NOTE: To find the most current posts, please scroll down to the two big red arrows. You can't miss them.

STRS Ohio Watchdogs: a public Facebook group you can join

STRS OHIO WATCHDOGS

by Cindy Murphy

STRS Ohio Watchdogs monitor the management and investment practices of the State Teachers Retirement System of Ohio.

We advocate for prudent and transparent investments, the restoration of the COLA for retired teachers, and the rollback of additional years of service required for active teachers.

This site will provide you with information about the work that is being done by Ohio's active and retired teachers to preserve our retirement benefits. Check back often for updates.

Join our conversation on Facebook. You don't have to be a member of STRS Ohio to join. Everyone who is interested in learning more about the management and investment practices of STRS Ohio is welcome.

Use this link to join our pack on Facebook:.

https://www.facebook.com/groups/ohiostrswatchdogs 

Have you joined the Ohio STRS Member Only Forum on Facebook?

If you are a member of STRS Ohio and have a Facebook account, you are eligible to join thousands of others who make up the Ohio STRS Member Only Forum. This is a closed group of retirees and actives who are advocating for the return of our COLA, which, as you no doubt know, your STRS Board SUSPENDED on April 20, 2017. Two of our members, Bob Buerkle and Dean Dennis, filed a class action lawsuit against STRS on May 23, 2019 suing for the reinstatement of our COLA. The text of the lawsuit can be found on this blog. You can go here to join the Forum and sign the petition, already signed by more than 20,000 people, for the return of our COLA: Ohio STRS Member Only Forum

Click image to enlarge

Angel of Grief

Garrison Keillor

Items of interest in the Archives: The 2013 STRS Board Election

Many people have been very interested in reading about the irregularities of the 2013 STRS board election. There are many posts related to this topic, beginning the first week of April 2013, after the ballots were mailed to retirees from STRS. You can find them by going to the Archives for this blog, over in the right sidebar, and clicking on dates beginning with April 7, 2013. Dennis Leone announced his candidacy for a retired seat in November, 2012. There is a lot of information about him in the Archives, beginning with November 12, 2012 posts. If you want to read only the best stuff about that infamous election of 2013, go over to the sidebar on the right of where you are now, which is the archives of previous articles on this blog. Scroll down to April 2013. That's where the "interesting" articles begin. You will see many, clear up to the middle of May 2013.5/28/13

.....so what REALLY happened in 2003 that touched off a firestorm at STRS that is still smoldering today? Read it here, from the Cleveland Plain Dealer. (Hint: It ain't over yet!)

More here (Akron Beacon Journal, 2003)

A MUST READ: Dennis Leone Reform Initiatives as an STRS Board Member  Between 2005 and 2009

To find current, day-to-day posts -- pull your scroll bar down a ways, just below the big red arrows (you can't miss them). Thanks.

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Find your state representative and senator here.

http://www.legislature.state.oh.us/

I know, it's weird.........

Many posts that appear "at the top" for a while are eventually moved down, where they can be found under their original posting dates. Also, if you are confused by the postdating, this is done to keep these posts up there; otherwise, they drift down when new posts are added. It's a "blog thing" which I have no other way to control. KB

Handy links: Contacts, information and more (short version)
This is an abbreviated version of the original 'Handy links' post. Click here to view a more complete list. (Some of it is old.)

STRS Board.....STRS website

Board calendar

E-mail contacts at STRS (old, but some may still work)

Map/directions to STRS, 275 E. Broad St. Columbus, OH 43215

STRS "Membership Survey" (spoof)
State legislators.......State of Ohio website

Latest OEA salaries (2011) over 100K; USDL report

Rich DeColibus' PowerPoint presentation STRS' PBI Program; Does it work?: click December 21, 2008 (blog Archive) and scroll down to December 23 posts.

