Saturday, June 17, 2006

Flashback -- 3 years ago: Public retirement system painting an 'ugly picture'

Has the "ugly picture" significantly been retouched and do we still have a "dancing" executive director? (JC)
By Paul E. Kostyu
Copley Columbus Bureau chief
July 12, 2003
COLUMBUS -- Lawmakers who oversee Ohio's five public retirement systems were hot Wednesday over revelations that the state's teachers retirement system spent nearly $15 million on bonuses and artwork at a time when the system is struggling and member benefits are being cut.
Herbert Dyer, executive director of the retirement system, said Wednesday that the money spent on bonuses and art “belongs to the board,” not the teachers who contributed to the system and can be spent “as the board sees fit.”

That wasn’t good enough for Rep. Michelle G. Schneider, R-Cincinnati, Sen. Kirk Schuring, R-Jackson Township, and Rep. John Boccieri, D-New Middletown, who are members of the Ohio Retirement Study Council.

Using investment returns on bonuses, artwork, subsidized child care, travel to Hawaii and Alaska, among other places, and other expenses of the retirement system board, Schneider said, was “wrong. It’s shocking. It’s a distorted perspective on whose money this really is.”

The system gave out nearly $1 million last year to 65 employees not associated with managing its financial portfolio. Thirteen got bonuses of more than $20,000, seven more than $30,000 and one topped $50,000. The investment staff received more than $13 million in bonuses even as the system’s portfolio lost $12.3 billion during the past three years.

Dyer told council members that upcoming changes to health-care benefits will cost retirees and their families more so that part of the system remains solvent.

Dyer would not apologize, however, for the spending spree, saying the staff deserved the raises. He said its effort was “superior if it was better work than average.”

He said the investment managers deserved bonuses because they kept the portfolio from losing more than it did.

“We didn’t lose the money by misplacing it,” Dyer said.

“I am most disturbed by the increases to employees,” said Schneider, who also questioned spending $869,000 on artwork.

“I collect artwork,” she said, “but I don’t do it with other people’s money.”

“Good artwork is expensive,” Dyer responded. “It’s what artists expect for their work. It was designed specifically to complement the decor (of the system’s building).”

At one point, Boccieri said to Dyer, “The more I listen to your testimony, the more agitated I get.”

Schuring, who was not present for Dyer’s testimony because he was attending another meeting, said later that he is convinced there has to be more oversight of the state’s retirement systems. He said the council is ill-prepared to provide oversight because overseeing spending is not part of its responsibility.

“How are we going to stop these things from happening again?” he said. “It might take legislative action. They have to be fiscally prudent and fiscally conservative. Bonuses and increases in staff are not needed.”

Council members also listened to Dennis Leone, the superintendent of Chillicothe City Schools, whose investigation of the retirement system led to the disclosures about spending. While teachers are being affected by the retirement system board’s decisions, he said, so are Ohio’s taxpayers. He noted that matching contributions to the retirement system come from school boards that use taxpayers’ dollars.

“That’s 944 employers who contributed $1.2 billion,” he said. “That’s taxpayer’s dollars.”

Leone said he closed three schools and laid off 45 employees “and I don’t get a bonus.”

Since 1998, the retirement system increased the number of its employees by 42 percent to 707.

He said the retirement system board “just doesn’t get it. They just don’t understand how it looks. They just don’t understand how wrong it is.”

Dyer insisted that the money to employees, which included a $41,000 bonus for himself, was needed “for getting (and keeping) a good staff.” He said it was necessary for board members to travel to meet “face to face” with fellow board members from other state systems to learn how to run the retirement system effectively and efficiently.

Leone said after the meeting that Dyer “danced all around” council members’ questions. He said the system’s spending “is completely foreign to me.”

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

A Sampling of STRS Bonuses

The State Teachers Retirement System gave out nearly $1 million in bonuses last year to 65 employees ranging from the executive director to the director of the employee day-care center. The bonuses do not include more than $13 million in bonuses given to the managers of the system’s investment portfolio.

Thirteen noninvestment employees got bonuses of more than $20,000, seven more than $30,000 and one topped $50,000.

Here are the positions that topped $30,000:

Job Title - Annual pay - 2002 bonus - Percent

Deputy executive $150,000 $52,500 35%

director, finance

Deputy executive $150,000 $49,875 33%

director, member benefits

Deputy executive $148,000 $49,728 34%

director, administration

Executive director $266,810 $41,052 15%

Info. technology director $140,000 $33,368 24%

Government relations $108,675 $32,603 30%

director (lobbyist)

General counsel $125,235 $31,309 25%

Here’s a sampling of salaries and bonuses for some other positions:

Communications director $95,800 $15,328 16%

Building services director $75,800 $14,402 19%

Child care director $61,400 $8,639 14%

Creative services manager $63,400 $5,706 9%

Food services supervisor $39,300 $1,965 5%

Total $5,615,065 $888,595 16%

Source: State Teachers Retirement System

Tom Curtis' speech to STRS Board June 15, 2006

Good afternoon board members, executive staff and guests. My name is Thomas Curtis. I am speaking today on my own behalf. I am an STRS disability retiree with 27 years of service.

Congratulations to Jeff Chapman on his election today as the next vice-chair.

I wish to again commend the board for the countless hours you devote each month to the enormous amount of business at hand.

I did not make copies of my presentation today, as I desire to review my presentation from last month.

Last month, I addressed the board with issues about the board make-up, finding time in your agenda for retiree issues and I requested a review by each Board member of Dennis Leone’s two position papers from 2003.

To date, I have received not one response. Damon, I thought the reason for providing copies of our presentations was so that board members could respond to our questions at a later date? What happened to that concept?

I sent an email to Chairman Brown on June 4th and asked, "Would you kindly advise me as to whether any consideration has been given to my recommendation during the public speaks portion of the board meeting in May that the board review both of Dr. Leone's 2003 papers? If not, would you kindly make a motion requesting such at the June board meeting? "

I received no response from Dr. Brown, but then he has never responded to any email I have sent him.

On June 8th, I sent the same email to vice chair, Conni Ramser. She responded three days later. This was her response.


