Saturday, June 12, 2010 bring up some pretty good points about the direction public educaton is going and also about hedge funds and charter schools!

Hedge funds can only harm education
Saturday, June 12, 2010
By Thomas M. Stephens
Hedge funds searching for high returns via charter schools pose the same risks to public education that Big Oil poses to the Gulf Coast: a toxic mess with dire consequences.
This "spill" will originate in New York state, where hedge-fund executives mounted an offensive against teachers unions to influence lawmakers and to more than double the number of charter schools there to 460. On May 28, the New York legislature acceded to these demands, adding at least another $2 billion a year for charters.
The impetus is President Barack Obama's Race To The Top education initiative, which requires states to increase the number of charters. So the president who has been labeled a "socialist" has set in motion policies that will weaken forever our society's great equalizer: public education.
It isn't surprising for Wall Street to advance its self-interests. But it's suspicious behavior for these capitalists to devote such great resources to increase the number of charter schools.
Consider these dangers:
• Hedge funds are basically unregulated and operate with little regard for anything but profit.
• Charter schools are badly flawed. Both nonprofit and for-profit outfits run them, and they operate with minimum local control and financial accountability, as news reports across the nation have shown. All the while, they siphon students and money from public schools.
If charters improved children's education, these issues might be tolerable, but that's not the case. Results of the National Assessment of Educational Progress since 2003 show they never have outperformed public schools.
But like Big Oil, hedge-fund gurus have the financial and, thus, the political clout to pressure lawmakers to further privatize public education, and at a high cost to the public.
Don't forget what hedge funds are; they use high-risk tactics to achieve high returns. The only real limitation is that they tend to take money from supposedly sophisticated investors, some of whom represent retirement funds whose members don't want to gamble on their future incomes. At one time, hedging investment bets through various market tactics offset high risks. Not so much anymore, as recent Wall Street history shows. Disastrous failings of hedge funds stunned our reeling economy. And, tossing kindergarten-through-12 {+t}{+h}-grade schools into the vortex of a market economy will have similar results. But here the target is our children's future.
Prospects of success for hedge-fund intrusion into education is being abetted by the erosion of confidence in public schools - erosion worsened by misuse of standardized test scores and incessant pounding of teachers and teacher-preparation programs by politicians, corporate interests and misguided reformers.
Zealots are strangling our schools by demanding student and teacher accountability through more testing. As a result, "teach to the test" is the survivors' mantra. So other disciplines for life's enjoyment, including physical and health education and the arts, are disappearing.
Bottom-line and top-down reformers ignore crucial differences of our richly diverse student population, differences that homogenized teaching and standardized testing cannot fully address.
We must speak out against those who pretend to be concerned about public schools but really want to leave them to the whims of market forces. They exaggerate public education's failures and falsely claim these are a major drag on our competitive edge in the global economy.
It's strange that those who preach accountability for public education still embrace unaccountable hedge-fund managers as allies and see no problem with tossing our children's futures into the roiling waters of market forces.
Thomas M. Stephens is professor emeritus in the College of Education and Human Ecology at Ohio State University and is executive director emeritus of the School Study Council of Ohio.
From John Curry, June 12, 2010

Letters re: Grandfathering for retirees

Sharyn Wiehe to Molly Janczyk, June 12, 2010
VERY good questions. Quite frankly. nothing would surprise me now. Retirees should be grandfathered and the solutions need to be found elsewhere. Retirees have no recourse as in the education world we cannot waltz back into our field. Talk about immoral.
George Justice to Molly Janczyk, June 12, 2010
Subject: Re: QUESTIONS FOR OEA: Ohio Schools: OEA statement concern
MOLLY- Re; your 2 questions at the end: If we look at the pattern followed by STRS in recent years I 1) doubt that STRS will consider any grandfathering for retirees and 2) hell yes STRS will expect retirees to pay for themselves and their spouse. STRS has shown little empathy toward the retiree recently. Changes/expenses are laid on our backs not on active teachers.

