Saturday, November 11, 2006

FLASHBACK -- 3 years ago -- STRS saved from Ohio brokers' desires of profiteering & HB 227

Note from John Curry: SB 133 (the bill that became law) isn't perfect, but at least it beat out HB 227 which would have lined the pockets of Ohio brokers with our monies. At least we won this battle!
Pension reform law may bring millions to state’s bank systems
Canton Repository, November 9, 2003
By PAUL E. KOSTYU Copley Columbus Bureau chief
COLUMBUS — Ohio’s financial institutions could benefit from a windfall of tens of millions of dollars a year if one of the proposed reforms of the state’s five public pension systems becomes law.
That provision may mean, however, the systems will have even greater trouble than they do now paying the health-care costs of their members.
That’s because, the directors of the pension systems say, their investment portfolios would have to absorb the cost of switching their business to Ohio-based companies and paying a higher per-trade rate.
Though the intent of the provision in House Bill 227 is to generate business for Ohio companies, directors questioned whether that really will happen. Instead, a costly “middle man” could be inserted into their investment strategy.
Mike Van Buskirk, president of the Ohio Bankers League, contends there would be no additional cost to the pension systems. He said the investment track record of Ohio financial institutions is equal to or better than those out of state.
“Switching to Ohio companies,” he said, “would not change investment strategies. The objectives remain the same, to generate income and protect the investment.”
At issue is the provision that says 70 percent of the pension funds’ equity and fixed-income trades must be conducted by Ohio companies. The bill also requires another 10 percent of those trades be handled by minority businesses.
And, it says that not less than 50 percent of the assets handled externally must go to an investment manager with headquarters in Ohio or with at least three operating locations in Ohio totaling 15 employees.
The House bill and a companion in the Senate, SB 133, are both expected to be passed by their respective committees and chambers this week. The Senate bill does not have the Ohio provision.
Gov. Bob Taft has said he wants to sign pension system reform by the end of the year.
Orest Holubec, a spokesman for Taft, said the governor is “definitely looking” at that Ohio requirement issue in the House bill.
It defines an Ohio-eligible company as one that is subject to taxation by the state, employs at least five Ohio residents and has been a securities dealer in the state for three years. It’s based on a policy used by the Ohio Bureau of Workers’ Compensation. (Note from John - BWC policy-just what we didn't need to copy!)
But pension system directors said there’s a difference between a bureau policy that is flexible in its application and a law that isn’t.
A staff report submitted to the Ohio Retirement Study Council, which reviews all legislation dealing with Ohio’s pension systems, recommended the provision be dropped. The report said the change is “a significant departure from well-established legislative principles” that oppose mandates.
The staff report said the mandates could violate Internal Revenue Service code and open the pension systems to lawsuits for “breach of fiduciary duty.”
Though it is unclear whether the House or Senate bill will become the vehicle for pension reform, Sen. Kirk Schuring, R-Jackson Township, said the Ohio provision of the House bill should be dropped.
Schuring, who sits on the study council with the bill’s sponsor, Rep. Michelle G. Schneider, R-Cincinnati, said, “I’m not sure we should be getting into investment practices. ... To handcuff the systems could be problematic.”
But Schneider said the provision is needed. “We’re not forcing them to invest in Ohio companies,” she said. “They can invest in any company. But instead of using a New York broker, they should use an Ohio broker.”
The Bureau of Workers’ Compensation uses 126 investment management companies, 31 of which have Ohio addresses. That’s 24.6 percent of the total, though other companies have an Ohio presence.
Neil Toth, director of investments for the Public Employees Retirement System, said the Ohio provision would cost his pension plan $40 million to $100 million a year.
Damon Asbury, interim director of the State Teachers Retirement System, said the provisions are “noble goals” and “well-intentioned.” But Ohio brokers, he said, don’t have the capacity, exchange capability and the research facilities needed by Ohio’s large pension systems.
The mandates “would drive up costs and would dilute the fiduciary responsibility of the board,” he said. “It goes to the independence of the systems.”
Laurie Hacking, executive director of PERS, said because of the pension plan’s size, it needs sophisticated traders who can handle multiple trades rapidly. She suggested that the Ohio provision inserts a middle man and makes the system’s trading less anonymous. Anonymity is needed, she added, so pension system trades don’t impact the market unnecessarily.
Van Buskirk said it may be true that, 20 years ago, Ohio companies did not have the size or sophistication to handle the pension systems’ investments. But not today.
In a side-by-side comparison where the costs are the same, Schneider said, Ohio companies should handle the pension business.
“They should at least be allowed to bid. They can’t even get their telephone calls returned,” she maintained.
Asbury said the Ohio provision was “hastily developed” without discussion. As written, it would cost the teachers’ retirement plan $30 million to $40 million a year, he said.
Schneider said the Ohio investment issue has been around for a while; this latest effort was initiated by Rep. Charles R. Blasdel, R-East Liverpool, who is chairman of the committee hearing the House bill. He could not be reached for comment.
Laurel Johnson, a spokeswoman for the School Employees Retirement System, said her pension system’s staff was “still crunching” information to determine the impact.
William J. Estabrook, executive director of the Police & Fire Pension Fund, said even a penny difference in the cost per share traded means a significant amount of money to the pension systems on a daily basis. He predicted using Ohio companies would be more expensive.
“This means millions of dollars to the systems,” agreed Richard Curtis, executive director of the Highway Patrol Retirement System.
Curtis predicted his system’s trade rate of 1.5 cents per share could jump to 5 or 6 cents per share, adding $300,000 to $350,000 per year to the fund’s costs.
Asbury said the added costs of the Ohio provision would have to be deducted from investment earnings, which then reduces the balance in the pension fund. As a result, less money would go into pension and health-care benefits.
“We’re not saying ‘Buy Ohio,’ ” said Van Buskirk. “Just don’t exclude Ohio. Look at the results. We have sophisticated and talented investment managers at entities located in Ohio. They just want a fair chance to compete.”
You can reach Copley Clumbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail:

