Saturday, August 22, 2009

Donna Seaman's speech to STRS Board August 20, 2009

Hello, my name is Donna Seaman, a 2002 retiree. My views are my own and do not reflect the views of any organization.
I was unable to attend the June STRS board meeting and participate in the tributes and notes of gratitude to outgoing board member Dr. Dennis Leone. Most of what I say today includes my sincere and heartfelt thanks and appreciation to Dr. Leone for his efforts while on the STRS board.
Largely because of Dr. Leone's urging, the STRS newsletters now reflect a far more realistic reporting of the sad state of STRS investments and value. August's newsletter states: "The reduced level of investment assets will result in a funding shortfall." Realistic, yes, but far more accurate than the previous newsletters which were condescending and painted a picture that everything was ok!
August's newsletter also reports: "STRS operating budget for this year is the lowest operating budget in four years."
I say far too little and far too late. STRS's operating budget should be and should have been drastically cut! Monday night's national news reported that 69% of cities and states, such as Chicago and California, have taken furloughs, salary cuts or layoffs. But not so for STRS. Yes a pay freeze, yes slightly increasing the work week, but also given an extra paid holiday (the day after Thanksgiving), yes a hiring freeze. But nothing like the 30% to 40% reduction in staff and operating expenses that is warranted and needed because of the 30% to 40% loss in investment value.
And the board plans to go ahead with the $3 million plus in performance based incentives for the first seven months of the 2003-09 fiscal year after Dr. Leone continued to urge the board not to do this. And your constituents have implored the board not to pay these bonuses. I remind you, your STRS individual investment employees already are paid (notice I did not say earn) as much as Ohio's governor, and some of them are paid twice as much as our governor! And this in the face of huge investment losses. And now bonuses for them? How on earth do you justify these expenditures? How can you look retirees in the face as you spend and spend? Especially as you change and reduce retirees' health insurance coverage, and plan changes in our cost-of-living adjustment, which is simply unacceptable. Now you discuss changes for active teachers as well, which will impact my daughter who has 20 plus years of experience and is making plans for retirement at 30 years of teaching.
Yet there are virtually no significant changes in STRS operating expenses which would show constituents and yes, the general public, that you are serious about shortfalls. STRS must make internal cuts as well! Dr. Leone has urged out-of-state travel cutbacks or elimination; he has urged that STRS staff pay more for their own health insurance.
I have repeatedly asked you that STRS employee health insurance benefits be the same as retirees -- no better, no less. That is only fair and justified!
Board decisions have negatively impacted my husband and me. By the way, my husband, a 1986 retiree, is one of the 800 plus that Mr. Nehf reports have STRS pensions of $30,000 or less. And he has virtually no other income! He no longer receives the 13th check and now you are planning to reduce our COLA as well. As ;I said, I was unable to attend June's board meeting. But I did request and receive an auditory transcript of the meeting.
Mr. Myers, did you really make a motion in June to stop Dr. Leone's discussion on the matter of bonus checks for fiscal year 2009? Ms. Ramser, did you second that motion? Mr. Meuser, did you also vote in favor of the motion to stop the discussion? What kind of impact do you think you are having on the board, and on constituents who listen to each and every word you say? How effective do you think you can be on this board? Do you believe you are following the stipulations in Ohio Revised Code required of an STRS board member?
I'm so grateful to have had Dr. Leone on the board these past four years, and for his continued persistence in working for retirees. I urge the new board members to continue those efforts, and existing board members to reflect on what needs to be done. And to have the courage to do it!
Thank you.

Patricia Miller's speech to STRS Board, August 20, 2009

Click image to enlarge.
Ummmm...correct me if I am wrong but...didn't we hire PWC for a recent study and didn't THEIR rep. appear and present this study yesterday at our STRS board meeting?
From John Curry, August 21, 2009
....and WE are still hiring THEM after THIS? The name of the study was, "State Teachers Retirement System Analysis of Pension Plan Funding - August 20, 2009."
1. Why are we still hiring them?
2. How much did this study cost?
PwZ Zapped in $97.5 Million Settlement

The auditor, accused by Ohio of violating securities laws in its work with AIG, will pay one of the highest amounts ever for an accounting firm in a class action.

