*STRS Flashback* 5 years ago...."If Mr. Dyer is guilty of anything, it's doing what the board wants him to do." (ORTA's Joe Endry)

From John Curry, June 24, 2008
Subject: *STRS Flashback* 5 years ago...."If Mr. Dyer is guilty of anything, it's doing what the board wants him to do." (ORTA's Joe Endry)

Well, Joe, Mr. Dyer was found guilty of violating the Ohio ethics law in a criminal court. Did the "board" really want him to do that? Since many on that board were also found guilty of violating the same Ohio ethics laws...maybe you were onto something! John

Canton Repository, June 29, 2003

STRS bound by costly contract

By PAUL E. KOSTYU Copley Columbus Bureau chief

COLUMBUS -- Demanding that Herbert L. Dyer resign as executive director of the State Teachers Retirement System is one thing. Paying for it is another.

If the STRS board fired Dyer tomorrow, he would walk away with a $533,620 check. Unless the board can prove “malfeasance, misfeasance or nonfeasance,” Dyer gets paid for the rest of his 6-1/2 -year contract, which ends June 30, 2005.

If he resigns, he gets at least $133,405 because he must give STRS a six-month notice. That does not include pay for any unused sick or vacation time.

His contract gives him an incentive for awarding the STRS investment staff high bonuses regardless of how its investment portfolio does — the more bonuses they get, the more he gets.

Dyer has been under fire for three weeks for directing a pension fund that paid $15 million in performance bonuses and for artwork purchases and travel over three years. That was paid while the system’s investments plummeted by $12.3 billion and health-care contributions by retirees jumped significantly.

Privately, people in and out of the retirement fund are predicting Dyer will go, either on his own or because he will be forced out. One person said Dyer seems “more dejected” with “a different demeanor” than he normally projects.

But those who work with him say he remains in charge, goes about the business of the fund and has not talked about stepping down.

The chairwoman of the board, Deborah Scott of Cincinnati, has repeatedly and succinctly said, “Mr. Dyer is still the executive director.”

Marilyn Gibbs, a retired Plain Local Schools teacher, sent an e-mail June 12 to several people, including four members of the retirement system’s board. She asked, “I wonder if it’s time for someone to ask Mr. Dyer to resign.”

One board member responded.

Joseph Endry, the only member of the board who is elected to represent retirees, wrote back, “Well-written personal contracts are very expensive to break. Be patient.”

Asked to explain his message, Endry said, “It’s not that easy to break contracts. If Mr. Dyer is guilty of anything, it’s doing what the board wants him to do. He didn’t build this building.”

Among the criticisms of the retirement system is the spending on its posh, nearly $95 million headquarters in Columbus.

Dyer joined the teachers retirement system Jan. 1, 1993. He got a new contract in February 1997, and his current contract began Jan. 1, 1999. It was amended in April 2002.

Dyer’s contract calls for his pay to be adjusted annually based on the Consumer Price Index of the previous year or 3.5 percent, whichever is higher. The index has not been above 3.5 percent since 1991. Computations of Dyer’s base salary, however, show that his raises were actually above the 3.5 percent limit set by the contract.

In 2001, his base salary was $236,000 and rose to $256,260 in 2002, a $20,260 or 8.6 percent increase, according to STRS documents. It went up again this year to $266,810, which is a $10,550 or 4.1 percent increase.

Dyer also has received annual bonuses for meeting performance goals. His bonus is based on the weighted average of bonuses given to the STRS investment department multiplied by a percentage obtained from his annual evaluation.

In other words, the higher the bonuses paid to the STRS investment staff — whether the portfolio did well or not — the higher Dyer’s bonus.

For example, in 2002 the 110-member investment staff received $3.75 million in incentive bonuses for its work in 2001. The average bonus was $34,100. Dyer got a $41,052 bonus or 120.39 percent times the investment staff average.

You can reach Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: paul.kostyu@cantonrep.com

Flashback from five years ago: Teacher pension losses don't stop spending -- Educators and officials question big bonuses for fund employees

From John Curry, June 1, 2008

The Plain Dealer - Cleveland, Ohio
June 8, 2003

Columbus - The State Teachers Retirement System lost 21 percent of its investment assets in the past three years, a total of $12.3 billion

by Stephen Ohlemacher
[Click on photos to enlarge]

Despite the losses, employees of the public pension fund got a total of $14 million in bonuses during the decline.

In 2001, STRS handed out a total of $6.1 million in bonuses to 345 employees, according to STRS documents. One employee's base salary of $164,000 was bumped to $342,880.

It was the same year the fund lost 5.66 percent of its assets, more than any of the four other public employee pension funds in Ohio, according to the Ohio Retirement Study Council, which oversees the funds.

A lot of pension funds lost big money while the stock market plummeted.

But STRS spending practices - and the fallout from lost investments - have sparked outrage among some of the 424,171 teachers and retirees in the system.

The fund now stands at $46.5 billion, after peaking at $58.8 billion in August 2000.

"They are spending in a manner that is completely foreign to their members, and the employers that send them dollars," said Dennis Leone, superintendent of Chillicothe schools in southern Ohio.

Leone has documented many of the STRS board's spending practices and shared them with teachers, retirees and public officials across the state.

The revelations came as retirees learned their health insurance premiums will soon double, and their benefits will be cut.

The spending includes a $94.2 million office building adorned with $869,000 in artwork, generous fringe benefits for STRS employees, and frequent out-of-state travel for pension board members.

The art of renovation

The State Teachers Retirement System spent a total of $869,000 on eight pieces of artwork by Ohio artists for its renovated downtown Columbus office building. The pieces include metal sculptures and wood bas-reliefs.

STRS also is getting criticism from unlikely sources: two public officials who sit on the nine-member board that controls the pension fund.

Ohio Attorney General Jim Petro and Susan Tave Zelman, state superintendent of public instruction, said STRS spending has been excessive.

Both have been on the board for years. Both promised to be more diligent in monitoring the fund in the future.

"At a time when there are shrinking resources, you don't give bonuses," said Zelman, a board member since 1999.

"When times are good people tend not to look at these things," she said. "You can rest assured, now I'm going to be more aggressive in looking for ways to have a more efficient system."

Petro said he is a big supporter of performance bonuses. But, he said, the STRS bonuses appear to be out of line, considering the fund was losing billions of dollars a year.

"If school districts, especially in financially tough times, would have been as extravagant as STRS has been, we'd have spanked them even harder," said Petro, who often criticized the spending policies of school districts when he was state auditor.

"I think there have been occasions when we've been brilliant in our advocacy for accountability, and there's been other occasions where we've probably not been as aggressive as we should be," said Petro, an eight-year member of the STRS board.

A third board member, state Auditor Betty Montgomery, defended STRS spending policies, though she said they should be reviewed.