I'm not sure what your point is. Review the materials and point out the issues that are dealing with pension funding and health care. Dr. Leone is more than capable of raising issues that he feels need to be addressed at this time.


My point is that there are still unresolved issues within Dr. Leone’s papers and they need to be addressed. I am very annoyed that none of you Board members find it necessary to respond to retirees who come here and address you each month.

Jeff Chapman, you are one of the two retiree representatives, but I have had no response from you concerning my last month's request.

Our concerns need to be addressed and not ignored. Thank you for allowing me to speak today.

Tom Curtis

To three Board members: Thank you from a retiree

From Kathie Bracy, June 16, 2006
To Conni Ramser, Jeff Chapman and Mike Billirakis

Conni, I want to thank you for proposing your substitute motion yesterday to put a $100,000 spending limit on the Executive Director instead of allowing it to go to a whopping half million. While $100,000 is still too much, it is far better than the alternative, and I very much appreciate your recognizing this.
Jeff and Mike, I want to thank you for supporting Conni's motion, and thereby getting it passed. All of you did the RIGHT THING; and this is the kind of action that goes a LONG WAY with retirees.
Thank you ALL for observing ORC 3307.15. You were thinking of us, and we appreciate it. Please keep up the good work.
Kathie Bracy
One of thousands of STRS retirees who are counting on you

Friday, June 16, 2006

Mary Ellen Angeletti: Minutes of the 6/15/06 CORE meeting

The CORE Advisory Board met at STRS on Thursday, June 15th, 2006 at 11:45 am. In attendance were Chuck Chapman, Nancy Hamant, Betty Bell, Mary Ellen Angeletti, and Chuck Angeletti. Mary Ellen served as scribe. Guests attending the meeting were Ann Hanning, Blin Scatterday, Lou DiOrio, Mark Meuser, and Ray Variakojis.
In Dave Parshall's absence (he is in the process of moving), Mary Ellen reported the balance of the CORE financial fund which was down due to the expenses of the current STRS election. CORE will have to try to recoup these monies in some way.
The website statement promised by Dave Parshall regarding who speaks for CORE, etc. (discussed at the May CORE meeting) could not be shared today as Dave had to be absent so this will occur at our August CORE meeting.
Mary Ellen followed up on the point made at last month's CORE meeting as to the importance of communicating with our local legislators during July and August when they are in their home districts concerning support for the proposed legislation for the STRS Health Care.
Tom Curtis then reported on the June 5th CORE Retreat. He shared one suggestion which came from the Retreat was that CORE's lack of leadership by having no designated leader or figurehead to use for the purpose of making contact with other groups and that this might be hindering CORE. Tom made no motion concerning this topic; instead, he presented it as a topic for CORE to consider and perhaps study. He used the examples of our close association with Dave Speas of ORTA and explained about the visit by Gary Monto, the President of the Retired Fire and Police group.
Mr. Monto shared his suggestions at the Retreat, challenging CORE to designate officers and to develop structure like other recognized organizations, having perhaps a constitution or charter or by-laws. He suggested that in this way we could join with other pension organizations such as the Fire and Police for the purpose of exploring our own prescription drug plan rather than contract with a PBM (Pharmacy Benefit Manager such as Caremark).
Betty Bell then asked Tom if we could perhaps use the Fire and Police by-laws which she understood were simple by-laws which we could change as go along. Betty then recommended changing our CORE dues to annual dues which would help replenish our coffers. Tom felt that CORE would probably need the summer and longer to consider ramifications and suggestions for restructuring and then to present recommendations by the end of the year. Two year terms were mentioned at the Retreat.
Nancy Hamant then restated a motion made by her and seconded by Ryan Holderman at the June CORE Retreat. "I move that the CORE Advisory Board take to members the recommendation that CORE needs to have elected officers, i.e., chair or president, vice chair or vice president, treasurer, membership and regional advisor representatives as well. CORE needs to make its operation more efficient by perhaps having four meetings per year and having two CORE members attend the other STRS Board meetings. These two members would report by email a summary of the STRS meeting that they attended."
Nancy reminded us that we began chiefly as an email group so we could report on the STRS meetings by emailing the minutes. Since STRS has eleven meetings a year, we would need 22 CORE volunteers to cover the STRS meetings (one for the Thursday meeting & one for the Friday meeting each month). This motion piggybacked on the conversation of studying the proposed re-structuring of CORE. No action was taken on Nancy's motion but it was used for further discussion. Nancy offered that those of us on the CORE Advisory Board sometimes feel we are condemned to life long term limits. We need to distribute the workload.
Betty shared that a friend of hers had been contacted by STRS by phone for the purpose of conducting a survey of 12 questions. Following the survey, the caller announced that she was eligible to attend a paid ($50.00) meeting at STRS. Her friend attended this meeting and at some point, she made the suggestion that STRS should have their own PBM rather than Caremark. The STRS officials in charge of the meeting informed Betty's friend that they were not going to discuss that that day.
The CORE Advisory Board members voted by email prior to today's meeting (following the June 5th Retreat) to delay any decision-making on the issue of re-structuring CORE to the September Annual CORE meeting. It was suggested that we use today's CORE meeting as well as the August CORE meeting for discussion of pros and cons. At today's CORE meeting, it was decided to use the month of July as well, even though there is no STRS meeting in July. CORE Advisory Board members and any other CORE members interested in attending will meet at CORE in the back cafeteria room on Thursday, July 20th at 9:00 a.m. We have the room for the entire day. All are welcome to attend and give input & ideas.
Lloyd Knudsen then asked Lou DiOrio, Ann Hanning, and Blin Scatterday if their organizations have ever considered developing their own PBM (Pharmacy Benefit Manager). Ann replied that ORTA was part of the Ohio Retiree Coalition (all five pension systems) which met throughout 2004 - 2005. It was decided that each of the pension systems needed to get their own houses in order first.
Someone mentioned that the Health Care Advocates feel that their work is done. They have a proposal for obtaining a long term dedicated stream of revenue for HC if the legislature accepts it. Ann Hanning offered that the Health Care Advocates do NOT have a final plan in place yet. Health Savings Accounts are not going to cover the expenses of health care for public employees.
Tom Curtis then asked Lou DiOrio if he attended the Health Care Advocate meetings. Lou said that the other systems backed out at the time of these discussions but they must now come together as a coalition. Tom asked Lou DiOrio about PBM experiences, to which Lou stated that the state of Wisconsin's public pension systems have come together to form their own PBM. All of us felt that this was an important achievement to note that it HAS BEEN DONE.
Nancy Hamant reminded us that three fifths of the states are suing Caremark (which took over Advance PCS) which operates ILLEGALLY. She said that the PBMs are crooks which give kickbacks to their organizations such as STRS. Blin Scatterday shared that only a Plan A was offered to the legislature so that they will stay with Plan A and won't consider or know about any other perhaps better choices (active teachers paying all of the 5% and shaming the employers). Gary offered that they only had six months to study the PBMs. Perhaps Caremark was the best deal, to which Chuck Angeletti offered that perhaps Caremark gave the best kickback to STRS.
Lou DiOrio offered that his group (OCHER, Ohio Council of Higher Education Retirees) has no funds, either. He said he is not paid so he doesn't have to attend meetings if he doesn't want to. Whereas Ann Hanning HAS to attend the STRS meetings because she is paid to do so. She is not a volunteer. He told us that this was something CORE had to consider (paying volunteers). He feels we do not get structure in any other way than to have a paid position. He reminded us that we are a focus group and a good one. He feels that CORE structure is needed. Ray warned that legislators love to see us fighting among ourselves.
Ryan Holderman then volunteered that when he retired in 2003, he joined ORTA but soon saw a reluctance on ORTA's part to accept and investigate Dr. Leone's findings. No reply from Ann or Blin.
Ideas offered at today's meeting:
1. We need a spokesperson to make contact with other groups.
2. Ryan Holderman offered to contact Paul Boyer who has already offered to work on by-laws, charter, mission statement, or constitution. These two have volunteered to study some form of guiding principles if re-structuring of CORE occurs. They will try to communicate via email and provide some sort of outline or draft to present to us at the July 20th meeting.
3. A slate of officers cannot be done until we define responsibilities for positions.
4. CORE meetings are critical. Could we do four only? The September Annual Meeting is a must.
5. We must capture the effectiveness of email. This is how we started.
6. We consider a chairman, a vice chairman, a treasurer, and an advisory board. Should any of these positions be paid positions?
7. We retain our current advisory board which would be a central part of CORE.
8. The Chairperson would have responsibility to promote what the Advisory Board advises.
9. There should be term limits for positions perhaps two year terms.
10. We will meet in July.
11. Recommendations must be sent out to all prior to the September Annual CORE meeting so that all of CORE has time to study and prepare to vote at the Sept. meeting.
12. Do we want to consider ANNUAL dues for CORE?
13. Should we have regional advisory representatives?
14. Should we ask for volunteers to cover one STRS meeting a year and report minutes to us via email? We would need to recruit 22 volunteers.
We ended our meeting with a discussion of whether CORE should endorse political candidates or not. ORTA offered that they do not since they must work with everyone. Ray Variakojis, OFT, suggested that CORE endorse issues instead especially since our constituency represents both parties and Independents, too. Nancy Hamant recommends that we endorse a dedicated stream of revenue for Health Care since Health Saving Accounts cannot begin to pay for our health care expenses in the future. Ann suggested that the local RTA chapters get legislators to join them and thus gain their support and their ears in this way.
We did not have time to discuss input for direction and focus for CORE for the coming year. Will it be Health Care?
The next meeting for CORE will be Thursday, July 20th at 9:30 am at the back cafeteria room at STRS. All are welcome.