Alan Rappeport, | US
October 6, 2008

PricewaterhouseCoopers agreed to pay $97.5 million to the state of Ohio to settle a class-action lawsuit on behalf of investors in troubled insurer American International Group, which uses PwC as its independent auditor.

The "partial" settlement, on Friday, came after the Ohio Public Employees Retirement System, the State Teachers Retirement System, and the Ohio Police and Pension Fund filed a lawsuit seeking damages for investors who bought AIG securities from 1999 to 2005. In the complaint, PwC was accused of violating securities laws relating to a market division scheme allegedly involving AIG that was disclosed in 2004 and improper accounting for reinsurance and other transactions..........

Darlene Rusicka: Memo to STRS Board August 20, 2009

Tentative STRS Plan as proposed by the STRS Administration

From CORE, August 22, 2009
CORE members Dave Parshall, Mary Ellen Angeletti, and Jill Fetters were able to attend the second day (Aug. 21) of the STRS August meetings. Below is an explanation of why retirees still do not know what the recommended plan will be.
STRS held their August meetings on Thursday, August 20th and Friday, August 21st. The STRS Investment Department reported a positive 6.1% return for the month of July. The current value of the pension fund at the end of July was $55.5 billion dollars market value which is up from $52. billion dollars in May.
The STRS staff shared their recommended plan of proposed changes to meet the Ohio Retirement Study Commission (ORSC) deadline of September 9th for each of Ohio's five public pension systems to come up with a plan for achieving a 30 year funding period. Note that the plan (below) is recommended by the STRS administration. For this reason, STRS Board members viewed it for the first time at the Thursday meeting. Upon further study of the 5 levers of the plan, the Board members and the Health Pension Advocates had many questions and the discussions were continued into the Friday meeting. Following the report from the Investment Dept. on Friday, there were unexpected interruptions in the agenda by urgent litigation issues which required lengthy executive sessions for the Board. When the Board returned to discussions of the plan below, it was decided that four scenarios of changes to the plan would be run by Chief Financial Officer Bob Slater's accounting department to determine the effects and savings of each. At this point, it was also determined that another Board meeting would be required to finalize a plan, and a date of Tuesday, September 1st at 9:00 a.m. was set. Due to the fact that this meeting will occur in September, Board member Jeff Chapman will be off the Board as his term will have expired, and the three newly elected members will join the STRS Board. They are Carol Correthers (active teacher member), Bob Stein, and James McGreevy (both retired teacher members).
Click image to enlarge.

Thursday, August 20, 2009

Lloyd Knudsen's prepared speech for STRS Board meeting

From Lloyd Knudsen, April 20, 2009
STRS speech
Hi CORE leaders!
As many of you already know I didn't get to fully deliver my "prepared" speech today at the STRS meeting. Due to the Board's already published COLA recommendations, I decided it was more important to use my 3-minute speech time to ad lib some comments about our COLA. I did take
the opportunity to read the first two paragraphs of my speech praising Dennis for all his STRS contributions. Here is the speech I planned to give.

My name is Lloyd Knudsen. I was a 30-year teacher in the Woodridge Local Schools of Summit County. I am currently the President of the Medina County Retired Teacher’s Association.

I would first like to commend Dr. Dennis Leone for the all the positive changes he helped bring to STRS. But perhaps Dr. Leone’s greatest STRS legacy will be receiving that OEA label of “dissident” board member. Thank God we had one board member who had the insight and backbone to disagree with STRS management. Every active and retired teacher owes Dennis Leone a debt of gratitude for being their “true” representative to this board.