"If you kept them on public employee salaries alone, you would not be able to attract or keep the quality investment managers that keep our fund growing," said Montgomery, also an eight-year member of the board.

STRS Executive Director Herb Dyer said the pension board is simply trying to recruit and keep good investment staff in a competitive profession that pays well and offers good benefits.

"I appreciate that people who don't do that kind of work for a living might not understand it, but that's the reality of the professionalism involved," Dyer said.

Teachers take a hit

The investment losses, combined with increasing health-care costs, are proving expensive for teachers and retirees. In July, teachers will have to start contributing a larger percentage of their pay to the retirement system, an increase from 9.3 percent to 10 percent. In January, health insurance premiums for retirees are scheduled to double. Insurance co-pays will increase, and benefits will be cut.

Teachers contributed $827 million to the retirement system last year. Their employers - mostly school districts spending taxpayer money - contribute 14 percent of teacher payroll, a total of $1.2 billion last year.

Some teachers complained that STRS spending hasn't reflected the financial problems of the pension fund.

The STRS board completed a $94.2 million expansion of its office building in downtown Columbus in 1999. The seven-story building is decorated with eight pieces of artwork, all by Ohio artists, Dyer said.

The $869,000 art budget follows guidelines for state buildings, but some of the price tags have angered school officials, nonetheless.

One piece, called "A Whole Morning World," is a series of painted metal tubes shaped like birds hanging from the seventh-floor atrium. The cost: $378,500.

Another sculpture, called "Integrity," cost $100,000.

The building also has a child-care center that cost $818,000 and a $426,000 fitness center, according to STRS documents. In 2002, the pension board paid $487,748 to subsidize the child-care center so employees could get discounted rates for their children. Workers with family incomes of up to $66,000 are eligible for subsidies.

"I'm all for working mothers, and I certainly support day care," Zelman said. "But I don't think that STRS finances should be subsidizing STRS child care."

The number of people working at STRS has increased nearly 42 percent since 1998, from 499 to 707. The pension board added 137 new positions in fiscal 2001, including 69 administrators, according to STRS documents.

The lost investments haven't slowed the travel of board members, who have flown to conferences in Hawaii and Alaska, among other places. The STRS board spent an average of nearly $174,000 a year the past three years on travel, according to STRS documents. The biggest spender was board member Hazel Sidaway, a teacher from Canton who spent a total of $61,400 for travel the past three years. Board member Jack Chapman, a teacher from Reynoldsburg, came in second at $52,600.

"When your assets are declining, you don't spend money like that," said Marianna Lijoi, a teacher in Eastlake. "That is not their money to spend frivolously. That money is for teachers' retirement."

Susan Jacoby, a retired teacher from Canton, said, "They have spent our money like it belongs to them."

The STRS board is made up of six members (five teachers and a retiree) elected by the active and retired teachers, and the three state officials who serve as part of their jobs.

The elected members are paid expenses, but not a salary. The public officials designate members of their staffs to attend board meetings.

The board approves STRS policies and votes on an annual budget. The executive director is responsible for the day-to-day operations.

Bonuses defended

The STRS board pays its investment staff and administrators performance-based bonuses each year for meeting certain goals, such as outperforming a stock index. In a down market, the goal for some investors is to not lose as much as a certain index, Dyer said.

The investment staff also is eligible for additional discretionary bonuses distributed from a pool of money generated from investment profits. Dyer said the pool will run out of money after bonuses are paid next month, unless the investment portfolio is profitable this year.

"We did lose some money, obviously, in market value," Dyer said. "But in general, if the staff is able to save you money in a declining period, that's good staff work."

A financial consultant's study of STRS bonuses found that the bonus system is similar to those at other companies. But the 2002 study warned that the system could result in "inappropriate risks" because "there is no downside for under-performing the market."

The study, by Buck Consultants of New York, recommended tying bonuses to the overall performance of the pension fund, rather than investors' individual goals. Dyer said the STRS board plans to adopt some of the consultant's recommendations.

Ohio's four other public employee pension funds offer bonuses to employees, but none are nearly as large as the ones paid by STRS. For example, the Ohio Public Employees Retirement System spent $765,252 on employee bonuses last year, compared with $5.7 million at STRS, according to figures provided by both funds.

The public employees pension fund has more members (797,234), and more assets ($51 billion), than STRS. But it has 168 fewer workers because it contracts with outside managers for more of its investment work. The operating budget for the public employees pension fund was $74.8 million last year, compared with $87.3 million at STRS.

The STRS staff grew in recent years because the pension fund expanded some of its services after it moved into the renovated headquarters, Dyer said. There has been a hiring freeze, except for essential personnel, for 18 months, he said.

Dyer said the building expansion cost more than expected in part because labor and material costs were high in the late 1990s, when the economy was still booming. The building sits on top of a parking garage, which added to the cost, he said.

The Ohio Arts Council has a program called Per Cent for Art, in which the state sets aside 1 percent of the construction budgets of major state projects for artwork. The STRS building did not participate in the program because it was built with money generated by the fund. But the STRS art budget was within the guidelines, Dyer said.

Petro said he had no problem with the art.

"What would ancient Rome have been like without public investment in the arts?" Petro asked.

Scrutiny promised

Deborah Scott, chairwoman of the STRS board, said the board plans to re-examine policies on employee bonuses, but she defended the practice. She also defended board members traveling to out-of-state conferences, noting that all the elected members are either active teachers or retirees who don't have much formal training in investments. Scott spent a total of $40,500 on travel expenses the past three years, according to STRS documents.

"First of all, you learn what's going on at other systems, you learn what type of issues they're dealing with," said Scott, a first- grade teacher in Finneytown local schools near Cincinnati. "We're schoolteachers. We don't have degrees from business schools."

Dyer defended Sidaway's travel expenses, noting that she had served as chairwoman and vice chairwoman of the STRS board in the past three years, and was expected to attend many events.

Nearly 40 percent of her $61,400 in expenses were for travel and lodging for board meetings in Columbus, he said.

Steven Puckett, who is Zelman's designee on the board, said board members need training, but more of it should be done in Ohio.

State Sen. Lynn Wachtmann, chairman of the Ohio Retirement Study Council, said he plans to question STRS officials about their spending practices at an upcoming meeting of the council.

"Maybe they should run things a little leaner and meaner over there and be a little more reflective of their membership," said Wachtmann, a northwest Ohio Republican.

"I'm not saying that what they are doing is wrong, but I'm going to raise the question," he said. "I think we can put political pressure on them if we feel that's appropriate."