Charts: PBI (bonus) payments

Popular links; click, then scroll down: charts, graphs, investment staff, lists, spreadsheets

$TR$ Inve$tment $taff $$$ (old)

SPECIAL (must read):

Dennis Leone's INVESTIGATIVE REPORT on STRS: May 16, 2003...Who is Dennis Leone?........(PDF version)...More on Dennis Leone .......(PDF version)

Dennis Leone: "Catcher of Thieves"

Dennis Leone's STRS Report to ORTA, March 2007

Dennis Leone's Testimony at the Statehouse 9/5/12
The Plain Dealer article that started it all

Dennis Leone: Factors Driving STRS 30-Year Planning and Revenue Assumptions (with charts)

Historic PBI vote, January 16, 2009

Charts: PBI (bonus) payments

CURRENT POSTS BELOW

Edward Siedle: Ohio Teacher Pension Documents Finally Released To Us Reveal Imprudent Investment Should Never Have Been Made

 Pension Warriors by Edward Siedle

Ohio Teacher Pension Documents Finally Released To Us Reveal Imprudent Investment Should Never Have Been Made

Not just any state pension would gamble and lose its entire $525 million investment in a private fund investing in companies that have "checkered financials." Forever Imprudent STRS Ohio did.

EDWARD SIEDLE
OCT 20, 2024
The ugly details of a grossly imprudent $525 million Panda Power gamble STRS Ohio lost, reveals why the Forever Imprudent pension has been stonewalling public records requests for years. Lots to hide.After nearly 4 years of public records litigation, the State Teachers Retirement System of Ohio finally released to us offering documents related to just one of the hundreds of high-risk, costly private funds the pension has been gambling on in secret. The damning details of this single investment—disclosed in the offering documents to anyone who took the time to read them—reveals why the pension has been fighting for years to keep all its private investment stinkers secret. Lots to hide.

STRS Ohio staff somehow concluded investing state teacher retirement savings in a fund that openly-stated it would be investing in “companies that have a checkered financial history,” was prudent. It’s not easy to lose an entire $525 million investment (and harder still to get paid a bonus when you do) but STRS Ohio investment staff did just that.

 It’s not easy to lose an entire $525 million investment (and harder still to get paid a bonus when you do) but STRS Ohio investment staff did just that.

Here’s what The Toledo Blade had to say about Panda Power in Editorial: Prudent person fallacy

A $525 million loss by the State Teachers Retirement System of Ohio in a private equity investment called Panda Power is revealing for the imprudence the “prudent person” law allows. STRS lost the entire investment. News of the investment debacle leaked from STRS in 2021.

The offering documents for the Panda Power fund shows the need for reform. The prospectus provided to the Ohio Retirement for Teachers Association’s pension consultant Edward Siedle is just like hundreds of other private investments in all of the Ohio pension fund portfolios.

Read entire Editorial: Prudent Person Fallacy  in Toledo Blade.

Robin Rayfield to STRS board: ".....over the years of turmoil here, the membership has spoken very loudly and clearly that change is necessary.

The membership has spoken very loudly and clearly that change is necessary!

Robin Rayfield's speech to STRS board
October 17, 2024

My name is Dr. Robin Rayfield. I am the Executive Director of ORTA. Thanks for the opportunity.

I had prepared remarks, but I'm going to deviate from them.

I think it's important to say thank you for the recent action to try to do something to help all parties.

We've always been about fixing the system, not simply about COLA.

But over the years of turmoil here, the membership has spoken very loudly and clearly that change is necessary.Unfortunately, the motivation, or the information underneath that desire for change, has often been characterized by management primarily as misinformation.

Understand that misinformation, if I don't agree with it, I call it misinformation. However, if I agree with it, it's information. So, I think we all have to recognize that.I've suggested two simple things, at no cost, that would help fix the trust and, we think, would help put STRS on a good track.

The first is, comply with the transparency that we have all asked for. There is a magistrate's order that said share the documentation behind the alternative investments.

The second thing we could do, very related, is move out of those opaque investments, and increase our passive investment strategies. The Auditor of State has confirmed we would do better. Save hundreds of millions of dollars to get, maybe better, but certainly similar, returns.

The last thing I would say is this: last month you did a great presentation on purchasing power. I wouldn't have been able to do it, but it was great. We've gone backward 21% in the last decade.

In that same decade, STRS compensation increased by 58%.

There's a disconnect between us being a partner. It's not a partnership if one person pays all the bills and the other person reaps all the benefits from those sacrificing.

Thank you.

Blade Editorial: The coming crisis is a manmade disaster by imprudent Ohio lawmakers. Simply requiring state pensions to make the terms of their investment contracts transparent would be enough to keep them out of one-sided deals like Panda Power.

