Saturday, February 04, 2006

Dave Speas: Husted no friend of public education; Molly: Contact your legislators now

From: Dave Speas
Sent: Saturday, February 04, 2006
Subject: Re: Contacting legislators: Day 2 of the STRS Retreat
I have met with Mr. Husted and he is NOT a friend of public education. He has been in the forefront of the charter school and voucher movement. No amount of pressure will make him change his mind on those issues and the educational leaders of this area around Dayton have not been able to move him from his position and we have tried. He will be against helping public educators on a fundamental personal belief basis. Defeating him when he runs is the only way to change the stance of this powerful political player. Dave
From: Molly Janczyk
Sent: Friday, February 03, 2006
Subject: Contacting legislators: Day 2 of the STRS Retreat
Rep.Husted is Speaker of the House.
Ohio House of Representatives
77 South High St. Columbus, Ohio
If you read below the notes below from the STRS Retreat and from Mike Billirakis a few days ago, you can see it is imperitive we contact legislators now to let them know we support increased contributions from employees and employers. OSBA is doing so and we need to counter per comments below [report on Day 2 of Board retreat] and from Mike B.
If we wait for others, 2007 will bring certain problems for us. We need act now to address our futures with powerful facts in persuasive letters, emails and calls to support increased legislation for educators.

Tom Curtis to Margaret Porter re: Billirakis' pay deal

From Tom Curtis, Jan. 31, 2006

Hello Margaret,
I guess it would only seem natural to think he would have his contract moved the highest salary schedule in the state. Having been the OEA president, he could have been working on this deal for a few years. It sure has a bad smell to it, even though the Auditor of State says it is perfectly legal and the STRS has sanctioned it and let it stand.
It would seem that our STRS management could not possibly come up with anymore ways to benefit them, but they get excellent advice from the many consultants they hire and pay lavishly for this service. After just giving non-investment staff $4 million in bonuses from 2002-2003, Aon consultants on January 19th, asked the board to increases wages for all non-investment staff. Some would receive as much as a 20% increases if this is approved.
Thank you for your support in obtaining signatures in your county. We can only hope we are able to elect people that will see the STRS management for what they have been to us, parasites that have lived exceptionally well, while mishandling our money and not seeing to it that their stakeholders had what they promised them. There is honor among thieves. It has been shown that they certainly do not honor us for providing them with a dedicated flow of income.
Take care, Tom Curtis
From: Margaret Porter
Sent: Monday, January 30, 2006
Subject: Re: Questions/Reply from Perry Local Schools-Billirakis -Open Records Act- They forgot to answer question # 2- Wonder why?
Just to let you know. Perry Local schools is in Lake County , north of Cleveland. It is or was the highest paying school district in Ohio. Margaret Porter
From: Molly JanczykSent: Sunday, January 29, 2006 7:47 PM Subject: FW: Questions/Reply from Perry Local Schools-Billirakis -Open Records Act- They forgot to answer question # 2- Wonder why?
Thought Mike was taking money from Perry Co to pay for days at STRS. This schedule of payments seems to list a per day rate when at STRS. $30,000+ in benefits and $70,000+ in salary aside from NEA salary.
The law needs changed. One should not be allowed to be on full salary and benefits NEVER having taught one day in a system.

Tom Curtis to Board member Mary Ann Flannagan: Thank you

Hello Mary Ann,
Thank you for taking the time to stop and chat with both my wife and I during the retreat and recent board meetings. It is comforting to know that you are highly concerned about the many issues confronting the membership, the more you become acquainted with the workings of the STRS.
As a disability retiree, I am still considered to be an active member and as such, am represented by definition, by the five active teacher board members. Those are the only board members I am permitted to vote for, even though I consider myself to be a retiree.
I found I do have an email address that is different from the one you provided me with on Friday. That address was [xxx]. I am not sure where I obtained that address from, but I received it during election time last year. It may be your home address, as I believe you had indicated that you were rarely at home due to your father's illness at the time and indicated it was better to call you then it was to email you.
Anyway, I am most appreciative that you are willing to correspond with me, as I still have many questions and concerns about the whole process at the STRS. I am sure you do as well.
I was an industrial arts/technology education teacher at the high school level for my entire 27 years of teaching. I have a lifetime background in this area. Because of my training I have a lifetime background of needing and searching for knowledge and/or information, so I can make choices, recommendations and take action based upon that knowledge and information, to the best of my abilities.
After three years of regularly attending board meetings, chairing some of the monthly CORE/STRS executive staff meetings, constant correspondence with STRS executive staff, minimal with OEA & OFT leadership, ORTA leadership and members, legislators, Ohio government officials and many others, I am still in a quandary as to why the STRS finds itself in the financial position it is in today.
We are being told that we must rely on the investment staff and non-investment support staff to keep us afloat. If they do not perform as needed, it would appear our pension system is doomed. I am very uneasy to know that as much as 78% of our funds are locked into the stock market, because if this country would go into a major recession, our pensions would be in jeopardy. At least this is my perception, though it may be wrong. Right now I am worried about where the membership stands? We appear to be so totally dependent on the staff, that we are threatened to either increase their wages or they will leave us and move on to greener pastures. I do not like this scenario. All the STRS management has ever had to do is take our dedicated flow of income and invest it wisely, so the returns would provide for what had been promised; a pension and health care. No other industry is that fortunate to just simply have a dedicated flow of income without having to do anything for it. Until five or six years ago that dedicated flow of income has covered the entire overhead of the system and has been solvent. Now, we are told that has changed and will no longer be the case. Consequently, we have now found out that teachers worked all of those years relying on nothing more then a myth. We were told by our local and state unions that teachers did not make much income during their working years, but that they would be secure and financially able to live the rest of their lives in relative comfort, considering that we worked for much lower then private industry wages.
Mary Ann, I will help in whatever way I can to help establish a meeting process by which the membership can speak with board members face to face. Correspondence is one method, but often does not provide the true meaning, or spirit of what one has to say about their concerns. This need is certainly unprecedented, as Terri Bierdeman brought out during the retreat, as most of the past years have been good years and the membership had little to no concerns.
Retirees now find themselves in the position of having lost health care benefits we thought were promised and would be delivered; concerns are very heightened.
It appears the issue of grandfathering is dead. I am thoroughly saddened by that fact, as I have found my pension to have been reduced by one third today, not knowing what that effect will be in the future. Further, the thought of what we will do for health care in 2018, when the HCSF is scheduled to run dry is of great importance and the STRS has provided no comfort, only fears.
All I ever hear about by attending the board meetings and staying involved is the continued needed for increases in the cost of operation of the STRS. They seem to feel that is always justified, when the retirees are receiving little to no consideration. That to my understanding was the reason for establishing the STRS was to benefit the retiree, but from my viewpoint, that is not happening and I do not understand why? That answer has been elusive for the three years I have been consistently involved. Maybe I expect something here I will never receive. I am beginning to feel this will be the end result. You are yet to retire, but once you do, you will find just how quickly you become a person of little concern to those who are still actively working and are now the care taker of your retirement funds. I would never have expected such, but that is the experience I have found. You were endorsed and supported to become a board member by a union. One you have dedicated much time and effort to throughout your career. I have no idea how the OFT treats its retirees, as I belonged to the OEA, but the OEA has treated me as though I were already dead once I retired, as I am no longer providing the OEA with any income. I have no voice. I do not even believe the OEA-R members have much of a voice, as they provide little income to the OEA. This is a union mentality and one the leadership should recognize, if they were truly concerned about their membership.
I paid dues to the OEA faithfully, each year during my entire career. Yet when I contacted the OEA leadership about the abuses at the STRS, they completely ignored me. That is abusive and unacceptable treatment.
Consequently, I have taken every opportunity to offer my negative feelings about the OEA to every active member I can reach. I will continue to do so, because they have let me down and not supported my needs at this point in my life, when I feel I have needed them the most.
Thank you for listening and taking my concerns into consideration when you vote your conscious at the STRS.
Tom Curtis
CORE Advisory Committee Member

Molly to Damon, Board, Mitchell, Staff: Unfunded liability, compensation, communication

From Molly Janczyk,
Sent: Saturday, February 04, 2006
Subject: Damon,Buser,Mitchell,Board,Staff: Unfunded Liability,Compensation,Communication

Dear Damon, STRS Board, Steve Mitchell, STRS Staff:

1. The report states the a roll back of the 35 yr incentive only would reduce the unfunded liability by only about 3 yrs. I understand that this says IF IT HAD NEVER BEEN PASSED but I want to clarify so folks don't think rolling back would achieve gains now.

