Saturday, September 19, 2009

STRS Board member Craig Brooks: Summary of remarks preceding 9/18/09 bonus vote

From Craig Brooks, September 19, 2009
Subj: Re: THANK YOU!!!!!!!!!!
Here is a summary of where I was coming from yesterday:
I try to think and act as a shareholder would in my decision making at STRS
Background comments:
1 - I believe the investment staff are professionals who try to do the best they can for the members.
2 - I am a believer in compensating staff competitively, that means the right compensation to attract and retain well qualified personnel.
3 - I am a believer in compensating staff based on performance versus benchmarks.
4 - There has been a lot of comments in the media as well as on blogs and e-mails that STRS has not performed well relative to other Public Pension Funds. Many times the data is not based on similar time frames, let us wait a month or two for the evaluation done by ORSC. It is also important to evaluate performance over several time periods, not just 1 or 2 years.
Setting The Record Straight
There has been many comments relative to the decline in STRS Assets the past 18 months to 21 months. Part of the decline is due to the difference in contributions of approximately $2.4B versus payments in retirement benefits of $4.9B per year. Contributions are growing at 3% per year payments out are growing at 7-10% per year.
My vote
I voted against paying the PBI for this past fiscal year:
1 - I believe the revised system we recommended for this fiscal year was better, which included not paying PSI in years where returns were negative.
2 - I had difficulty paying incentives in a negative return year, when STRS has proposed changing benefit for its members. That said I believe the proposed changes to ORSC were justified.
3 - Although I am an advocate at looking at relative returns over longer periods of time STRS had a negative return of 1.2% versus its benchmark for this past fiscal year.
Kathie, I believe that staff and the board work hard to do the right things! We delibrated long and hard on thr PBI issue as well as long term strategic planning. I was not here when the board had to deal with the legal issues and law suits that came out of shutting down the previous PBI plan, all STRS employees had, other board members were. I am comfortable that as a result of these deliberations we will end up with a better and fair compensation system going forward and a board that takes many views into account.
I do not know if my recommendation was right but I will continue to be an independent thinker.
Thank you and have a nice weekend,
Kathie Bracy to Craig Brooks and Jim McGreevy, September 18, 2009
Subject: THANK YOU!!!!!!!!!!
Craig and Jim --
I can't thank you enough for having the courage to vote as you did today. Your speeches were ELOQUENT. If you have a copy you'd care to send me for my blog, I'd love to have it. If not, or instead, if you would care to put together some comments I can blog, that would be fine, too. Or none of the above, it's your call.
I could tell you had both deliberated long and hard over the issue of awarding the PBIs, as your explanations were well thought out and both of you were extremely articulate in conveying those thoughts. Thank you, thank you, thank you!! I know you didn't do it to make brownie points with anyone; that was farthest from your mind. And I know it was not an easy decision by any means. In the end you did what you believed was best. That's all you can do. You deserve a good night's sleep after that (and that may be your only "reward"); but know that many people greatly appreciate the courage you showed today.
The outcome of the vote was a huge disappointment, and I dread to think of what future battles we all (and particularly the two of you) may face. Poor Jim -- your very first Board meeting -- but you were well prepared for it; you both were.
Kathie Bracy

Terms of Office - STRS Board Members & Perhaps it's time to request a change!

From Ryan Holderman, September 19, 2009
Subject: Terms of Office - STRS Board Members
Here is a list of the STRS Board members and the dates that their terms of office expire:
August 31, 2010 (These two seats will be open for election in the spring of 2010)
Mark H. Meuser (OEA-backed) Constance K. Ramser (OEA-backed)
August 31, 2011
Taiyia L. Hayden (OEA-backed)
August 31, 2012
Tim Myers (OEA-backed) Regina F. Burch (Governor's appointee 2008) Craig C. Brooks (Jointly appointed by the Ohio Speaker of the House and President of the Senate 2008)
August 31, 2013
Bob Stein (retiree representative, CORE-Backed) Carol Correthers (OEA-Backed) James McGreevy (retiree representative, CORE- and OEA-Backed)
Steve Puckett; represents Superintendent of Public Instruction, Deborah Delisle. Dr. Puckett has been on the STRS Board the longest of any member. His term does not expire. Perhaps it is time to request a change!
The Treasurer of State has yet to fulfill his obligation set by the ORC and appoint someone to fill the long vacant eleventh seat on the STRS Board.

Friday, September 18, 2009

Steve Wartenberg (Columbus Dispatch): STRS Board vote on bonuses

Retired teachers' board votes 7-2 to defer investment-staff bonuses
Some members opposed any bonuses for year when fund lost money
Columbus Dispatch, September 18, 2009
By Steve Wartenberg
The State Teachers Retirement System of Ohio's board approved a plan by a 7-to-2 vote today to defer $3.4 million in bonuses to its investment staff.
Many of the system's members opposed the deferred bonuses, saying it wasn't appropriate to pay bonuses at all, even on a delayed basis, for a fiscal year during which the system lost 21.7 percent or about $18 billion and saw its total assets drop to $52.7 billion.
Board members Craig Brooks and Jim McGreevy voted against the proposal.
McGreevy said he agrees in principle with awarding bonuses, but that "given the political, cultural and economics conditions I concluded no."
The proposal calls for half of the bonuses to be paid out after the system's assets total at least $60 billion. The payment would not be made until the end of the fiscal year in which that benchmark is reached, and not before July 1, 2010.
The second half would be paid at the end of the fiscal year in which assets grow to at least $65 billion, and not before July 1, 2011.
The fund's assets stood at $56.8 billion on Aug. 31.
The bonuses will not expire, and employees will be paid even if they have left the system when the benchmarks are met.
Eight of the bonuses are for more than $100,000, with the highest at $162,488.
Previously, the board voted not to award bonuses in any fiscal year in which the fund's total assets decrease.