Friday, June 11, 2010

Why CORE members' speeches weren't delivered at the June 10, 2010 STRS board meeting

June 11, 2010
I e-mailed Mark Meuser, board chair, today to find out what was happening yesterday, as there seemed to be some confusion on whether CORE members would have an opportunity to speak, as we were off our usual schedule because of Mr. Cordray's speech. Below is the response I got from Mark this evening. The two speeches, by Donna Seaman and RH (Bob) Jones, are posted farther down.
Kathie Bracy
Thank you for asking me. There is not much to tell.
The public speaking session went on as scheduled, immediately following the executive director's report. Two of the scheduled speakers were not present, so we simply had to proceed to the next agenda item, Health Care. There was no pre-determined plan to change the agenda or have members speak at another time.
It was only later, during the Health Care presentation, that Board members noticed many audience members returning, probably from the Cordray talk. At the very next break, we made inquiries among the audience to determine if the speakers were still there and if they would like to deliver their remarks. We would certainly have adjusted the agenda to accommodate them. Unfortunately, they had already left the meeting.
There was no attempt to deny anyone's ability to address the board. I have no objection to your copying my explanation. Thanks again for asking.

Ohio Attorney General Richard Cordray addresses CORE June 10, 2010

Sorry, I was unable to upload the video of Mr. Cordray's speech to this blog, but am posting copies of his handout below. They give a pretty good picture of what his work for the pension systems is all about. KBB
Attorney General Richard Cordray (left) and CORE president Dave Parshall (click image to enlarge)

A "choir boy" from Grove City, Ohio holds Wall Street accountable (click images twice to enlarge)


Changes in the Illinois state retirement system...the 3% STAYS with the current retirees

From John Curry, June 10, 2010
Even in a retirement sytem, that is in the worst shape of all state retirement sytems, the current retirees KEEP their (COMPOUNDED) COLAS. STRS....take note!!!!!!!!!!
evanston/news, June 10, 2010
Educators hired after Jan. 1 won't get as sweet a deal when they retire, which of course may not be for decades.
Threatened with a sharp downturn in the state's bond rating, Illinois lawmakers in late March swiftly scaled back benefits for newly-hired employees and took steps to rein in runaway retirement benefits for highly-paid employees.
The measure raises the retirement age for full benefits to 67 while allowing retirement at 62 with discounted benefits.
A cap will be placed on the salary used both to calculate employee contributions and benefits. The cap will be synchronized to a Social Security figure, currently $106,800 a year.
Once retired, those new hires won't get the annual 3 percent pay raises -- compounded -- that effectively double the pensioners' checks over 24 years.
In retirement, pay raises will be one-half of the Consumer Price Index or 3 percent, whichever is less. The percentage raises won't compound annually. Each annual increase will be figured using the pensioner's starting pension.
-- Staff Writer Karen Berkowitz

Dennis addresses the..... Sign in the STRS cafeteria!

From Dennis Leone, June 10, 2010
Subject: RE: Sign in the STRS cafeteria!

Yes, and this is ONE item that I DO feel Mike Nehf stepped up to the plate – which Herb Dyer and Damon Asbury simply refused to do. Nehf heard my whining, and the whining of CORE on this issue (while ORTA and OEA sat silent), and he responded with a push to change the 37½-hour work week to a 40-hour work week. My chief complaint with the old system was that there were STRS employees who were cleverly adding a little time on Monday, Tuesday, Wednesday, and Thursday so they could skip Friday entirely. No one really cared about it before, except John Lazares and me. This is one area where the change would NOT have occurred had Mike Nehf not supported it. I am thankful that he did.

Dennis Leone

Sign in the STRS cafeteria!