QUES: Re: 8.25%: ARE YOU SAYING that if we achieve this amunt of return, we COULD be at 30 yrs unfunded liability in 3 yrs.?

2. Regarding compensation: QUES: Re: Saying that staff IS leaving due to private pay: -how many would leave anyway as we cannot pay private top rates even if we adjust salaries -can they not be replaced with qualified staff to do the same productive jobs immediately -can some depts be cut back in Cust. Serv.; many members have indicated they will be happy with less customer service as that is not the problem. A Newsletter would ans many questions upfront if anticipated questions are addressed so call , etc. could be reduced. I rarely use Cust Serv. due to some differences in answers though more recently they seem right on. I generally go to the source for any serious issue to be assured it is comprehensive.

3. Communication: Part A: Excellent pts were brought up re: communication. We would love to be provided factual info instead of relying on working to obtain it. A fact center would be wonderful and regular emails from STRS APPROVED by the ENTIRE BOARD for output with input from the ENTIRE board if they wish. In that way, we know all consider the facts beneficial and comprehensive for membership knowledge.

I feel this is what is lacking from all organizations to membership. Information, as Leone pointed out, stops rumor in its tracks! When STRS hears of rumors, issue statements of fact! BUT, the ENTIRE board must view it prior so that no board member disagrees or at least can add their take. We must know without exception that these memos or Newsletters are approved by all to build trust that we are not only hearing one dept or person's slant or the view wished to be presented.

Many members are angry that WE are the only ones relating what each board member has to say on different issues. They want their membership newsletters to tell them how each board member contributes and stands on issues. This would be a remarkable tool with brief summaries regarding each board member's position on the issues of the month so membership understands their thinking for consideration of all views. A notetaker can do such with Damon, Mitchell and each board member reviewing the notes for approval and corrections. Each board member sees all notes regarding Damon, Mitchell and every other board members' comments for absolute accuracy. A checks and balances type issue to ensure members that it is totally without change of original.

How much time would a monthly Newsletter take vs. the generic minutes online? Care would have to be made to ask membership WHO DOES NOT HAVE ACCESS TO A COMPUTER so mailings could be made to them ONLY to save costs. If Mitchell and the ENTIRE STRS Board had the opportunity to address issues online it would make all our lives easier and better informed. Damon's minutes are already included but he could add points as well. Then we have comprehensive information in front of us with real people to ask questions and get direct responses. If you make attempts to answer questions upfront you know will result, it will dispel so much inquiry.


PART B: Public Speak: It is my interpretation that: -We may name board members to adress concerns and questions determined by legal opinion and agreed to by Damon. Therefore, this portion of the introduction should be dropped. -That if one askes a board member a question, that board member may answer if they choose or refuse to answer at that time. This was discussed and I thought decided last fall and all seemed to agree with this position. It should not be up to the Chair whether a board member wants to answer but up to the individual board member. The Chair does not have the right to make a decision for another as decided by legal opinion sent to Damon and Damon agreed.

Therefore, it has already been discussed and decided that membership may address board members, may have answers from them if the board member wishes to respond which goes such a long way as Leone pointed out, to dispel rumor and make the board look forthcoming and with nothing to hide.

**Respect of manner is of course expected with no namecalling from anyone. The board is there for us and we have the right to address them and ask questions. This was legally determined by legal opinion on the matter. Lazares and Leone have always said they are on a public board and expect such from the membership.

PART C: Chapman suggested and Flannagan agreed that Advisory Grps could be implemented for better communication with membership such as CORE does with its regularly held Damon/CORE meetings. That is a great idea! Invite membership to form small groups to attend the different open meetings to ensure factual communication and perhaps assign a bit of time during the session for their input.

Communication is everything but membership must know all the background making a decision vs. throwing the decision out to us with no warning or background info which scares and raises voices of dissent. We have many clear thinking and balanced individuals who can sit in and be objective helping to bridge the gap of communication and offer members input for consideration.

Thanks to Jeff and Mary Ann for opening this door. We have long asked to sit in on allowed meetings. Letting us in would go a long way for proper interaction and accurate flow of information.

Most sincerely,
Molly J.

Correction to minutes of Day 3 of Board retreat

Please note the following correction to the minutes below. When Dr. Leone spoke of 70 STRS employees getting bonus checks, he said the bonuses were in excess of $10,000, not $70,000. The actual quote was: "A total of 268 non-investment employees got their final bonus check this year (from fiscal year 2003) as a result of the lawsuit and settlement agreement. Of the 268, 70 of them got bonuses in excess of $10,000. Fortunately, these bonuses are now stopped, but at least one STRS Board member, Judith Fisher, said she feels they should continue since the Board's consultant said that these employees are "underpaid." -- M.E.A.