Maybe, if we had had a dissident on past STRS boards, our health care program might not now be on life support. For 20 plus years the employer’s 14% contribution rate has not been increased. Maybe another dissident would have pushed for an increase in that employer percentage. And just maybe, if we had done it when times were good (like when we built this beautiful building) the legislature would have passed it. Sadly, our health care fund limps along on a 1% employer contribution and retirees continue to pay for the STRS management and board’s lack of proactive planning.

Maybe, if we had had a dissident on our board earlier this decade when the recession cost STRS $20 billion in stock losses, our pension program might not now be on life support. STRS’s reaction back then to those losses was--it’s “only a paper loss” and we’ll earn it back. Now our current recession has cost STRS another $40 billion—and suddenly we realize we’ve got a financial crisis on our hands. Other states (one I’m familiar with is Minnesota) years ago enacted minimum retirement age requirements for actives as well as other changes to combat their pension problems. Sadly, our pension system is now in crisis and BOTH retirees AND actives will pay for the STRS management and board’s lack of proactive planning.

So who will pay to get our STRS financial ship back on course? Certainly not STRS itself. They plan no cuts or reductions for themselves. This leaves the financial burden up to the active and retired teachers.

In fact, the current debate seems to pit the benefits of actives vs retirees. I find this rather ironic. For 30 years I was an active teacher. And for 30 years I paid my “dues” annually to OEA, NEA, as well as to my local association. But once you retire, you are no longer part of their team. Also, for those 30 years I paid my dues to STRS in the form of the employee pension deduction taken out of my paycheck every 2 weeks. I believe retirees have paid their dues to OEA and STRS in full!

When this board is deciding what pension changes you will make, I hope you will consider most retirees have few, if any real financial options at this point in their lives.

As retirees, our contributions to our retirement system have been devalued by STRS comments like-- retirees are “just living too long” and the retirees’ COLA is STRS’s “largest expense”. I hope you will remember that STRS was built by and made successful by active teachers who grew up to become retired teachers. WE ARE THE REASON THIS SYSTEM WAS CREATED AND STILL EXISTS TODAY!

Thank you for listening.

Shirlee Zerkel: Message for retirees over 65 with Medicare A & B

From Shirlee Zerkel, August 20, 2009
Subject: To all STRS retirees over 65 with both Medicare A and B
As you know most of us who have both Medicare A and B are being pushed by STRS into the Aetna Medicare Plan. STRS talks about how much they are going to save if all of us in that age group go with the Aetna Plan. Gee, they have thrown their least expensive members away. Traditional Medicare A and B pick up most of our medical bills and then STRS picks up a few dollars after we have met their $500 (plus plan) deductible. I know it sounds like a good deal for this first time around. What happens the second year or even later?
I have a little story about an experience my neighbor has had with an Advantage Plan. He and his spouse were forced by Dana Corp (the company he retired from) to go from regular Medicare with Dana as a supplemental to Blue Cross Medicare Advantage Plan. The first year was fine. Now he is ready to start year two on this plan and he receives a letter and plan summary in the mail this week. Now he is being told that he can only go to certain doctors and providers for service. Yet he will still pay the premiums for traditional Medicare B (which usually covers every doctor who accepts Medicare). For 2010, he has lost the choice that regular Medicare gave him. He also has a premium he pays to BlueCross. He has lost his choice of providers even if he has gone to them for years.
The above is a little food for thought.

Wednesday, August 19, 2009

Donna and Dean Seaman to Nehf & Board: Ready to listen to your excuses and justifications for your ill-advised decisions

From Donna and Dean Seaman, August 19, 2009
Subject: Board meeting
Board members and Mr. Nehf: As you meet in board session this week, I urge you NOT to reduce the cost of living adjustment for retirees. Our expenses have gone up (as has everyone's) for years, and our pension benefits have stayed the same except for the annual cost of living adjustment, which we badly need. You have, in my judgment, mismanaged STRS funds for years! Now you are planning to harm retirees once again with reduced health insurance coverage starting in January, and reducing or eliminating COLA. Your insensitivity to retirees is appalling.

