prevent democratically elected individuals from choosing what they want to do with their pension money.

Steen and Fichtenbaum have repeatedly brought up how quick the turnaround time was between Yost receiving the memo and filing the civil suit. It is unclear the total timeline, but the documents were received by government officials in early May. Yost said he was investigating on May 9, and by May 14, a lawsuit had been filed in Franklin County Court of Common Pleas.

Transparency

Educators are caught in the crosshairs of this legal battle.

"I'm kind of in this fight," former teacher Robin Rayfield said. "I'd certainly like to just be retired."

Rayfield has been pushing for transparency from STRS. He leads the Ohio Retirement for Teachers Association (ORTA), the faction of reformers. They have played a major role in electing board members who also want to change the financial system.

"The reform majority has really only been in place for a couple of meetings," he explained.

AG Yost also wants transparency.

I've obtained his eight newly filed subpoenas. They went to QED's three separate entities, a business called OhioAI, STRS, Metcalf, Tremmel and former STRS board member Bob Stein.

For his first time talking about the civil suit, Metcalf answered some of our questions over email. We were not able to have a back-and-forth but may be able to in the future.

"QED is surprised and disappointed that the Attorney General’s office did not reach out to QED during the three years the office has been aware of the anonymous accusations," Metcalf said. "Allowing QED to illuminate the truth could have saved taxpayer money."

Metcalf is referencing prior allegations of concerns from STRS staff about the relationship between QED and several board members.

"QED welcomes the opportunity to present the truth. It is unclear how the Attorney General’s office will prove that QED was involved in a breach of fiduciary duty when our engagement with STRS has been legal, ethical, and proper," he continued.

Yost didn't reach out to him to speak before filing the lawsuit accusing him of collusion, he said.

"After a positive working relationship with the Attorney General during my seven years in state government, I was surprised and disappointed that the Attorney General's office did not contact QED in the three days between when the Attorney General announced his investigation and when he filed the civil lawsuit," he said. "It’s disturbing that the Attorney General’s policies and procedures would allow a taxpayer-funded civil lawsuit based on anonymous, self-serving allegations without any attempt to understand the truth."

Yost not making contact until now isn't surprising, Case Western Reserve business law professor Eric Chaffee said.

"There are concerns about making sure that evidence is maintained, that ultimately the truth is discovered," Chaffee said. "As a result of that, in some instances, when you interview somebody, you ask them pointed questions and leading questions and suddenly they know exactly what you're looking for. As a way of making sure that the end varnished truth comes forward, sometimes you actually serve the discovery request first before you completely and totally reveal your hand."

Metcalf and Tremmel must provide all communication between them and anyone related to STRS — and Rayfield.

"We have no commitment, no relation," Rayfield said. "There's never been any money exchange between ORTA and either Seth or Bob Stein or JD Tremmel."

He continued that it is possible that he and the men could have been "at the golf course," and bought them beers or Gatorade.

"But what they have provided to me is a level of knowledge or expertise that I simply don't have," the former teacher said.

QED has helped navigate and explain financial documents that come from STRS, he said.

"There's probably very insignificant information that they will find, maybe some of it they'll find funny because I might joke with them or laugh, you know, get a funny email and send it back to them," Rayfield continued.

STRS was subpoenaed for information regarding their 14-page memo.

"STRS Ohio will continue to fully cooperate with the Ohio Attorney General’s office regarding its investigation into the governance of the pension system. STRS Ohio operations, as highlighted by recent audits, continue to be well-run. Teachers in the classroom and retired educators can rest assured their pension is safe. STRS Ohio members with questions should contact the pension system through  the website or by calling STRS Ohio toll free at 888-227-7877," STRS spokesperson Dan Minnich told me.

The STRS memo claims QED and ORTA have worked together, But Rayfield believes he and QED are being targeted for being critical of the pension board.

"The anonymous, self-serving accusers attack everyone who has been critical of STRS: including defendants Wade Steen and Dr. Rudy Fichtenbaum; former STRS board members Bob Stein, Steve Foreman, and Yoel Mayerfeld; former SEC attorney and pension expert Ted Sidle [sic]; renowned pension consultant Richard Ennis; teacher unions; individual active and retired teachers; eight of the eleven current STRS board members; and the media. We are another voice in the chorus of criticism. QED has a relationship with some, but not all, of these individuals and groups. The inference that we aren’t allowed to talk to someone is ludicrous. Frankly, the only people supporting STRS staff are either political or consultants and lobbyists paid to reinforce STRS’ false narrative," Metcalf said.