From John Curry, June 10, 2010
Soon...all STRS employees will see a 40-hour workweek....thanks to Dr. Leone and CORE pressure!
(Click image twice to enlarge)

Molly Janczyk: Questions for OEA

From Molly Janczyk, June 11, 2010
Subject: FW: QUESTIONS FOR OEA: Ohio Schools: OEA statement concern
A statement was made by the OEA President, I believe. I do not have the magazine in front of me due to needed renovations with stacks of things everywhere.
The statement paraphrased also do to not having it in front of me was along the lines of: 'grateful to have access to STRS healthcare'.
Reason for concern:
in March of 2002, I read a one line sentence in the STRS Newsletter along the lines of some spousal changes in healthcare may occur. That is when I began calling STRS and contacting them through repetitive emails building to a daily emails. That simple sentence turned those who have spouses under STRS upside down never to recover. We went from minimal premiums to paying the entire premiums for spouses with no grandfathering or graduated steps which should have occurred for at least the previous decade.
When I asked why STRS had not put in gradual steps in the late eighties or early nineties as they were well aware of the impending crisis, I was told the membership would get upset. WOW! Like we weren't beyond destroyed to have it hit us in huge numbers without the ability to cover it with simple COLAS in 2003.
Joe Endry has just come to STRS as the Retiree Board member having served as Exec. Direc. of ORTA. He warned the Board and former STRS Exec. Direc. Dyer of the healthcare crisis looming saying if STRS did nothing then, early 90's, we could not afford healthcare in 10 yrs. He was right. Both OEA and STRS under Dyer said legislation to mandate STRS healthcare was unnecessary. Legislation was being considered to mandate healthcare in the early 90's by former STRS Board member Mary Ann Cervantes' father who was a legislator. Dyer stated he wanted STRS out of the healthcare business and my opinion is that he was just going to let it run out and that be that until 'disgruntled retirees' came into the picture with media cameras in 2003. But, too little, too late, as the bottom had dropped and long term planning and incremental increases and changes had not been put into place for that day when funds became challenged. So, retirees, with no warning who had made irrevocable decisions to retire, paid to save healthcare-with no grandfathering, no reserves, nothing but their own funds and at the expense of their personal homes, cars, lifestyle, denying themselves medical and RX treatments to pay for healthcare. Spousal subsidies were dropped, coverage went from 100% to 80%, RX's soared. COLAS stayed stagnant at first year of retirement rates and retirees lost more money every year forced back to work if able and to use personal finances if not.
Other answers were 'We were riding the wave' (Jack Chapman)-in other words, the STRS former Board members were simply counting on an endless upsweep of discretionary money evidently with not a thought of implementing incremental increases for premiums, RX, and out of pockets a decade earlier to prevent devastation overnight.
Point: I have learned simple inserted comment usually turns into fact when printed in STRS or OEA statements. I wonder why the word 'access' was used in this statement and
1. Are we headed towards retirees having to pay for their entire recipient premiums as well as for their spouses' entire premiums?