Results of STRS Board vote on bonus issue 9/18/09

• The motion passed 7 - 2.
The motion was made by Tim Myers, seconded by Carol Carrethers.
Craig Brooks and Jim McGreevy voted against it. (THANK YOU, CRAIG AND JIM!)
Tai Hayden was absent.
Voting FOR the motion: Bob Stein, Conni Ramser, Carol Carrethers, Tim Myers, Mark Meuser, Regina Burch and Steve Puckett.

STRS Board meeting
September 18, 2009
John Lazares: I am running for Bob Stein's seat as soon as his term is up.
Announced 9/18/09

RH Jones: Thank you Craig Brooks and Jim McGreevy

From RH Jones, September 18, 2009
Subject: Thanks for voting correctly

Dear Craig Brooks and Jim McGreevy,
Thank you both for doing the right thing by voting against the ill advised PBIs. This money would have helped us compound OH STRS funding in the best interests of it's members as mentioned in the ORC 3307.15.
The gigantic losses which our STRS has unwisely sustained should not have been awarded. The investment staff have access to the Stock Market even before it opens to the public! Greedy Washington politicians are already looking at doing away with this advantage! Now, they will have even more reason to oppose us. How short sighted the rest of the board has been. With this lucrative reward, the STRS investment employees need to wake up at their desks and perform. At least, they should now volunteer to work extra hours to reward this massive generosity!
This is my opinion,
Robert Hudson Jones, retired teacher STRS member

Kathie & John,

One thing that I forget to mention in the “Thanks for voting correctly” to Craig Brooks and Jim McGreevy is: The various State Teachers Investment Groups DO NOT PAY BROKER FEES NOR DO THEY PAY TO SELL as individual stock holders do. And even with this advantage they lost money – to award such losses is “beyond the pale” once again -- I said this before in the year 2000.


RH Jones: Thank you, Jim Stoll

From RH Jones, September 18, 2009
Re: Performance Based Incentives - STRS

Jim Stoll
Thank you for being one of the very few actives that are monitoring your OH STRS. We desperately need more like you in order to move our STRS in the correct direction.To understand how the OEA leadership would sanction investment staff PBIs when your, and my, retirement system lost an inconceivable amount of money is shocking to any average person. The key is that more actives being involved and vocal. Only then will they straighten up.
Retired educators have much less influence on our STRS board members than do actives. In spite of being vocal in my ineffective ORTA, I seem to be ineffective in bringing about responsibility to their members' wishes. They remain a problem, not a solution. Actives have access to the OEA assemblies and being vocal there, by identifying the STRS shortcomings, hopefully will stimulate the OEA leadership to action. The OEA said in the past that it is NOT their job to monitor the system. Members need to remind them that the STRS is their retirement system too. The damage must be repaired; Our defined Benefits depend it. The bad publicity from the STRS thoughtless shenanigans has caused cash hungry politicians to look with lust after OUR STRS money. They figure, if the STRS is just going to waste it, why not divert it to their own pockets.
Again, thank you for your help.
RHJones, retired teacher and Life Member of OEA

Results of vote on bonus (PBI) motion 9/18/09

From John Curry, September 18, 2009
Subject: *****STRS Bonus motion****NEWS FLASH

In a telephone conversation with Kathie Bracy today from the STRS Boardroom I can relate this information.

A motion to pay the 3+ million dollars bonuses to the STRS investment staff PASSED at today's board meeting.

A long executive session preceded the board vote.

The motion to pay the bonuses was made by OEA endorsed active teacher board member Tim Myers.

The second to Tim's motion to pay the bonuses was made by OEA active teacher board member Carol Correthers.

2 board members voted against this motion...they were:

Craig Brooks and Jim McGreevy

ALL the other board members present voted FOR the payment of the bonuses.

More information will follow. Stay tuned to the Columbus Dispatch for media coverage at

OEA endorsed active teacher board member Hayden was not present so didn't vote.

More information to be forthcoming from CORE members who attended the meeting. You can keep up-to-date with additional info by clicking on Kathie Bracy's website at this link:

Please share this email with all active and retired stakeholders of STRS.