You have continued the practice of paying performance based incentives (bonuses!) to already overpaid investment staff. You should not even be considering paying out an additional $3 million plus to them for the first seven months of 2008-9 fiscal year, yet the word is out that you plan to do just that at your September meeting! How can you look retirees in the face when you have received so much negative input from us about paying bonuses! There is absolutely no reason (including possible litigation) for such a move! The board has always had the power and authority to make changes in performance based incentives, and you should not continue paying them in any circumstances.

Already the 90 plus investment staff are paid (notice I did not say earn) as much as Ohio's governor, and some of them are paid more than twice what our governor earns! And they continue to be paid these salaries even when the funds are down $30 to $40 billion. I wonder, how many highly paid investment staff does it take to lose $30 billion? I do not agree that those people are your "best and brightest!"

While your decisions have negatively impacted, financially, my husband and me, for years, now I find that you are adding my daughter's financial well-being to the mix! She is a teacher with 20 plus years who is carefully making retirement plans for year 30 and you plan to jump the retirement age to age 60! I understand your need to make STRS "solvent," but again, you do not even discuss cutting STRS staff (long overdue) or making other internal cutbacks. Always it is the retirees, and now the actives, who suffer at your decisions.

I plan to attend the Thursday STRS board meeting and listen carefully, as I always do, to your excuses and justifications for the ill-advised decisions you continue to make.

Donna Seaman, 2002 retiree and Dean Seaman, 1986 retiree

Shirlee Zerkel to Mike Nehf and STRS Board: Others are making cuts; why isn't STRS?

From Shirlee Zerkel, August 18, 2009
Subject: A plea for fairness in your recommendations to the legislature for STRS changes
Dear Mr. Nehf and the STRS Board.
I retired in 2002 at the age of 60 and 27 years of service. I have noted the discussions between the STRS staff and Board during this rough economic time. I have heard much talk about how reductions for members both active and retired can save millions and millions for the system. I realize that cutting members benefits saves large amounts of money, but some serious talk of reducing staff benefits would go a long way in the since of fairness and those cuts could save a few million also. But I have heard of no such suggestions to the Board by the staff, nor have I heard the Board bring up those issues either.
You have already voted to push the over 65 Medicare A and B members to the Aetna Medicare Plan (Advantage Plan). When you did that, you threw away the members who cost you the least in health care dollars. I and many others have yet to meet even your $500 deductible for 2009.
This week you will be voting on recommendations that will go to the legislature next month. Some of those recommendations include changing calculation rules for final average salaries, increasing the minimum retirement age, raising the rate of contribution for the actives and the school boards, eliminating the short-sighted 35/88 rule, and seeking negative changes in our COLA. I ask you not to recommend a change in the COLA for those already retired. We now have almost nothing left of the promises we were given when we retired. Yet, one of you Board members stated in reference to the investment bonuses that the Board should not break a promise to the staff. The change in number of hours ( 37 1/2 to 40) worked by staff is not to take effect until sometime next year in order to give employees time to adjust. We retirees were never given time to adjust when cuts were made to our benefits. Please consider us now. How much more do you expect the retired who receives under $25,000 in annual pension to give up? Many retirees have little ability to earn more money. In my opinion retirees making less that $35,000 a year in pension should be grandfathered and be able to keep their 3% COLA.
I ask you, once again, do not cut our COLA until other cuts in operations are made. I have yet to hear discussion of a reduction of staff. A head count freeze is not a reduction; there is no savings there! I have yet to hear discussion on a wage reduction; a wage freeze is no savings! I have yet to hear discussion of increased insurance premiums for the staff; continuing on is not a savings! Spending 3.4 million on bonuses in September is not a savings! Giving yearly service awards and reimbursing for unused sick leave for all staff is not saving money! Other public and private organizations are cutting staff, giving unpaid furloughs, reducing wages, and lowering other benefits. Why isn't STRS?
Treat us the retirees and actives as you do your STRS staff,
Shirlee Zerkel