Chaffee disagreed.

"There's smoke here," the professor said. "Often when there's smoke, there's fire."

Regulations prevent Yost from bringing frivolous lawsuits, the expert added.

"There is reason to believe that there may have been misconduct that rises to the violation of the law, otherwise they wouldn't have actually brought this matter," Chaffee said. "There's at least something worth looking into, even if it's ultimately found that it doesn't rise to a violation of the law."

Yes, the requests are wide — such as asking for all communications on their business plan, but Yost has a plan, Chaffee said.

"The AG knows what they're doing here in how you conduct discovery in a sophisticated matter; this is done in a very strategic fashion. Some of the choices may look odd and haphazard, but It's almost certain that they have a plan here," he added. "And based on the fact that they're dealing with confidential sources, very likely that they know exactly what they're asking for."

I asked what worried Metcalf the most about revealing the communication between himself and STRS board members.

"QED has nothing to hide and has always followed the letter and spirit of the law," he responded.

Communication

Before Yost sent out the subpoenas, I made several of my own records requests to the pension fund, asking for all communications between the board members and QED.

A small portion was returned, showing Fichtenbaum's communication with Metcalf and Tremmel. But they weren't over text messages or emails.

Screenshots from Fichtenbaum’s phone show that he used the encrypted app Signal to speak to the men. This app automatically deletes messages within a set time of the receiver reading them; however, the call logs don’t. Even after Yost filed the lawsuit in May, Fichtenbaum talked to QED leaders more than two dozen times throughout the following month and a half.

"It's awfully strange that they're using apps that essentially will not allow their communications to come to light; it provides no record of them," Chaffee said. "And ultimately, it's going to make it more difficult for the AG to figure out what went on here."

As a journalist, I have and use Signal for sources to discreetly provide documents and information that they don't want to be traced back to them. Using the app at the Statehouse is incredibly common, especially after the FBI got access to the phones of politicians and lobbyists during the FirstEnergy scandal, which led to plea deals, prison sentences and suicides.

"We’re just a few of the 40 million people who use this messaging app," Metcalf said.

That being said, the app itself is about being secretive, Chaffee said.

"The more records you create, the more problems you may have down the road, especially if there's some sort of claim of wrongdoing, like the issue here," he added. "It's rather disturbing that the state would be using this type of app."

Lawmakers talking amongst themselves to avoid reporters' records requests is one negative thing, but using a disappearing chat to talk to an investment firm that wants to do business with you is a whole other game, he said.

"Ultimately, if everything is on the up and up, what's wrong with having everybody take a look at it?" the professor said.

Signal's privacy protections may not be that protective, though. When reading through their policies, it states that they will give information "to meet any applicable law, regulation, legal process or enforceable governmental request." That being said, the app does state that it can't "decrypt or otherwise access the content of your messages or calls."

Yost hasn't subpoenaed Signal yet. We reached out to the app to see if they would even have already deleted messages in their system.

Litigation will continue as we await our next chunk of records.

Read this article here.

Robin Rayfield clarifies the anti-teacher actions of the STRS management and the Attorney General that harm all of us

ORTA Executive Director Robin Rayfield's Report

August 2024 ORTA Update

August 19, 2024

"As the reform movement began to gain seats on the board management saw the threat to their way of life and sought to call upon the governor, then the AG, to maintain their grip on the billions and billions in our retirement system."

STRS Update

The summer has been active for the STRS pension system. There were a couple of resignations from the board (Dale Price and Steve Foreman) with replacements being named.

Michelle Flanigan is replacing Dale Price. Michelle’s term began a month early in August of 2024 and runs for 4 years. Mr. Foreman retired from education, so he was forced to give up his active seat. Mr. Harkness replaced Steve. Mr. Harkness is an active contributor from Akron and will serve out the remainder of Steve Foreman’s term.