Angeletti report: Day 3 of Board Retreat

John Lazares had requested that time be allotted to Steve Buser so that he could speak to the Board regarding the 35 year rule. Board members still have questions about this rule and so Dr. Buser attempted to translate what he believed to be true about this rule and what he wishes he had known about it at an earlier time and for less money to the system.
In June of 2005, the accrued liability was 73.6 billion dollars. The value of assets was 53.6 billion dollars (not including health care). The unfunded liability was 21 billion dollars. S.B. 190 has lots of other things in it in addition to this 35 year rule but this bill raised the base for active members to 2.2%.
If S.B. 190 had passed without any 35 year enhancement, the unfunded liability could have been reduced by 18 years. If all components of the 35 year rule are considered and one runs it out to infinity, it is a wash.
The benefit of the 35 year rule to the system is that it encourages members to delay retirement and the system is 330 million dollars ahead because all of these members are paying into the system for five additional years.
A member who retires with 30 years experience is expected to live for 15 to 20 additional years. A member who retires with 35 years experience is expected to live 7 additional years. However, senior members are staying in the system longer anyhow in order to pay for health care.
The history of this enhancement involved the legislature, which thought that STRS had accrued too much money, and they wanted STRS to do something with it. A majority of members benefited by the 35 year rule. Brown added that he had heard that the 35 year rule was initiated to attract science and math teachers to the education field. He also heard that it was initiated to combat a pending teacher shortage.
At an earlier time, 2% to 2 1/4% was donated to health care, but in retrospect STRS should have put much more into health care. Brown reminded that no plan was written in black and white in order to be flexible regarding what the legislature might ask STRS to do. The impact on the funding period changes. For example, if the funding period is 8.25 = unfunded liability is less than 30 years, if the funding period is 8.04% = unfunded liability is 55 years, if the funding period is 7.75% = unfunded liability is 110 years, and finally if the funding period is 7.50% = unfunded liability goes to infinity. Bob Slater said that under current assumptions, STRS could reach an unfunded liability of 30 years by 2015 with another 4% to dedicate to health care assuming an 8% return. Dr. Buser was interrupted frequently during his presentation, and I did not feel that had a chance to say what he wanted to say.
On the positive note of Slater's 2015 outlook, Steve Mitchell introduced a plea for raising reimbursement to STRS staff. He is very concerned about needing to attract and hire acquisition officers in the International Real Estate division. He has lost some key employees and reminded the Board that 75% of his investment people are delivering above their benchmarks. Those people who handle the International and domestic equities are beating their benchmarks.
Buser, Meyer, and Lazares all had points to make concerning this topic, and Brown said that they were raising their voices and starting an argument. Lazares reminded Brown that he spoke of respecting other Board members at yesterday's session and that he must now show respect for these Board members who wanted to express their opinions. Brown apologized.
It was clarified that across the board increases in reimbursement were NOT intended. It was suggested that salary ranges be set for key managers up to certain levels without across the board increases. The idea of possibly adjusting salary ranges to 60% for non-investment managers and 75% for investment managers was suggested.
Fisher felt that the Board was micro-managing. . . that Mitchell knew what was needed. She reminded the Board that there had been no increase for the investment staff for 4 years and yet this staff had delivered phenomenal results for the system. She quoted John Osborne, who had recommended 6 million dollars for the investment managers. He had felt that STRS could easily pay up to 8 million dollars for our investment staff and had reminded the Board that it would cost them 74 million dollars for external investment managers with no evidence that external managers could do any better than our internal investors.
Asbury reminded the Board that their options were
1. pay our internal managers
2. index the fund or
3. hire external managers.
Puckett asked the question, "Can we attain it without an increase in investment?" (I think he was asking if STRS could pay out this 6 to 8 million dollars increase in reimbursement without needing to make more money through our investments to cover this additional money.) No answer was given to his question.
Meyer reminded the Board that they are responsible to help STRS avoid big risk and asked, "How much risk are we willing to take?" He reminded them that at yesterday's session, the Board had suggested getting 8% return using internal managers. He is undecided.
Andy (staff) added that STRS had just completed their own compensation study (AON). "Let's be pro-active and make some adjustments to the investment and non-investment staff." Greg (Business Manager in the I.T. Dept.) emphasized that his group supports Mitchell's investment staff. . . most all of the non-investment staff supports the investment staff in some way. The AON study results have been published and indicate that compensation at STRS is low.
Leone interjected that the market has done well the last 18 to 19 months with a 12% growth this year and last. "Why are these investment managers going to leave?" he asked Mitchell. No answer. Meyer said we need to measure people against benchmarks.
Mitchell then reminded the Board that Adam Barnett (?) had referred to 40 basis points. "Google is underweighted. What is the Board going to do? People know about the AON compensation study. They are looking to the Board now. Investment and non-investment staff will walk. They know that there will not be another compensation study for 4 or 5 more years. Maintaining 40 basis points is going to be hard to do."
Flannagan then made the comparison of two of her daughters. One is a teacher who will have her low salary job for life. The other daughter has a job in the corporate world and is bouncing from job to job in order to get a better salary. Her comparison exemplified the difference between the world of education (public sector) and the world of corporate business (private sector).
Mitchell again reminded the Board that only 1 or 2 acquisition officers were left in the International Real Estate area, and he needs to replace more asset managers. Leone said that non-investment staff received bonus checks for 6 years. . . that 70 people got bonus checks of $70,000.
Knoesel reminded the Board that the non-investment staff gives a high level of service. That they had been paid a lower salary for 5 years. She volunteered that there has been a one-third turnover in the call center and that errors on pension estimates had been made due to new people on the job in the call center.
Asbury said that the AON study told the Bd. where the market is and that increases in reimbursements would be made on a case by case basis only. Fisher emphasized that when staff reaches performance goals, they insure productivity. The judgment of the AON study was that STRS compensation is low and needs to be brought up to the middle of the market.
Rider (facilitator) said that STRS members receive red carpet service because this is what members say they want. He said that staff has a key role in providing this service. He asked the Board, "Compensation? Planning? Where do you want to be? You must acknowledge where you want to go." Leone said that it is not a question of employees not being deserving. It is a question of the money. This is where this conversation ended.
Laura Ecklar, director of Communication Services, conducted the next part of the morning's agenda titled Agreement on Key Messages. She discussed the relationships with different audiences, which is public relations and a management function of her department. She said that STRS' success depends on responses to the public. She referred to the many entities mentioned in yesterday's session led by Terri Bierdeman in the Environmental Scan. She related that the last two and a half years have been low points in STRS history due to downturns of impressions of STRS and downturns of the market.
Changes have been made at STRS and her dept. has tried to communicate & share these changes with the membership. She said, "We must do the right thing and then tell that we have done the right thing."
Members feel that pensions are the number one priority. Excellence of service and red carpet treatment are important. The health care issue has become the critical issue. At a time of disconnect with members, immediacy is important Ecklar said. In an effort to reinforce the STRS staff, on-going research is essential. E-mails, phone calls, letters, newsletters, face to face discussions, and surveys are used by her dept. to gather opinions and the results are that membership is extremely satisfied with STRS.
Her dept. must stay in sync with the membership. Comparing old and current STRS newsletters is an interesting exercise. Health care and operational expenditures were not even mentioned in the old ones because they were not important to members. Social security was an issue to members and when STRS responded to it, then members said, "Keep it up, STRS."
Her job is informing, advocating, and researching. She then asked the Board if there were other key messages which they would like to add to what has already been done. Knoesel said that the caliber of service is extremely high. Buser then asked, "Do we cut back resources for staff?"
Leone asked, "When things happen like the staff paying more for health care, is there ever an attempt made to explain?" Asbury said that the staff is reminded of the plight of the retirees as well as the many benefits of working at STRS. He said that the STRS staff has an ABC committee (like the ones in the schools) to keep the staff informed. Making sure that members know the rationale for the resulting changes is important he said.
Fisher suggested that another employee survey might be in order and results could be segregated by categories. Knoesel then offered that delivery of service, innovation, and cutting edge suffer when resources are tight. Buser asked if cuts are being made differentially. Asbury asked, "Where would we put our priorities if all was well?" The answer was investment and non-investment staff.
Ecklar said that the big topic everywhere right now is health care which helps STRS get the attention it needs. Asbury said there was a need to engage the young teachers and collaborate with them concerning their financial needs. Fisher suggested that STRS consider providing services of this kind to young teachers . . STRS could charge for the workshops. Puckett said that STRS already provided workshops but could tailor them to include personal/financial counseling. Ramser felt this effort was already being offered.