Ohio Department of Education: A new board

Note from John: Below is a short letter to me in reference to getting Mr. Puckett removed from the STRS board. Maybe we at CORE should work through the State Board of Education to light a fire under Zelman to remove Puckett.
Perhaps our efforts to change the Ohio Dept. of Education representative should shift from the State Supt. to the State Bd. of Education.
(Name not published due to privacy request)
From John Curry, November 10, 2006
Subject: Is reform over with Zelman still at the helm? A "new Board" at ODE
Among the board's direct duties is supervision of the Ohio Department of Education and the hiring and firing of the state superintendent. Superintendent Susan Tave Zelman was hired in 1998 to replace John Goff, who retired.
Zelman plans to continue under the new board and new governor, spokesman J.C. Benton said Wednesday. "She wants to retire in Ohio," Benton said.
Note from John: Should we retirees now let our new Governor know how we feel about STRS Board member Puckett and Zelman? I think so!

Election reshapes state school board
Members may focus on funding, charters
Cleveland Plain Dealer
Friday, November 10, 2006
Scott Stephens Plain Dealer Reporter
This week's election for the State Board of Education promises to determine far more than what Ohio will teach about evolution.
While science got the headlines in the costly and often nasty Summit County race between Tom Sawyer and Deborah Owens Fink, Democratic victories also may reshape charter schools and school funding.
Newcomers won four of the five races for seats on the state board. They include two well-known Democrats: Sawyer, a former congressman, and John Bender, a former state representative from Lorain County.
The terms of four more appointed board members will expire Dec. 31, enabling the new governor, Democrat Ted Strickland, to either reappoint or replace them.
That means the 19-person board could have eight new members come January and be transformed into a bully pulpit for Strickland-backed policy.
That's significant because the governor-elect has pledged to work with legislative leaders to reform Ohio's school-funding system, which the Ohio Supreme Court has repeatedly said is unconstitutional. If Strickland wants to push for a constitutional amendment to change school funding, he will have some valuable allies on the state school board.
"There's going to be a constitutional amendment," Bender said before Tuesday's election. "I will support and campaign for it. Then, working at a policy level with a new Democratic governor, maybe we can shift away from our reliance on property taxes."
Sawyer, a former schoolteacher, agreed that a constitutional change is necessary because of House Bill 920, a 1976 tax-relief law.
Before the law, revenue to schools increased if real estate in a community appreciated. But House Bill 920 freezes that revenue at the amount generated the first year a new tax is collected, forcing districts to go to voters when revenue doesn't keep pace with costs.
"People aren't voting against their schools," Sawyer said. "They're voting against the means of funding their schools."
The new board could also put some pressure on charter schools. That would most likely come in calls for tougher oversight and changes in the law that now allows non-elected charter school boards to use public money to hire a private, for-profit firm to run their affairs.
"In my opinion, it's taxation without representation and it needs to be changed," said Sam Schloemer, an incumbent board member from Cincinnati who retained his seat Tuesday.
Among the board's direct duties is supervision of the Ohio Department of Education and the hiring and firing of the state superintendent. Superintendent Susan Tave Zelman was hired in 1998 to replace John Goff, who retired.
Zelman plans to continue under the new board and new governor, spokesman J.C. Benton said Wednesday. "She wants to retire in Ohio," Benton said.
Even Owens Fink, who lost her seat Tuesday, said she wants to continue - in some capacity - to push for education reform in Ohio.
"There are not permanent victories or losses in politics," she said. "But it was never about politics for me. It was about the kids."
To reach this Plain Dealer reporter:, 216-999-4827