This summer also witnessed a great deal of scrutiny concerning the PBI (bonus) system at STRS. In June, the board failed to approve the bonuses for the investment staff at STRS. Then, in July a special meeting was called to discuss the status of the PBI payments. After being threatened by the A.G.’s office the board reversed itself and approved the payment of the bonuses. Of course, many people that follow this closely felt betrayed by the reversal. Many comments on social media were not kind about this action. However, I must caution those that are critical, that threats made by the attorney general of Ohio are not to be ignored or taken lightly. When the AG makes threats to remove a board member, everyone must consider that threat carefully. After all, the AG is currently attempting to remove two STRS board members based on an anonymous letter received. The corrupt nature of the governor and the AG are a threat to our pension.

Recent STRS Meeting

Perhaps a light at the end of the tunnel for our pension system is the recent action by STRS to hire a governance consultant. Hopefully, the board will hire a consultant that is not hand picked by the management staff at STRS. Having an independent voice in the leadership at STRS will lead to better outcomes. What is interesting to note is that, since STRS membership, both active and retirees, have voted in reform minded candidates, the management and status quo members of the pension system have gone to extreme lengths to fight against reform. For decades upon decades the management team at STRS have paid themselves bonuses, have underperformed a passive index, have ignored their membership, and have refused to change anything. As the reform movement began to gain seats on the board management saw the threat to their way of life and sought to call upon the governor, then the AG, to maintain their grip on the billions and billions in our retirement system. I recognize that the reform isn’t happening as fast as we might like, but reform is coming. Have faith that what is right and just will win out in the end.

Another positive discussion from the STRS meeting in August comes from the STRS policy discussion. The board is currently looking at restoration of the promise of colas for retirees and for fewer years of service for active teachers. For years the board has refused to discuss ‘broken promises’ made to retirees and changes to the years of service requirements for actives, however, the discussion this month was about ‘how do we get back to what was promised’. I certainly see this as a step in the right direction.

Dean Dennis sums up some of the egregious actions of our pension system and "higher up" elected politicians that harm some of our best STRS board members and the STRS membership

ORTA President Dean Dennis' Report

August 2024 ORTA Update

August 19, 2024

Greetings, Members.

I hope our active teacher members have been enjoying the summer and are readying themselves for another year of service to Ohio’s children as the 2024-25 school year starts. Public education is the backbone of our country. Our active teachers sacrifice so much for Ohio, including contributing 14% of every dollar they earn to help pay for a pension underfunded by our legislature.

Let's remember some important facts to keep this issue at the forefront of what Ohioans can do to help. Active teachers are projected to receive a retirement benefit that should cost an 11% contribution rate, yet they pay 14%. Most retired teachers were charged a contribution rate that included a 3% COLA upon retirement. However, what is genuinely intergenerational inequity had the 3% COLA reduced to 2% after they retired and then eliminated in 2017.

Ohio is a non-Social Security state, so inflation protection must come from the state. Sadly, the employer contribution rate for teachers has been locked at 14% for over 40 years. To put this into perspective, the national average employer contribution rate for teachers is above 29%. Intentionally, because they are concerned if they raise taxes, they won’t be re-elected, or unintentionally, for reasons only known to them, they are causing Ohio’s retired teachers to suffer financially. Here is who is not suffering financially—the STRS investment staff.

The July Board meeting approved the investment staff’s performance bonuses (PBIs). The senior staff presented how STRS moved from a top-quartile pension system to a top-10 % one. They shared how our financial staff was underpaid and how there could be an exodus of personnel if performance-based bonus incentives were withheld. If only the senior staff advocated for members to the same degree as they advocate for themselves.

Recall the 14-page STRS staff letter, hand-delivered to Governor DeWine, who forwarded the letter to the Attorney General (AG). This letter played a part in the staff PBIs. Based on the unfounded accusations in the letter, the AG brought suit against two board members, Fichtenbaum and Steen, for allegedly violating their fiduciary duties. The investment staff’s PBI bonuses were on the agenda at the July meeting. A representative of the AG's office sat with our board members at the meeting. With the majority of the board looking to reduce the PBI bonuses significantly, the AG’s office hinted that a significant reduction could jeopardize the entire board. The AG’s office implied they could be violating their fiduciary responsibilities. With the AG’s involvement lurking, the PBIs were passed with only a modest reduction.