Monday, August 17, 2009

RH Jones re: COLA cuts

From RH Jones, August 17, 2009
Subject: No COLA cuts for any OH retirement system

To all, especially the ORSC & ORTA:

Re: No COLA cuts for any Ohio retirement system

The Ohio (OH) Substitute House Bill 155, effective 02/01/2002, according to retired educator Dr. K. Fluke, was to establish the 3% COLA for all of the Ohio retirement systems. If the Ohio Retirement Study Council (ORSC) recommends doing away with the 3% COLA only for the STRS, would not the intent of this bill be violated? I think, yes, it would; and, by singling out only the STRS, and not the OPERS, SERS, Highway Patrol, and Police/Fire, would certainly be showing partiality. The best way for all is to not cut any of the retirement system’s COLAs.

As legislators pay into OPERS, if any new legislation was passed to cut any of the 3% COLA only for the STRS, it would seem to indicate the legislators would want to keep their own nest protected; but, yet, allow ours to go unprotected. This would be totally unreasonable to the average person. As everyone probably knows, the legislators and the STRS employees pay into OPERS. It would seem to me that this is a conflict of interest. In other words, they would want us to be cut, but not themselves. And, further, how could the STRS Director, Mr. Mike Nehf, recommend cutting our 3% COLA when his could be cut, as well? This whole thing just does not make any sense.

Another reason SHB 155 was established was to do away with the COLA “bank” that was so hard for the accounting departments to calculate for so many different retired individuals. The simple 3% COLA corrected that, and was less time consuming for the accounting employees; and, because of that, less expensive to calculate.

Also, of note -- as Dr. Fluke stated to me -- is that the active teacher STRS newsletter mentioned that there has not been any asset re-allocation change for retired teachers. He said this fails to mention our cuts in health care. Is this the STRS officials just being absent minded? I do not think so.

RHJones, retired teacher STRS member

Sunday, August 16, 2009

STRS forgot the other half of the story!

From John Curry, August 10, 2009

Benjamin Franklin once said, "Half a truth is a great lie."
Yesterday I received the August edition of the "STRS Ohio News." On page 2 (the scanned page in the attachment to this email) a spokesperson for STRS makes the statement:
"A change to the COLA would, in fact, affect all STRS Ohio members---future, current, and retired educators. But, it actually has a greater financial impact on future retirees than current retirees because current retirees have already been receiving an annual COLA throughout retirement. These increases would not be taken away. A change in the COLA would only affect future COLA payments. For members who have yet to retire, they will be financially impacted by a change in the COLA throughout their entire retirement."
The other "half" of this little story that STRS didn't relate is that those current educators who will retire in the future will do so at a final average salary that the current retirees could have never dreamed of. Also, many current retirees could not take advantage of the 35 year/88% enhanced could they? You know, the one that OPERS never implemented because they knew they never could afford it. Of course, their healthcare package rates for their retirees would put STRS's package rates to shame, wouldn't they?
Click images to enlarge.

Opinions re: NO cutting of retired STRS benefits

From Lenora Wood, August 15, 2009
Subject: RE: NO cutting of retired STRS benefits