Fisher reminded the Board that they must give Ecklar the heads up when things are coming down the pike in the next 9 months so that she could be proactive and not reactive. Buser then interjected that cheaper studies of more contingencies were needed. Brown offered that STRS should not hide behind history but try to find solutions. Fisher asked, "What is STRS communicating that is being misunderstood?" Billirakis said that the problem was that teachers get their information from teachers' lounges and the Internet. He asked, "How can we address that all of our membership gets the same information and that it is accurate?"
Ecklar brought up the 35 year issue as an example. "STRS has been the source of the most reliable information concerning this issue," she said. She felt that getting out and about and offering more face to face interaction was vital. Regarding the need for an additional stream of revenue to support health care, she said that the active teachers understood the need, they didn't like it, they weren't happy, but they accepted the consequences.
Regarding communication, Leone said that when he speaks with teacher groups, some groups know nothing about any problems of any kind at STRS and some groups know everything. Chapman suggested having advisory groups to collect concerns similar to the CORE group which meets periodically with Dr. Asbury and his executive staff. Flannagan liked this idea.
Ecklar cautioned against leaning to one group's concerns and reminded that there were 439,000 members. She said that lots of members belong to groups like CEA-R but don't necessarily want to be engaged. Ramser emphasized the importance of keeping accurate information out in the public eye all of the time. Leone suggested that Board members reach out to their own constituents to correct inaccurate information. He said that this was part of the role of a Board member.
During the working lunch to discuss policy, Bob Slater offered clarification on S.B. 190. He said that if all gains for actives and retirees in this bill had been rolled back in 2005, the funding period of 55.5 years would drop to 39.1 years representing a difference of 16.4 years. If the gains for actives only had been rolled back in 2005, the funding period of 55.5 years would drop to 41.6 years representing a difference of 13.9 years.
During the discussion of changes that need to be made to accomplish STRS goals, it was emphasized that these changes would be discussed further at the February and March STRS Board meetings and the Board could make changes, could vote or not vote at that time. It was reviewed that a Health Care Committee would be reinstated.
A copy of the OPERS compliance guideline was shared and it was noted that the Police and Fire Pension had an identical compliance guide. Meyer noted that there was a continuing education requirement, and he stated that he did not want to travel to satisfy this requirement. Asbury reminded the Board that members have a fiduciary responsibility to do this, and STRS has an obligation to report to the ORSC who has and who has not done this.
Meyer then asked if participating in Board meetings would satisfy these requirements. CEUs are given for some of the activities of the Board members. It was decided that the staff would prepare highlighted copies of the OPERS compliance guidelines including the continuing education plan to have ready for the Bd. members.
A suggestion was made that the Executive Director's report be delivered BEFORE the Public Speaks portion of the Thursday afternoon STRS meeting so that visitors can hear this report.
There followed a discussion of the process of electing the Board Chair and Vice-Chair. Fisher objected to the exclusion of the appointed members from being Chair & Vice-Chair. Leone asked if the Board voted to change the policy or suspend the policy. Asbury said that Ramser & Brown were the only ones to fill these offices, and they did not have the required two years remaining in their terms.
Regarding Fisher's concern, Asbury and Ecklar said that long ago there had been a rotational system but that the appointed members (Attorney General's rep, Dept. of Educ. rep, etc.) were never included in the rotation. In the discussion which followed, it was realized that there would be a need to stagger terms for appointed members of STRS so that there would be at least two members staying on the Board when one leaves. This mistake will be corrected.
Fisher asked if there would be an automatic succession of chairs or not. Puckett stated that it seemed fair and appropriate that appointed members serve as Chair and Vice Chair. Another requirement for the Chair/Vice Chair is that a member has been on the STRS Board for one year. Leone felt it should be an elected member only to serve in this capacity. Flannagan agreed saying that there would be suspicion by constituents that appointed members were not for their best interests. Ramser said that the fear and suspicion that the statutory appointees bring an agenda is unfounded. This issue was tabled and will be brought back for an up or down vote at a later time.
A discussion of the public participation of the STRS meetings followed. Buser suggested that we promote Knoesel's call center and have members send emails and calls there.
Leone questioned prohibiting members from using Board or staff names when addressing the Board. He also expressed his desire to allow Board members to respond to incorrect information or give answers if so desired. Fisher felt that if a Board member wanted to respond to a member's question, then that Bd. member should just indicate such. Ramser felt it might lead to a back and forth argument.
At this point, Leone cited two examples. In the first example, he said that Billirakis and Puckett were on the STRS Board when he spoke before the Board and said that money was used for scholarships. Eugene Norris corrected Leone on the spot and that stopped Leone in his tracks. Leone said he was wrong.
In the second example, Leone spoke to the Board complaining about the purchase of sculptures in the STRS building. Billirakis admitted that the Board should not have purchased the art. This admission stopped the controversy in its tracks.
These were two excellent examples of reasons to allow for Board members to be able to speak. Chapman suggested that statements be directed to the Chair. He felt that response was okay but not a lengthy dialogue.
Flannagan said that Board silence could be interpreted as guilt or indifference. She suggested that the Bd. member could tell the person that she/he would like to speak to them later. Then she suggested that perhaps Damon should respond to the member first, then make a request of the Chair who either gives permission or not.
Leone related that if the 35 year enhancement in the OEA comments at the September meeting could have been nipped in the bud then and there. The Board had NEVER discussed this issue at all. This issue was tabled and will be brought back later to be voted up or down.
Boles shared that all documents & references will soon be identified by number and will be available to be accessed by email hopefully by May.
Brown asked if the present six committees was okay and reminded members that they would be deciding how to handle disability cases soon. Fisher felt that the committees were working well.
The next item of business was a discussion of the SID (Special Improvement District of Columbus) led by Terri Bierdeman. She shared the history of the district of which the STRS building is a part. Due to a concern about the decline of property values, meetings were held to bring together neighbors including STRS, COSI, Capital Law,etc. A majority of property owners agreed that they wanted to levy a special tax assessment and this was accomplished and will begin in 2007.
STRS will have to pay an additional $30,000., Motorist Mutual will pay $41,000, and Grant Hospital will pay $66,000. The money collected will be used for security, safety, outreach to homeless, clean up promotion, landscaping, & promoting new development. This is a done deal and since STRS has been a leader in being a part of SID and because it gives STRS more recognition at City Council government, Bierdeman proposed that STRS join the signature. By participating in this, STRS would also have a voice in the neighborhood. It represents $650,000 plus any grant money obtained. It is a five year SID. The Board approved this request.
A Board attorney (Bill) introduced a Board member suspension policy. The policy says that a contributing Bd. member or retired teacher member of STRS who is convicted of or pleads guilty to a felony, a theft offense or a violation of any of the ORCodes listed on the document shall be deemed vacant.
It states that in some circumstances it may be in the best interests of the system to suspend Board members who receive a bill of indictment, but prior to conviction, for one of the above stated offenses. The Board may, by majority vote, suspend a member indicted for one of the offenses set forth above if the indictment alleges:
1. risk to the system's assets
2. self-dealing by a Bd. member or
3. a conflict of interest between the Board member and the system.
It states that the Board may seek legal counsel familiar with fiduciary law to determine if one of the above factors is alleged. Suspension under this policy does not result in a vacancy. A Bd. member who does not plead guilty to, or is convicted of, any of the enumerated offenses, that member's seat shall be deemed vacant. (It should be noted that copies of this document were given only to the Board members. Dr. Leone requested that Eileen Boles supply copies to all in attendance in the audience.)
Following the reading of this document, questions and discussion ensued. We were told that there were 102 laws which deal with ethics. Each case will be handled individually. An ethics violation does not trigger suspension unless it includes a conflict of interest. A conflict of interest can be decided by the Board or a judge or counsel. IF a member is convicted, his/her seat is lost (suspended). This policy will be included in the other policies and voted up or down at the Feb. Bd. meeting.
The last item for discussion at the Retreat was a Follow Up - A Wrap Up. The review included exploring what ifs for health care and pension, finalizing planning parameters, and finalizing Bd. policies. Puckett requested a list of liabilities for health care with a ballpark estimate. Buser requested a cost of compounding COLAs and said he would meet with Bob Slater to accomplish this. Mitchell referred to the "spirited discussion of compensation in the morning session" and stated that he felt it should be added to the parameters. Brown added that the compensation could go either way. It is what the Board wants to do in the long term. But compensation WAS added to the list of parameters at adjournment of the Retreat.
If there are errors or omissions, etc., please let me know. I apologize if there are mistakes.
By Mary Ellen Angeletti