Jim Stoll to Mike Nehf and STRS Board: It's time to end the bonus program

From Jim Stoll, September 18, 2009
Subject: Performance Based Incentives - STRS
Dear Mr. Nehf and STRS Board:
Many Thanks to Steve Wartenberg of the Columbus Dispatch for presenting to all STRS members (Active and Retired) the proposed motion on PBI's for investment staff that may be voted on for Friday. (See Attached)
Unfortunately, it is another clear example of the lack of leadership and mismanagement by the STRS Board and its Executive Director.
First, a bonus is a bonus, whether delayed to a later date, or paid now. The performance for this year was simply horrendous (18 Billion Dollar Loss - which has forced drastic changes to the Pension of hundreds of thousands of Teachers!) by any standard, there shouldn't be any Bonuses paid for this, period. If the Board and Executive Director hasn't heard this from the people whom they are Fiduciaries too, then they simply have their head in the sand and should be sued by the Class. (Their Membership). I certainly hope for their sake that "no promises were made to employees" regarding this issue, as Mr. Myers was quoted as saying in a Columbus Dispatch article (I believe January 2009), as this would be a clear violation of Board Policy and in my opinion a Breach of Fiduciary Duty.
Secondly, how ridiculous is it to put in the proposed motion that "The Board Waives The Requirement That The Associate be Employed by STRS Ohio On The Date of Either of The Two Payments....."
Are you kidding me?? It's called an "Incentive"! Its designed to keep and retain the employee! Why wouldn't you want to create an incentive for those "brilliant minds" that Mr. Nehf refers to stick around, if they are truly as valuable as Nehf claims they are? If its supposed to be an INCENTIVE payment --- why in the world would you pay that out to someone who's no longer employed. Makes absolutely no sense to me!!
So, if the employee leaves - we're going to pay them anyway?! This is unbelievable - that we would spend or give a bonus of over $162,000 to someone who is no longer employed by STRS, for a Performance which devastated the system and lagged all other five ohio pension systems for the year in question. The person who thought up this proposed motion should be FIRED -immediately...... I certainly don't pay thousands of my retirement dollars into the System every year for this kind of thinking.
STRS Board - it is time to end this nonsense. The only solution, which we've been telling you for a year now is simply to terminate this bonus program which you've recognized as extremely flawed by changing it several times since January.
Jim Stoll Director of Athletics
Sycamore High School
7400 Cornell Rd.
Cincinnati, Ohio 45242
513-686-1770 ext.3210

An OSU retiree wants to know.............

From Kathie Bracy, September 18, 2009
Subject: Re: fighting pension changes
Hi xxx --
Thanks for writing. Quick answer for now, as I'm on my way to STRS for "the big vote". Check out this post, as it may give you some ideas:
Kathie Bracy

From an OSU retiree, September 17, 2009
Subject: fighting pension changes
Hi, I am also a retired OSU teacher and am writing you to request your advice in how best to keep up with the proposed changes to our pensions and how to fight them. I recently found your blog when I googled fighting STRS benefit changes.
I would appreciate your advice and would be happy to give you any further information you might require.

Ken Ruth to STRS Board: It's not just the retirees any more

From Ken Ruth, September 17, 2009
Subject: rumble.....
To the Board:
Do you hear it?
Not just the "malcontent" retirees any more.
Active teachers, Superintendents, Legislators, Newspapers, the Public are demanding to know "WHAT IS GOING ON?"
Ken Ruth, retiree
Sidney, OH

Thursday, September 17, 2009

Mary Ellen Angeletti and Kathie Bracy to STRS Board: Your vote on the bonuses will be sending a message

From Kathie Bracy, September 17, 2009
Subject: Fwd: Friday Vote
Board members:
I agree totally with Mary Ellen's message (below). Your decision tomorrow WILL send a message; only YOU can determine what message you want to send. We're all in this together, and how you vote tomorrow is going to have an impact that is going to stay with you the rest of your life. You decide what you want that to be. It's in your hands.
Kathie Bracy
From Mary Ellen Angeletti, September 17, 2009
Subject: Friday Vote
STRS Board Members and Executive Director Nehf:
Friday's vote for or against bonuses for the Investment staff is CRUCIAL. That vote alone will send either the correct or the incorrect message to the ORSC committee members, the legislators, and the taxpayers of Ohio regarding the fate of educators in this state. A vote against the bonuses will be seen as financial prudence by all of those aforementioned folks whose support we are trying to obtain and influence.
Mary Ellen Angeletti,
STRS retiree
From John Curry, September 17, 2009
If you don't think the folks on the extreme right want to trash your defined benefits pension just read this link (the second one) below. One of the authors, Terry Ryan, is a strong proponet of charter schools in Ohio.
Here's what Terry had to say in the Canton Repository about Governor Strickland's recent budget as it pertained to public schools (and, of course, the related defined benefits retirement offered by STRS. These folks just can't wait to see STRS turned into a defined contributions retirement system.
“His budget would severely worsen the funding inequities between charter and district schools,” said Terry Ryan, vice president of Ohio programs and policy at the Fordham Institute, an education think tank and charter school operator.
Now... for the Fordham Institute's article (with Terry Ryan as the co-author) which urges a movement to DC retirements. Educational excellence? Give me a break!

Fred touches on the "Holy Grail" of bennies in education that many are unaware of.........the "pickup"

From John Curry, September 17, 2009
Fred touches on the "Holy Grail" of bennies in education that many are unaware of.........the "pickup." Should administrators also pay their "fair share" for their retirement? Teachers have to!
Employee contributions and retirement ages should be increased, and the employee-benefit "pickup" should be phased out. (Pickup means the employer contributes all or part of the amount of pension contributions for certain employees; thus, certain employees contribute less than their fair share while their employers, the taxpayers, pay more than their fair share).
Ease investing rules for pension plans
Columbus Dispatch, September 17, 2009
Perhaps state law pertaining to public pensions needs revisiting. Could it be Ohio law and administrative rules governing public-pension investments are too restrictive and conservative? ("Pension plans outline reforms," Dispatch article, Sept. 10).
Recent equity-markets indices' lows were on March 9. Since then through Sept. 9, the Dow Jones industrial average, arguably the most-watched index in the United States and perhaps the world, has gained 45 percent, the broader Standard & Poor's 500, 53 percent, and the Nasdaq, 63 percent.
Corporate bonds have rewarded investors with capital appreciation in addition to relatively high current income (interest), and real total return the past 40 years compares favorably to equities.
I disagree with eliminating retirees' health insurance. This traditional benefit is a major part of employees' financial and retirement planning. Just because some employers have reneged on retirees' health-insurance promises doesn't make it right. To help keep health-care costs down, perhaps the pension plans and employers could institute financial incentives to encourage healthier lifestyles by employees, retirees and their families. The lump-sum death benefit likely is of nominal cost, as it is probably low-cost group term life insurance. Cost-of-living increases need not be eliminated.
Employee contributions and retirement ages should be increased, and the employee-benefit "pickup" should be phased out. (Pickup means the employer contributes all or part of the amount of pension contributions for certain employees; thus, certain employees contribute less than their fair share while their employers, the taxpayers, pay more than their fair share). It should be acceptable to base annual retirement benefits on a five-year salary average, rather than three years, resulting in a nominally decreased retiree income.