June Board News from STRS

From STRS, June 11, 2010
This week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The June report follows.
RETIREMENT BOARD CHAIR, VICE CHAIR NAMED; MEUSER RECOGNIZED FOR SERVICE During its June meeting, the State Teachers Retirement Board elected James McGreevy as its vice chair for the coming year. According to Board Policies, Tim Myers, who is currently serving as vice chair, automatically moves into the position of chair. Normally, both Myers and McGreevy would be moving into these leadership positions on Sept. 1, 2010. However, Mark Meuser, the current board chair, has announced his retirement from his position with the Gahanna-Jefferson City Schools and thus is resigning from the Retirement Board. As a result, Myers and McGreevy will assume their new responsibilities on July 1.
During the board meeting, a resolution recognizing Meuser's service was presented. In it the board expressed its deep appreciation for the valuable and tireless service he rendered to the membership and associates of STRS Ohio upon being elected to the board in 2006.
RETIREMENT BOARD ACCEPTS THE ANNUAL INVESTMENT PLAN The Retirement Board voted to accept the Investment Plan for fiscal year 2011 (July 1, 2010-June 30, 2011). The plan details staff's investment strategy for each asset class comprising the system's investment fund.
STRS Ohio staff expects the U.S. economy to remain on a positive growth path during fiscal year 2011 that will spread to sectors beyond business inventories. Rather than the typical "V-shaped" expansion that usually follows a deep recessionary plunge, staff is forecasting a moderate "U-shaped" expansion. Outside the United States, a modest recovery and expansion is expected for many developed countries, while stronger growth is forecasted for emerging countries. Though inflation will remain largely contained, staff noted that monetary and fiscal policymakers around the world will need to slowly remove the extraordinary stimulus they introduced to ward off another Great Depression. The economic threats from a potential sovereign debt contagion that began in Greece will restrict growth potential and could threaten economic expansions in the United States and elsewhere. Staff noted that policymakers will need to walk the tightrope of tending to longer-term fiscal sustainability while not jeopardizing the cyclical recoveries by removing stimulus too soon.
On July 1, 2010, the Fiscal 2011 Investment Plan will be posted on the STRS Ohio Web site ( or available by calling STRS Ohio's Member Services Center toll-free at 1-888-227-7877.
FISCAL YEAR 2010 BUDGETS ADOPTED The Retirement Board adopted the proposed budgets for fiscal year 2011 (July 1, 2010-June 30, 2011). The operating budget totals $89,773,600, which represents a 2.1% increase over this year's operating budget. No merit or cost-of-living salary increases for STRS Ohio associates are included in the budget. The capital budget for fiscal year 2011 totals $2,101,000. Additionally, the system expects to spend $580,000 in contract payments for the STaRS system that has replaced STRS Ohio's former obsolete pension management computer system.
RETIREMENT BOARD APPROVES HEALTH CARE PREMIUMS AND PROGRAM CHANGES FOR 2011 The Retirement Board approved three eligibility changes for the STRS Ohio Health Care Program resulting primarily from the health care reform bill recently passed in Washington, D.C.
1) Dependent children, as well as incapacitated children, will now be eligible for health care coverage until the end of the month in which they turn age 26, if they do not have access to other employer-sponsored health care coverage.
2) Upon reaching age 26, the monthly premium charged for a person incapacitated since childhood will be the same rate as the spouse premium.
3) The waiting period for late enrollees in the health care program will be reduced to 90 days from six months.
These changes go into effect on Jan. 1, 2011.
The board also approved the 2011 premiums for all the plans offered through the STRS Ohio Health Care Program. A complete list of these premiums will be posted on the STRS Ohio Web site ( on June 25, 2010, or can be obtained by calling STRS Ohio's Member Services Center toll-free at 1-888-227-7877 after that date. Additional information about the 2011 STRS Ohio Health Care Program will be provided in upcoming newsletters and on the STRS Ohio Web site. In late October, all current enrollees will also receive personalized health care plan information in preparation for the fall open-enrollment period, which extends from Nov. 1-23, 2010.
RETIREMENTS APPROVED The Retirement Board approved 239 active members and 71 inactive members for service retirement benefits.
LEGISLATIVE NEWS INCLUDES UPDATE ABOUT PENSION PLAN ACTIONS AROUND THE COUNTRY The June 2010 issue of STRS Ohio's Legislative News includes a report from the National Association of State Retirement Administrators listing reforms to public pension plans in progress around the country. The newsletter can be accessed via the STRS Ohio Web site at
STRS Ohio staff is still awaiting the draft legislation containing the Retirement Board's proposed changes for the pension fund, as well as language reflecting changes proposed by the other Ohio retirement systems. STRS Ohio staff continues to meet with legislators, stressing the importance of the legislation to the system's long-term viability.
E-MAIL NEWS SERVICE TOPS 100,000 SUBSCRIBERS During May, the number of subscribers to STRS Ohio's e-mail news service surpassed the 100,000-mark. This service is used to keep both STRS Ohio members and non-members apprised of actions taken at each Retirement Board meeting, as well as other important news and events.
RECENT HEALTH CARE PROGRAM CHANGES RESULT IN SIGNIFICANT SAVINGS Since mid-July 2009, several changes to the STRS Ohio Health Care Program have gone into effect. These changes are resulting in positive outcomes for program participants, as well as significant savings for them and the Health Care Stabilization Fund.
Here are a few examples:
- The medical care management program offered under the Aetna Medicare Plan (PPO) includes a Health Risk Assessment (HRA). During first quarter 2010, 70.5% of the enrollees in the program completed the HRA; these assessments and other case management triggers resulted in about 4% of the enrollees now receiving case management assistance.
- The use of generic prescription drugs has increased as a result of the "Call for Generics" program that began in mid-summer 2009. From July 2009 through April 2010, the estimated savings from the program is $1.8 million for the health care fund, with member savings resulting from lower copayments totaling about $1 million.
- Other changes to the Express Scripts prescription drug program (e.g., $150 deductible for Tier 2 and Tier 3 medications) has resulted in a more than $10.5 million reduction in program costs.