Angeletti report: Day 2 of 2006 STRS Board Retreat

From Mary Ellen Angeletti
February 3, 2006
(Written 2/2/06)
Damon Asbury introduced the day's agenda which was devoted to assumptions that guide the STRS mission and protect the sovereignty of the system. He introduced Terri Bierdeman who is the Director of Governmental Relations for STRS. Bierdeman led the STRS Board through a document labeled as an Environmental Scan whose purpose was to tell the Board where we are in the world today, to give a lay of the land across the country, and offer some possible opportunities open to the Board.
Terri set out goals for this exercise as:
1. providing the Board with information to aid in policy decision-making and
2. enabling staff to carry out those decisions by receiving input and direction from the Board members on their expectations and concerns.
She began with STRS Ohio and related that STRS members were extremely satisfied and willing to contribute more. This is a big plus for STRS and a valuable resource.
There is some concern as to whether members will continue to support a health care revenue stream when they hear about the 35 year enhancement. Gossip is a real problem with the prevalence of the Internet and incorrect info. with perceptions of benefits and changes getting spread fast and is a challenge to counter.
She shared an update concerning health care meetings which have occurred with legislators (in Oct.-Dec.), with leadership (Senate Pres.,Speaker, Gov.), ORSC, Ohio Eight, and Alliance for Adequate School Funding. She said that the good thing was that they weren't thrown out of any of the offices, which is a positive.
All seem to support employees contributing more to HC but many oppose employers contributing more. She feels that there is a possibility of legislation passing BUT not this year. Both Bierdeman and Lazares blamed term limits for some of the current lack of support.
The unfunded liability of all retirement systems has to be recognized and dealt with. Senator Husted didn't see anything happening this year. Health care came up in the conversation and Husted said STRS should not be in health care. So STRS has some work to do to sell their idea of a revenue stream for health care to the representatives.
Of course, Brandt of OSBA says that STRS does not need any more money. . . just cut costs. STRS must counter the influence of the OSBA. More meetings are planned for the month of Feb. with the HCA, legislators, and target audiences (school bd. members, STRS retirees, PTA, & other educational coalition groups, & editorial boards).
An actuarial report (Buck) evaluating health care will be presented at the Feb. STRS Board meeting. Final decisions will be needed in March. It seems possible to introduce the legislation for an additional revenue stream for health care this year, then spend the winter educating legislators, and then possibly have something on the table to consider.
If this does not pan out, then are the employees (teachers) going to be willing to pay the entire amount? STRS will have to decide what to do. Bierdeman feels that the legislators will not want the demise of the teachers in their laps so they will be inclined to perhaps take action on down the road.
Brown said he did not want to delay the effort to get the legislation through until 2007. He prefers this year. Lazares added that retirees can help with influencing the legislators. Brown asked if the legislation failed, what other solutions are there? Billirakis said that there are no other solutions. He said that the longer we wait, the bigger the price tag will be. If all else fails, then Billirakis said STRS may have to cut benefits and that is an ugly option.
Flannagan volunteered that her school union has interviewed campaign candidates in the past and asked them questions. Her union never endorses candidates but simply wants to know the candidate's thinking. Brown said that STRS has been pre-empted from discussing what to do if the legislative effort fails. Asbury said this is why there is a need for contingency planning. STRS can't put their head in the sand.
Knoesel reminded Bd. members that change can be affected within STRS by returning the 1% donated to health care back to the pensions. Assuming an 8% return, it would take three years to accomplish this. Bierdeman suggested using the strength of STRS member support. . .keep members on STRS side and educate them even more.
Again term limits of legislators was mentioned as part of the problem. . . current legislators have no historical memory. Bierdeman said that Speaker Husted likes to use the media to test ideas. She feels that no Democrat will oppose HC and increased contributions but GOP may or may not. Even a Republican sponsor for our STRS HC funding will NOT guarantee passage.
Lazares warned of COAST, a grass roots group opposed to any tax increases, which is very active in southwest Ohio. Husted has mentioned privatizing workman's comp. Some vendor groups are pushing defined contribution plans. The economy in the state of Ohio is bad with the loss of manufacturing jobs and a shrinking tax base.
Damon volunteered that the legislature cannot make STRS do anything to get to 30 year unfunded liability. They could threaten STRS authority, or they could change laws to make STRS jump through more hoops. Damon says STRS wants to show legislators that we are acting responsibly until it is clear that we are against a wall.
Taft focused on education in his state of the state address. A supply of quality teachers will be needed to improve education in Ohio. Health care for active teachers & retirees is an important benefit in attracting these teachers. However, Cols. Schools will be laying off 200 teachers this summer. Is this short or long term?
Charter schools are growing (271) which offer lower salaries and high turnover. Vouchers are increasing. Husted is pushing both vouchers and charters. There is opportunity in all of this climate for STRS to educate legislators but funding support is not 100%. Is the STRS plan better than a DC plan? Is there another plan? All of these currents affect the present climate in Ohio.
On the national scene, Bush is a lame duck president. The economy has a deficit ($10,000 is spent every second of time). GM and Wal-Mart are two corporations which are walking away from benefits and dumping risk. Will Medicare D be tweaked more? Social Security reform has been put on the back burner.
At the national level, STRS must maintain membership and be active in the Roundtable. Lobbyists are a strength for STRS due to the vacuum of term limits. Many campaign chairs are lobbyists. Then there are terrorist events to consider.
Most all states are facing the same problems. Bierdeman used the Fire and Police Union in Colorado for an example of what other systems in other states are dealing with and trying. This system has old members pitted against young members with distinct ideology differences among members. Members under the age of 45 have a limited tier of health care benefits. There is tiering of new members with significant changes in formulas, eligibility, and benefits. The chief lobbyist has quit.
There is a ballot initiative on reform in the offing. There is danger on the horizon to everyone. Alaska has a defined contribution plan for new hires. Meyer suggested that someone keep a tally of ideas on changes made in other states.
In summary, Bierdeman reminded Bd. members that the world has changed, that environment affects outcomes, that there is not enough money for everything, there are tough choices ahead, not everyone will be happy, the system solvency is a concern, trade offs will have to be made, the Board bears the fiduciary duty to make decisions in the best interest of the membership, and the Board cannot abdicate the decisions to others.
Following a break, the Board members were asked to read a document titled "Determining the Foundation Blocks for Pension Benefits and Funding" and do an assignment in small groups and make a report following lunch. There were 11 items listed on this document which Board members were to discuss, evaluate, modify, include pros and cons, add additional actions to be taken, prioritize, and then report back.
There were also listings under the title "Existing Guiding Principles for Pension Retirement Design" and "Existing Guiding Principles for Health Care" which earlier STRS Boards had composed. I do not know if the Board members were asked to do anything with these last two documents as I had to leave at noon.
Before this exercise began, Buser and Fisher said that they felt that the principles were too general. Knoesel said that the principles guide options for the benefits staff to explore. "You are a new STRS Board and staff needs your input", Knoesel said. Damon offered that Boards are policy makers providing a general guide for the STRS staff. Then the staff develops the Board's specific recommendations. The Board however makes the final decision.
Leone expressed his desire to have the staff make recommendations for everything that they could think of that could be done to insure the solvency of the pension fund. I was not able to attend the afternoon session of the Retreat today so I cannot share anything about it.
Perhaps others who attended will pick up the slack and send us details on that session.

Friday, February 03, 2006

Dave Speas to STRS Board: Stop the bickering and steer the boat before we drown

From Dave Speas
February 2, 2006

Molly, The group included many who have been to Columbus and many who are not happy with OEA, STRS, and et all. However, if there are six board members who can agree to work toward the priority goals set by the board for the members then let them get to work.
Too much time is being spent fighting for turf when many retirees are waiting for relief. Every minute spent fighting for turf is taking away from positive work that is needed to be done. The majority can over turn the chairs if they want to force the issue and the chairs will have to move on to the issues of the future.
Too much time has been spent on repair, the group feels it is time to get to the issues of saving all of us out here from more dire problems. Six is all it takes to move on. Are you telling us that there are not six who can agree on the top priorities and move on them. Where is the leadership from ALL the members?
We want POSITIVE action from whomever is willing to lead out of this infighting and name calling. We thought we selected adults who can move beyond the individual issues and get to the issues that are to be dealt with. Every day that movement is not made toward the top priorities set by the board, is that much longer and that much closer we get to more heartache.
It does not take 11 members to set direction. It takes six members. Get the six members on page 1 and go. The ark is sinking, the people are getting ready to drown and the crew is arguing over who is right and who is going to steer the boat. Stop it and steer the boat. We want to hear how they are going to get the make the boat seaworthy, not who is going to steer. When is this going to end? The next election or the election after that? That will be too late for some of us.
We do not need to be in Columbus to know that this board was elected to move forward from where we were. Find six members and move and leave the others studying the direction and bring them along by the power of the debate not by beating them into submission. Whether you feel we are out of line we are waiting for strong movement toward the very thing all of us fought for in the past few years, a board dedicated to US.
The statements were not directed at any one board member but to all of them. We want them to be partners as chairs and as members. Stop the bickering, every one of them and get on with the job at hand. NOW!
Dave Speas and the band of 37

Thursday, February 02, 2006

Comments from some who were not able to attend the Feb. 1 Board retreat session (Curry, Janczyk & Speas) and one who did (Leone)