Dennis Leone re: June 15, 2006 Board meeting

Dennis Leone to John Curry
June 16, 2006 9:01 AM

..........a very, very well written editorial by the Toledo Blade.
Here I am at STRS, getting ready to begin day two of the this month's STRS Board meeting. Did you hear what happened yesterday? A sub-committee or Flannagan, Fisher, and myself met at 7:30 a.m. to reconsider my May motion to limit the spending authority of the STRS executive director. As I thought would occur, I was out-gunned 2-1 on the matter. Flannagan and Fisher decided to propose a $500,000 spending limitation on Damon instead of the previously approved $1 million threshold. (My defeated motion last month was a $50,000 cap.)
When Fisher made her half-million dollar recommendation in public, Ramser (who spoke with Lazares and me ahead of time) offered a substitute motion for there to be a $100,000 cap. Much to the unhappiness of Fisher, Flannagan, Brown, Puckett, and of course, the staff, this motion passed 5-4, with the yes votes coming from Lazares, me, Ramser, Chapman, and Billirakis. (Buser and Meyers were absent.) Not quite what John and I wanted, but a big improvement nonetheless. Ramser and Chapman (who seconded the motion) deserve to complimented on this. Nancy Hamant, Herman Fisher, and Ryan Holderman all expressed their appreciation to Ramser after the meeting, which was the right thing to do.
One more thing occurred of interest. The staff proposed changing existing policy that would drop the reimbursements that the spouses of deceased retirees receive if they are on Medicare B plan. I offered a substitute motion, that passed 9-0, to grandfather in all spouses of current retirees who are eligible to receive Medicare B reimbursements. In other words, if a retiree on Medicare B dies after age 65, his/her spouse will continue to receive the Medicare B reimbursements that were previously received when his/her retiree spouse was alive. A good decision for STRS retirees.
Gotta run............the meeting is about to start. Feel free to share.
Dennis Leone
Friday, June 16, 2006 12:46 PM

.........and so you know, John, the grandfathering in for the spouses of deceased retirees who are on the Medicare B plan requires that said spouse must be at least 65 years of age. The trigger date is Jan. 1, 2008, which means that if a current retiree spouse is 64, he/she also would be grandfathered in because she would turn 65 before the implementation.
Dennis Leone

Editorial, Toledo Blade: When secrecy begets secrecy (Will justice in Ohio wear a blindfold -- let's hope not!)