PHOTOGRAPHS BY WILL SHILLING SPECIAL TO THE PLAIN DEALER [Since the original photos accompanying the article are no longer available, I'm using some I took in May, 2008. KBB] $94 million: The pension fund completed the expansion of the seven- story office building in 1999. Photo $100,000: "Integrity," a metal sculpture by Stephen Canneto, adorns the area outside the sixth- floor board room. Photo $378,500: "A Whole Morning World" [should be "A Whole World Mourning" KBB] by Larry Kirkland, a series of colorful painted aluminum tubes shaped like birds, hangs from the seventh-floor atrium. [When a breeze comes through the atrium, sometimes some of the pipes strike each other and sound like wind chimes. KBB]

STRS Flashback -- 2 Years Ago.....Was Hazel hiding under a rock?‏

"With all due respect, anyone who works for state government has to be hiding under a rock if they had not heard of an ethics law."

Franklin County Municipal Court Judge Carrie Glaeden

ETHICS VIOLATION

Ex-pension board member sentenced

Friday, May 12, 2006 Alayna DeMartini
THE COLUMBUS DISPATCH

A former member of the state teachers pension board apologized to a judge yesterday for twice accepting freebies from companies the board hired.

"I would like you to rethink that it was only on two occasions that you let the teachers you represented down," Franklin County Municipal Court Judge Carrie Glaeden told Hazel Sidaway. "I think it was more than two occasions."

A jury convicted Sidaway last month of two misdemeanor ethics violations of accepting four free tickets to a Cleveland Indians game in 2001 and two free tickets to a Broadway production of Hairspray in 2003.

"I?m having a hard time understanding why ... you thought it appropriate to accept that," Glaeden told Sidaway yesterday when she sentenced her.

A year before Sidaway accepted Cleveland Indians tickets in 2001 she had accepted other baseball tickets, Glaeden said. She also accepted a free meal for her grandchildren, the judge said. The allegations came out during the trial; she was not charged in connection with them.

Glaeden sentenced Sidaway, a retired Canton elementaryschool teacher, to two years on probation and ordered her to pay $670 in fines and $5,382 for the cost of the investigation. She also required her to serve 200 hours of community service split between the Canton school district and a retirement home or senior center.

"I tried for 17 years to represent the teachers of Ohio with dignity and dedication," Sidaway said. "I accepted something of value that I should not have taken."

The free tickets Sidaway received were from investment consultants who had contracts with the State Teachers Retirement System.

The jury acquitted Sidaway of four other ethics violations for accepting free meals at Columbus restaurants from companies the pension board hired.

The companies included the cost of the meals for board members in their bill to the board, H. Ritchey Hollenbaugh told jurors.

If that was the case, the judge said, then the cost was coming out of the pensions of teachers and retired teachers across the state.

Hollenbaugh said his client wasn?t aware of the ethics law when she accepted the tickets.

"At the time there were no red flags raised. There should have been, but there weren?t," he said.

But Glaeden questioned that.

"With all due respect, anyone who works for state government has to be hiding under a rock if they had not heard of an ethics law."

ademartini@dispatch.com

Flashback 2 years ago: STRS Board member Hazel Sidaway convicted; more to come

From John Curry, April 26, 2008
Subject: FLASHBACK-2 YEARS AGO- STRS Board member Sidaway convicted...the first of many more to come!

"Prosecutor Lara N. Baker said Sidaway and the board were part of a retirement system culture of entitlement. She said the board abandoned its responsibility to retirees and teachers. She said Sidaway took so many trips on the pension fund’s dime that it became a full-time job for her."

Ex-STRS board member Sidaway guilty

Canton Repository, April 15, 2006
By PAUL E. KOSTYU
COPLEY COLUMBUS BUREAU CHIEF

COLUMBUS - Hazel Sidaway was found guilty Friday of two counts of violating state ethics laws. The former Canton City Schools teacher faces a $1,000 fine and a 6-month jail term on each count. Eight jurors took two hours to arrive at their verdict after listening to testimony for three days in Franklin County Municipal Court. They said Sidaway was innocent of four ethics charges.

She was convicted of accepting four tickets, valued at $120, to a Cleveland Indians game in July 2001 and two tickets, valued at $550, to the Broadway show Hairspray in May 2003. She took family members to both events.

Sidaway’s attorney, H. Ritchey Hollenbaugh, said an appeal is unlikely. He said Sidaway had no regrets about going to trial. “She never considered a plea because to this day she believes she did nothing wrong.”

Judge Carrie E. Glaeden will sentence Sidaway on May 12.

Hollenbaugh said he will ask for leniency and that the judge “take into consideration other cases, like the governor’s.” Gov. Bob Taft was convicted of four ethics violations last year in a plea deal that netted him a $4,000 fine and court costs, but no jail time.

Hollenbaugh referred to Taft in his closing arguments Friday. “Did (Sidaway) play golf 52 times and not report it?” he said.

This was the second conviction in an ongoing investigation by the ethics commission of the State Teachers Retirement System, where Sidaway was a board member when she broke the law. Former Executive Director Herbert Dyer was convicted on a single ethics charge in a plea deal in September 2005. He was fined $1,000 and court costs and ordered to pay $394 in restitution to the retirement system.

Dennis Leone, the former superintendent and now retirement system board member who initiated questions about how the fund was operating years ago, said he hopes Sidaway is ordered to pay restitution.

“I wish other spending abuses that board members engaged in could be part of this decision,” he said.

Other board members and staff are on the prosecutor’s radar, some of whom went on the New York trip with Sidaway and others who may have violated ethics laws in other ways. Retirement system attorney Bill Neville attended the trial and took notes.

“We’d like to resolve (future) cases expeditiously,” said Paul Nick, chief investigator for the Ohio Ethics Commission. “I think they can see what is coming.”

“I think people will be paying attention,” Hollenbaugh said.

Sidaway cried and her lips quivered as Hollenbaugh made his closing arguments, telling jurors “she is not a criminal.” He said, “This case is an insult to the people who do public service.”

Prosecutor Lara N. Baker said Sidaway and the board were part of a retirement system culture of entitlement. She said the board abandoned its responsibility to retirees and teachers. She said Sidaway took so many trips on the pension fund’s dime that it became a full-time job for her.

Under cross examination by Assistant City Attorney Mickey Prisley, Sidaway said she considered the Broadway show a board meeting because conversations occurred before the show, during intermission and on the walk back to the hotel after the performance.

Prisley was incredulous, asking her repeatedly to justify the expense.

“I’m telling you,” Sidaway said firmly, “we had conversations at appropriate times in the evening.”

The commission initiated an investigation of the retirement system after media reports, including many by Copley Ohio Newspapers, in 2003 and 2004 raised questions about travel, bonuses, artwork and other items.

Reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: paul.kostyu@cantonrep.com

Note from John....what did the OFT have to say about this? Well, click here to see their commentary.

FLASHBACK -- ONE YEAR AGO TODAY...does anybody in ORTA have any backbone?