Toledo Blade

October 18, 2024

Prudent person fallacy

Now, after nearly 30 years of ‘prudent person’ investing with hundreds of deals totaling tens of billions of dollars with terms like those in the Panda Power fund, STRS wants a 28.5 percent increase from taxpayers to bailout the fund.

THE BLADE EDITORIAL BOARD

Since 1997 Ohio’s public pensions and the Bureau of Workers’ Compensation have used the Orwellian “prudent person” standard to make the most risky, ill-fated investments in state history.

Rare coins and Beanie Babies in the portfolio managed by Toledoan Tom Noe, with such independence he was able to steal millions from the fund, was possible because of the Ohio legislature’s bad judgment. It’s a mistake the General Assembly has not corrected.

A $525 million loss by the State Teachers Retirement System of Ohio in a private equity investment called Panda Power is revealing for the imprudence the “prudent person” law allows. STRS lost the entire investment. News of the investment debacle leaked from STRS in 2021.

The offering documents for the Panda Power fund shows the need for reform. The prospectus provided to the Ohio Retirement for Teachers Association’s pension consultant Edward Siedle is just like hundreds of other private investments in all of the Ohio pension fund portfolios.

The document demands secrecy. STRS was forbidden to share the document or disclose the information in the document without Panda’s written permission.

Panda warned that the investment in merchant power would bring “no significant returns for a substantial period of time.” The deal tied up the pension investment for 10 years with an option allowing Panda to extend the terms two more years.

The management fee of 2 percent on $525 million of committed capital is $10.5 million a year. If Panda produced more than an 8 percent return, the managers got 20 percent of that profit. Taxes and expenses were also borne by STRS. Panda warned they would be substantial.

The risk factor tied to the 20 percent profit share for Panda was red-flagged from day one. The agreement “creates an incentive to make more speculative investments than would otherwise be the case,” Panda warned in the prospectus for the fund. Panda told STRS they would be investing in “companies that have a checkered financial history.”

Panda warned they would be using leverage and investing in leveraged companies bringing an opportunity for enhanced returns or a large loss of capital.

The value of the investments would be solely determined by Panda with the warning that there could be a material difference between carrying value and market value.

Now, after nearly 30 years of “prudent person” investing with hundreds of deals totaling tens of billions of dollars with terms like those in the Panda Power fund, STRS wants a 28.5 percent increase from taxpayers to bail out the fund.

The prudent investors at the Ohio Public Employees Retirement System and the Ohio Police & Fire Pension Fund also want much more money from taxpayers for the same purpose.

Since 1997, the S&P 500, which used to be the staple of Ohio pension funds, has increased 1,073.11 percent, or 9.40 percent a year. This easily beats every Ohio pensions’ annual assumed rate of return.

The coming crisis is a manmade disaster by imprudent Ohio lawmakers. Simply requiring state pensions to make the terms of their investment contracts transparent would be enough to keep them out of one-sided deals like Panda Power.

So you were NOT promised a COLA when you retired? Look again!

From a 2007 STRS publication:

 

Trina Prufer to STRS board: STRS has been shattered beyond recognition as a benevolent manager of retirement savings. The State of Ohio owns this, and needs to fix it, with an increase in funding, going directly into restoring benefits.

Trina Prufer's speech to STRS board

October 17, 2024

My name is Trina Prufer. I retired at 30 years and was a School Psychologist for 20 of those years. My husband passed away before retiring, having taught Anthropology at Kent State University for 40 years.

The title of this short presentation is: The Pottery Barn Rule: “You break it, you own it”

I would like to remind this board that teachers had nothing to do with running up the STRS unfunded liability… that occurred because the organization wasted far too much on mismanagement. Its core responsibility was to pay the benefits obligated by the ORC and it failed miserably in delivering on its mission.

Teachers were assured of a secure lifelong benefit at an adequate percentage of their final average salary (FAS), which in my day was 66%. That was the purpose of the 3% annual, automatic cola, which is a normal component of a defined-benefit pension, in a non-social security state.

So, what does that STRS defined benefit look like today? After ten years without a cola, that 66% FAS diminishes to about 49% purchasing power. After 20 years, which is the official plan to reach 100% funding, the purchasing power reduces to about 36%. Additionally, active teachers are paying 14% for a benefit with a normal cost of 11%. No other public teacher retirement system, in a non-social security state, has ever harmed its members to this degree.