"Even though the five justices sit on the state's most prestigious legal body, none of them can claim to be a political virgin.
"We can only note that the five have received $51,000 in campaign contributions from Mr. Taft, as well as $23,510 from Noe."
When secrecy begets secrecy
Toledo Blade, June 16, 2006

THE Ohio Supreme Court's order that Gov. Bob Taft turn over weekly reports involving the Bureau of Workers' Compensation is only a small victory for freedom of information in regard to the Coingate scandal. What the court does with the documents will test the future of open government in this state.
Supplying the records to the court, which will review them and then rule on whether they should be made public, is one step in a tortuous process the justices established in an April decision that granted the governor executive privilege to keep internal documents secret.
We opposed that decision, and the review the court is now undertaking illustrates the pitfalls for above-board democracy when secrecy is allowed to beget secrecy in state government.
What we have here is a case in which information that ought to be public under Ohio's open-records law is being subjected to an unnecessary secondary review - in secret - by a state body that is political as well as legal in nature.
State Sen. Marc Dann, of Youngstown, a major figure in revealing the still-unfolding Coingate scandal, wants the reports released on the supposition that they will shed light on what the governor knew about wrongdoing at the Bureau of Workers' Compensation, which has lost millions of dollars in investment irregularities, including Tom Noe's $50 million rare-coin funds.
Mr. Taft wants to keep the reports secret, claiming the ones in question don't have anything to do with workers' compensation, that he already has released all relevant information about the bureau, and, anyway, the governor has the inherent right to confidentiality in communication with his close aides.
Never mind that executive privilege is mentioned neither in the Ohio Constitution nor in the Revised Code. A majority of five elected Republican justices had to borrow the concept from federal law and court decisions in what looked suspiciously like an effort to help protect Mr. Taft, a fellow elected Republican.
Those justices who may complain that their integrity is being impugned by the assertion that their April 13 decision was a political one are welcome to plead that case before the court of public opinion.
Even though the five justices sit on the state's most prestigious legal body, none of them can claim to be a political virgin.
We can only note that the five have received $51,000 in campaign contributions from Mr. Taft, as well as $23,510 from Noe.
Absent more Coingate bombshells, the information Mr. Taft is fighting so hard to keep secret most likely would cause political or personal embarrassment, but that's not a valid argument, constitutional or otherwise, against disclosure.
The public is entitled to know the full story behind how tax dollars and/or workers' compensation contributions have been squandered, and Bob Taft should not be allowed to hide behind some convenient veil of executive privilege.
The court should release the workers' compensation reports and let Ohioans have a look at information that is rightfully theirs to begin with.

Thursday, June 15, 2006

STRS Ohio Health Care Program Funding Proposal

There has been growing interest by some STRS Ohio members and retirees to become engaged on a grassroots level with the campaign to obtain an ongoing and dedicated revenue stream for the STRS Ohio Health Care Program for current and future retirees. In light of that, we are offering guidelines on how an individual might participate, keeping in mind that there is currently no introduced legislation.

The specific proposal for a dedicated revenue stream: The legislative proposal would increase educators’ contributions by 2.5% and their employers’ contributions by 2.5% of teacher payroll, phased in at .5% increments per year over five years. At the end of five years, this initiative would provide a total of 5% annually dedicated solely to fund STRS Ohio health care. Without additional revenue, the STRS Ohio Health Care Program cannot continue.

Talking Points for “Personal” Message:

1. If continued health care from STRS Ohio is important to you, let your legislators know.
2. The plan proposed by STRS Ohio and the Health Care Advocates would create a dedicated revenue stream for health care through equal contributions by active teachers and their employers. Support by the membership indicates teachers are willing to take care of their own and make sacrifices now for the future.
3. Ask your legislators if they support the proposed plan.
4. If they do, thank them and ask them to take a leadership role.
5.If they do not, stress that STRS Ohio cannot continue providing health care without additional revenue. Ask who will pick up the liability for those who cannot afford health care coverage in the open market. Finally, ask if this means Ohio will simply add those retired teachers - present and future - to the uninsured rolls.
Guidelines for communicating with legislators are provided below. If you would like to share any feedback from your contact with your legislators, you can e-mail a message to the HCA Legislative Team at the following address:

General Guidelines for Communicating Effectively With Legislators


Do be courteous.

Do keep the message short and succinct.

Do keep letters to one page, stating the purpose at the beginning.

Do include commendation for the legislators for past or current actions.

Do give reasons for your position.

Do ask legislators for a statement of their position on the issue.

Do include your address and sign your name.

Do follow up with your legislators after your letter has been answered and thank them. If they have agreed with your position, ask them to take a leadership role. If they disagree or are undecided, send additional information.


Don’t be unrealistic in your requests.

Don’t send form letters or cards.

Don’t try to address multiple subjects.

Don’t assume the legislators know all the details of your proposal.

Don’t threaten or attack.

Don’t degrade your legislators or your opposition, and don’t impugn their motives.

Chuck Chapman's speech to STRS Board June 15, 2006

June 15, 2006

I am Chuck Chapman: Life member of OEA, and ORTA with thirty two years of teaching service. I am Legislative chair for Medina County RTA.

I am pleased to see the positive changes in the composition of the Board. We can now move forward knowing that the Board will be making decisions to improve and protect the system.

It is very frustrating to observe the Board taking a lot of time to make improvements to protect our finances. Changes in our health care coverage can happen very quickly.

Nancy Boomhower illustrated very clearly the problem with the child care center. We have been promised for years that it would become cost neutral. Not much has happened. I am not against a child care facility but I am hurt that my health care money is being used to maintain the facility. Please either reorganize it to make a profit or close it.

May I urge you new members to the Board to remember ORC 3307.15. The Board and other fiduciaries SHALL discharge their duties solely in the interest of the participants and beneficiaries.

I do not see how you can support rehirees utilizing STRS Health Insurance. Should it take four years to solve the problem? It doesn’t take four years to change my health care costs. I do not see how you can vote on contracts or settlement agreements without having a chance to study them and have them before you.