From John Curry, April 12, 2008
I think we now know that answer, don't we? John

One year ago.....
Kathie Bracy to Tom Beck, April 12, 2007
Subject: To Franklin County RTA president Tom Beck re: Membership

Dear Tom,

That was a good meeting we had yesterday, and I want to commend you for your efforts as president of FCRTA. However, there are some issues that need to be addressed. I was just looking at the FCRTA website (http://geocities.com/fcrtaoh) at a page where you set forth your theme for your term of office as president of FCRTA -- "Make a Difference -- Again.....by signing up at least one new member." It's a very noble theme, but to be honest, I'm having trouble coming up with reasons to hang onto my own membership, let alone encourage others to sign up.

The problem I have is with the leadership of ORTA. They are totally unresponsive to the membership -- at least to the members I know who would like to hear from them. Many letters have been written to ORTA officers and board members about various topics pertaining to STRS; yet nobody gets replies! This is the second time I've written to you -- you don't reply, either, because I've yet to get a response to my first letter, written one month ago today.

I think if ORTA leaders were receiving a lot of mail commending their leadership, people would be hearing back from them regularly. It takes a lot of backbone to respond to messages that are critical of the way things are being done, and in the last few years, I haven't been able to think of much for which to commend ORTA.

I am a proud member of CORE (Concerned Ohio Retired Educators), the only retiree group that is aggressively working to bring about reform at STRS since Dennis Leone's investigative report of May 16, 2003 exposed many examples of blatant mismanagement and misspending of retiree funds. At the time, we looked to ORTA for leadership in initiating reform, but none was forthcoming and still hasn't. No wonder -- one of ORTA's own, former ORTA president Joe Endry, was one of the former STRS Board miscreants who were later convicted of ethics charges. Maybe it's easier to blame us for exposing him (along with the others) than it is for ORTA to take its lumps and move forward. I'm surprised Joe Endry has the nerve to show his face at FCRTA meetings. I might be more inclined to make an effort to bring a new member if I didn't think his would be one of the faces they would see there. Is ORTA still proud of him or what? I don't get it.

Retired STRS Board member Dennis Leone has done more than any other individual to initiate reform at STRS and to continue introducing reform initiatives at Board meetings. While he has received many distinguished honors for his efforts, ORTA has YET to recognize him for this. When he submitted his March 2007 STRS Report for publication in the ORTA Quarterly, ORTA's publications director, Tom Seamon, refused to publish it supposedly because Dr. Leone had shared it with some retirees and RTAs that had asked him to speak. When he asked Mr. Seamon why it was rejected, he never even received a response! If ORTA has a policy against publishing material that was already distributed, they never made that clear beforehand. There was a lot of information in that report that was much too important to wait a month or two to put out. Now ORTA is doing real harm to thousands of retirees who will probably never get that information any other way. Is this what ORTA wants? Is this real leadership? Is this the kind of organization I am supposed to encourage my friends to join?

To continue, when Dr. Leone asked ORTA president Don Bright if the rejection decision could be reconsidered, he never received a response from him, either! He also told Mr. Bright that he or Ann Hanning could have shown him a little respect by calling him in regard to the matter, but did they extend such a courtesy to him? No, of course not -- they are ORTA "leaders!" They have never contacted him about ANYTHING during his first 20 months on the STRS Board -- and he is representing RETIREES!! Helloooooo? ORTA -- is anybody out there??

When Dr. Leone asked Ann Hanning (in writing) if he could write another column to substitute for the first one which was rejected, AGAIN he never received a response. If this isn't proof that ORTA never wanted to publish his report in the first place, I don't know what is.

Does ANYBODY in ORTA have any backbone? ORTA doesn't respond to its own membership!! And they expect US to go out and get NEW members for their dying organization? ORTA needs to take a good look in the mirror and do some real soul searching to figure out WHY membership is declining. And they need to start with those who are the most critical, because those are the one who will best articulate the problems ORTA currently refuses to face. Leadership? What a joke! Get us to bring in new members? I don't think so.

Kathie Bracy
FCRTA and ORTA life member (but not proud of it!)

Flashback to March, 2007: Where was ORTA? Quiet -- as always!

From John Curry, March 20, 2008
Subject: *FLASHBACK* One year ago -- March 20, 2007 -- Where was ORTA...another year of silence from an org. that's supposed to represent retirees' best interests!

Things just don't seem to change, do they? There's a big gap between what is right AND what is politically correct, isn't there? The ORTA silence is deafening, isn't it? John

Dennis Leone to Molly Janczyk, March 20, 2007
Subject: Never ORTA Assistance at Board Meetings

Truly, Molly, had ORTA stood up and been counted on so many of the resolutions I presented over the past 19 months, it would have been sooooo helpful. Instead, ORTA sat quiet. It was always only CORE representatives who spoke up to Board members and wrote to them about their unwise decisions.

Where was ORTA to say: You know, Board, you really should review summaries before you vote on big ticket vendor contracts. You know, Board, maybe some of these staff perks should be cut back. You know, Board, it may not be fair to the members if you vote on Damon's contract without it being on the agenda. You know, Board, maybe it's not wise to pay the legal fees of 3 employees when free service is available from the State Attorney General's Staff. You know, Board, it's not a good idea to pay for fax lines, credit cards, and personal long distance phone calls for the homes of Board members. And you know Board, Dennis and John may be right, maybe you should first look at other options before you vote on the Medicare Part B reimbursement issue.

Dennis Leone

FLASHBACK -- 3 years ago -- The day Deb, Eugene, Jack & other STRS travelers won't forget!

"In the wake of media reports last year about questionable spending on travel by pension board members, the legislation prevents the re-election or appointment of anyone who spent an average of $10,000 annually from 2000 through 2002 on board-paid travel.

"At the State Teachers Retirement System, that means board member Deborah Scott will be prevented from running for re-election. It also means current board chairman Eugene Norris, who was defeated recently in his re-election bid, cannot be appointed to a seat being vacated by Jack Chapman when he retires this summer."

Ohio House approves pension reform bill

Canton Repository, May 26, 2004
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — After last-minute maneuvering, a reworked pension reform bill passed the Ohio House on Tuesday. It will go to the Senate today for its concurrence.

A revised Senate Bill 133 finalized behind closed doors Monday reached the House floor late Tuesday.

Some Republicans joined Democrats in an unsuccessful attempt to defeat the bill because they wanted to keep active members of each system in the majority on the respective boards.

Among other changes, the legislation adds three investment appointees to each board — one by the state treasurer, one by the governor and joint appointee by the president of the Senate and speaker of the House.

The reform bill comes on the heels of a report from the Ohio Ethics Commission that alleged criminal wrongdoing at the Ohio Police & Fire Pension Fund. That report has been sent to the Franklin County prosecutor.

The ethics commission is continuing its investigation of the State Teachers Retirement System. That report is expected within the next couple of months.

The long-stalled reform measure picked up speed within the last couple of weeks after Gov. Bob Taft brought stakeholders together to work out their differences. The Legislature also wanted to get something done before adjourning this week for the summer and the campaign season leading to the November election.