Ralph Roshong's speech to STRS Board, September 17, 2009

I commend the Board and Staff on the completing of a set of recommendations to the ORSC along with Mr. Nehf’s presentation. It was a difficult task and not favored by all. I personally do not feel the elements were recommended for implementation soon enough for the depth of our crisis and I feel the public is certainly NOT responsible to pay increased rates to solve OUR problem. We will have to wait and see what the ORSC proposes to the full Legislature. The STRS Boards, over the last 11 years I have been attending meetings, have been extremely short sighted in their actions and failed miserably to look at the long range strategic goals and objectives of our pension fund. Their interest seemed to focus on how retirement benefits could be increased as much as possible for themselves. Our funding crisis is real and severe as reiterated by several consultants and Bob Slater’s financial reviews for the last 6 months.
The basic compensation packages for our investment staff are very generous. Bonuses for their “performance” should be put to bed until the so called trigger is reached and then look forward and design an appropriate bonus program, NOT backward to pay bonuses for questionable results. Bonus programs in the financial worlds of both Europe and the U.S. are being considered as a culture of greed.
The granting of part-time credit must be addressed. An educator should have to work a whole day for a day’s credit, not a couple hours, and 180 days for a year’s credit, not 120 days. Our System has been giving away credit without a commensurate payment into the Fund.
The Board must realize our STRS Staff’s benefits must be reviewed as they should participate in the same type of belt tightening that retirees are going through. It is certainly not appropriate for Staff to be recommending all these reductions for retirees and not share fairly in the pain themselves with similar reductions. I am aware that this is not a pension saving idea, but a moral one.
I would think that there is a rather large portion of space in our STRS building that could be considered for leasing or renting. I feel the Board should direct staff to review our facility’s capacities and determine if we could lease space to organizations such as SERS, PERS, Police and Fire, State Highway Patrol pension funds, ORSC, or other similar quasi governmental groups. It would certainly be a help in paying the utilities and upkeep.
Do what is right, it will satisfy some and astonish the rest! Harry Truman via Mark Twain

Helena Pieratt: Every penny a promise made

From Helena Pieratt, September 17
Subject: Tomorrow's decisions
Ladies and Gentlemen of the Board of Ohio's STRS,
Tonight, as your stockholders pray for your loyalty to us in refusing to pay undeserved bonuses, may you not forget that retirees are totally dependent upon their (non-compounding) COLA's as the only means of keeping their heads above water when costs of living inevitably increase.
Just look upon them as our "bonuses"....earned over long, dedicated, underpaid careers ...every penny, a promise made.
We are counting on you,
Helena E. Pieratt, retired
Cincinnati Public Schools

Donna Seaman's speech to STRS Board, September 17, 2009

Hello, my name is Donna Seaman, I am a 2002 retiree. My views are my own and do not reflect that of any organization.
Today or tomorrow you will be voting on awarding performance based incentives to investment staff for 7/12 of the 2008-09 fiscal year. Please consider carefully how much further you will reduce trust, respect and morale of STRS members who have been pleading with you for a very long time to completely abolish, once and for all, bonuses for that department.
Now you plan to call these bonus payments by another name: delayed and reduced payment of the bonuses! Calling it by another name does not change the fact that these bonuses should not be paid at all and should be absolutely eliminated!
Mr. Nehf always refers to investment personnel as the best and brightest, a phrase that has become totally disgusting to me. We recently learned that among the devastating losses in all five Ohio public pension systems, STRS’s losses exceeded all others! In my judgment, STRS’s best and brightest are obviously the best at losing money! But we are still reminded that the board is saving money by having its own investment personnel on staff.
It is totally out of line and appalling that this board is still discussing this issue. We’ve all seen the breakdown of investment staff salaries, most of which are far higher than Ohio’s governor’s salary. There is absolutely no justification for paying bonuses on top of these salaries at any time, but especially in the light of their huge losses. I request, once again, that you do NOT grant performance based incentives, in any form whatsoever, ever again.
Although one of your board members was quoted that she loves us, I ask that you please do not love us so much. We can’t take much more of your loving decisions which devastate and anger us and destroy whatever is left of the board’s credibility and respect.
Instead, I ask that you “love” the STRS employees! Show the STRS staff some of the severe cutbacks that you have shown retirees. In fact I suggest you direct Mr. Nehf to totally eliminate all the best and brightest investment staff, at a savings to STRS of $19.5 million each year. Eliminating this entire department, with love of course, and distributing those funds among the 140,000 retirees as a 13th check of about $135.71, would begin to make amends to retirees for all the cuts we have suffered in the past few years.
Board members, do the right thing, and abolish all incentives, now and in the future. Thank you.

