Blade editorial June 19, 2025: Reform is over.

 

Edward Siedle: Circus Clowns Center Ring At Ohio Teachers, Minnesota State Pensions; The clown show continues at these massive state pension circuses... but no one's laughing.

By Edward Siedle

June 18, 2025

Dan MacDonald's words to STRS board re: conundrums and sour lemons, and advice to board members

Dan  MacDonald's speech to STRS board

June 12, 2025

MY PUBLIC PARTICIPATION - CONUNDRUM 

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

This STRS Board is in a conundrum.  Conundrum, a problem that is difficult to deal with.  

An anonymous letter from someone on STRS staff regarding our former Director that led to his dismissal from STRS with a platinum golden parachute.  A 14-pages, once anonymous, letter regarding two board members. Conundrum.  I would venture to say that our STRS elected Board members do not earn salaries anywhere in the vicinity of the majority of STRS staff or the appointed members of the Board or Ohio legislators.   A $90 plus billion public pension funds taken over by common people; teachers at that. It is a conundrum for STRS and the legislators.  

Last month I questioned the appointed Board members' loyalty to STRS or to their appointee.  As naive as I am, only during last month’s public participation did I find out about the authors of the 14 pages and later their names. Conundrum. Lawyers at that, STRS lawyers. So, who are the seven elected restorer members to trust, to listen to, to believe?  Think about it!  And now Mr. Allison has added information as to a manager and Board member.  

PAUSE 

Another conundrum.  Who suggested and hired outside consultant CBIZ who presented research that 341 STRS staff members need between 2% to over 10% salary raises?  I do not doubt CBIZ findings, BUT PERS, SERS, Police & Fire, and the Ohio Highway Patrol really could use CBIZ because if the Ohio STRS Members Only forum is accurate, and since presented budgets and the Ohio Retirement Study Council is targeted as the “Source,” their staffs are monstrously underpaid. I know STRS doesn’t want to be compared to their cousins; it’s like comparing a polished apple to sour lemons except the sour lemons continue to treat their members as the reason for their existence and they are not requesting a 9% increase in their budget for their sacrificing staff.  

Yes, national and state politics are being played out right in this room. It is hard for Board members to deal with two masters.  I’d say to the elected restorer members, stay the course.  Do what you think is right.  Continue to be conundrums, a problem that is difficult to deal with. Appointees, consider taking a Wade Steen stance.  Be reasonable but push back, make STRS more transparent.  

As always, actives need their benefits enhanced and retirees need a decent permanent COLA.   

Dan MacDonald's report on the June 2025 STRS board meeting

From Dan MacDonald 

June 16, 2025

PERSONAL JUNE STRS BOARD SUMMARY

Dan MacDonald attended the June 2025 STRS meeting. I was not present when the meeting commenced at 8:30 a.m. on June 11 and went into executive session. The public part of the meeting was to begin at 12:30 a.m. and I was present. It actually started at 1:53 p.m. with a 6-5 vote to authorize hiring Steven Toole as the next STRS Executive Director. Mr. Toole was the former director of the Retirement Systems Division of North Carolina. [Restorers 6 and appointed and one elected active 5]. The Board then motioned to terminate outside consultant Corn Ferry which had conducted the search for an executive director. Vote 8-1with an abstention and an active elected member not voting. The Chair also welcomed new board member Lynn Sautter Beal appointed jointly by the speaker of the House and the Senate president.

The Investment Committee was called to order at 2:01 p.m.  May was a good investment month.  The fund’s net value grew by a plus 3.0%. The total net fund return for the fiscal year to date is 7.7%.  The total fund is $98.5 billion, higher by $3.2 billion since the start of FY 2025. [The fund was 4.5% my last report and I was cringing then that the investment goal of 7% per fiscal year was not going to be met. The general fund still needs to survive June 2025. Remember STRS FY is July 1 thru June 31. FY 2026 starts July 1, 2025.] Outside consultants Meketa and then Callan shared their quarterly performance reviews as of March 31, 2025, of the funds. The reports were glowing in light of the turmoil since January.

There were reviews of the semiannual Broker Evaluations and Associated Policies and the Statements of Fund Governance and adoption of the Statement of Investment Objectives and Policy. Comments were shared and the committee motions passed.

The committee then spent close to three hours in discussion of the Performance Based Incentive Plan.  [Think investment bonuses. The meeting recessed at 6:45 p.m.  I departed at 5:30 p.m.]