I applaud you for making some cuts in staff fringes; Eliminating the adoption policy effective December of this year. Reducing sick leave and unused sick leave pay out days: reducing health insurance availability for part time employees: reduce maximum amount staff members can receive per year for college courses.

I am not happy with the Board’s reaction to service awards. Thank you for reducing the amount reimbursed per year but it still sounds like a bonus or a 13th check.

I want to make it perfectly clear that I am and have always been proud of our staff but it is time that we share in the cuts that must be made.

Tom Curtis to Lara Baker: Some from Broad Street still need to be brought to justice

June 15, 2006
Ms. Baker,
Thank you kindly for your very timely response. May I wish you well in your endeavors concerning the new evidentiary materials. You and your staff are greatly appreciated by STRS retirees for taking these cases forward and reaching a just resolution for each of them. You may tell me you are simply doing your job, but you and your staff are to be commended for your work.
Best Regards,
Tom Curtis
June 14, 2006
RE: 061406 Curtis To Baker, Ethics Cases Against STRS Board Members & Employees

Mr Curtis:
Thank you, once again, for your input on this matter. Rest assured, we are aware of our obligations and of the relevant time constraints. Unfortunately (or fortunately, depending on how you look at it), the process has been delayed due to the acquisition and review of additional evidentiary material. I assure you that we are working diligently to move this process forward and reach a just resolution.
Lara Baker
Chief Legal Counsel, Criminal Division
Columbus City Attorney's Office
June 14, 2006
Hello Ms. Baker,
I am writing you to ask when your office is going to go forward with the rest of the OEC ethics charges against both former and present STRS board members and employees. It does not seem as though much is being done and I am hopeful you will not allow the time limits to run out on any of these people.
As a result of the failure of these people to uphold their fiduciary responsibility, my wife and I and about 25% of all STRS retirees now struggle to pay the huge health care costs we are faced with. This is not why I remained in teaching for 30 years. I was promised better, but did not get what I was promised.
It is bad enough that the political atmosphere in Columbus is so corrupt that no other branch of the legal system, other then the OEC has been willing to represent the STRS membership and make these people accountable for their actions. This is a huge travesty of justice in my opinion. Our fiduciaries misspent our funds and the only way we can address this is to sue them ourselves, which would likely cost us more than we are worth. That does not seem right, but we get no help from the very people that are in political offices and should do such.
I am begging you to please make sure all of the people at the STRS named by the OEC are brought to justice and not allowed to plea out. Thank you in advance for your consideration and response.
Tom Curtis
STRS Retiree

Wednesday, June 14, 2006

Ohio Investment Scandal Reaching Beyond Workers' Comp

COLUMBUS, Ohio (AP) -- A sweeping investigation into bribery for investment contracts at the state insurance fund for injured workers has returned authorities to familiar territory: Ohio's pension funds and the state treasury.

The list of the top 10 to 15 brokers doing business with the Ohio Bureau of Workers' Compensation contain many of the same firms that handle investments for state pension funds and the Ohio Treasurer's Office, Franklin County Prosecutor Ron O'Brien said Wednesday.

He confirmed the state investment investigation has expanded to the Ohio's five public pension funds, as first reported in The Columbus Dispatch.

"It would not be unexpected to see many of the same names arising [in our investigation]," he said. "However, whether there is anything illegal is as yet unclear."

O'Brien's office is part of the large law enforcement task force investigating a state investment scandal that began with rare-coin dealer Tom Noe's contracts with the workers' comp agency.

Noe is accused of stealing more than $1 million from the coin fund, and the former executive in charge of investments at the workers' comp agency says Noe bribed him to help secure the coin contract, which Noe denies.

Terrence Gasper, the bureau's former chief financial officer, pleaded guilty in state and federal court to accepting stays at a Florida condo, money for his son's tuition and other gifts in exchange for doling out investment business.

He was the first bureau official convicted in a yearlong political scandal in Ohio that has shaken the GOP-dominated government and given Democrats hope of regaining some offices, including governor. Prosecutors say more charges are expected this month.

In 2004, a trio of associates of then-Ohio Treasurer Joseph Deters was convicted in a pay-to-play scandal at that office in which preferential treatment of brokers was linked to campaign giving.

In August, the former chairman of the Ohio Police and Fire Pension Board pleaded guilty to three misdemeanor ethics violations over receiving and improperly reporting similar gifts.

The former executive director of the State Teachers Retirement System, Herb Dyer, was found guilty last fall of accepting golf outings and other gifts from a firm that advised the fund on its investments. He was forced to resign in 2003.

In April, STRS board member Hazel Sidaway was convicted of ethics violations for taking gifts from clients of the pension fund while she oversaw their contracts.

"There are a number of retirees who have been wondering when other former board members would be charged for doing the same things Hazel Sidaway did. It's common knowledge those things happened," said Dennis Leone, a retired superintendent named to the teachers' pension board after the scandal.

But a 2005 voluntary audit by at least one of the state's pension funds -- the Ohio Public Employees Retirement System -- found that a new, more stringent ethics policy adopted in 2002 significantly reduced gift-giving to employees.

The review found that before the policy members of the investment staff were regularly wined and dined by those doing business with OPERS, and afterward such occurrences had fallen to a minimum.

Aristotle Hutras, executive director of the Ohio Retirement Study Council that oversees Ohio's pension funds, said the systems would continue to cooperate with law enforcement.


Ohio's public pension funds and the amounts of money they manage:

Public Employees Retirement System, $65.2 billion
State Teachers Retirement System, $54.6 billion
Ohio Police & Fire Pension Fund, $9.8 billion
School Employees Retirement System, $8.6 billion
Highway Patrol Retirement System, $700 million

(Source: The Columbus Dispatch)

New Ohio Flag, or Color a Buckeye (star)

By John Curry
June 14, 2006 (Flag Day)
Click on the image to enlarge.
If you don't know who some of these people are - enter their name in a Google News Search or Google search along with the word "Ohio" and I'm sure you will learn. Being a retired teacher, I just love learning exercises! I have left out two -- I'm sure with current Ohio pension news -- that task can be accomplished and who knows, we might even need more stars on the flag? Heck, you can even color it!!!
From Ohio - where ethics is often-times a challenge -- John

Ohio investment scandal reaching beyond workers' comp [Better keep your eye on STRS]

Associated Press
June 14, 2006

A sweeping investigation into bribery for investment contracts at the state insurance fund for injured workers has returned authorities to familiar territory: Ohio's pension funds and the state treasury.