June Hughes: New state school board members elected

From June Hughes, November 11, 2006
Subject: A Special Word of Thanks from Sam
Note from John Curry: With many new faces on the "new" ODE board, maybe we at CORE can press for removal of Puckett. John
I just heard from Sam and here are the ones who won for the Board of Ed...........June
In District 2, John Bender won. John is pro-science.
In District 3, Thomas Gunlock had been appointed just three months ago to John Griffin's slot. However, Susan Haverkos beat him. I've since found out she's backed by the right wing and by Diane Fessler, a State Senator who served on the Board some years ago. Susan is a proponent of charter schools and Intelligent Design. James Uphoff, in 3rd place was the pro-science candidate.
In District 7, Tom Sawyer defeated Deborah Owens Fink(incumbent). Tom is pro-science.
In District 8, Deborah Cain defeated Jim Craig (incumbent). Deborah is pro-science.
Despite some very positive changes, there are still some battles to be won.
Thanks again for all your help. I'm now beginning to realize just how many people were working for me. I'm very grateful.

A blogger's commentary: Being watched from the Statehouse

Some observations from a retiree in support of the STRS Board's 5.0% health care initiative
November 8, 2006
Health care is uppermost in the minds of many of us these days, particularly since its very existence in the not-too-distant future is at stake. While we all want the best solution for health care, and while we are willing to push lawmakers to help, it is also critically important that we be highly alert to the fact that these same lawmakers DO observe what goes on down the street at STRS. And what are they seeing? Gross mismanagement and poor decision-making by a dysfunctional Board which does damage to its own credibility when:
1. Board chair Conni Ramser makes a public statement to the press that Dennis Leone does not act like an adult, that he needs parenting, and that he'd be suspended if he were a student in her class.
2. Board member Geoffrey Meyers tells Dennis Leone that it is a "waste of time" for him (Leone) to ask a question about the Ferguson contract.
3. Former Board chair Bob Brown tells Dennis Leone to "shut up" when he (Leone) questions the cost associated with Flannagan and Chapman's attending a conference in Florida.
4. Board member Mark Meuser writes that any board involvement in vendor contracts "impairs the staff's ability to negotiate."
5. STRS pays $55.00 each for Billirakis, Ramser, Puckett, Flannagan and Chapman to have their own personal credit cards. This is not to mention that the misuse of credit cards was a topic of Leone's 2003 report, or that 82 staff members were required to turn them in after his report came out.
6. The Board forks up $315,000 for a headhunter without so much as discussing the proposed contract.
7. Even though Dennis Leone and John Lazares say "don't do it," the Board pays for the personal legal fees of STRS employees when free legal advice was available from the State Attorney General's Office.
8. Damon is given a new contract without the action being on the agenda.
9. The Board angrily rejects a Leone motion, 8-2, that Damon have a $50,000 spending cap, and instead, votes 8-2 to give him a $1 million dollar spending limitation.
10. Board member (Zelman's rep) Steve Puckett expects the Board to pay his personal long distance phone calls during a trip to Florida, and Mike Billirakis expects the board to pay for a home Internet connection.
11. Against the recommendation of Dennis Leone and John Lazares, the Board votes 9-2 to approve a $3.4 million settlement agreement without having a document in hard, only to learn later that the law firm representing the board added a provision to the agreement without prior board approval. The icing on the cake: the Board pays this law firm $300,000 with no final review, despite Leone's begging that the Board at least discuss it.
All of this is just a sample. OEA doesn't get it. ORTA doesn't get it. (Or maybe they just don't WANT to get it.) Until the above nonsense stops, we are fighting an uphill battle. And of course, there are those in OEA who wish Dennis Leone and John Lazares would never say anything at all about the above items. *Finding a solution to health care is more important* is their mantra and their battle cry while blatantly ignoring the persistent bleeding of the retirees' funds and the continuing culture of entitlement on the STRS Board.
We need help badly to get legislation passed for the 5% health care initiative. But what are our legislators supposed to think when they see these kinds of antics going on at 275 East Broad Street? We have two Board members we can ALWAYS count on to Do the Right Thing: Dennis Leone and John Lazares. The rest of them need to shape up or ship out if we want even a PRAYER of getting legislation passed to save our health care. Which is it going to be?