From RH Jones, August 15, 2009
Subject: Re: NO cutting of retired STRS benefits
To all:
I don't want STRS to go down either. However, everyone knows who is responsible for this: the bungling of the OEA/OFT, OEA-R, and especially to the ORTA, who in the past 20-years have not recognized that it is their responsibility to monitor their STRS. I wonder: Have they been too busy selling insurance to be bothered. The STRS board and the employees must also recognize they are, in part, at fault for our STRS being in this bad situation. The past excesses of board perks spending, and the past/ present excessive employee perks, has lead us to this problem. Over the years this negative drain on the fund has finally caught up with them. The STRS officials are supposed to serve us, not themselves.
Not to recognize the cumulative effects over the years of this thoughtless drain of funding, that could have been compounding in STRS fund investments, is outright irresponsible.This has given the OSBA, and the some of Ohio's miserly business community "leaders", the excuses they have been looking for to keep from properly funding local school districts. Services to STRS members, like trying to keep us up with inflation, and providing good HC/Rx, is what STRS was founded to do. It is OUR pension system. It was not intended to be a fund to provide extraordinary benefits for anyone but us. A healthy STRS is good for union membership as well as a guarantee that there will be good teachers in the classrooms to move Ohio forward. An educated public is the key to the financial security of our beloved State of Ohio.
Desiring honorable, thoughtful and reasonable STRS officials to serve us should not be regarded as irrational. It is now the obligation of each of us STRS members to monitor the STRS officials. Educated educators cannot afford not to do otherwise.
By the way, the STRS seems to be playing games with the COLA discussions by having the COLA issues presented at both the Thursday and Friday meetings. It should be on Thursday only. They know a lot of us will not stay overnight and will not be able to attend both days.
Since they announced this, it is necessary that large numbers of retired educators attend either both days, or one day, or the other. Nevertheless, numbers of us need to be there. To say the least, no future COLAs, 13th checks, and HC/Rx is not in our best interest.
This is my opinion,
RHJones, retired teacher STRS member
From Kathy Kienle, August 14, 2009
Subject: Re: Future COLA & other taboo cuts
Bob, I agree with you, but it looks like changes are needed to keep the fund solvent. I do not like what has gone on, but I do not want the STRS to go down. I will try to make the August 20 meeting, but I do not feel our presence will change the situation. I have written each STRS member and the Retirement Council plus Mike Nehf. I only hope things turn out well. I have many retiree teacher friends who do not seem worried. I pray and hope God will be in control.
Kathy Kienle

Dennis Leone, August 16, 2009: Everything is NOT really "on the table"