In 2012, STRS the Ohio Legislature took the easiest and most imprudent way out of its funding dilemma. It shifted the blame and responsibility of fixing the pension shortfall onto individual teachers, who are the least able to absorb this enormous cost. Do teachers not have the need to pay for groceries, housing, medicine and support care as we age? Are we not human? Why is STRS even a retirement system if it pushes its oldest retirees into poverty?

STRS has been shattered beyond recognition as a benevolent manager of retirement savings. The State of Ohio owns this, and needs to fix it, with an increase in funding, going directly into restoring benefits. Pay what is owed, restructure STRS to reflect the needs of educators, and rewrite the law, so state workers are protected from financial abuse. The state legislature needs to take responsibility for what it broke, and just do, what needs to be done.

Toledo Blade: One-time check to be paid to retired Ohio teachers in December

Toledo Blade

October 17, 2024

By Jim Provance

Retired Ohio teachers to get 1-time checks in December

 COLUMBUS — The bigger question of a future cost-of-living adjustment still up in the air, the board governing the Ohio’s pension fund for teachers on Thursday set aside a total of $306 million for one-time benefit payments for retirees.

The State Teachers Retirement System board figures it has room for $882 million for possible distribution but opted to hold back most of that now in anticipation of a vote on potentially restoring a COLA next spring.

The supplemental benefit, credited to the fund's strong investment earnings, would amount to an average boost of $1,720 for retirees, depending on years of service and time collecting benefits.

The payments, subject to tax withholding, would be made in December.

“It is one time, and it is not an ongoing commitment,” said board member Alison Lanza Falls, an appointee of Republican state Treasurer Robert Sprague. “It’s also a positive. ... The major concern I have is setting expectations.”

“... When we have short memories and when there are many people around who remember the phrase ‘the 13th check,’ they remember that 13th check went on for years and years and years ...,” she said. “I just think that’s a risk we can’t ignore, and it’s also a risk we can’t control.”

STRS, one of the largest public employee pension funds in the nation, has assets exceeding $90 billion. While strong investment performance has improved the fund’s bottom line, it is still considered to be 10 years away from being fully funded with enough assets on hand to cover its expected liabilities.

Some retirees are still angry over the board’s decision to do away with automatic annual COLAs and have criticized decisions of the board to pay performance bonuses to in-house investment staff.

The board looked at several options, including a possible combination of a COLA and one-time check. It plans to send notices, possibly with the next checks, to stress that this payment is no “13th check.”

“I want to reinstate the COLA, but I don’t want people to get confused with that,” said Carol Correthers, representing contributing members. “If [the supplemental payment] doesn’t happen again, then they’re going to be saying, ‘Why didn’t you do it again?’”

A one-time payment would be available to all retirees who've retired prior to this year. There is a five-year waiting period to benefit from a COLA.

This month's meeting had two new faces at the table.

Gov. Mike DeWine recently appointed Jon Allison, who served as aide to Republican Gov. Bob Taft, to replace Wade Steen, whose term expired last month.

Mr. Steen, allied with the retiree reformers, returned to the board earlier this year under court order after Mr. DeWine had removed him months earlier. The court found that the governor lacked the legal authority to remove his own appointee in mid-term.

Also new was Carolyn Everidge Frey, appointed by the Department of Education and Workforce to replace Scott Hunt.

Attorney General Dave Yost has sued to have Mr. Steen and current board chairman, Rudy Fichtenbaum, removed, alleging they violated their fiduciary duties to the system by promoting a questionable investment scheme. That case is still pending.

All of this occurs as the board is dealing with the pending departure of its executive director, Lynn Hoover, and the previous resignation of its chief investment officer, Matt Worley.

Read the article online here.

Robin Beebe to STRS board: "if a cup of coffee, a box of popcorn, or a plate of cookies would not be prohibited under the Ohio Ethics Law, surely a simple piece of celebration cake should be acceptable?????"

Robin Beebe's speech to STRS board

October 17, 2024

My name is Robin Beebe. Retired teacher of mainly 4th Graders and Kindergarteners. 35 years. Fremont City Schools and Perrysburg Schools. Retired for 15 years. Please start your 3 minute timer now.

After receiving a scolding lecture on gifting at the last September STRS Board Meeting, I thought to myself, "Hmmmmm....... I need to check this out further...."