Senate President Doug White, R-Manchester, said the Senate will concur in the House changes today, which will send the bill to the governor for his expected signature.

The newest version of the bill, sponsored by Sen. Lynn R. Wachtmann, R-Napoleon, changes the makeup of all five of the state’s public pension system boards. The state auditor and attorney general have been removed from the boards.

Also, an additional retiree will be added to the boards of four systems. The police and fire fund already has two retirees.

An earlier Buy Ohio provision requiring a certain percentage of business go to state-based brokers and investment managers was watered down. Now, each board will have to set an annual goal for using Ohio companies and file a report about their use with the Ohio Retirement Study Council.

In the wake of media reports last year about questionable spending on travel by pension board members, the legislation prevents the re-election or appointment of anyone who spent an average of $10,000 annually from 2000 through 2002 on board-paid travel.

At the State Teachers Retirement System, that means board member Deborah Scott will be prevented from running for re-election. It also means current board chairman Eugene Norris, who was defeated recently in his re-election bid, cannot be appointed to a seat being vacated by Jack Chapman when he retires this summer.

The bill also requires people who promote themselves or companies to the pension systems to register as lobbyists.

You can reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: paul.kostyu@cantonrep.com

Senate Bill 133: Reforms Ohio’s five public pension systems to improve oversight. Passed the House Banking, Pension and Securities Committee 13-8; passed the Ohio House, 57-42.

FLASHBACK-3 YEARS AGO -- STRS Bonuses disclosure despite the utterance of confidentiality

STRS director won’t pocket $40,000 bonus he wanted
Canton Repository, May 19, 2004
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — Under pressure from lawmakers and members of the State Teachers Retirement System, Executive Director Damon Asbury will not accept a bonus he earlier said was due him for work in fiscal year 2002-03.

The bonus, worth about $40,000, was subtracted from the package Asbury plans to recommend to the pension board Thursday. The bonuses to 370 investment and noninvestment employees will cost the system $3.81 million.

After maintaining for days that the dollar amount for each employee was confidential, the retirement system Tuesday released the names of employees and the bonuses they are receiving.

The list shows that F. Cassandra Hill, a teacher in the system’s child-care center, will receive the smallest bonus, $174. Her 2003 salary is $31,000.

The highest bonus goes to James M. Meeth, director of fixed income and an investment employee, who will receive $79,905, which is more than half of his 2003 salary of $140,020.

Laura Ecklar, a retirement system spokeswoman, said Asbury decided he should not personally benefit from a recommendation he makes to the board. Until Tuesday, Asbury had maintained that he should get the bonus just like all other eligible noninvestment employees. She said she did not know the exact amount of Asbury’s projected bonus because it was not on the list made public.

As deputy executive director for administration in 2001-02, Asbury received $49,728 as a bonus. As executive director, Asbury now makes $189,500 annually.

The bonus program for noninvestment employees was eliminated in the wake of media reports last year about spending on bonuses, artwork, travel and other expenses while the system’s portfolio declined and members’ health-care costs increased.

The program awarding bonuses to investment employees was reinstated but in a modified form. It now ties part of the amount each person receives to the overall performance of the entire retirement system portfolio. In the past, the bonuses were linked to how well the accounts managed by each employee faired.

Asbury said bonuses should be paid to investment and noninvestment employees to avoid potential lawsuits. He made that decision based on advice from Assistant Attorney General John E. Patterson, the attorney for the board. Patterson’s boss, Ohio Attorney General Jim Petro opposes the plan.

Although Asbury’s current contract prevents him from receiving bonuses, that’s not the case for Stephen A. Mitchell, deputy executive director of investments. According to his contract, Mitchell receives a 20 percent bonus if more than half of his staff qualify for one. In Asbury’s plan, Mitchell is budgeted to receive $48,470, based on a July 2003 salary of $242,350.

Most of the highest bonuses went to the investment staff, with some ranging from $30,000 to $60,000. Some noninvestment staff have proposed bonuses in the $10,000 to $30,000 range. Retirement system lobbyist Teresa M. Bierdeman, for example, is scheduled to receive $26,343. Her annual salary is $112,100. Retirement system general counsel Cynthia E. Hvizdos earns $129,120 and will get a $29,052 bonus under Asbury’s plan.

But those pale in comparison to Asbury’s two deputy executive directors, Sandra L. Knoesal, who oversees member benefits, and Robert A. Slater, who is chief financial officer. They will receive $43,324 and $46,573, respectively.

You can reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail:

paul.kostyu@cantonrep.com

Hazel Sidaway and STRS: A flashback

From the OFT...an STRS flashback (Hazel Sidaway) from one year ago!

Flashback, 3 years ago: STRS workers to get nearly $4 million in bonuses

“Oh my God,” said state Rep. Michelle Schneider, R-Cincinnati, and sponsor of legislation to reform the state’s five pension systems. “They just don’t get it. The nightmare continues.”

STRS workers to get $3.85M in bonuses

Canton Repository, May 12, 2004
By PAUL E. KOSTYU
Copley Columbus Bureau chief

COLUMBUS — Employees of the State Teachers Retirement System will get bonuses worth $3.85 million from a program that was suspended in the aftermath of revelations about excessive spending last year.

Retirement System Executive Director Damon Asbury said late Tuesday night that he will recommend to the Retirement System board next week that payments be made to 371 investment and noninvestment employees for work done in the 2002-03 fiscal year.

Asbury said he felt the system had a legal responsibility to make the payments because employees participated in the program expecting to earn bonuses for meeting “stretch goals.”

Employees met their stretch goals, for example, by attending workshops, talking to parents and keeping spreadsheets of expenses, according to information first reported in July 2003 by Copley Ohio Newspapers.

Asbury made the decision based on an Ohio attorney general opinion issued late last year, but not made public. He said the report indicated that a valid bonus contract existed between the system and employees.

“Oh my God,” said state Rep. Michelle Schneider, R-Cincinnati, and sponsor of legislation to reform the state’s five pension systems. “They just don’t get it. The nightmare continues.”

Asbury said he intended to brief key lawmakers Tuesday, including Schneider, but couldn’t because of the Legislature’s busy calendar. But he said state Sen. Lynn R. Wachtmann, R-Napoleon, and another sponsor of reform legislation, knew about Asbury’s decision earlier this year. Wachtmann, who is also chairman of the Ohio Retirement Study Council, could not be reached Tuesday night. The council meets today.

“This is not a step in the right direction,” said Schneider, a member of the council. “It absolutely hurts the effort to restore faith and trust in the system.”

Thomas Curtis, a retired teacher from North Canton, called for Asbury’s resignation immediately. He said Asbury told retirees “there was no contract” with noninvestment employees and they would never get bonuses. “This is totally against what he told us. I am disgusted.”