Although the bonuses were approved, it has become apparent that our investment staff is far from underpaid. They might be the highest paid. The average STRS investment staff salary is reported to be $230,000. Add $10 million in bonuses divided by the 69 eligible staff members, adding another approximately $145,000 per staff member. This would be an average compensation of $350,000. A study needs to be done so there is just compensation for taxpayers and staff. There needs to be an end to this issue over PBIs and hard-to-understand benchmarks year after year.

Lastly, in case you missed it, board Member Wade Steen returned to the board, and after the June meeting, reform-minded Board Member Steven Foreman announced his retirement. For the August Board Meeting, newly elected, reform-minded board member Michelle Flanigan experienced her first meeting, replacing former board member Dale Price. If you attended or viewed the meeting, you saw she was well-prepared and involved. Her dedication and preparedness make her a promising addition to the board, bringing hope for positive change.

Sadly, Wade Steen’s last board meeting will be in September. Members and the public owe Wade more than words can express. Wade is a true friend to education, members, and the public. Governor DeWine never got things so wrong. On the positive side, retiree Steven Foreman’s replacement will be seated in September. At the August board meeting, board members selected Michael Harkness as Foreman’s replacement.

Mike Harkness is the First Vice President of the Akron Education Association (AEA), an independent association from OEA and OFT. Mike has been following the media and social media information about our pension. I found him to be informed and committed. He’s “100% dedicated to the system” and “not afraid to make tough decisions.” Mike believes people who have put in the years deserve protection. In short, Mike is “willing to fight for members.” I believe our board made a good decision in selecting Mike Harkness.

Dan MacDonald's personal report on the August 2024 STRS Board meeting: "Two Long Days"

From Dan MacDonald

August 18, 2024 

STRS August Board Meeting, Two Long Days 

I attended the August 15th and 16th STRSOH Board meeting. Implementation of recommendations from the Funston Audit has Board members meeting in committees that then report to the entire STRS Board; therefore, the days flow from committees to entire Board back to committees. Although the Board has had committees in the past, this is really a new concept in progress.  

Thursday morning began with the Governance Committee meeting [Correthers, Fichtenbaum, Davidson, Herrington, Jones]. Some other Board members were present, but are not on the committee. 

If you recall, the Governance committee had AON as its consultant, but they withdrew. Three companies were separately interviewed to become consultants. The committee asked the staff to vet these three companies and three others that have not been interviewed. The committee then worked on Pension Funding of Member Benefits and development of a Sustainable Benefits Plan (SBP). 

STRS staff suggested to add language changes to the funding policy – for instance, “The funding objective is to: take steps to adjust benefits to the level prior to the adoption of measures from 2012 to 2017, while preserving the fiscal integrity of the system as determined by the Board’s actuary.” [Current policy does not describe a SBP so one might be helpful. I see this as a financial plan which is partly in policy, currently ignored, but certainly not spelled out.] 

New language suggested addresses both actives and retirees, COLAs and reducing years of service. These objectives would be in the funding policy. [Note that a 1% COLA actuarily costs $7 BILLION dollars; 2% 14 BILLION; 3% $21 Billion. This money is currently not available so do not think this is suddenly going to happen. A lot of discussion over all of this.  You can find the presentation slides at STRSOH.org under ABOUT, then BOARD MEETINGS then AUGUST MEETING MATERIALS “Pension Funding of Member Benefits Policy Updates.”] Only half this presentation was given as four hours brought the committee meeting to noon. The previously discussed policy changes were reviewed and recommended to be taken to the Board.

Near 12:15 pm the actual Board meeting was called to order. After minutes were approved and the Board addressed revised committees [Michelle Flanigan now seated, and committee assignments adjusted], Public Participation took place. Ten people spoke. A variety of topics addressed: fees paid external investors, PBI’s being a good thing, not fulfilling fiduciary responsibilities, suggestion to take a vote of no confidence, Siedle audit and what is being hidden, contractual obligations ignored, hostile takeover accusation, special meetings, and equities held in the STRS investment portfolio of a company that abuses affordable housing. The lunch break followed at 1 p.m.

After the break, the Finance department had STRS’s actuary consultant, Cheiron, present on Sustainable Benefit Plan Priorities. The thrust of the presentation addressed the challenge to balance different member interests [think actives, retirees] and not forgetting that contributions and investment earnings should equal benefit payments and expenses [they are not]. Supplemental benefit discussion and the Pension Funding Policy, along with the Sustainable Benefits Plan, are discussion items for the next seven months.