The list of the top 10 to 15 brokers doing business with the Ohio Bureau of Workers' Compensation contain many of the same firms that handle investments for state pension funds and the Ohio Treasurer's Office, Franklin County Prosecutor Ron O'Brien said Wednesday.

He confirmed the state investment investigation has expanded to the Ohio's five public pension funds, as first reported in The Columbus Dispatch.

"It would not be unexpected to see many of the same names arising (in our investigation)," he said. "However, whether there is anything illegal is as yet unclear."

In April, a board member of the State Teachers Retirement System was convicted of ethics violations for taking gifts from clients of the pension fund while she oversaw their contracts. In August, the former chairman of the Ohio Police and Fire Pension Board pleaded guilty to three misdemeanor ethics violations over receiving and improperly reporting similar gifts.

In 2004, a trio of allies to then-Ohio Treasurer Joseph Deters were convicted in a pay-to-play scandal at that office in which preferential treatment of brokers was linked to campaign giving.

O'Brien's office is part of the large law enforcement task force investigating a state investment scandal that began with rare-coin dealer Tom Noe's contracts with the workers' comp agency. He is accused of stealing more than $1 million from the coin fund, and the former executive in charge of investments at the workers' comp agency says Noe bribed him with money to help secure the coin contract.

Terrence Gasper, former chief financial officer, pleaded guilty in state and federal court to accepting stays at a Florida condo, money for his son's tuition and other gifts in exchange for doling out investment business.

He was the first bureau official convicted in a yearlong political scandal in Ohio that has shaken the GOP-dominated government and given Democrats hope of regaining some seats, including governor. Prosecutors say more charges are expected this month.

BWC probe expands into pensions: Something about to hit the fan again at STRS?

Investigation involves dozens of officials, vendors
Wednesday, June 14, 2006

The investigation of bribes at the Ohio Bureau of Workers’ Compensation has provided ammunition in the probe of possible illegal gifts going to officials involved with multibilliondollar investments at the state’s pension systems, The Dispatch has learned.

Investigators won’t comment on the matter, but one source said more than a dozen vendors and as many or more public officials and employees are under scrutiny.

Authorities are trying to determine whether gifts provided by brokers and vendors violated laws requiring public officials to disclose such items to the public, or whether the gifts led to conflicts of interest or even constituted bribes.

Board members at the Ohio Police & Fire Pension Fund and State Teachers Retirement System already have been prosecuted for improperly accepting freebies from vendors or failing to disclose those gifts.

But the investigation of investment scandals at the bureau is uncovering other information, including situations in which brokers or vendors giving gifts to bureau officials possibly were doing the same at some pension systems, The Dispatch was told.

The news follows last week’s guilty pleas to corruption charges in both federal and state courts by Terrence W. Gasper, the former chief financial officer of the Bureau of Workers’ Compensation.

Gasper admitted accepting thousands of dollars in gifts, including free stays at an oceanfront condominium in Florida and a $9,000 college-tuition check for his son, from brokers and others in exchange for handing out lucrative bureau investment business.

He is cooperating with investigators as part of his plea agreements, and authorities say charges against others are likely soon.

Authorities already had been investigating allegations of improper gift-giving at pension systems that led to prosecutions of three members of pension-system boards.

Two members of the Ohio Police & Fire Pension Fund board, Thomas Bennett and David Harker, pleaded guilty to illegally taking thousands of dollars worth of gifts from vendors — including a golfing trip to Scotland and another to Ohio State’s 2002 national championship football game in Arizona.

Last month, former State Teachers Retirement System board member Hazel Sidaway was sentenced after being convicted of accepting four free tickets to a Cleveland Indians game in 2001 and two free tickets to a Broadway production of Hairspray in 2003.

Other current or former board members and at least one high-level State Teachers Retirement System administrator reportedly accepted similar perks and have been questioned by Ohio Ethics Commission investigators. Charges are likely to be announced against one of those officials soon, a source said.

Dennis Leone, a retired schools superintendent who was elected to the teachers system board as part of a reform slate, said the charges would be welcome news.

"There are a number of retirees who have been wondering when other former board members would be charged for doing the same things Hazel Sidaway did," Leone said. "It’s common knowledge those things happened."

Laura Ecklar, spokeswoman for the State Teachers Retirement Fund, said the accusations against Sidaway and other board members differ significantly from those against Bureau of Workers’ Compensation officials. Unlike bureau officials, pension leaders are not accused of trading investments for perks or favors, Ecklar said.

But as part of a sweeping investigation into bureau investments by an unprecedented task force including the Ohio inspector general, the Ethics Commission and other federal, state and county entities, additional information surfaced that provided new details on vendors at the bureau, some pension systems, or both, sources said.

There are cases in which brokers or investment firms that did questionable business at the bureau also did work for one or more pension systems.

For example, the bureau terminated two hedge-fund investments last year worth $550 million that it had with American Express Asset Management. Bureau officials have said they were funded in 2000 and 2002 in a blatant violation of the bureau’s investment policy, which didn’t allow hedge funds at the time.

The Police & Fire fund also fired American Express and a firm that did marketing for it, Northwinds Marketing Group, for poor performance. Both were named in court documents as vendors who provided gifts to board trustees.

Northwinds paid $84,320 to the pension fund and American Express paid $39,680 as part of settlements. The firms also paid $20,000 each to the Ethics Commission to cover their share of the costs of the investigation.

The federal bill of information filed against Gasper cites two unnamed brokers and a marketer who provided gifts to Gasper in exchange for investment business. Those names remain under seal.

Click on image to view larger version.