STRS Retiree Buying Power: STRS Ohio Pension Benefits By County

From John Curry, June 10, 2010
The next time you hear a merchant complaining about a public service retirement, show him this and....remind him that STRS retirees don't have to shop at his store...there are other stores out there who will appreciate STRS retirees' money!
(Click image twice to enlarge)

RH (Bob) Jones’ speech intended for delivery before the STRS board June 10, 2010

Our “Golden Years”: it takes all of our gold to get through them! Is that anti-family, I wonder?

The STRS has publicly recommended that we older retirees be penalized, perhaps illegally, with a 1% cut in our simple COLA – this coming after a previous cut in retirees’ HC/Rx. Especially penalized are those retirees who have to pay an anti-family penalty cut of the spousal and dependent coverage. Because of this, perhaps, married elderly teachers would be better off to divorce their faithful, longtime spouses. Afterwards, one of them, the one with the smaller income, then goes onto the public dole. Is that not disgraceful for the teaching profession? In all fairness, the anti-family penalty should be rescinded and our COLA left as is, at a simple 3%.

Thank you for allowing me to address you once again.

Donna Seaman's speech originally intended to be delivered before the STRS board, June 10, 2010

Hello, my name is Donna Seaman. I retired in 2002 after 30 years as an administrator and teacher. My views are my own and do not reflect that of any organization.
I have spoken to you many times before but it is difficult for me to do so when I receive virtually no collective or individual response or feedback from any STRS board members. Nevertheless I am here again to urge you, once more, to consider STRS retirees as your first line of concern and your first priority.
The STRS newsletter reports that operating expenses have been somewhat decreased. I applaud that effort and ask you to continue additional reductions in staff and operating costs. This building is still far to expensive to operate and does not need to be that impressive and elaborate.
Health benefits for retirees continue to be modified, changed, revised each year, and yet STRS employees' health insurance plans are far better and cheaper than ours. You have added co-pays for us, different coverages, increases in premiums for next year, and we still have what I consider a "Ford" coverage, while STRS staff enjoys "Cadillac" benefits. Again I urge you to consider that health coverage should be comparable for STRS staff and for STRS retirees.
You have nearly removed discussions about performance-based incentives, bonuses, by postponing payment until the value of the STRS portfolio reaches a certain amount. But the bonuses have not gone away! The entire compensation package for investment personnel must be reviewed and studied, and revised to reflect today's economy. Yet the board does nothing about that. Investment staff continues to accept credit for their outstanding investment skills when times are good, and tell us that it is a downturn In the market when times are bad.
(Incidentally I want to quote here what Mr. Cordray said to us in our CORE meeting today about bonuses--he was actually talking about Wall Street bonuses at the time. "They do well when they do well. They do well when they don't do well. Ultimately they do well." EXACTLY how I feel about STRS investment staff bonuses!)
While you continue to pay bonuses to investment staff, discussion of reinstating the 13th check is never mentioned! Retirees wonder: how can you pay those enormous bonuses and not even have a discussion about reinstating the badly needed 13th check for retirees? It is way past time to have that discussion and begin to offer hope to retirees.
The cost of living reduction proposed last September to the Ohio Retirement Study Council should have grandfathered in retirees of a certain age and income level. You may be assured that if and when the legislature finally tackles those issues, legislators will be inundated with input from STRS retirees about the COLA.
In closing, I urge you once again to become aware of retirees' concerns, and responsive to them. Please take the initiative to make changes and improvement for retirees and not allow "business as usual" to continue at STRS.