Rich DeColibus: It's not rocket science - why doesn't STRS get it?

From Rich DeColibus, September 17, 2009
Subject: PBI

Dear Board Members,

I see the gorgon of PBI has again raised it's ugly head. You know, given almost the entire civilized world is disgusted and appalled by the undeserved, massive bloated bonuses the financial world regularly attempts to justify for performances which can only be characterized as mediocre at best, it really is inexplicable to ordinary people like me that this ludicrous vestige of ancient thinking still exists. Are you really in favor of the multi-million dollar bonuses AIG executives got after we taxpayers shelled out $50 billion to bail them, and their company, out of impending bankruptcy created totally by their own greed and incompetence? Naturally, their response was lavish and extravagant "conferences" at exotic and expensive resorts that we funded. Who could deserve a little fun more, the poor fellows? Do you somehow believe we STRS members think your PBI bonuses are in any way different or more acceptable? If you do, please adjust your belief; they are a fiscal atrocity, given the recent history of STRS's investments. You can bob and weave until doomsday, but you will never convince any sane STRS member you have any justification for this; child molesters have extensive explanations for why "It isn't their fault" they do what they do, and we STRS members are tired of the same old "It isn't their fault," so we continue to pay out millions for bonuses that have absolutely no rational explanation in the real world.

As far as I can tell, the only effect these fiscal lesions have is to encourage your investment counselors to take riskier actions on the basis of "If it goes bad, oh well, no skin off my nose, but if it succeeds it'll pad my bonus nicely, woohoo." It violates every notion of common sense to operate any financial investment organization this way. Why doesn't STRS "Get it?" C'mon, this is not rocket science. Your only responsibility is preservation of capital; it is clearly not being an employment house for financial advisers. The facts are crystal clear. Had STRS invested primarily in T-bills for the last twenty years, STRS would have $85 billion in assets today. Yes, you can do much better than bonds in the short term with riskier investments, but the downturns you don't see coming will always cost more than the higher profits you get when things are good, which is exactly what happened the last two years. Your investment counselors get multi-hundred thousand dollar salaries to see the market future, and the reality is they didn't see the future well enough to merit being rehired, much less deserving bonuses. Those are facts, and my expectation is STRS Board members will respond to facts, not mushy feel-good rationalizations. Maybe my expectation is excessively mean-spirited, but it is my expectation nonetheless, because it is my money being squandered.

Rich DeColibus
[Rich was president of the Cleveland Teachers Union for 16 years, now retired]

Mario Iacone to STRS Board: Vote NO on bonuses

From Mario Iacone, September 17, 2009

Dear Board Member

Please VOTE NO tomorrow for any form of a BONUS payment.

Bear in mind that over the last ten years the Investment Staff has received generous bonuses.

Also, note that the bonuses were received for INVESTMENT GAINS WHICH HAVE NOT BEEN SUSTAINED. Whatever was gained was lost again.

Further note that according to ORSC review, the AVERAGE RETURN for the last 10 years has been 3.5%.

DELAYED BONUSES are merely a way of setting up a future Savings Account for Investment Staff for performance that does not deserve such.

STRS members will not receive such a future Savings Account.

Thank You for your consideration.

Mario Iacone


Mario Iacone to Mike Nehf: Delayed bonuses will not appease STRS members, legislators or taxpayers

From Mario Iacone, September 17, 2009

Mr. Nehf,

Would you please clarify the rationale for the delayed bonuses?

Two figures are used! 60 Billion. 65 Billion.

I could understand paying the bonuses at those figures if those numbers represented benchmarks at which pension benefits would be restored to retired and active STRS members.



If not, please explain what is the difference if they are paid later as opposed to now?

Delayed bonus payments WILL NOT APPEASE STRS members, legislators that will have to confront the issue, and Ohio taxpayers, part of whose money is being used to pay those bonuses via contribution to employee retirements.


Mario Iacone


Another superintendent speaks out re: Bonuses

From John Decker, September 17, 2009
Subject: Employee Bonus
There have been numerous e-mails, letters, telephone calls, etc. regarding STRS employee bonuses. It appears the only supporters of such is the STRS Director and Executive Board.
I have never known a system/organization where employees were awarded bonuses, gifts, incentives, etc. during non-productive performance. It only seems logical the STRS Board would do the same.
In the past year, the ONLY reason the Board and/or Director has supported the bonus package was to keep 'good' staff. I have been an STRS Member for 40 years with 25 as a superintendent. I have seen hundreds of 'good' staff go and come. I have NEVER been unable to employ someone just as good or BETTER.
I have never seen such an outstanding organization run by such dysfunctional people in all by 60+ years. It appears as if you do not care about the thousand of retired STRS Members.
Your actions have disrupted the lives of hundreds of STRS members. It there anything we can do to make our statement any clearer.
John Decker. Supt.
Miami County ESC

Mario Iacone to Tim Myers: I find fault with your analogy

From Mario Iacone, September 16, 2009

Dear Mr. Myers,

I am confused by the analogy and logic you used to justify paying the Investment Staff bonuses.

I believe you stated,

"It was for work already completed," he said. "It would be like back when I was coaching football and at the end of the season they would say, 'You didn't win any games, so we won't pay you the contracted amount for the season.' "

I find fault with your analogy because the Investment Staff was paid for work completed and for losing. I believe they received salaries in the $200,000 to $300,000 range and they received that while STRS has lost 25 Billion or so.