The Board was called to order at 8:32 a.m. on Thursday, June 12. The proposed Fiscal 2026 Budget was presented by the Finance Department and Interim Director Aaron Hood. Half the staff of STRS is eligible to retire within 5 years. [A concern]. The budget addressed the significant rise in anticipated retirements and includes level-setting compensation and the addition of 20 employees and the goal to make STRS Ohio “return to its status as an employer of choice in Columbus and in the public pension world.” [Read that quote again.  Since the budget with an amendment ultimately passed unanimously, actives and retirees need to be demanding of our employees.  We are to be the choice employer in Columbus and the public pension world, and the Board unanimously voted for that to happen].

The Member Benefits Department presented the 2026 Health Plan changes.  Under Medicare, the maximum out-of-pocket increases from $2,000 to $2,100.  The subsidized premium rates are rising by up to $81 per month depending on plan. Spousal coverage is rising by up to $104 per month depending on plan. The motion passed 10-0. Looking forward, the Benefits Department will be doing strategic planning with the Board. In 2023 the health care fund was 169% funded; in 2024 the funded status was 158%; the funded status is expected to fall below 150% funded in the next valuation.

Following Benefits, the Board went into Executive Session. Upon return and before Public Participation Board member Allison, under a Point of Information, stated that on behalf of the Board, publicly it should be known that the 14-page anonymous letter written by two STRS staff lawyers to the AG, governor,  and some legislators, was drafted at the direction of an STRS Board member and a STRS manager. [I saw this as an attempt toward transparency. No one said more. The chair immediately went to Public Participation. I can make an educated guess as to the Board member, but the manager is another issue, particularly if still on staff].  During Public Participation, eleven people spoke. Nine retirees and 2 actives.  One of the actives was recently elected Chad Smith who introduced himself. Others spoke to 14-page authors being villains or heroes, STRS culture, the politics within STRS, investment fees, ORSC, Siedle’s audit, COLA, PBIs and Budget.

After a 90-minute lunch and Executive Session, Interim Director Hood gave the Director’s Report.  Retirements are on an uptick. In 2023, at this time of year, there were 422; in 2024 there were 330, right now there are 1,072 of which 396 are retiring with 32 years of service. [Good call Board member Davidson]. Three staff members were also recognized for their 25 and plus years of service at STRS.

Routine Matters paid the bills, but the real focuses were motions on the 2026 Budget and from the Investment Committee: Broker evaluation, Statement of Investment Objectives & Policy, Fiscal 2026 Investment Plan, and the 2026 Performance-Based Incentive Policy [PBI]. Board member Davidson moved to amend the 2026 Budget to raise the non-investment side merit-based salary increases approximately1%.   The average increases in salary for the Investment Department were above 5%; for non-investment staff below 5%. The PBI policy by the full Board was again discussed. Board member Harkness pushed the Investment Department to search for ways to bring in-house more of the investments that are being outsourced. [As I have previously reported, STRS in-house investments represents 60% of the general fund; 30% of the fund is outsourced and costs 5 times greater than what is in-housed.]   The Budget with amendment and the PBI policy all passed unanimously.

Old/New Business was never mentioned.  The meeting adjourned at 1:51 p.m.

The next meeting is scheduled for August 20, 21, 22, 2025.

Trina Prufer: Thoughts after the June 2025 STRS board meeting

From Trina Prufer

June 15, 2025

A Thought Experiment 

I was at the meeting last week when the board voted to continue the bonus program. Like all of us on this site, I was frustrated, saddened and unhappy with this outcome. The disappointment in the room was palpable. Never-the-less, I understand why the vote turned out this way and applaud how our reform board members handled the situation. Essentially, this is a David and Goliath conflict for control of billions of dollars with the financial lives of 500K educators at risk. They took the path that allows us to fight on for another day.

So let’s do a thought experiment by envisioning a hypothetical do over. What would have happened if our reform board members had voted to end the bonus program? The backlash against teachers would have been swift, extreme and perhaps permanently crippled our ability to have any voice in how STRS is run. The State holds all the cards. Because STRS is governed by statutes that can be changed by the legislature, there are no laws protecting the defined-benefit and in the governance of STRS.

The implied threats against reform board members hovered like an imaginary guillotine set up in the center of the room. The risk was that reform board members would be sued by the AG‘s office on the trumped up charge of dereliction of fiduciary duty and the ORSC would recommend that educators be removed from the board on the grounds of preventing a “hostile takeover”. We have already seen this movie.

STRS operates like no other public retirement system in the nation. Its funding model is designed to financially harm members as the state’s contribution rates will never fully fund the benefit. IMO, Ohio’s pension laws are unconstitutional as they allow for the unlawful seizure of members’ assets. Our issues are massive and reform board members are doing the very best they can under extraordinary conditions. They deserve our support and understanding of the constraints they work under. They fight for us every single day. Since they have been in the majority, we have attained small but significant gains. This will be a very, very long fight.