Thursday, June 10, 2010

STRS Flashback -- 1 year ago, the Lima meeting and Dennis Leone addresses the potential COLA cut

From John Curry, June 10, 2010
"I also have said to many that taking away more from retirees cannot be the solution of the pension solvency problem."
Dennis Leone
From Dennis Leone, June 10, 2009
Subject: Re: STRS Town Meeting at Apollo Career Center: Allen Co. RTA
Yes, you are correct. In fact, what I actually said in Lima (it's on tape) was that if active teachers are "grandfathered" in such a way that they will be allowed to take advantage of current retirement arrangements (i.e. 35-year/88% rule) -- which will help them for life -- then retirees should be likewise grandfathered with their COLAs. The reporter was a little mixed up on this issue. I also have said to many that taking away more from retirees cannot be the solution of the pension solvency problem.
Dennis Leone
From RH Jones, June 10, 2009
Subject: STRS Town Meeting at Apollo Career Center: Allen Co. RTA
To all:
I am quite sure that Dr. Leone wants any COLA cuts to take place for those active educators not now "grandfathered". We "grandfathered" retirees have given up enough already.
RHJones, retired
Bonuses hot topic at STRS forum
Beth L. Jokinen
Lima News, June 9, 2009
LIMA - The head of the State Teachers Retirement System had little good news for educators Tuesday. And he said little about performance-based incentives that many wanted to hear.
"Most of what I tell you tonight is not going to make you very pleased," Michael Nehf said during a town hall meeting hosted by the Allen County Retired Teachers Association. "Unless we make some changes to the system we will be unable to pay all the benefits."
While current retiree pensions are safe, there are shortfalls when looking long term, he told about 150 people.
The current financial downturn is hurting the system's assets, just as it is for retirement systems around the country, Nehf said. The board is studying the situation.
Dennis Leone, STRS board member from Chillicothe, criticized STRS staff for not making the public aware of the problems sooner. Options the board is looking at, including raising the age requirement and reducing cost of living allowance, should have happened years ago, he said.
Discussions quickly turned to the bonuses paid to investment staff. Nehf said the system is saving money by having its own investment staff, the system has to compete for the employees, and the staff is doing well for the fund. Leone is an opponent of the bonuses.
"I said a year ago we need to stop giving out bonus checks when we are losing billions and billions of dollars," Leone said. Many applauded Leone and others speaking against the bonuses.
The retirement fund lost $33.2 billion during the past 16 months. The fund sits at about $50 billion.
The board voted last month to cut the bonuses beginning in fiscal year 2011 if the retirement fund sees a negative overall return. The decision falls in line with what Rep. Matt Huffman, R-Lima, has proposed with legislation. He also spoke against the bonuses.
Leone wanted the board to not pay bonuses owed from the first half of fiscal year 2009, which ends June 30. The board suspended the bonus program for the second half of the year, meaning the payments are based on just the first half of the fiscal year.
The board will vote in September to approve the bonus amounts. Preliminary reports show they will total nearly $3.4 million. The payments are already 50 percent of what they would have been, Nehf said.

Wednesday, June 09, 2010

STRS FLASHBACK - The shot heard 'round Ohio in 2003 and a history lesson for newbies!