From John Curry, Feb. 2, 2006
Dave, I have the utmost respect for you. You have the patience of Job with the ability to bring people together and to mediate differences of opinions. You have a positive outlook on matters that cause great difficulties for others of less patience. Please take my feelings on what has and is happening at STRS as just that - my feelings. I mean no disrespect to you by differing somewhat from your perspective.
Conflict among human beings, and it has existed since recorded history, has-is-and probably will exist for the duration of recorded history. The majority of human conflict is driven by the desire for money, power, greed, the desire to impose one's religion upon others (Holy Wars), or a combination of these. If all people acted in good faith, we wouldn't have a need for as many laws as we now have on the books, law enforcement agencies, or a military.
STRS retirees have suffered injustices at the hands of misspending, mismanagement, and an entitlement philosophy that most surely has existed inside the walls of the STRS and was allowed to thrive thanks to many former and some current Board members as well as former and some current persons in a position of leadership at STRS. Today, I (and others) still rightfully interpret some of what we see going on at STRS to be more of the same (to a lesser degree). We still see the failure for some at STRS in leadership positions to come to grips with the reasons why our once excellent retirement system has fallen- it wasn't just the stock market "dip" in the early 2000's like some would like us to believe. We see the failure for those very same people to admit that wrongdoing (both illegal and unethical) was perpetrated upon the shoulders of over 100,000 retirees. Until those people can and will openly state these injustices - or - they are replaced, we will still have conflict. A major problem in this conflict resolution comes from organizations who face embarrassment or loss of membership should the majority of active teachers really understand what really had happened at STRS. These organizations face the loss of membership monies should the "troops" be informed of the truth.
I would much sooner be enjoying a life of carefree retirement rather than having to work a post-retirement job for affordable healthcare for my spouse and spending hours at this computer each day to educate both actives and retirees of the political spins that some in the leadership of STRS and the OEA place on the reasons why we are facing difficulties. I will continue to do so until I have faith in the majority of the STRS Board and the administration at STRS to execute their duties in the best interests of retirees and the complete compliance with ORC 3307.15 - that may take a while. Yes, Dave, I am a Christian - but I (and other CORE members) am tired of turning my cheek to some yet in power at STRS who refuse to accept responsibility of what has happened and who continue to place a "spin" on what has happened and is happening at Ohio STRS. I will not stop until my educator brothers and sisters really know the true picture of what really transpired at STRS and the STRS ship's rudder has caused a true 180 degree course correction. Looks like I (and others) still have lots to do.
John A Proud CORE member
From: Molly Janczyk; Sent: Thursday, February 02, 2006; Subject: Re: My Take of the First Day of the STRS Retreat

I think all agree that benefiting membership is the top priority and I am sorry if some don't like the tone, but this reflects what occurred due to some not even able to hold a discussion which varies from their views. We don't want board members who will simply vote to go along as that was the problem of the past. I think membership needs to understand free speech and discussing and respecting everyone's views are necessary for solutions. Some are only willing to discuss one way. That is just not going to happen. The Chair and Vice Chair try to shut down motions for things such as not voting until all info and contracts are in front of them and find later they approved costs they had no awareness exits. These are still the same old deliberate attempts to roll things through. I think your membership needs to applaud those willing to say, NO, finally. Someone has to do it and should have long ago. Questioning all points is why Leone and Lazares were elected so that membership is fully aware of the details of budgets and where their money goes. We can't help it that some on the board still think it is ok to work with companies who have been found guilty of violations or think it is fine to approve costs for items no one knew existed with corporate mentalities of 'what's the problem, it's only this much.....'
The past is not the past as long as this type of thinking still exists on THIS board. We are there monthly and HEAR what THIS board says: I heard Fisher, an investment appointee board member berating Lazares asking 'WHO does it hurt. It's a matter of degree' when she was talking of violations. ISN'T THAT precisely what was wrong with the past board. NO! To go along to get along is simply NOT ok with thousands of membership. I respectfully disagree.
Most think and this is what we are hearing from various membership attending the monthly board meetings, including OEA speakers, that this is THE FIRST TIME they have heard discussion and debate on issues and to keep it up. If you wish to direct comments to those intolerable of discussion, send this to Brown and Ramser for starters. Fisher doesn't seem to me to be tolerate of views outside her own and Meyers seems most private corporate in his thinking not public sector.
I think those 37 need visit STRS and see who is not progressing from past behaviors.
Most Respectfully Submitted based on facts viewed and taken from those of us attending actual board meetings seeing Brown and Ramser throwing fits and denying free speech and proper rules of procedure because it has not gone their way. That will not EVER be ok NOR will we EVER tolerate board members rolling over so as not to make waves. Molly J.

From: Dave Speas, Feb. 2, 2006
Good afternoon, In a meeting of retirees and actives the subject of the STRS board was brought up. After a long discussion with all taking part, I thought, after this long email, some out there would be interested in the view of the two groups together.

1. They want the board to learn from the past but not be hindered in their decision making by the past. This is essentially a new board and they want it to get on with helping staff solve the problems STRS faces. Learn from past mistakes but move on and work hard on the future.

2. Staff at STRS has to be top notch. It is their work and expertise that makes a 63 billion dollar entity run. Stop looking at past practices and do what is fair but not excessive. STRS staff members help the investment staff get their job done. Much of the work of the investment staff is done by other staff members so they can concentrate on beating the benchmark, which they have done consistently. The rest help US! We do not want second rate people helping us decide our golden years' decisions. Whatever it costs to have those good folks there for us is not going to bring back healthcare and will keep us from having even worse financial problems because we got bad advice from untrained and average public workers. (Ala the federal and state government advisors)

3. Do NOT roll back anything teachers have gotten over the years. Doing so will make the healthcare problem even greater. Even though some of the retirees did not have the opportunity for 35 years they feel we are all in this together and do not want to make active teachers pay as they may be in a worse situation when they retire in the healthcare area and possible added years of work.

4. Concentrate on doing POSITIVE building of trust and work atmosphere. Our futures are on the line and anything that gets in the way of progressing on getting back what we have lost is negative to all of us. Board members do not have to be on the same page all the time but they should understand one thing, we cannot change the past, what people did, what people said, what people ethically did wrong but must move from this point and get on the same page as far as letting the staff do their work and the board spend their time on asking the questions, setting policy and making progress toward a limited set of goals.

5. Set the priorities and personalities be damned! Every board member should be working toward the priorities in the order they set them. Stop sniping, stop griping, stop living in the past, get on with the priorities. Every person, 37, felt I should send this email as a former board member. All the retirees and actives agree 100% on these points. The board was elected to do the work for ALL of US! Forget yourselves and your personal agendas and get on with the priorities. They did not like the tone of this email as it looks like they are not at work on the top priorities Respectfully submitted, Dave Speas
From: Dennis Leone, Feb. 2. 2006:
Molly -- Mary Ellen's summary is excellent, and accurate.
Dennis Leone

Nine Principles of Boardsmanship - focus of Feb. 1, 2006 Board retreat session

Nine Principles of Boardsmanship
by Jamie LaRue
These are the principles that were discussed during the Feb. 1, 2006 session of the STRS Board retreat and used in Mary Ellen Angeletti's report (below).
1. Understand the difference between governance and management. The purpose of the Board is oversight -- the big issues. Keep your eye on mission, on planning, on broad institutional strategy. Don't mess with day to day operational decisions.
2. Respect your fellow Board members' time. Stay focused on the tasks before you. All of us have lives that matter to us. Unless you have good reasons not to (meaning "reasons that are vital to the organization and actually involve you"), stick to the agenda.
3. Bring all relevant information to the Board. The purpose of the Board is to make informed decisions, to provide intelligent organizational leadership. If you have data that matters, bring it forth. Don't sit on it in the hopes you'll get your way. That's intellectually sloppy and morally dishonest.
4. Thoughtfully consider the opinions of others. Board deliberations do not consist of waiting for the other person to finish so you can speak. They consist of open-minded evaluations of the ideas of your colleagues, and staff. This obligation extends to each issue, not just to the people you usually agree with.
5. Have your say. Argue passionately for your beliefs. Articulate your opinions as clearly, concisely and forcefully as possible.
6. Vote your conscience -- what you believe, not what you think others might believe. Don't assume consensus when it could be that people are waiting to see how it comes out, or waiting for someone else to voice their dissatisfied but inchoate opinion. Take a stand!
7. Represent the "Board decision" honestly. It could be that you voted your conscience -- and were roundly defeated. So be it. Be clear about when you're speaking as yourself, and when you represent the Board. You're entitled to your opinions, your doubts and your free speech. But do your colleagues and your audience the courtesy of clearly identifying the speaker. As a member of the Board, begin with a careful representation, without slander, of the decision of that body.
8. Move forward until new evidence urges a reconsideration. Don't keep revisiting things you've already decided. On the other hand, sometimes new evidence arises that compels you to think again. It could be that new evidence supports your dissenting opinion. Or it could be that it contradicts the majority opinion that you agreed with. But if you've got new data, be prepared to consider a new decision.
9. Build the organization by example. This is a big one. It speaks to fundamental attitude. There are lots of pieces to this, but here are the main ones:
• Presume innocence and the good intention of all parties.
• Make each other look good; speak well of your fellow Board members. Build on each other's work.
• Hold to the vision -- spend your time working FOR the big organization goals (not against this or that).