Kathie Bracy
November 8, 2006
A clarification on Point #9 (taken from an e-mail I sent 11/9/06 to a retiree)
The STRS Board ultimately did approve in June, on a 5-4 vote, a $100,000 spending cap for Damon after rejecting Dr. Leone's first motion in May. But this didn't happen till retirees in large number expressed their discontent about the May vote (here again, OEA sat quiet). It's appalling that the revision did not occur until RETIREES let the board know that Leone and Lazares were not alone with their opinion on the matter. It left many lawmakers scratching their heads, wondering what the heck is wrong with the STRS Board majority.
The same thing happened with Dennis' motion in May to prohibit future board actions on vendor contracts unless the board first receives summary documents before the vote. The board rejected this 8-2 in May, then came back in September and approved it 6-2 -- but NOT until after many retirees blasted the board at the August Board meeting. I wasn't able to be at the August meeting, but I sure heard about it. You and I both know these changes would never have occurred if it hadn't been for retirees, not OEA, speaking up. As always, we need to "keep their feet to the fire."

Finding Susan

Other ways to contact the Ohio Department of Education (and hopefully Susan Zelman, who seems to be too busy to respond to us)
Click here for the ODE Contact Center
Since we never get responses from Dr. Zelman, this may be another way to go. Phone numbers below.
General Contact Information
The Ohio Department of Education provides customers a toll free number for timely responses and support. Call 1-877-OHIOEDU (or 1-877-644-6338) and a customer service representative will forward your call to the staff member who will assist you. Local customers may call (614) 995-1545. Other numbers: (614) 466-7578; (614) 728-9703 (from the Web)

E-mail addresses for Drs. Puckett and Zelman (which never get us any responses):
Dr. Steven Puckett: steven.puckett@ODE.state.OH.US

Paul Boyer to Susan Zelman: Some good reasons to remove Puckett

From Paul Boyer, November 10, 2006
Subject: Retirement
Dear Dr. Zelman:
I have been one of the leaders in CORE, Concerned Ohio Retired Educators, since early in 2003 after Dr. Dennis Leone, Chillicothe Superintendent, issued his thirteen page discovery of the way the STRS State Pension Board Executive Director Herb Dyer and members of the board were spending OUR retirees' money on themselves. I have attended many monthly board meetings and gave speeches to the board outlining our displeasure with the way they were wasting OUR money. I chaired a special CORE/Damon committee that met monthly to discuss issues.
During all of that time, your representative on the board, Dr. Puckett, has done very little, if any, work to save our money from going down the drain. I agree with what another of our CORE members wrote in a recent email to another member as follows:
Her rep on the STRS Bd., Steve Puckett, has certainly not represented the best interests of Ohio's retired teachers. All that Mr. Puckett has done is to rubber stamp approval for anything and everything that the STRS executive staff requests without proper oversight of contracts (with or without your instructions). He is the only remaining member of the infamous STRS Board found guilty of ethics violations and consequently removed from the Board in disgrace. Yes, all retired teachers should let Governor Elect Strickland know of their displeasure with Zelman's STRS Bd. rep.
We are earnestly asking you to give a high priority to removing Mr. Puckett from the STRS Board and replacing him with someone who will study ORC 3307.15 and use it as the guiding principle for his/her service on the board.
We CORE members were successful in persuading the legislature to remove the Auditor and Attorney General from the state pension boards when they wrote SB 133, the reform state pension bill. Perhaps we should have gone a step further and included the State Education Superintendent in that move.
Further, our membership was instrumental in helping defeat Mr. Petro in his primary run for Governor and we believe we had a good part in defeating Mrs. Montgomery in the General Election. I have written her a letter congratulating her on her retirement inasmuch as she will complete her service as a state elected official at the end of the year because of the election.
Now, we have word that you wish to stay in Ohio because you want to retire here. May I remind you that there will be some new members on the State Board of Education and it behooves you to try to help straighten up the STRS Board's actions if you do not want them voting against your renewal. Leaving Dr. Puckett as your representative on the board well not help you. If you want to retire here with a good retirement, then that is another reason to get the board cleaned up.
I hope you will take this letter seriously and take some decisive actions.