The Board meeting recessed about 3:30 pm. The Audit committee [Davidson, Falls, Fichtenbaum, Sellers, Steen] then opened and met publicly until 5:40 pm when it went into Executive Session. 

The audit department presented its past, current and future internal audits of the departments of STRS. Outside auditors Crowe LLP presented the timeline for its yearly independent audit. 

Outside consultant, ACA Group, also presented regarding governance, risk, and compliance. STRS was praised for its GIPS Standards compliance since 2006 and ACA’s review of STRS accounting/financial practices. 

The committee meeting public session ended after Acting Director Lynn Hoover discussed the Funston fiduciary audit, which was completed in May of 2022, and the current status of its 172 recommendations. 63 completed; 51 in progress; 24 planned; 5 in disagreement; Board still to decide 29. [Yes, it does add to 172]

Day 2 began with the Investment Committee meeting [Falls, Fichtenbaum, Herrington, Hunt, Steen] which lasted 210 minutes. STRS Director Worley reported a June return of positive 1.07% with the investment assets ending the year at $95.3 billion, up $5.2 billion since the closing June 2023. The total net return for FY 2024 was 10.53% [Remember that the actuarial assumption is 7%. This does not mean a COLA is suddenly on the table. I think $107 billion was mentioned as overall liability needed to address to be fully funded and a Sustainable Benefits Plan is being developed and discussed. STRS is closing the gap.]

July’s return was positive 1.2% with total assets at $96.1 billion, up by $800 million in FY 2025.

Domestic Equities were then reviewed.  Outside consultant Meketa then shared a Performance Report as of June 30, 2024. Once again STRS did well against its peers. [I know, no COLA,] Outside consultant Callan presented its review of the Alternatives Portfolio, which has improved the risk-adjusted returns of the total fund through added diversification and strong performance. 

Meketa was then back addressing and leading discussion on an assets-liability survey the Board had taken and its implications. One finding: “There is far more agreement in the survey results than what comes through during Board meeting discussions.”

Meketa went over all 23 questions with the Board showing their responses. The presenter was challenged on whether he represented the staff or the Board. He made it clear that he was there for the Board and would help them with what they should be asking and requesting. [First time I ever have heard a consultant pledge that position.]

The committee then voted on a Reference Portfolio Benchmark. The committee passed 4-0 with Herrington not voting. The proxy voting summary then was presented – 53,748 proposals voted; 7,127 ballots responded to during the six-month period. There also was a review of securities compliance policies and procedures and a semi-annual derivatives exposure report presented.

That was Friday morning. The STRS Board was called to order at 12:30 pm and immediately broke for lunch. The meeting was called back to order at 1:52 pm with some votes coming from committees to the Board, all passed. Mr. Davidson did request a legal opinion regarding the May 16 removal of the chair and vice chair.

The Executive Director report covered activities at STRS for July and August. Against 42 other systems, STRS call center earned the highest service level score. Info was shared on member and employer outreach and a legislative report. [It’s an election year.] 

An Ohio Retirement Study Council sub-committee has concern regarding STRS intergenerational equity and any 13th check or COLA payout by STRS. [STRS is special and ORSC should explain the ways STRS is different than any of the other 4 state pensions other than their desire for no COLA.] 

The Benefits department then addressed 2025 Proposed Premiums. Over 90% of STRS plan enrollees have no premium increase, including Health Care Assistance Plan enrollees. Non-Medicare enrollees do increase from $279 to $319. A non-Medicare spouse has a $161 increase. This is a year for dental and vision insurance. Remember that these plans are offered only every other year.

Routine Matters began about 4:05 pm.  FY 2024 PBIs were authorized. Fichtenbaum was voted chair, and Jones was voted Vice chair. Someone named Michael Harkness was elected to fill Steve Foreman’s contributing member seat. Foreman resigned. Former Board Member Arthur Lard was also nominated, but he wasn’t elected.

Under old business, Board members Jones and Sellers presented on seminars attended.

Under new business, Neville’s paid leave was extended another month. Davidson asked the governance committee to take up the definition of teacher service. Correthers pointed out that at least 3 meetings will not be on the third Thursday of the month, February, April, June.