Dennis Leone to Mike Nehf and STRS Board, August 16, 2009
Subject: Everything is NOT really "on the table"
Board – I write this in my last day as an elected STRS Board member. Much has been written over the past several months how “everything is on the table” pertaining to potential reductions to address future pension solvency concerns. Here is the truth: Everything is NOT on the table – at least as such pertains to the STRS staff and the STRS Board majority.
While the board annually takes action to require retirees to pay more for health insurance, while the total assets at STRS have dropped a staggering $27.4 billion since 10-31-07, and while the board soon will be making far-reaching legislative recommendations to reduce retirees’ COLA, to increase the contribution rate of active teachers, to increase the contribution rate of employers, to eliminate the ill-advised 35-year/88% rule, to calculate final average salaries on the top 5 years instead the top 3 years, and to raise the minimum age of retirement, here is what is NOT “on the table” for consideration:
1. The staff has refused to recommend --- and the board has refused to take action -- to require that STRS employees pay more for their health insurance which is provided by pension system funds.
2. The staff has refused to recommend – and the board has refused to require – that STRS employees receive a base wage reduction. Yes, a few months ago the board finally and reluctantly took action (with split votes) to implement a wage freeze, to require a 40-hour work week (changing the long-standing 37 ½-hour work week), to suspend bonuses for the second half of fiscal year 2009, to eliminate bonuses completely in future years when STRS experiences a stock market loss, to require a minimum asset threshold of $65 billion for investment staff members to be eligible to achieve their bonus potential, and to remove certain staff positions (i.e. real estate attorney) from the bonus plan completely . It deserves noting that ALL of these were initially rejected by both the STRS staff and the STRS board majority when they were first recommend many months earlier. The staff and the board felt they knew better, and the changes that finally occurred only after much ugliness and blood on the sidewalk. But don’t talk about anyone getting a possible wage reduction. After all, the staff and OEA-dominated board majority continue to believe that STRS won’t be able to attract the “best and the brightest” at STRS if we reduce wages or if we fail to give bonuses to investment staff. Never mind that the average BASE compensation for the STRS investment staff in fiscal year 2009 was $156,000. Bonuses come into play on top of that, even though the STRS Board provides staff with spectacular fringe benefits and a wonderful pension plan (through PERS) which are not the norm in the private sector.
3. The staff has refused to recommend – and the board has refused to implement – a true hiring freeze. Yes, the board has approved a “head count” freeze, but his is not the same as a hiring freeze. A “head count” freeze does not ensure savings. While I do not believe that the staff will be attempting to “beat the system,” it is a fact that two half-time employees can cost more than one full-time employee -- with the FTE “head count” remaining constant. The STRS executive director has pledged to reduce staff, but the board has rejected the notion that formal action is needed to require it. I made such a motion and it failed. Everything seems to be built on trust, even though the staff and board members personally and collectively violated this trust in past years by wasting pension system money in many, many different ways.
4. The staff has refused to recommend – and the board has refused to require – that STRS employees have an unpaid furlough of any kind. Bowling Green State University announced on August 14 that 500 employees there will be receiving an unpaid furlough during the 2009-10 academic year. Many state offices in Columbus are currently doing the same. Not at STRS however. In fact, there even are employees at STRS who still receive additional compensation yearly with “service awards” as well as annual cash reimbursements for unused sick leave.
5. The board flat-out rejected a motion I made a few months ago to place a moratorium on board member out-of-state travel. In other words, it is okay to reduce things for the membership, but not for the board members themselves. This will cause happiness for board member Tim Myers, who spent thousands and thousands of dollars on out-of-state travel “for training” during fiscal year 2009. Myers is the reincarnation of Jack Chapman on the STRS Board. Myers also publicly stated that the board “broke a promise” when bonus checks were suspended for the investment staff in January (Myers voted no), even though the STRS employees do not have individual contracts, and even though said employees were told very clearly a year in advance, in writing, that the board could suspend or modify the bonus plan at any time for any reason. At the June board meeting, Myers even made a motion (which failed 5-4) to stop me from discussing the bonus question for fiscal year 2009. This provides a snapshot for what STRS is facing in the future with the OEA-dominated board.
The Bonus Embarrassment: At the September Board meeting, the STRS will vote to approve bonus checks totaling $3.4 million for the first half of fiscal year 2009. This means simply that in the past two fiscal years, even though STRS stock market returns have been a dismal -27.1%, a total of $9.4 million will be handed out in bonus compensation. Can you believe it? The board majority didn’t listen in the fall of 2008 when members repeatedly expressed their outrage. No sir. The board majority felt it knew what was best for STRS and felt it knew the pulse of the STRS membership. They told me so, publicly, over and over again. In fact, as two members publicly stated, STRS needs to give bonus checks to staff even when we lose money to provide “an incentive for them to perform at their highest level.” The board could have stopped the bonus plan dead in its tracks one year ago, but did not. The vote to approve $3.4 million in bonuses in September for the first half of fiscal year 2009 is terrible mistake. But we will lose so much more through litigation, Tim Myers wrote recently, if the board does not give the bonuses. This is a cop-out in my eyes, given that a responsible STRS board and STRS staff should have stepped up to the plate to do the right thing a year ago – given what everyone else has gone through and what will be going though in the near future.
Without a doubt, the STRS Board’s recommended pension solvency plan for the Legislature will include a provision to raise the contribution rate of both active teachers and school boards. A proposal to raise the school boards’ contribution – given the reality of the state’s economy – makes no sense whatsoever, and every lawmaker I have spoken with knows this. So what will happen? How will the final proposed bill come up with the dollars needed to replace an increase in the school boards’ contribution rate (which will likely be stripped from or not included in the final proposed legislation)? You guessed it……..a harder hit on the retirees’ COLA and certainly not a harder hit on the contribution rate for active teachers. In other words, take away from those who have the least ability to earn more.
Dennis Leone
STRS Retiree Board Member
August 16, 2009
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