Dennis Leone: STRS Update #2

STRS Update #2

By Dennis Leone, Board Member

May 31, 2006

I did not intend, when I wrote my STRS Update #1 three months ago, to prepare another one so quickly. Several important things, however, occurred at the STRS Board meeting on Friday, May 19, 2006, that I knew would be of interest to many:

Health Insurance for Rehired Retirees: Three months ago, the Board voted 10-1 to support proposed House Bill 272, which included a provision to prohibit full-time rehired retirees from utilizing STRS health insurance. The Board vote included a reasonable request for a phase-in (a three-year waiting period) before rehired retirees who are currently using STRS health insurance would be dropped. Board member Mary Ann Flannagan voted no, not because she opposed the prohibition, but because she said she preferred a four-year waiting period instead of a three-year waiting period. Recently, legislators proposing HB 272 determined that pension boards have the power to implement such changes on their own, so the language about rehired retirees’ health insurance was dropped from the bill. (The sponsor even told me personally she did want lawmakers to become the scapegoat for something the STRS Board should be deciding.) On May 19, I informed my fellow board members that I felt our proposed legislation to increase contributions 5.0% would be enhanced if lawmakers saw that we were “taking care of business in our own shop” and decided – on our own – to prohibit full-time rehired retires from utilizing STRS health insurance. For reasons I cannot explain, my fellow Board members (except John Lazares) now have no interest in considering such a Board action while our proposed 5.0% contribution increase is still on the front burner. Also, Board members Mary Ann Flannagan and Conni Ramser both said they now oppose the prohibition of STRS health insurance for rehired retirees. In a nutshell, the matter of rehired retirees utilizing STRS health insurance has been tabled, with no future discussions scheduled. I told my fellow Board members that I felt that failing to act was gutless on the Board’s part.

Motion Requiring Board Votes on Expenditures in Excess of $50,000: I made such a motion, which was seconded by John Lazares – not as a statement of distrust regarding the STRS staff – but because I disagree with the fact that huge dollar amounts have been spent in recent months (like a $300,000 legal bill) without Board discussion and without a formal Board vote. Appointed Board member Judith Fisher made a substitute motion to trash my proposal, which was seconded by appointed Board member Geoff Meyers, and instead, proposed formal Board votes only for expenditures in excess of $1 million. This passed 7-3-1 (with Bob Brown, John Lazares, and myself voting no, and Stephen Buser abstaining). After a break, the Board then voted 8-2 (Meyers was absent) to reconsider the Fisher motion that passed and refer it to committee. The reconsideration came up, not because some Board members now want my motion or a lower amount, but because some Board members believe that perhaps their personal liability will increase if they have any greater oversight on such expenditures. In other words, this matter may get worse. John Lazares and I did our best to inform our fellow Board members that we feel it is our fiduciary responsibility to be provide oversight on pension system expenditures.

Motion Prohibiting Board Votes on Settlement Agreements and/or Vendor Contracts Unless the Board Has Said Documents Prior to the Vote: If I ever thought something should be a no-brainer, it was THIS motion, which I made, and which John Lazares seconded. The motion failed 8-2 (with Lazares and myself voting no) and was referred to committee for future consideration. I made this motion because in recent months the Board approved a costly settlement agreement (regarding non-investment staff bonuses) and a costly Vitech contract (for needed IT services at STRS) – but in both cases – no document was in front of the Board when the vote was taken. John Lazares and I have tried to explain that as a public board, it is our obligation to know what the terms are of things like settlement agreements and large vendor contracts prior to the Board vote. I am not suggesting that ALL vendor contracts (like a Pepsi contract for the STRS cafeteria) come to the Board for a vote. I am saying, however, that when the staff places an agreement and/or a contract on the agenda for Board approval, how can we be expected to vote on it if we don’t have the necessary documents in front of us? While I have been asked to serve on a three-member Board member committee to discuss this matter further, and will do so, I do not see myself compromising on this issue. I am very, very disappointed with my fellow Board members regarding this matter. Maybe it will come up again as a vote. I don’t know.

Actions to Reduce STRS Staff Fringe Benefits: For the past eight months, I have voted no on all monthly expenditure reports of the STRS executive director because I disagree with so many of the fringe benefits that staff members receive. On May 19, the Board voted to reduce six staff benefits that should streamline the STRS operating budget by approximately $410,00 per year as described below:

  • EDUCATIONAL ASSISTANCE – The Board voted 10-0 (Meyers was absent) to reduce the maximum amount staff members can receive per year for college courses from $7,000 to $5,250, to require 12 months of employment before a staff member can become eligible for a reimbursement, to require employees to pay 50% if they do not receive an A or a B, to prohibit an STRS reimbursement of any kind if the employees fails the course, to require employees to pay back STRS for courses if they leave STRS within 12 months after a course was reimbursed to them, and to implement a lifetime maximum benefit for employees who take courses. While I almost voted no because I feel the new amount is still too high, I voted yes because the $5,250 now matches that of other pension systems in Ohio. Gone is a ridiculous policy we had – in place for who knows how long – that gave employees a 50% reimbursement even if they failed the course they were taking. The Board action should reduce expenditures by approximately $30,000 per year.

  • TOTAL SICK LEAVE ACCUMULATION -- The Board voted 8-2 to limit total sick leave accumulation to 1,000 work hours (133 days), to freeze the sick leave of 54 employees who are currently above that total, to provide no sick leave separation cash for employees hired after July 1, 2006 if they quit, and to freeze the potential sick leave separation cash for current employees should they resign in the future. While John Lazares and I liked all of the provisions adopted, we voted no on the motion because we feel that no employee should receive total sick leave cash unless it is part of a retirement severance. The practice at STRS is almost unheard of in public school districts. I am quite pleased with the other reductions approved, all of which I have been pushing for over the past two years.

  • ANNUAL SICK LEAVE ACCRUAL AND PAYOUTS -- The Board voted to reduce annual sick leave accrual from 18 days to 15 days and to reduce the annual cash payout of unused sick leave from nine days to five days. While I am pleased that this will reduce expenditures $195,000 per year, I was the only Board member to vote no because I am completely opposed to employees being able to cash in – on an annual basis – unused sick leave (even if it is “only” five days per year). I like the annual sick leave accrual dropping from 18 days to 15 days.
  • CASH PAYMENT WHEN EMPLOYEES ADOPT A CHILD – The Board voted 10-0 (with Meyers absent) to abolish this weird policy effective 12-31-06, but not without a great deal of discussion on whether public agencies have an ethical role to help solve societal adoption issues. I objected to the Board even having a discussion like this because Board members are supposed to be the caretakers of pension money.