The meeting adjourned at 4:41 pm. Next meeting scheduled for September 18, 19, 20.

[New Board member Michelle Flanigan jumped right into discussions and probing. Chair Fichtenbaum pushed back on many of the financial presentations. Davidson probed and put forth ideas and suggestions. Falls continued to acknowledge other ideas and search for consensus. Sellers probed and Steen pushed Board members to continue the push for teachers. His final meeting is next month. Actually, everyone on the Board was engaged throughout the two long days. Personally, I also heard senior staff addressing active/retiree issues that have been continually raised. Acknowledgement is a start.]

Dean Dennis to STRS board re: the Attorney General's charges against two board members without talking to them: Where is the evidence? Where is the due process? And does anyone in Ohio think it is fair that you have to run back to the AG who charged you for approval to decide who can defend you?

Dean Dennis' speech to STRS board

August 15, 2024

To our board members, stand firm; members support you. 

To STRS employees, remember you serve at the will of our board.

August 2024 - Dean Dennis, 35 years Cincinnati Public, ORTA Executive Committee Chair, STRS Ohio Watchdogs Administrator, and Ohio STRS MOF member.

I want to thank our Board for their service during these rough times. As everyone knows, the 14-page STRS staff letter to the Governor's office has created almost impossible conditions for our Trustees to perform their fiduciary duties. Has the press asked our acting ED if she was party to this letter, which triggered the AG to charge two of our board members without talking to them? Where is the evidence?  Where is the due process? And does anyone in Ohio think it is fair that you have to run back to the AG who charged you for approval to decide who can defend you?  

A few months back, our members publicly witnessed our board members negotiating performance bonuses with a member of the AG Office. Understandably, not many members were sympathetic to senior management's comments that their employees relied on these bonuses. This incident only served to highlight how disconnected they continue to be. In the STRS staff 14-page letter to the governor, STRS staff went so far as to label our active teachers' democratic election of their representative to the STRS board, with a majority of 85% to 15%, as a “hostile takeover.” They seem to think our pension system is their personal property.

The vote was a clear call for change: maintain the status quo or move towards reform. Members unequivocally sent a message that they desired reform: more transparency in how their money is allocated in investments and accountability in how much money has been wasted in fees.

To our board members, stand firm; members support you. To STRS employees, remember you serve at the will of our board.

       

Dan MacDonald reminds STRS of their blatant, irresponsible mishandling of stakeholders' funds

Dan MacDonald's Speech to STRS

August 15, 2024

Mr. Chair and members of the Board, good afternoon. I am Dan MacDonald, an STRS retiree with 38-plus years of service.  I am also the Executive Director of Local 279R, Northeast Ohio AFT retirees.

I attended a Geauga County retiree meeting last week.  About 60 people were in attendance.  After reminding them of this week’s STRS Board meeting, hands went up.  Expressions of disappointment were shared with me on this Board. Their feelings of promises made but not kept. There is a vast difference between many urban/suburban districts and rural districts. Final salary averages in rural districts are often thousands of dollars less. You already know that, but anger and sadness exist in these counties.

I do not know why I haven’t truly realized the following - I’ve been attending these meetings for years.  I’ve been staring at the proposed 2025 Budget May 16th document all summer. In 2023 $44.3 million dollars were spent on internal management expenses.  I figured that included the 2022 PBIs.  Assets managed were $60 BILLION plus.  External management expenses were $256 million.  Assets managed $30 BILLION plus.  I figure all the consultants' fees are part of this number, but still external managed is almost 6 times more expensive for handling half the assets.  Either the consultants are super expensive, or the external managers really have huge fees.  Has anyone compared the return of external funds to internal funds?  I do not remember such a report; everything seems always to be lumped together.  Maybe our investment department should be looking to take over some of these external investments.  Bring that $256 million price tag down.

Also in some past meetings, a 13th check and a COLA have been discussed and Cheiron directed. Personally, probably not my memberships train of thought, a 13th check adds nothing to our yearly pension.  It is a one-time only.  Personally, I would like the Board to see how this new fiscal year plays out financially before promises are made.  Springtime tells us pretty much how FY 2025 is going, up or down.

As always, actives need their futures enhanced and retirees need their COLAs.

Thank you for the morning session that addressed the pension funding policy.  First steps.