Asbury said he had heard informally that employees planned to sue the system over the bonuses. He said he had hoped to have the issue settled in January, but “we didn’t want it to get in the way of the pension reform bill in the Legislature.”

John Lazares, a Warren County superintendent who was just elected to the board but will not take office until September, wondered if there was another motive. He beat incumbent board member and chairman Eugene Norris by less than 300 votes Saturday. He said the margin would have been even greater had this news come out sooner.

“I ran on the issue that we have to rebuild confidence and respect for the system,” he said. “I know this will devastate members. I don’t support it.”

Asbury said there is money in the system’s budget this year to pay the bonuses, but not in next year’s budget.

“We need to move forward,” he said. “This is a carry-over from our past. It’s unfortunate. This is one thing we have to deal with head-on. I understand the sentiment on both sides. It’s not a decision I took lightly. I agonized over it, but I feel it is the right decision in the best overall interest of the system.”

You can reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: paul.kostyu@cantonrep.com

From Dennis Leone: Point of Explanation and a Flashback

Dennis Leone to John Curry, May 7, 2007
Subject: Point of Explanation and a Flashback

John -- yes, the comments below represent a verbatim transcript of what was said at the April STRS Board meeting. [Click here to view comments] But here's point of explanation that may interest your readers and you.

Note that I state my concern about the proposed 12.45% increase in the budget category entitled "salaries and wages" for fiscal year 2008. Also note that Jeff Chapman expressed his concern over the proposed 8.5% overall budget increase. A few minutes after our remarks, the Board voted 7-2 (Leone and Chapman voting no) to give Damon Asbury the green light to present a budget to the Ohio Retirement Study Council that included another $1.5 million in order to restructure salaries and bonuses of investment staff even higher. I asked, before the vote, what this would translate into in terms of the increase in salaries and wages, as well as the total overall budget increase. The answer (BEFORE the vote) was that the additional $1.5 million would produce -- in fiscal year 2008 -- an increase for salaries and wages of 14.0% and an overall budget increase of 10.0%.

A few days after the vote, the staff initiated some cuts internally which meant that the proposed budget Damon actually submitted to the ORSC included a 13.7% increase for salaries and wages, and overall budget increase of 8.6%. While I am pleased that Damon and the staff took it upon themselves to make some cuts after the board meeting (which I would have liked to know about before they occurred), I still feel the overall 8.6% proposed budget increase and the line item increase of 13.7% for salaries and wages are just too high. Jeff and I also voted no because the board action gave Damon the okay to present a budget to the ORSC that included 9 new positions.........and while we were told what the new position titles will be, we were not told what the people will do, why they are needed, and what they will be paid. I felt all of this was a flashback to Dyer and the previous board from 2003.

The final board vote on the 2008 fiscal year STRS budget will occur at the June meeting. It will be difficult for the full board to pull back on the above budget items because Damon was told it was okay to present the above to the ORSC, which he has.

Dennis Leone

Posts from July 14, 2006

From Lenora Wood, July 14, 2006

CORE Leaders and others

Dean is my son-in-law, retired supt. and retired assistant sjupt.

From: Dean Werstler
Subject: Potential STRS News Date: Wed, 12 Jul 2006 15:06:10 -0700

Hi,

Hope things are going well in Akron.

I received a letter from the Buckeye Association of School Administrators recently that I find very encouraging. It appears that BASA, the Alliance, CORAS, and the E&A Coalition (and a total of nine statewide organizations) are working together to resolve the school-funding dilemma in Ohio. It appears that they are spearheading an effort to amend the Ohio Constitution to solve the school funding problem. All other efforts have failed, hopefully, this one will finally bring a long term solution. This effort will require a massive undertaking in all communities to gain the support of the public.

It might benefit CORE to approach this group and explore mutual concerns. Perhaps there is a way to solve the school funding problem and provide a secure retirement system including monthly benefits and appropriate affordable health care to retirees. This opportunity to amend the constitution only comes around about every 50 years.