STRS members have already paid them, most of us simply do not want to additionally pay them a BONUS FOR LOSING!


Mario Iacone


Wednesday, September 16, 2009 it is....STRS' latest plan on how to pay the bonuses! A bonus delayed is still a bonus!

From John Curry, September 16, 2009
Teachers pension system
Bonus pay, now or later, still upsets STRS critics
Columbus Dispatch, September 16, 2009
By Steve Wartenberg
THE COLUMBUS DISPATCH A bonus delayed is still a bonus, say critics of a new proposal by the State Teachers Retirement System of Ohio to put off paying 90 investment officers $3.4 million in performance-based incentives.
The system lost about $18 billion during the fiscal year that ended June 30, dropping its asset total to $52.7 billion. As a result, many members want the bonuses eliminated entirely.
"This new plan is designed to quiet people and cause people to think there's not a bonus, when really there is," said Dennis Leone, a former member of the pension system's board whose term expired in August.
He is against awarding any bonuses, now or in the future, and calls the new plan "totally unacceptable."
The proposal was sent to the pension fund's board of directors last week. It will be introduced by Executive Director Michael Nehf during the board meeting that begins today, and it will be voted on Friday, said Laura Ecklar, spokeswoman for the pension fund.
Specifically, the proposal calls for half of the $3.4 million in bonuses to be paid out after the system's assets total at least $60 billion. The payment would not be made until the end of the fiscal year in which that benchmark is reached, and not before July 1, 2010.
The second half would be paid at the end of the fiscal year in which assets grow to at least $65 billion, and not before July 1, 2011.
The fund's assets were at $56.8 billion on Aug. 31, Ecklar said.
The bonuses would not expire, and employees would be paid even if they have left the system when the benchmarks are met, according to the proposal.
Eight of the bonuses are for more than $100,000, with the highest at $162,488.
"I suspect the reaction from a lot of members has influenced the staff in trying to be sensitive to the wishes of membership," board Chairman Mark Meuser said of the proposal.
"If (the proposal) doesn't pass, there could be a motion to pay (the $3.4 million) as originally intended or perhaps not pay it at all," Meuser said.
The pension fund can do that under its rules. Bonuses may be "amended, rescinded and/or terminated at any time by the board."
Meuser would not say how he will vote, but Vice Chairman Tim Myers said he will vote for delayed payments.
"It's coming from staff, and if they're willing to do that, I'm not going to vote against it," he said.
Earlier, Myers said he would have voted to pay the entire $3.4 million immediately.
"It was for work already completed," he said. "It would be like back when I was coaching football and at the end of the season they would say, 'You didn't win any games, so we won't pay you the contracted amount for the season.' "
The board voted in May not to award a performance-based incentive in any year in which the fund loses money.
Jim Stoll, athletic director of Sycamore Community Schools and a member of the teachers pension board, said he has been copied on at least 500 anti-bonus e-mails from members to the fund's staff and board.
"It sort of sounds like they're admitting they made a mistake and are trying to do the right thing," he said. "But at the end of the day, they're still giving these people a bonus for losing ($18 billion), and that to me is absurd."
The board awarded $5.9 million in bonuses for fiscal year 2008, when the fund lost $6.4 billion, and had planned to award $5.6 million this year.
The board voted in January to suspend bonuses for the final five months of the year and award a new total of $3.4 million.
"I made a motion not to pay the bonuses at all, all the way back last September," Leone said. "But they didn't listen."
At a recent meeting with the Ohio Retirement Study Council, which advises the legislature on public pension matters, Nehf said the recession has hurt the fund's total value. "If no changes are made, we will eventually be unable to pay benefits."
Changes proposed to shore up the pension fund include increasing employee and employer contributions, reducing cost-of-living adjustments and delaying the age at which members can retire with full benefits.
The employer-contribution increase would be phased in, starting in 2016, and cost taxpayers $50 million the first year and rise to $250 million in 2020.
Any such changes must be approved by the legislature.

"If it looks like a bonus, swims like a bonus and quacks like a bonus, then........."
" A bonus by any other name is still a bonus."

Shirlee Zerkel to Board re: Bonuses; just vote NO

From Shirlee Zerkel, September 16, 2009
Subject: Fwd: changes needed!
Dear STRS Board members:
I would like to remind you that your Board policy states: Bonuses (PBI) may be "amended, rescinded and /or terminated at anytime by the Board". That time to vote for termination is NOW! If some investment people want to leave STRS, let them. There are many who are looking for jobs with a 6 figure income and good health care benefits.
On September 9th, you made recommendations to the ORSC for many changes that will have a drastic effect on many active and retired teachers and even the taxpayers of Ohio. Your own director, Mr. Nehf, has stated: "If no changes are made, we will eventually be unable to pay benefits." I feel all who have any connection to STRS should share the suffering. We educators should not bear all of the burden. Yet the only change I see suggested by the STRS staff for this week's meeting is to delay the PBI's. I see no suffering in that proposal just a delay.
The Columbus Dispatch article even stated that the bonus if delayed will be given to even those who may no longer be employed by STRS. That's really nice. I wish there was as much care shown for the educators whom you represent.
It is unacceptable that you are even still considering bonuses at a future date given how much money has been lost by the system, many lost retiree benefits so far, and the pending proposals sent to the ORSC earlier this month. The ORSC and the legislators are watching your decisions. I believe that any vote , other than termination of bonuses, will be suicide for the STRS system. I am not asking you to delay bonuses; I am asking you to VOTE NO to the BONUSES (PBI's) this Friday.
Sincerely, Shirlee Zerkel
retiree of 2002

John Virdo to STRS Board: NO BONUSES!