Mary Ellen Angeletti's minutes of Feb. 1, 2006 session of STRS Board retreat

From: Mary Ellen Angeletti
To: Molly Janczyk
Subject: My Take of the First Day of the STRS Retreat
Date: Wed, 1 Feb 2006
This is MY take on the happenings today, Wed., Feb. 1st at the first day of the STRS Retreat. IT WAS A SET UP!!! Unbeknown to Dennis or John (I don't know about the other Bd. members), Conni Ramser and Dr. Brown met in late December to establish an agenda for the Retreat and to do the planning for it. They hired a retreat facilitator named Craig Rider (I wonder how much we paid him?). The sessions he conducted in the A.M. and in the P.M. were sessions to encourage warm and fuzzy feelings toward each other as Board members and to encourage TRUST, RESPECT, and "effectiveness in successfully working together". IF Conni and Bob thought that this was going to temper Dr. Leone and Dr. Lazares, they made some serious misjudgments.

PURPOSE OF RETREAT (as stated by Brown, Ramser, Rider, & Asbury): Review of STRS Ohio's Mission, Vision, & Guiding Principles TRUSTING AND RESPECT ARE PARAMOUNT:
1. In developing goals
2. In coming together as a Board
As soon as the Retreat agenda was available to all Board members, John Lazares offered that he did not know anything about having a facilitator until Friday, Jan. 27th as he had been out of town. He requested more lead time for future agendas. He expressed concern when he had not received any agenda for the Retreat earlier and was suspicious of just this type of surprise, pre-planned agenda.
Following this, it was clarified that there would be no formal votes at the Retreat. There could be consensus votes if so desired.
Dennis then asked who determined the agenda and the hiring of a facilitator, & it was announced by Damon that the Bd. Chair Brown and Vice Chair Ramser had met the end of Dec. to do just this. I am unclear if Damon joined them or not.
A solid, sound pension with affordable health care were the goals for the Board to achieve. It was mentioned that this Board is one of the most diverse Boards since it has elected members, 3 superintendents, two unions
(OEA, OFT), and appointed members. Still they must represent ALL of their membership, not just the group who may have helped get them elected.They decided to explore what stands in their way of achieving these goals. Must learn how to improve working conditions of the Board so that consensus could be reached by the end of the week of the Retreat. Must have shared goals.
Following this discussion, the remainder of the A.M. session consisted of a review of the Board members' self-evaluation (a document given them to complete in the autumn). This document consisted of a list of Guiding Principles which represented the manner and method by which the Board would conduct its operations, both present & future. Bd. members rated each of the 5 principles on a scale of 1 to 5 with 0 for "Don't Know".
Only 10 Bd. members completed the Evaluation. Right off the bat, Dr. Leone challenged the first Guiding Principle which stated the "Board honors & supports the values, vision, and mission of STRS Ohio". He said that "in terms of expenditures" he did not agree that this was being done.
Buser volunteered that they haven't reconciled the conflict of pension security and health care versus member service. Buser stated,"If we aren't at 30%, we have certain restraints, and we may NOT support member service." Do we support HC over pension?
Lazares added, "People forget about member service over money (pension)." Lazares said, "The ultimate goal is for us to provide the best benefit STRS can." Puckett reminded the Bd. that health care is part of the STRS mission now. Security is pension and health care. Buser reminded the Bd. that the current 10 year funding in health care was due to the last few good years of good returns. Leone warned that the Bd. has not planned for external factors that might negate our pension.
An earlier risk assessment study said that there is a 1 in 6 chances of a significant downturn in the economy. Fisher said that contingency planning needs to be done for this possibility. Lazares said still the PENSION CHECK IS THE MOST IMPORTANT THING.
Sandy Knoesel reminded the Bd. members that they must communicate with membership as she reported many anxious phone calls concerning the 35 year enhancement. Damon reminded them that pension and health care (service) are not either/or issues. Brown offered that contingency planning is okay as long as there is good communication to members. Buser asked about contingency planning for both negatives and positives.
Reacting to the third guiding principle, Flannagan said that the Board needs to get to those problems which cause conflict and are emotional. Lazares offered that it was not possible for the Board to speak as one voice because Board members represent others. History separates us. SB 133 came about because of misconduct and resulted in ethics training, etc. THAT Board was wrong so speaking with one voice may NOT always be the right thing to do.
Flannagan emphasized the importance of the sunshine laws. Chapman offered that diverse opinions haven't had respect so the Bd. is several groups trying to form one group. Ramser added that the focus must be on the job and setting policy. Brown added that the pros and cons of one voice need discussing.
Lazares emphasized that the main thing is 3307.15. The perception of the Bd. is that there is more discussion going on now than ever before. The 5th guiding principle concerned conducting business in a courteous manner toward fellow Bd. members. It was mentioned that courtesy aided how cranky & inpatient Bd. members became.
Leone strongly disagreed with this principle. He was referring to the anger displayed when he offered his substitute motion at the earlier Board meeting. Fisher disagreed and said that lack of knowledge was what caused the problem. Confusion was the cause of the cut off by Ramser of Leone's substitute motion. Fisher suggested that a person be present at Bd. meetings to rule on Roberts Rules. Dr. Asbury said that Bill _______?
(he was in attendance) would volunteer to help enforce Roberts Rules at future Bd. meetings. Billirakis (who was absent at today's Retreat) had offered cliff notes of Roberts Rules to the Bd.
The second page of the self-evaluation involved Governing Style. During discussion of this part of the evaluation, Ramser offered that there is still a struggle, that control issues seem most important.
Leone said that one cannot delegate away their fiduciary responsibility to the staff but instead Bd. members must take personal responsibility. Damon said that fiduciary responsibility is at the heart of the issue. He said Bd. members must trust the staff but Bd. members must question the answers the staff gives.
Buser complained that managerial concerns monopolize the Bd.'s time. The legislature says we are responsible for every nickel. Fisher felt that Bd. members should not be required to question the staff information. Puckett said that oversight does not mean management.
Leone reminded that the prior Board did not provide oversight. Fisher said staff is ethical & honorable but communication can be improved. Fisher said Board is micro-managed. Meyer said areas of problems have been corrected.
Leone brought up the Vitec ITcontract. He wants to know how the 64 million dollars (of this contract) are going to be spent. Lazares did not agree with Meyers' contention that the Bd. should leave the contract formation to the staff to do. He reminded the Bd. that this is public sector, not private sector. He feels Meyers and some of the other appointed members of the Bd. have great knowledge & experience about the private sector but this is now public sector and is very different. Facilitator then said that oversight then is verification??
It was asked if there was an IT Committee to which Damon said that Puckett was on the IT Committee last year but the committee was dropped. Damon offered that he felt he had the mission to do the selection of the vendor for the IT contract and to develop the contract. Should committee construction be renewed?Leone then suggested that future contracts be shaped similarly to labor contracts in that only the NEW items are HIGHLIGHTED for the members to review. Meyer liked this suggestion.
Patterson (the attorney) offered that the Board is a client but when members leave STRS on Friday, then they are individuals. The facilitator said that the Board had voted to approve a project and not a contract. Flannagan felt that Leone's view was concern over fiduciary responsibility. Buser asked if they did too much voting on managerial items. Rather than a matter of oversight, it was felt that the Bd. needed better communication. Bd. members should not be reluctant to say, "I don't understand." or "Let's just table this item or contract."
Fisher asked what governing with excellence means. Damon said this was an ideal. In Principle #4, Fisher was bothered that 4 Bd. members rated it negatively. That is, four members felt that not all Bd.members were competent, conscientious & effective.
Leone responded that he held his position on the Bd. as accountable to membership as a priority. He used the example of the BASA saying "Beware, STRS Bd. will eliminate HC." and OEA saying "The OEA minority STRS Bd. is talking about ending health care. This never occurred when OEA was in the majority on the STRS Bd. This is a reason to vote for Ramser."