Dean
_______

Canton Repository, June 30, 2006
What if kids could go to school anywhere?by PAUL E. KOSTYU COPLEY COLUMBUS BUREAU CHIEFCOLUMBUS - In addition to carrying books, a child’s school backpack will be filled with cash, at least figuratively, under a plan backed by a Washington think tank with Ohio ties. That has political conservatives criticizing each other over competing school funding plans.
In an op-ed piece in the New York Times this week, former U.S. Secretary of Education Rod Paige suggested each school child receive “a ‘backpack’ of financing that travels with him to the public school of his family’s choice.”
The proposal, called the 100 Percent Solution, is backed by the Thomas B. Fordham Institute and its foundation, which were founded in Dayton but are now based in Washington, D.C. Paige is a trustee of the institute, which is a charter-school sponsor in Ohio.
PLAYING THE PERCENTAGES
The 100 Percent Solution would allow a student to use the money at a traditional public school or a charter school. The proposal also would weight the allocation based on a student’s needs or circumstances. For example, children with special needs, from low-income families or poor school districts would have a higher allocation. And the proposal gives flexibility to schools buildings, not necessarily districts, to use the money as needed with an emphasis on results.
The Fordham proposal is not to be confused with the 65 Percent Solution, which was announced in September 2005 by now gubernatorial candidate J. Kenneth Blackwell and a group called First Class Education, which is backed by Patrick Byrne, the founder and president of Overstock.com, an Internet retailer.
The 65 Percent Solution would require 65 cents of every education dollar be used on classroom instruction, which includes costs for teachers, instructional supplies and aides, field trips, athletics, music, arts and special-needs instruction. The remaining 35 cents of the dollar could be used for administration, plant operations, maintenance, food services and transportation.
Paige, a political conservative, criticized other conservatives for supporting the 65 Percent Solution, calling it “one of the worst ideas in education.”
“The 65 Percent Solution is a gimmick that doesn’t begin to solve the biggest problems in school funding, much less education at large,” said Chester E. Finn Jr., president of the Fordham Institute and an assistant secretary of education for President Reagan. “Weighted student funding isn’t a complete answer to every challenge that public schools face, but it will eliminate the biggest funding disparities, foster equity, empower school leaders and catalyze school choice.”
Paige said that the 65 percent plan ties administrators’ hands when “they need more freedom to innovate.”
FLEXIBILITY AND INNOVATION
David Brennan, owner of Akron-based White Hat Management, the largest operator of private charter schools in Ohio, liked the Fordham proposal but thinks it needs to allow for private schools such as his, as well.
“The point he’s (Paige) making is don’t tell the schools how to spend the money,” Brennan said. “The future of education is innovation.”
Brennan said the most successful government programs are those that let consumers decide how to spend money. For example, he said, food stamps are the “most successful program for the poorest people” because they decide how to spend their allocation.
Carlo LoParo, a spokesman for Blackwell, said he didn’t know if Blackwell would agree with the 100 Percent plan, but he continues to back the 65 Percent proposal.
“We’re spending a lot of money on public education,” LoParo said. “The problem is the money doesn’t go to the classroom.”
LoParo said Blackwell supports privatizing school food services and transportation to control costs, similar to what colleges and universities have done.
“There may be a better way to do it,” he said. “The highest-achieving school systems within Ohio and the nation are close to or exceed the 65 percent in classroom funding.”
Democrat Ted Strickland, Blackwell’s opponent in November, said Paige’s proposal “has some merit ... and holds real promise.” Strickland said he supports allocating money based on individual student needs and fostering competition between public schools. He said he opposes using public money for charter or private schools.
Strickland said Blackwell’s 65 Percent Solution is a government mandate that would take away local control.
LEGISLATIVE PLANS
House Speaker Jon Husted, R-Kettering, has long backed charter schools and school choice, but has not examined the Fordham proposal, said spokeswoman Karen Tabor. Husted supports the 65 Percent plan “in concept,” she said, as well as “reasonable options.”
“We expect to continue to examine the education issue over the next couple of months,” she said.
State Sen. Kirk Schuring, R-Jackson Township, has been working since March on a school funding plan he proposed that would partner businesses with education. He said parts of the 100 Percent plan are “intriguing to me,” but he’s not sure either “solution” solves the problem.
“We need to change funding in Ohio and across the nation,” he said. “The global economy demands it. We need future intellectual resources to allow our economy to grow. ... The business community has to become a partner in the process.
“Education is the factory that produces the product,” he said. “Businesses are the customers who buy the product. Using any cookie-cutter formula will not be responsive to current needs.”
The Legislature’s term ends in December and school funding may have to wait for a new governor and Legislature next year.
CONSTITUTIONAL CONCERNS
William L. Phillis, executive director of the Ohio Coalition for Equity & Advocacy of School Funding, has been pushing for changes in education funding for more than a dozen years. His group’s lawsuits led to four Ohio Supreme Court rulings that said the current funding system — with its heavy reliance on property taxes — is unconstitutional because it’s neither equal nor adequate.
Though unfamiliar with the 100 Percent Solution, Phillis said he’s worried that it would lead to public funding of private and home schools.
“I’m not opposed to private education,” said Phillis, who sits on governing boards for a private elementary school and a college. But “if we use public money to fund private schools, there are some constitutional questions.”
Noting that Paige was secretary of education under President Bush, Phillis said the 100 Percent plan sounds like “their way of getting charter school funding to a higher level. Bush would not be adverse to privatizing all education.”
“It’s a small step to let the money follow the student to a public school, then to a charter school and then a private school.”
Phillis said the result will be schools segregated by culture, language and income. “The common public school is where kids get together and learn to be Americans,” he said. “Historically, [the public school] is where they have been socialized and Americanized. Paige’s plan would fracture society.”
Phillis also doesn’t like the 65 Percent plan, because it would treat all districts the same, while their needs differ.
Reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail paul.kostyu@cantonrep.com.
_______
Article published August 1, 2005 (Flashback)Noe used influence to select trusteeE-mails show how Hicks made changeBy JOSHUA BOAKBLADE STAFF WRITER
COLUMBUS - When it came to appointing a new trustee to the board of the Medical University of Ohio in 2003, the governor's office ignored doctor's orders and followed the advice of coin dealer and political confidante Tom Noe.At the time, the choice of the school's acting president, Dr. Amira Gohara, was Geoffrey Meyers, an executive with Manor Care, a national nursing home company with headquarters in Toledo.In a letter to Gov. Bob Taft on May 29, 2003, Dr. Gohara and William Connelly, MUO's general counsel, endorsed Mr. Meyers, saying he would bring "welcome expertise" in finance and reimbursement to the medical college.But then Mr. Noe got involved, registering a complaint with Brian Hicks, Gov. Bob Taft's chief of staff in July.Within a month, Mr. Meyers was out of the picture and one of Mr. Noe's friends, Carroll Ashley, was in.
When Mr. Ashley became a trustee that August, he was completely unaware of the machinations that took place on his behalf for the unpaid position.
"I didn't know that there was a second candidate considered," he said. "That's news to me."
Catherine Turcer, legislative director for Ohio Citizen Action, a government watchdog group, questioned Mr. Noe's backroom approach for a relatively minor appointment.
"If he was doing this for something without a paycheck attached to it, what would he do for something with a profit margin?" she said.
"It takes nepotism to a really different level."
Mr. Noe and Mr. Hicks could not be reached for comment, nor could Mr. Meyers, the executive vice president and chief financial officer of Manor Care who was away on vacation.
Friends for years
But one brief e-mail, part of more than 35,000 released last week by the governor's office, shows the depth of the relationship between Mr. Noe and Mr. Hicks, considered the most powerful nonelected official in Ohio.
The two had been friends for years; Governor Taft, like his predecessor, had appointed Mr. Noe to high-profile boards: the Ohio Board of Regents and the Ohio Turnpike Commission.
But in July, 2003, Mr. Noe's focus was on the MUO position.
After learning that Mr. Meyers was in the running, Mr. Noe contacted Mr. Hicks.
Mr. Noe wanted the governor's office to consider Mr. Ashley, a long-time hospital executive who now works in the insurance industry. The conversation left an impression, with Mr. Hicks sending an e-mail to a colleague who was working on gubernatorial appointments.
"I got an earful from Tom and Bernadette Noe on the MCO appointment," Mr. Hicks wrote in a July 16, 2003, e-mail to David Payne, the governor's director of boards and commissions.
"Are we so far down the track that we couldn't reverse course? Can you send me resumes of both candidates we're looking at?"
A month later, Mr. Ashley got the appointment.
Currently being investigated for possibly laundering campaign donations to President Bush's 2004 re-election campaign and under civil and criminal investigation for his role with a failed rare-coin investment with state money, Mr. Noe's friendship has become a liability for many people.
Pair fined $1,000 each
Mr. Hicks was fined $1,000 last week for neglecting to properly disclose two vacations at Mr. Noe's Florida Keys residence. Mr. Hicks' long-time assistant, Cherie Carroll, was also fined $1,000 for an ethics violation because she accepted expensive meals paid for by Mr. Noe.
While those affected by the coin-fund scandal have recently distanced themselves from the Noes, Mr. Ashley defended the couple's years of work in the public arena.
"In spite of some of the allegations and charges that have been made, they've done a lot of good things for the community," Mr. Ashley said. "I'm certainly disappointed with some of the things I've read, but I still consider them friends."
Mr. Ashley discussed the MUO position with Mrs. Noe in June, 2003. Later that month, he sent his resume to Mr. Payne.
It was an impressive resume. The University of Toledo graduate was president of Riverside Hospital from 1983 to 1994, before leaving to work in the insurance industry. Since 2002, Mr. Ashley has been the principal in the Ashley Insurance Group.
$9,000 to candidates
Mr. Ashley also chaired the Toledo Cultural Arts Commission and the World Cup Wrestling Tournament. He was a member of several political campaign committees and has given $9,000 to mostly Republican candidates during the past 13 years.
In comparison, Mr. Meyers has contributed $2,100 to Ohio Republicans, all of it last year, well after the decision was made.
During the vetting process for the MUO board, Mr. Payne received letters supporting Mr. Ashley from state Auditor Betty Montgomery and then-state representative Lynn Olman, a Republican from Maumee who recently bought the Noes $500,000 condominium.
MUO officials say they consider Mr. Ashley a valued member of the board.
"Mr. Ashley has done an outstanding job while he's been on the board and has been a big contributor," said Alfred A. Baker, a veteran board member and vice president for labor and employee relations at Owens-Illinois Inc.
"The Noes haven't been involved with Medical University affairs to my knowledge," said MUO President Dr. Lloyd Jacobs, who added that his own interactions with Mr. Noe were limited to regent business.
Mr. Ashley currently chairs the board's audit committee. He estimates that the board consumes 8 to 10 hours of his time each month. He views that time as helping to improve Toledo, not as a political prize.
"To be honest, I didn't know it was a position you competed for," he said.
Ms. Turcer said the exchange between Mr. Noe and Mr. Hicks and the resulting appointment continues to raise concerns about how business is done in Columbus.
"A lot of times we think, someone is trying to get a job for their kid or a second cousin," she said. "But what we're really talking about is the old boys' club, or to be politically correct, 'the old boys' and girls' club.' "
Contact Joshua Boak at: jboak@theblade.com or 419-724-6050.
_______
____________
Flashback, July 13, 2003 (Canton Repository)
Controversy surrounds STRS’s awarding of bonuses