From John Virdo, September 16, 2009
Subject: What's up with this?
Employees of STRS,
Up until now I have given you some room. Everyone makes mistakes. But according to the Columbus Dispatch, you do not make mistakes, you make calculated decisions hoping everyone is as dumb as you look.
I've taken pay freezes........ It's your turn!!!!
NO BONUSES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Or change the term you use for them to rightfully reflect them. Might I suggest the term:
Disgustedly yours,
John Virdo
Canton, Ohio

Molly Janczyk: Letter to Steve Wartenberg

From Molly Janczyk, September 16, 2009
Subject: Dispatch: Bonus pay article: 9.16, 2009
**Note: Reporter: Steve W.:
Please investigate the fact that employee contributions have not increased in decades despite inflation and soaring health care costs. The increases would be incremental over 5 yrs. and could be achieved without the consequences school boards tout. Monies are budgeted for about that amount yearly for increases to my understanding and cost waste could pay for much of it. Consider that top heavy administration salaries and jobs which could be trimmed, for example. Of course, the school boards state immediately the hit to school districts when it seems every district also has some waste which could be cut.
School districts have to pay one way or another. For example: Teachers will not be able to retire and will be in their 60's and 70's working to pay for health care. Paying for their health conditions will be costly to school districts as a consequence. Younger and less costly educators will be kept out of the profession with fewer jobs available. The school districts will be paying higher end salaries on top of the increased health care of its older educators. Also, the state and taxpayers will pay for greater use of the ER's due to educators losing or decreasing their health care costs by stopping treatments, drugs, and Dr. visits.
Compare the 2 scenarios and determine which costs more for the school districts and taxpayers over time. Incremental increases to provide educators who teach your children or an onslaught of ER use and an aging educator workforce draining money for their health care and salaries.
Thank you for giving this important issue affecting us all space in the Dispatch.
Molly Janczyk
STRS Retiree Activist

A superintendent speaks out re: Bonuses

From Carl Berg, September 15, 2009
Subject: Stop the Payment of Bonuses
Members of the STRS Board of Directors;
As an individual who is a re-employed STRS retiree covered by, and again contributing to, STRS, I strongly oppose the payment of any type of bonuses, either immediate or delayed, partial or full, in cash or in kind, to any STRS employees, or individuals contracted for performance of specified tasks by STRS, until such time as the funds controlled by STRS are considered solvent enough to guarantee the future availability to and benefit of its members. The payment off such bonuses are in direct conflict with your recent recommendations to increase the STRS costs to school districts and STRS members in Ohio.
I do not "buy" the notion that STRS will be unable to employ quality personnel without awarding such bonuses. These are difficult times. Quality people will accept less when the need and the greater good calls for such acts.
As a current Ohio educator, I have voluntarily declined to receive any increase in compensation for the 2009-10 school year, and by function of my position, I receive no step increases. I am not receiving any increase in compensation over the amount I received for the 2008-09 school year.
Like many other Ohio educators, past and present, I am doing my part to help all of us not only survive the current economic crisis, but to also help preserve the future for all STRS members. I expect you, as members of the STRS Board of Directors, to do your parts too.
I will be recommending that our Board of Education, and similar such boards of education across Ohio, make their collective views on the payment of bonuses known to you. Further, I am requesting that my colleagues and fellow STRS members serving in other school districts across Ohio also express their opinions to you.
Carl J. Berg
[Supt., Tolles CTC, Plain City]

Tim...back to the time when you were 'coaching football'.....

John Curry to STRS Board member Tim Myers, September 16, 2009
The Dispatch featured the article below in which you were quoted as saying, "It would be like back when I was coaching football and at the end of the season they would say, 'You didn't win any games, so we won't pay you the contracted amount for the season.' "
Did it occur to you that since you were "contracted" for coaching football that your employer was legally bound by the terms of your contract? In the same vein, did it ever occur to you that none of the STRS investments staff have a contract of employment with STRS?
That, Tim, is a real comparison of apples to oranges.
John Curry

Jim Reed: 'Again, as is the norm, Mr. Myers, you miss the point entirely'