Leone stressed that accountability demands that one reacts to such untruths. Fisher said that OEA and BASA inaccuracies are not pertinent and that Bd. policy and position has not changed. Brown maintained that he represents ALL STRS membership, not just those who encouraged him to run for the STRS Bd. and not just actives or retirees. Chapman felt that the Bd. must address Board policy more frequently.
The third page of the evaluation involved Board Job Description. Brown said that the link was the STRS staff. Buser was concerned about Bd. policies saying that perhaps the policies got in their way. Brown said that they don't have enough resources. Buser did not think that the policies were up to the tasks of the end.
Leone offered that the one disagreement voted on the Exec. Director limitations was his and was based on the incident in which Damon paid the legal fee for the non-investment staff suit against STRS without informing Leone. Leone expected Board discussion before the fee was paid. He was the only Bd. member to NOT know about this. Damon added a process point explaining that STRS had a legal responsibility to pay the legal bill and that a majority of the Bd. members felt it was a legal responsibility. BUT Buser, Leone, & Lazares all felt that they wanted more information on this before the fee was to be paid and that discussion would follow. It did not. Leone asked, "Is it wrong to expect discussion on such important matters?" Lazares suggested that perhaps making changes to the Executive Director's job description might be in order after Damon's vacates the job BUT Fisher said if any changes were needed that NOW was the time to do it. .. . .at the Retreat.
There was an hour break for lunch. Following lunch, the facilitator assigned each Bd. member to one of the Nine Principles of Boardship (a booklet) with directions to respond to their principle with positives and negatives as part of their evaluation of the principle.
1. Conni Ramser was assigned to Principle #1. She shared that policies are okay but some operational issues are problems. She felt that the Bd. had a way to go to stay on big issues but it still gets caught up on the day to day operational decisions. She said she needs to step back & wear her STRS hat & listen to constituency groups but must keep the mission of STRS & ignore issues that don't move STRS forward. She needs to ask critical questions that help her understand issues. The she said, "The past is past".
Buser offered that they must have priorities on governance issues (What is the main thing?) and instead they use most of their time on managerial issues (details). Puckett referred to Russell's 11 ratios of performance. He said they need more benchmarks of measurement for other issues, not just investments. Leone asked Damon, "Can Board members engage in management activities?" Damon responded, "NO".
Leone asked, "Can Board members ask questions? Can a Bd. member question if a policy is in place that allows Bd. members to get frequent flyer miles? " Asking questions and getting information is essential. Leone continued, "At an RTA meeting in Lima, Joe Endry said ,"I would not have known the size of so & so bonus if it had not been for Dr. Leone's revelation". "OEA's Gary Allen said my revelations were allegations and were improper." AT THIS POINT, DR. BROWN REQUESTED A 5 MINUTE BREAK AND WALKED OUT OF THE ROOM. . . . IN DISGUST. Leone asked what was wrong with the discussion and as Brown walked out, Leone and Ramser continued their discussion with Ramser insisting that she has no control over Gary Allen and what he says.
When Brown returned to the room, he asked Facilitator Rider to move the Board through the remaining agenda. Meyer protested this request saying that the discussion needed to be talked out before the Board could move forward. Then Rider asked the Bd. members, "Are there any members who believe that there were NO spending abuses by the former STRS Board? There was total silence.
Then he asked, "Are spending abuses by the STRS Bd.continuing today? No one spoke but Leone who said, "YES". Rider reminded the Bd. then that STRS spending practices were yet to be defined at the Retreat. Buser offered that there were many gray areas (problem areas of agreement on the Bd.) but the Board MUST concentrate on the important issues of fiscal soundness of pension solvency and health care.
2. Steven Puckett was assigned to Principle #2. He said that the Bd. must stay on task and meet time restraints. Felt that there were good intentions of staying on agenda topics. Could tighten up agenda more & listen to one another better & more intently. Complexity of agenda items is a problem. Need to listen to member's problems.
3. Meyer was assigned to Principle # 3. He agreed with this principle. What is done correctly? The staff provides requested information. Must trust the staff and ask questions..
4. Fisher was assigned to Principle #4. Board must use the order of the Roberts Rules in public sessions. But can speak more freely in Executive Session. She prefers exec. sessions. Bd. members MUST NOT be disrespectful. Some feel that there is too much control. All opinions must be considered. She suggested that a summary of pros and cons be a regular part of follow-up after discussions of principles. Need to acknowledge an opposing opinion but member does not have to agree with it. Encourage staff to give their recommendations (staff's perspective). They could remind Bd. members of current policy so a moderator might inform Bd. members if their recommendations go beyond policy or radically change policy in some way.
Buser offered that he is uncomfortable with the Board format. He feels it is not effective to have such a strict format. Buser suggested an executive summary and then the Board members would decide if they proceed or not.
5. Flannagan was assigned to Principle #5. She felt that the Bd.'s view was to encourage debate as long as it sticks to the topics and observes Roberts Rules. She said that these rules did not allow Leone to submit a substitute motion in December. This was wrong. She said members must listen actively and allow other members who request to share information . . perhaps at a later time. Allow a later 2 or 3 minutes opportunity to members to share. All Bd. members need to be open to this idea, she said. Even if members are out-of-order, this should occur . . perhaps at the end of the day.
Leone added that this encourages micro-management (problems?) for Damon. Leone again encouraged Bd. members to respond (if they want to) to membership concerns or questions raised during Public Speaks portion of the Bd. meeting. Facilitator reminded members that this would be determined when the Bd. reviews policy at a later time in the Retreat.
6. Buser was assigned to Principle #6. He agrees with this principle.
7. Leone was assigned to Principle #7. He offered that the Board's view was that he and Lazares have been problems for the Board. He emphasized that they spoke for themselves and that they tried to speak clearly. Obstacles to this approach are members inability to see that their actions may not be in sync with ORC 3307.15. Bd. members must be able to express dissent. Members need to explain their reasoning for Board votes.
Fisher feels that Bd. opinions being quoted in the news media is wrong. The opinions must be identified. Chair of Communications for STRS, Laura Ecklar offered that all messages for the mass media that have to do with STRS go through her. She releases them. She suggested that any STRS Board mass media release should go through the chair of the Bd. (Brown). She said that she and her staff would provide help to Dr. Brown if he requested it and he said he was not in favor of that. His take on this subject was that he alone should not represent the Board in this way as he felt it violated freedom of speech.
Leone then referred to Ecklar's "NO COMMENT" statement to the media on Nov. 2nd when she was asked questions regarding PBI inquiries. Ecklar maintained that there was "No information to share at that point." However, Leone pointed out that the PBI lawyers released everything to the mass media and it made STRS look bad. Damon agreed.
8. Damon was assigned to Principle #8. He felt that the Board's view was that they frequently revisit past decisions & are open. He said that no decision has been overturned capriciously by the Board. He suggests that if decisions need to be revisited, that the Bd. members approach the chair of the committee or the Exec. Director.
9. Brown was assigned to Principle #9 a and b. He shared that the purpose of the Board was to build by example. Must focus. Be ethical. That shades of gray are okay. Too often they see issues as black & white. Must caution against assuming to know what other Bd. members think. He will try, as chair, to allow all sides to be heard. Leone cautioned that when decisions are made by the Board, these decisions are setting an example. His example was "Voting expenditures for non-investment staff members when membership is HURTING."
10. Lazares was assigned to Principle #9 c and d. He felt this principle perpetuated how things have always been done at STRS by the Bd. He added that the Public Speaks portion of the Bd.meeting is predominantly negative and that Board members must not have a knee jerk response.
Larry KehresMount Union Collge
Division III
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