From John Curry, June 9, 2010
This was the article, that alerted both educators and non-educators alike, to the misspending, mismanagement and the entitlement philosophy that was rampant at STRS before a Cleveland Plain Dealer investigative reporter (now an investigative reporter for the Associated Press) laid it out for the public to see. John
P.S. Mr. Ohlemacher is featured below the main article as he does some follow-up investigative reporting that causes some mighty red faces for some state office holders and.....rightly so!
The [Cleveland] Plain Dealer, June 8, 2003
Teacher pension losses don’t stop spending
Educators and officials question big bonuses for fund employees
Stephen Ohlemacher
Plain Dealer Bureau
Columbus – The State Teachers Retirement System lost 21 percent of its investment assets in the past three years, a total of $12.3 billion.
Despite the losses, employees of the public pension fund got a total of $14 million in bonuses during the decline.
In 2001, STRS handed out a total of $6.1 million in bonuses to 345 employees, according to STRS documents. One employee’s base salary of $164,000 was bumped to $342,880.
It was the same year the fund lost 5.66 percent of its assets, more than any of the four other public employee pension funds in Ohio, according to the Ohio Retirement Study Council, which oversees the funds.
A lot of pension funds lost big money while the stock market plummeted.
But STRS spending practices – and the fallout from lost investments – have sparked outrage among some of the 424,171 teachers and retirees in the system.
The fund now stands at $46.5 billion, after peaking at $58.8 billion in August 2000.
“They are spending in a manner that is completely foreign to their members, and the employers that send them dollars,” said Dennis Leone, superintendent of Chillicothe schools in southern Ohio.
Leone has documented many of the STRS board’s spending practices and shared them with teachers, retirees and public officials across the state.
The revelations came as retirees learned their health insurance premiums will soon double, and their benefits will be cut.
The spending includes a $94.2 million office building adorned with $869,000 in artwork, generous fringe benefits for STRS employees, and frequent out-of-state travel for pension board members.
STRS also is getting criticism from unlikely sources: two public officials who sit on the nine-member board that controls the pension fund.
Ohio Attorney General Jim Petro and Susan Tave Zelman, state superintendent of public instruction, said STRS spending has been excessive.
Both have been on the board for years. Both promised to be more diligent in monitoring the fund in the future.
“At a time when there are shrinking resources, you don’t give bonuses,” said Zelman, a board member since 1999.
“When times are good people tend not to look at these things,” she said. “You can rest assured, now I’m going to be more aggressive in looking for ways to have a more efficient system.”
Petro said he is a big supporter of performance bonuses. But, he said, the STRS bonuses appear to be out of line, considering the fund was losing billions of dollars a year.
“If school districts, especially in financially tough times, would have been as extravagant as STRS has been, we’d have spanked them even harder,” said Petro, who often criticized the spending policies of school districts when he was state auditor.
“I think there have been occasions when we’ve been brilliant in our advocacy for accountability, and there’s been other occasions where we’ve probably not been as aggressive as we should be,” said Petro, and eight-year member of the STRS board.
A third board member, state Auditor Betty Montgomery, defended STRS spending policies, though she said they should be reviewed.
“If you kept them on public employee salaries alone, you would not be able to attract or keep the quality investment managers that keep our fund growing,” said Montgomery, also an eight-year member of the board.***
STRS Executive Director Herb Dyer said the pension board is simply trying to recruit and keep good investment staff in a competitive profession that pays well and offers good benefits.
“I appreciate that people who don’t do that kind of work for a living might not understand it, but that’s the reality of the professionalism involved,” Dyer said.
Teachers take a hit
The investment losses, combined with increasing health-care costs, are proving expensive for teachers and retirees. In July, teachers will have to start contributing a larger percentage of their pay to the retirement system, an increase from 9.3 percent to 10 percent. In January, health insurance premiums for retirees are scheduled to double. Insurance co-pays will increase, and benefits will be cut.
Teachers contributed $827 million to the retirement system last year. Their employers – mostly school districts spending taxpayer money – contribute 14 percent of teacher payroll, a total of $1.2 billion last year.
Some teachers complained that STRS spending hasn’t reflected the financial problems of the pension fund.
The STRS board completed a $94.2 million expansion of its office building in downtown Columbus in 1999. The seven-story building is decorated with eight pieces of artwork, all by Ohio artists, Dyer said.
The $869,000 art budget follows guidelines for state buildings, but some of the price tags have angered school officials, nonetheless.
One piece, called “A Whole Morning World,” is a series of painted metal tubes shaped like birds hanging from the seventh-floor atrium. The cost: $378,500.
Another sculpture, called “Integrity,” cost $100,000.
The building also has a childcare center that cost $818,000 and a $426,000 fitness center, according to STRS documents. In 2002, the pension board paid $487,748 to subsidize the childcare center so employees could get discounted rates for their children. Workers with family incomes of up to $66,000 are eligible for subsidies.
“I’m all for working mothers, and I certainly support day care,” Zelman said. “But I don’t think that STRS finances should be subsidizing STRS child care.”
The number of people working at STRS has increased nearly 42 percent since 1998, from 499 to 707. The pension board added 137 new positions in fiscal 2001, including 69 administrators, according to STRS documents.
The lost investments haven’t slowed the travel of board members, who have flown to conferences in Hawaii and Alaska, among other places. The STRS board spent an average of nearly $174,000 a year the past three years on travel, according to STRS documents. The biggest spender was board member Hazel Sidaway, a teacher from Canton who spent a total of $61,400 for travel the past three years. Board member Jack Chapman, a teacher from Reynoldsburg, came in second at $52,600.
“When your assets are declining, you don’t spend money like that,” said Marianna Lijoi, a teacher in Eastlake. “That is not their money to spend frivolously. That money is for teachers’ retirement.”
Susan Jacoby, a retired teacher from Canton, said, “They have spent our money like it belongs to them.”
The STRS board is made up of six members (five teachers and a retiree) elected by the active and retired teachers, and three state officials who serve as part of their jobs.
The elected members are paid expenses, but not a salary. The public officials designate members of their staffs to attend board meetings.
The board approves STRS policies and votes on an annual budget. The executive director is responsible for the day-to-day operations.
*** Jim (Petro) and Betty (Montgomery) were removed from the STRS board after they spoke these words thanks to SB 133 which removed them from the board. Jimmy and Betty didn't tell the whole story. In a letter written (June 6, 2006) by the Cleveland Plain Dealer State Editor Jane Hahoun, she relates these words about Jimmy, Betty and their designees on the STRS Board:
"Among those calling for reform (of the State Teachers Retirement System) were state Attorney General Jim Petro and Auditor Betty Montgomery, who complained that their designees on the STRS board had been outvoted or ignored when they tried to raise questions about expenditures.
Ohlemacher (a Plain Dealer reporter) examined the voting records of the designees and found that in fact, they had gone along with every vote on the expenditures from January 1999 to October 2003"
Note from John....the REAL person who was "outvoted" or "ignored" many times when he "tried to raise questions about expenditures" was the former STRS board member Dr. Dennis Leone.....Jimmy and Betty were, in fact, Dennis Leone wannabees and didn't know it!