From Jim N. Reed, September 16, 2009
Subject: Atta Boy, Coach Myers!
Dear Vice Chairman Myers and STRS Board,
As 45-year coach in the public schools of Ohio I was most intrigued and amused by Vice Chairman Tim Myers' reflection of his coaching days in a recent interview with "Dispatch" reporter Steve Wartenberg.
Mr. Myers, you have admonished STRS stakeholders who have resisted vehemently the expenditure of their millions of dollars in PBI's for investment counselors whose poor judgement cost the pensioners some $40 billion in assets. Doing so seems to have harked you to your days as a coach.
According to your misguided analysis, termination of the PBI's would be tantamount to your coaching analogy, "...back when I was coaching football and at the end of the season they would say, 'You didn't win any games so we won't pay you the contracted amount for the season.' "
None of the real coaches that I have been associated with took a contract for the subsidy only. It's asinine to compare the stipend of a public school coach's salary with that of an STRS investment counselor's six-figure base salary complimented by a six-figure bonus.
Again, as is the norm, Mr. Myers, you miss the point entirely. None of the classroom teachers with whom I taught for over 40 years were ever offered a bonus for having fewer failing students than the teacher down the hall.
Maybe the quote that appeared in the newspaper was inadvertently shortened. Perhaps the last couple of sentences should have read, "But we're changing your contract by upping your base salary and throwing in a bonus for your negative performance. After all is said and done, you lost only by an average of 25 points per game instead of the 35 points suffered by our rival's coach."
Many years ago the high school football boosters of Massillon rewarded their coach with a new Cadillac for a great season. The following season was mediocre by their standards. The same boosters bought the coach five gallons of gasoline to get him out of town.
Mr. Myers, this, of course, is silly but so is your perception of what your obligations are to the 450,000 stakeholders and their beneficiaries. Unfortunately, silliness in making decisions that are frequently life-altering to current and prospective retirees. It is inexcusable.
Wherever and however you were trained to represent active and retired educators leaves much to be desired. Perhaps you need to go back and review your obligations according to ORC 3307.15.
If you still don't get it, maybe it's time to take your five gallons of gas and leave town. Consider resignation so someone who really understands what retired and active educators expect and deserve, ethically and legally, from their retirement board.
As for the balance of the board, I would recommend you more carefully edit the remarks of your colleagues before they reach the growing number of disgruntled, but quite STRS-literate, "malcontents" and "dissidents" who refuse to any longer stay on the sidelines while the officials resemble blind mice.
Jim N. Reed
1998 retiree

Jim Reed to Steve Wartenberg: The bonuses are rewarding failure

From Jim N. Reed, September 16, 2009
Subject: STRS Bonus Pay for Failure!
Dear Mr. Wartenberg,
Please accept my personal and collective (education retirees) gratitude for your research and publishing of today's "Dispatch" column regarding the issue of PBI's at STRS.
As a 45-year public school educator I cannot express too strongly my disgust with what my retirement system has done through its mismanagement to shatter the promises made to current and prospective retirees of an affordable, secure retirement.
Most shameful is the abrogation of the fiduciary duties legally assigned (ORC 3307.15) the board to protect the funds of 450,000 stakeholders and their beneficiaries.
To even consider rewarding our employees (STRS staff) for investment failure is ludicrous but to actually pay preposterous bonuses (with our assets) to investors for not losing as much as other wrong-headed investors is something out of the Twilight Zone. And when one considers the amounts of these bonuses on top of the ridiculously obscene base salaries it's enough to make one regurgitate.
Not only are billion dollar mistakes being rewarded through the PBI policy to our employees against our approval (the board does not represent the STRS-literate retiree), it must be remembered that these employees have no real vested concern with our retirement system. They belong to PERS and have benefits far exceeding those of the STRS stakeholders. One might consider their employment as a vested interest but how much real interest, concern and incentive does an employee have when errors and mistakes go unpunished, when their families' security is not jeopardized by their poor workplace decisions? A huge bonus and a staggering salary are the reprimand!
Another of the obvious disconnects is the out-of-touch mentality of the majority of the STRS board and its executive director. They do not connect with the average retiree. This has been an ongoing issue for the past decade. Just look at the track record of this entitlement philosophy. In 2003 Dr. Dennis Leone published his research into the mismanagement and fractured ethical standards of board members and the executive director. Much of the dissemination of this award-winning investigation is credited to courageous reporters who recognized the information used to smash STRS's credibility came from their own records. Dr. Leone was only the messenger. Thanks be to Dr.Leone and fellow board member Mr. John Lazares for their relentless reluctance to serve as a rubber stamp for continued dysfunctional mismanagement.
Again, Mr. Wartenberg, thank you for your journalistic courage to cover the story of the embarrassment our retirement system has brought to the education profession in Ohio.
Jim N. Reed
STRS stakeholder

John Bos: First ones to the lifeboats are......

From John Bos, September 16, 2009
Subject: Timmy, OEA, and STRS

Let me see if I understand this web of intelligent discussion:
Timmy wants to pay the Investment Staff, even if we do not have the money.
OEA wants to keep all benefits high, even if we do not have the money.
OEA does not want actives to pay more money into the retirement system.
The retirees don't want the COLA reduced.
The legislature tells STRS to clean up their mess.
The ORSC wants to slaughter the elephant -- even if it slaughters the retirees. (Elephant is medical coverage.)
The Senior Leadership at STRS wants to keep the STRS staff happy.
Laura still tells us that "everything is beautiful."
We, the retirees, are trying to survive by living longer than our savings and pensions.
It seems to be that the retirees are the big losers.
Perhaps when Timmy talks football, the retirees are like the 9th grade practice team: cannon fodder.
The rich are getting richer, the poor are not going to live a long and healthy life, and OEA is most interested in their survival.
And Bill (the mouth of OEA) Leibensperger wants more time to study the problem.
The Titanic (STRS) is sinking. the retirees are on the lowest spot of the deck, Timmy wants to play football, and Bill is in the bridge looking for a route around new icebergs, and Laura is directing the band playing "Happy Days are Here Again", Mike Nehf is in the communications room talking to the bridge and the band. (No speakers to the retirees on the deck). Oh, I forgot, the legislature has TOTAL CONTROL of the lifeboats and are researching if there is any fuel available for a rescue. Want to bet who will be the first in the boats -- THE CREW!!!
Larry KehresMount Union Collge
Division III
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