And this is what I found...."The State of Ohio Ethics Commission - Gifts".

As a former Kindergarten teacher, let me explain to you what I discovered as I would to my kinders, straight forward, plain and simple.....I will share the pertinent sections.

"The Ethics Law prohibits a public official from soliciting or accepting 'anything of value' , if the thing of value could have a substantial and improper influence on him in the performance of public duties.

'Anything of value' is defined in state law to essentially include anything with any monetary value. So, before a public servant accepts a gift or thing of value, both the source and the value must be considered.

Examples of substantial gifts include outside consulting jobs or private employment, payment of debts, loans, travel to exotic locations, lavish meals, entertainment activities, such as golf outings or season tickets for a professional sports team, or significant discounts on major consumer items.

In Advisory Opinion 2001-03, the Commission offered examples of substantial things of value which cannot be accepted, but also gave examples of items that are considered nominal under the law.

Items that are considered nominal -  and therefore not prohibited - could include a cup of coffee, a box of popcorn, an inexpensive picture frame, or a plate of cookies.

Accepting gifts of this type would not be prohibited under the law. Be aware, though, that the Commission has cautioned that nominal items or expenses could have a substantial cumulative value if extended over time."

I hope this helps clarify some things.

In conclusion, plain and simple, if a cup of coffee, a box of popcorn, or a plate of cookies would not be prohibited under the Ohio Ethics Law, surely a simple piece of celebration cake should be acceptable?????

And so, as the old saying goes....."Let them eat (chocolate) cake!" Seriously!!!!! Gheesh!!!

Cathy Steinhauser to STRS board: Intimidating board members through lies is despicable. Do the right thing and restore our COLA sooner than later.

Cathy Steinhauser's speech to STRS board

October 17, 2024

Cathy Steinhauser – 35 yrs., satellite teacher of Family & Consumer Sciences through Pickaway/Ross CTC for Circleville City Schools.

I am aware that we now have two new board members this month. Welcome, and STRS pensioners are counting on you to do what’s right in making decisions that impact our everyday lives.  I’m a person who has the reputation for reminding the board members of their fiduciary duty.  You see, I have been schooling the board members on this topic for over 20 board mtgs.  Yes, you heard that right…it’s 21 now. Why do I keep doing this, you might be thinking? As teachers, we will repeat a lesson until the class fully understands it…sometimes it takes 20 or more repeated reminders. It’s been apparent to us pensioners that a lot of decisions haven’t been made with our best interests in mind. We have been missing a permanent COLA for many years. I have been retired for almost 9-1/2 yrs. and have discovered that I am deficient in my COLA by $45,000!! Yes, that’s what I said…$45,000.  I didn’t cause this, I didn’t do anything wrong as I paid my 10%, then 14% over 35 years and then 6 more years after retirement working in our after school program twice a week, so more was paid beyond.  I trusted STRS to do what they were hired to do and now, as our acting Executive Director said in response to a reporter’s question, “It feels like a slap in the face”. We pensioners have had to tighten our belts for way too long.  We have members who are living in poverty due to no sufficient COLA.  We’ve had pensioners die before getting consistent COLAs. We have pensioners these past 4 yrs. experiencing real hardship with prices up on groceries, gas, utilities, clothing etc. but STRS staff and investment group have been given bonuses to make their lives even more enriched. Shameful, disgusting, disrespectful and STRS owns this.

I’ll leave you with the definition of FIDUCIARY again from The Merriam-Webster Dictionary: “A person who acts on behalf of another person or persons putting the client’s interests ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary requires being bound both LEGALLY AND ETHICALLY to act in others' best interests”.  In other words, fiduciaries at STRS are required to take care of ONLY the pensioners.  With all the unethical decisions that have occurred the past 20 years, there should be many serving time and/or restitution or fired. Too many irresponsible mistakes have occurred in 20 yrs. If pensioners aren’t given a COLA, no one at STRS should be given a bonus. A mess has been made of STRS and needs to be cleaned up.  STRS needs to run this pension more frugally.

I also still haven’t found any information about a pension fiduciary obligated to being a fiduciary to the STRS employees, which was mentioned during a board meeting a few months ago…most likely because it is a lie…certain people in this room should not speak of things they know not of. Intimidating board members through lies is despicable. Do the right thing and restore our COLA sooner than later.