By PAUL E. KOSTYU Copley Columbus Bureau chiefCOLUMBUS — The people who run the pension system for Ohio’s teachers got millions in bonuses for attending workshops, talking to parents and keeping spreadsheets of expenses.
The bonuses are just one of the controversies swirling around spending by the State Teachers Retirement System. Critics blast the payments as an example of excessive spending. The system paid nearly $19 million in bonuses to its investment and non-investment staff from 2000 to 2003. During that same period, health care costs for retired teachers skyrocketed, and the pension fund’s portfolio plummeted.
By comparison, the larger Ohio Public Employees Retirement System gives only its investment staff bonuses, and those bonuses totaled just $2.06 million from 2000 through 2002.
The controversy about the teachers system’s spending has led nearly 80 percent of Ohio lawmakers and Ohio Auditor Betty Montgomery to call for Executive Director Herbert Dyer to resign. The system’s board met for nearly five hours behind closed doors Thursday to talk about “staff performance, compensation and other terms and conditions of employment;” many think the discussion focused on the terms under which Dyer will leave.
Meanwhile, the teachers pension board has temporarily suspended all bonuses as it reconsiders its policy.
Documents from the last full year for which bonuses were paid — the fiscal year that ended in June 2002 — showed at least 42 supervisors reached 100 percent of their bonus goals. Records for another eight employees did not make it clear if goals were met.
Of the 15 who did not meet all their goals, 10 were in the 90 to 96 percent range. For example, Damon Asbury, deputy executive director of administration, reached 96 percent of his goals and got a $49,728 bonus. That was on top of his $148,000 salary.
Shun Koizumi, supervisor of the copy center, was the least successful at reaching planned goals, 60 percent, but that was good enough for a $1,367 bonus tacked onto a $45,580 salary.
According to retirement system officials, the performance-based incentive program was set up so organizational goals could be achieved cost effectively.
“The goals are to expand beyond the associate’s regular assignments, representing additional initiatives and increased workload outside the normal scope of responsibility,” says one document.
Each employee develops and assigns a weight to his or her own goals. They’re approved by the employee’s immediate supervisor, the deputy executive director overseeing that department and Dyer.
At the end of the year, the employee reports whether he or she met the goals and by what percentage. That assessment is approved by the same three officers.
Teachers retirement system officials say the program is one reason member satisfaction with their pension system exceeds 95 percent.
What are some of the bonus goals that were above regular assignments and workload?
• Fifteen percent of Jodi L. Wells’ goals as director of the system’s child care center was to “continue to maintain open communication between parents and staff.”
She also was supposed to “stay abreast of latest research dealing with the Information Technology field as it relates to children’s use.” In other words, she read about Internet filters and talked to parents and staff about them.
Wells also was to “maintain awareness of budget and continue to explore options to increase efficiency.” To reach that goal, she created spreadsheets and monitored monthly spending.
All told, Wells achieved 93.8 percent of her goals and got an $8,639 bonus on top of her $61,400 salary.
• Carol Hamilton, supervisor of food services, achieved 100 percent of her goals in 2001-2002 and received a $1,965 bonus. Her goals for 2002-2003 were nearly identical. For example, in both years, four of her six goals were maintaining her dietary manager’s certification, performing employee safety training, assuring technical training for the food service staff, and making sure the staff was certified.
• To help earn his $13,462 bonus as the supervisor of business systems analysis, David Donithen participated in “a minimum of three formal activities to enhance technology and/or investments related knowledge.” In doing so, he met 20 percent of his incentives for the 2001-2002 fiscal year.
For the fiscal year that ended June 30, Donithen proposed going to two formal activities, counting toward 15 percent of his bonus.
Not reaching the goals has no effect on regular salaries or cost-of-living raises that supervisory staff receive.
According to the system’s spokeswoman, Laura Ecklar, any employee who gets a negative annual review or a “needs improvement” notation is not eligible for a bonus.
The number of non-investment employees eligible for bonuses increased from 46 in 2000 to 66 this year.
Retirement system officials and their consultants defended the incentive plan to the Ohio Retirement Study Council last week.
Lawmakers questioned why the STRS bonuses are “so vastly different” than those at the state’s four other pension funds.
Deborah Scott, chairwoman of the teachers’ board, said the program is based on the advice of consultants, Dyer and staff, who said the bonuses generally follow those at similarly sized pension funds in other states.
But council Chairman Sen. Lynn Wachtmann, R-Napoleon, called the bonuses “extraordinary” and said he was “extremely upset” by “a lot of misjudgment.”
“Help me out here,” said Rep. John Boccieri, D-New Middletown, addressing Peter Gundy with Buck Consultants, who was hired by the pension fund. “How do you justify bonuses for the copy center supervisor, the day care director and the maintenance supervisor?”
Gundy said his firm did not address incentives for those positions when it advised the board.
Boccieri asked if his firm consulted the retirement system members about the bonus policy.
“No,” Gundy responded.
You can reach Copley Columbus Bureau chief Paul E. Kostyu at (614) 222-8901 or e-mail:
paul.kostyu@cantonrep.com