Paul L. Boyer

Retired since 1985

Life member OEA/OEA-R,


Proud to be named

“Core” of CORE

John Curry: Spreading the word

From John Curry, November 10, 2006
Subject: We at CORE have to keep expanding our information spreading
After reading an article in yesterday's Youngstown Vindicator I feel that it touched upon a notion that many in CORE have -- we have to continue to communicate with educators -- educators we haven't carried on a dialogue with before. The sentence in the Vindicator that caught my eye came (surprisingly) from an internal Republican poll taken before the election and addressed by Bob Bennett (Ohio's head GOP Honcho); it reads:
"Internal Ohio Republican polls showed about 80 percent of people knew Taft was convicted of a crime, but only a small number knew it was for ethics violations related to accepting free rounds of golf, Bennett said."
Now, if after all the daily universal coverage of Bobby Taft getting "popped" for accepting the free rounds of golf by his cronies and his subsequent trial and conviction didn't embed in the minds of the general public then how do we at CORE expect the majority of both active and retired educators to really know what has happened to the "magnificent seven" former STRS officials who were also convicted of criminal ethics violations? Only a few major papers carried anything about the early ethics convictions of Dyer and Sidaway. The most coverage we educators obtained came when the four former STRS Board members recently got their dose of justice all on the same day -- then, more than the usual amount (which was sparse) was given print or lip service in the media.
I have taken the step to have "business cards" printed and carry a supply with me wherever I go. When I meet an active or retired educator I simply give them a few cards and request they share with other fellow educators. If I'm asked what business I am in I simply say, "the reform business!" These cards contain my email address, the CORE website address, and Kathie Bracy's blog address ( We DO HAVE TO CONTINUE TO SPREAD OUR INFORMATION to those many educators who still haven't the slightest idea what is going on except for what they read in a mailed STRS bulletin -- and those bulletins (as we well know) don't necessarily tell the whole story, do they?
John -- a PROUD CORE member

Friday, November 10, 2006

Attention anyone who ever owned a fixed annuity retirement product sold by Northern Life Insurance Company, aka ReliaStar Life Insurance Co.

Note: This has been checked out and found to be legitimate. KBB
If you or a friend owns or did own at any time a fixed annuity retirement product sold by Northern Life Insurance Company – also known as ReliaStar Life Insurance Company -- then interest on that product may have been undercredited and your retirement savings may be smaller than they should be. These are fixed annuity insurance products used to fund 403(b) retirement accounts.
An attorney from New Hampshire, Roy S. McCandless, Esq.,, 1-866-692-5277 or 1-866-252-7722- is investigating the insurance crediting practices of these companies in Ohio. Teachers in Washington State and California have brought class action lawsuits against Northern/ReliaStar complaining that Northern undercredited their retirement accounts in violation of their contract. Roy has information about those lawsuits and the issues involved. Please contact Roy if you have information about these fixed annuities sold here in Ohio or if you want to learn about the Washington and California lawsuits."
Roy S. McCandless, Esq., P.L.L.C.
(603) 496-4538 (cell)
(603) 223-2835 (direct line)
(603) 223-2985 (fax) email: or
Larry KehresMount Union Collge
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