Suzanne Laird to STRS board: I’m begging, not for treats, but for what I and all Ohio teachers deserve: a secure and stable retirement.

Suzanne Laird's speech to STRS board

October 17, 2024

Good Morning/afternoon, Members of my Board:

I would like to welcome our new appointees and pay compliments to several of our current teacher representatives for asking the tough questions. These teacher reps hit the ground running and can help you, as new Board members this October, separate the treats from the tricks.

At this time of year, we caution students against becoming too greedy with candy, yet here, at STRS, the greed is rampant.

At least SEVEN STRS employees make over half a million dollars a year when you combine their outrageous salaries with their treats — excuse me — bonuses. Even the custodial staff averages $61,000/year: more than some rural Ohio teachers! And, as you have seen, their surroundings are a treat for the eyes, the envy of every educator.

Those of you appointed by the governor: are you aware that 90 staff members at STRS earn more than your boss?! The tricks don’t stop there; you will witness vanity projects like the Stakeholder Task Force, proposed to waste thousands, free parking, a 10 dollar a month gym, and a cafeteria which loses hundreds of thousands of dollars every year.

Ahh, but they will try to trick you into believing that none of this largesse would bring back the COLA or reduce the number of years for active teachers. Ten years of bonuses in the 5 million dollar range would help, but the Attorney General’s ghouls haunt every meeting, scaring the Board into giving out more candy.

Do not be tricked. We educators were tricked into believing that we could trust our own retirement system. Now, we are being told that we did not contribute enough, (although we had no say: the actuary determined the amount which was withheld from our pay), and that we are living too long. But sadly, the graveyards are filling up with retirees dying to receive a COLA. Wait another ten years, we are told.

I’m frightened. I’m scared for the future of education in Ohio, and you should be, too.

I’m begging, not for treats, but for what I and all Ohio teachers deserve: a secure and stable retirement.

Dean Dennis to STRS board: Today, I still think adopting a formula-generated EA approach is more reasonable than following the 7% EA crowd. Remember, the crowd also has variable employer contribution rates, whereas we don’t. It’s time we demonstrate we are a top-tier pension system.

From Dean Dennis

October 17, 2024

October 17, 2024 - Dean Dennis, 35 yrs, Cincinnati Public Schools. ORTA Executive Chair.

I will read a quick section of the September 2024 Newsletter from the Ohio Public Employees Retirement System.

“The OPERS Board of Trustees approved updates to OPERS’ funding policies, establishing a decision-making framework to manage the future funding of the system's pension and health care plans.

The new policies came about because the trustees had expressed interest in creating a system to reduce funding risks by setting clear objective parameters honed on past experience that trustees will reference in the future to make prudent funding decisions.”

The new policies include the following update: Setting a systematic, formula-driven approach to identify potential actions for the trustees to manage funding and risks.

I bring this to your attention because on October 17, 2019, five years ago. I stood before the Board and presented the following:

Ohio Statute sets our funding period at 30 years. Over the last 40 years, has STRS earned less than 8% over any rolling 30 funding-year period? I believe we achieved around 8.5% over our previous 30-year period. So, why is our Earnings Assumption set at 7.45%, over 100 basis points less than what we are actually earning?

Why hasn't our Board adopted a reasonable EA formula that ties the actual earnings of our 30-year rolling funding periods and then adjusts the EA accordingly? Why can't we adopt an EA 50-60 basis points lower than what we earn and adjust accordingly every five years? If an EA of 7.9% were adopted, 60 basis points lower than what we are earning over our 30-year funding period, it would reduce billions from our 30-year liabilities. As fiduciaries, you could restore a COLA.

In March 2017, the Board drastically reduced the EA from 7.75% to 7.45%, dismissing the reality of our historical 30-year earning returns. Thirty months later, our 10-year earnings period netted a return of 10.44%, nearly 300 basis points above the current adopted EA. Adopting a reasonable formula-based earning assumption is not irresponsible; however, withholding benefits because of a lack of one is irresponsible.

Today, I still think adopting a formula-generated EA approach is more reasonable than following the 7% EA crowd. Remember, the crowd also has variable employer contribution rates, whereas we don’t. It’s time we demonstrate we are a top-tier pension system.