  • SERVICE AWARDS – I have been calling this program the 13th check for STRS employees. It provides an additional check of $100-$200 per year to employees for no real reason, other than they work at STRS. I made a motion to drop the program completely, which was seconded by Lazares. This failed 7-2. A second motion passed 7-2 (with Lazares and myself voting no because we wanted deeper cuts) to reduce the “award” to $75 per year and make it eligible for hourly, non-managerial employees only. While Lazares and I agree the new policy is an improvement, and we are happy that it will reduce expenditures approximately $64,700 per year, we stated our opposition because of our strong feelings about what has happened to retirees. Board member Jeff Chapman stated that he voted yes because he felt it was a like a teacher’s year-to-year step increase.

  • HEALTH INSURANCE AVAILABILITY FOR PART-TIME STRS STAFF -- The Board voted 9-0 (with Brown and Meyers absent) to change current policy that provided part-time STRS employees the same health insurance plan that full-time employees received, even if they worked only 20 hours per week.. (The plan required all said employees to pay 19% of the total premium costs.) Now, part-time employees who work between 20 hours and 29.9 hours per week will have to pay 50% of the total premium cost (instead of just 19%), and employees who work between 30 hours and 37.4 hours per week will have to pay 30% of the total premium costs. I nearly voted no on this item because I still feel “full-time” should be defined as 40 hours per week instead of 37.5 hours per week. I voted yes because the new policy is a big improvement and because it should reduce expenditures between $50,000 and $100,000 per year.

The above represents “the rest of the story” regarding the 5-19-06 STRS Board meeting.

Tuesday, June 13, 2006

Refreshing our memories: A Dispatch article on Hazel Sidaway last July (2005)


Ex-official of pension fund slapped with 7 charges

Friday, July 01, 2005
Bill Bush

Racing to beat a two-year deadline to file charges, the Columbus city attorney’s office has issued what it says will be the first in a series of ethics complaints against officials who oversaw the pension fund for Ohio teachers.

Former State Teachers Retirement System board member Hazel Sidaway, 61, of Canton, is charged with seven ethics-law violations accusing her of receiving free meals, gifts, travel and outings from businesses and people doing business with her agency.

Dozens of other board and staff members of the State Teachers Retirement System could be charged in coming months on similar allegations, officials said.

The culture of accepting expensive gifts "involves all levels of staff in the investment sections, some more than others," said Paul Nick, chief investigative attorney for the Ohio Ethics Commission.

The commission sent its investigation to the city prosecutor’s office.

"Based on what I’ve reviewed . . . I anticipate that there will be more charges," said Lara Baker, the assistant city prosecutor handling the case.

Nick and Baker would not name other officials under investigation, but Nick said the prosecution likely would "focus on people who were the decision-makers."

Generally, Ohio law prohibits public employees from accepting anything of value from those they regulate or do business with. Both the person giving the gift and the official receiving it could be in violation of Ohio’s ethics laws.

The first-degree misdemeanor is punishable by up to six months in jail and a $1,000 fine.

It’s too early to speculate on how the ethics probe could affect the pension fund’s investment department, which employs more than 100 people, said retirement system spokeswoman Laura Ecklar.

"There’s nothing to indicate that our members’ pension funds were adversely impacted or that any favoritism was shown to any vendors," Ecklar said.

Sidaway did not return calls for comment yesterday.

But she defended herself in an interview with The (Canton) Repository, saying she always worked to benefit teachers when she was on the board. "I’m sure in the final analysis, people will see the truth," Sidaway told the newspaper.

She is accused of taking gifts worth $910 without reporting them on her state ethics statements.

Six of the charges say Sidaway took and did not report free tickets to the Cleveland Indians in 2001, free dinners at Columbus restaurants in 2002 and tickets to the Broadway play Hairspray in New York in 2003, Baker said.

The last charge involves an aggregate of gifts from the investment firms Frank Russell Co. and Salomon Smith Barney for things such as meals, lodging and entertainment, Baker said.

Both firms said they are cooperating with the investigation.

Sidaway is scheduled to be arraigned Aug. 2 in Columbus. She retired on June 30, 2003, which meant that the two-year statute of limitations on her activity in office expired yesterday, Baker said.

The agency came under fire in 2003, when retired teachers complained that agency staff members had been awarded $14 million in bonuses at a time when retiree benefits were being cut because of investment losses and health-care costs.

The agency had lost $12 billion in the stock market but had just moved into a plush $94.2 million Downtown headquarters annex and was providing liberal perks for its board — whose members included Attorney General Jim Petro and state Auditor Betty D. Montgomery.

Dennis Leone, a former school superintendent from Chillicothe who became one of the retirement system’s harshest critics, charged yesterday that Petro and Montgomery are partly responsible for the board’s ethical lapses.

"I feel that had they done their jobs, these things would have been known two years ago," said Leone, who will be seated to an elected position on the board later this summer. "There was such a conflict of interest with them being on the board."

Under a state law signed in 2004, the attorney general and auditor no longer get a seat on the board because of the potential conflicts.

Montgomery and Petro are confident their representatives handled their responsibilities to the pension fund appropriately, their spokeswomen said yesterday.

The pension fund currently holds assets of about $58 billion to provide benefits for 430,000 educators, of which about 28 percent are retired, Ecklar said.

Since the backlash two years ago, the agency has adopted a no-gifts policy and has limited travel for board members.

Current board President Joseph Endry, of Westerville, said that while board members might have accepted gifts in the past, "they certainly don’t now."

He said that some expenditures, such as a $4,100 retirement party for Sidaway in 2003, "are trivial in light of a $60 billion" fund.

Many people "think that the spending of people like Sidaway had an effect on the life of retirees, and that’s not really true," Endry said.
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