From Dennis Leone, October 18, 2008
Subject: Email to STRS Board from Richard DeColibus
As I think most know, Mr. DeColibus is the recently retired teacher union president from Cleveland City Schools. [Rich DeColibus was president of the Cleveland Teachers Union (affiliate of the OFT) for 16 years, retiring c. 2004. KBB]
Rich DeColibus to STRS Board, October 18, 2008
Subject: Fwd: RE: Sharing -- additional thoughts
Dear STRS Board Members,
I have corresponded with Mr. Leone with respect to giving bonuses to the investment staff. I agree with him that it is inappropriate and he asked me to share my thoughts, as a retiree, with you. Look, my bottom line is simple: the investment staff should be doing no better or worse than the retirees and active teachers who fund(ed) the system. That, to me, is a very uncomplicated but reasonable ethic. If they are offended by that, they are free to seek happiness elsewhere.
I am not blind to the value of treating employees fairly, and making sure they understand they are being treated fairly, but to completely divorce accomplishment from compensation in ultimately counterproductive. Just about everyone is being hurt by this current financial crises and the investment staff has to understand they're in the same boat as we are, and when you have to bail, everyone has to bail.
Rich D.
Dennis Leone to Rich DeColibus, October 17, 2008
Subject: RE: Sharing -- additional thoughts
Rich -- I would really appreciate it if you could see fit to forward what you have written below to the board. They tell me quite strongly that I am wrong when I say I believe retirees (and actives for that matter) would agree with me on this matter.
Please consider it. You, personally, have nothing to lose. The board has one email address that goes to all 10 members. It is board@strsoh.org.
Dennis Leone
From Rich DeColibus, October 17, 2008
Subject: Re: Sharing -- additional thoughts
Dennis, if you are off base on this, then anyone who believes most of the investment staff should be anything but fired isn't even in the ball park. I find it outrageous that those responsible for investments that managed to lose $25 billion in the course of one year would have the unbelievable nerve to suggest they should get a "bonus". Do the STRS workers live on some alien world and commute to this planet everyday? When the investments YOU ARE RESPONSIBLE FOR lose $25 billion dollars, what the hell kind of logic is it to respond, "Well, gee, other people lost more than we did so we deserve a bonus." Isn't there anyone but you down there who can say, "HELLO. This is the real world. When you lose $25 billion, you don't get rewarded."? What we have here is a new definition of the word "outrageous"; someone should notify the OED staff.
Methinks your investment staff has been reading too many stories of CEOs who, with their brilliant foresight and leadership, have driven their companies to record losses and then collected ten of millions of dollars in bonuses and golden parachutes. This is not Wall Street. Your investment staff are not CEOs. This money they lost did not come from stock buyers looking to make a profit and willing to accept the risk; it came from teachers, administrators and other personnel who saw 10% of their salary removed by law from their paychecks for thirty to thirty-five years so they could enjoy retirement, not give bonuses to lessor fools who lost $25 billion of what the members contributed (see how kind I am, I agreed with their logic and only called them "lessor fools"?).
If the investment department makes huge gains, it is not unreasonable to discuss bonuses. If their argument is we should get a bonus whether we lose or gain, exactly what does the bonus stand for except the gullibility of the Board members who agree with such twisted rationale? These people must laugh long and hard when they get home; they've found the gravy train, and it's a great ride. Where do I sign up to join the investment department? Naturally, I'll expect a signing bonus, and I'd like my first year's bonus up front (since, obviously, it doesn't matter how much money I make or lose) as a sign of good intentions on the part of management. Of course, I also expect health care totally paid for even though hardly anyone else in the world (well, this country anyway) has anything that good, much less the members who pay into the system, and a full range of nice perks that validate my value as a human being and sensitive employee. Being the model of humanity that I am, I will not require Board members to grovel and crawl when I walk down the hall, although it will be considered proper form if they cast down their eyes, move to the side, and remain silent as I pass. See, nothing special, just the way it is for the rest of the investment staff; wouldn't want any special privileges.
This is not some little mom & pop family business, this is supposed to be a professional organization with a budget the size of a small country's and I expect everyone's attitude, behavior, and guidelines to reflect that. There are so many "investment counselors" hanging off of Wall Street building ledges we could probably hire them by the dozen; if our staff members feel put out about not getting a bonus after losing $25 billion, they should go and be happy elsewhere.
I mean, really. This is too much. It must be some sort of plot to remove the health care burden on STRS by giving so many members apoplexy they die in droves.
If I've been a little obtuse, let me know and I'll tell you what I really think!
Rich D.
From Dennis Leone, October 17, 2008
Richard - thank you for your email. I really appreciate it. I thought you might find the exchange below between John Bos (retired Assistant Principal from the Shawnee Local Schools - Allen County) and myself of interest. I'd appreciate your reaction - because if I am off base on this in some way, I want to be informed.
Dennis Leone
Dennis Leone to John Bos, October 17, 2008
Subject: RE: Thank You for your service to STRS
Thank you John for the information below on Wall Street investors. I will use your Wall Street illustration at the STRS Board meeting next month, but I am sure it will fall on deaf ears. The mentality is simply this...if the market declines, for example, 10.3%, but the STRS investment staff's portfolio declines by "only" 10.1%, then they deserve a nice bonus check because they beat the market. Can you imagine a teacher arguing that she deserves a merit increase after the student test scores in her class declined by a huge amount, because her decline was a little bit less than other classes in her school. Our lawmakers would laugh at this notion. STRS argues that the investment staff - even though they receive handsome base salaries and nice benefits no matter what happens with their portfolios -- should not be "penalized" (meaning no bonus checks) because of external factors beyond their control that drive the stock market down. This is like OEA/OFT arguing that teachers shouldn't be "penalized" because external environmental factors adversely affect their student test scores. In fact, right or wrong, teachers may eventually lose their jobs if their test scores are continually low, irrespective of external environmental factors.
Dennis Leone
From John Bos, October 17, 2008
Subject: Thank You for your service to STRS
Dennis,
Just a brief note to thank you for always being watchful of the STRS business and the issues that will directly affect our future lifestyle.
There is another issue with the bonus that has never been reviewed. Most investment personnel on Wall Street do receive a bonus. Unlike STRS, their bonus is paid in stock of their employer -- not cash. They are also strongly encouraged (monitored) to not cash this bonus, but rather to "live and die" with their employer. Therefore all of their decisions on investment have a DIRECT LONG TERM relationship with their decisions. STRS employees are given cash and frankly have no concerns about their investment recommendations.
Bloomberg (satellite radio when I am doing dealer trades to pay for our medical expenses) said yesterday that these "investment gurus" are all over the place looking for work. They formerly would set up small hedge funds if there were not employed. There is NO INTEREST in these hedge funds and they do not have the capital to become self employed. They will move anywhere and the salary is not the issue. The reporter said that outside of investments, they were probably better suited to being a WalMart greeter. I can not find this report in print.
I also still have concerns why STRS associates have United Health instead of the Medical Mutual, Express Scripts coverage. Old Joe Endry (former board member) told me once that they live in Columbus and expect the Cadillac! Dennis, if our plan was the best deal, why not require the associates to utilize the same plan?
Thanks again for your assistance. We are in the biggest crisis that the U.S. has faced since Pearl Harbor.
John Bos