From John Curry, June 9, 2010

Missouri State Employees Retirement System to drop staff bonuses

The Associated Press, Sun, Jun. 6, 2010

ST. LOUIS | A proposed plan would allow employees who run Missouri’s main government pension plan to get pay raises that would help offset having their controversial bonuses eliminated.

The St. Louis Post-Dispatch reported that this will be the last month for bonuses for most employees at the Missouri State Employees Retirement System.

The financial incentives came under fire after nearly $300,000 in bonuses were paid out last year despite a $1.8 billion loss in its portfolio in 2008. The bonuses were the result of the system beating a preset benchmark that considers five years of investment returns.

A compensation committee made up of retirement system board members voted 3-1 Friday to recommend having staffers receive raises worth 90 percent of their average bonuses the last three years.

The full 11-member Board of Trustees will consider the plan later this month. If approved, the changes would take effect when the new fiscal year starts July 1.

Gary Findlay, MOSERS executive director, said the net effect for employees isn’t a raise.

“Actually, they’re getting a cut” since only 90 percent of their bonuses would be rolled into base pay, he said.

One reason given by those voting “yes” was that the pay boost would help maintain staff morale.

The lone “no” vote came from Sen. Jason Crowell, R-Cape Girardeau. He said he prefers to return to the bonus system and add a requirement that the board vote on the bonuses rather than making them automatic when certain goals are met.

Crowell said the vote would prevent MOSERS from giving out bonuses in years when the system’s investments lost money.

Friday’s recommendation would affect about 70 employees — everyone except Findlay and Chief Investment Officer Rick Dahl. They can still receive bonuses because their pay is set by contract.

Tuesday, June 08, 2010

OK, board, are you listening??? I think we already know the answer.

Dennis Leone to John Curry, June 8, 2010
Subject: Re: Fw: SummitCRTA meeting and PERI's attack on our 13th ck
This is so discouraging to read......but I guess I should not be surprised. Why, when our COLAs are to cut beginning in 2011 that NO ONE from ORTA and NO RETIREE REPRESENTATIVE ON THE STRS BOARD has stepped up and said: "Wait a minute, if you're going to impose this change for retirees in 2011, then at least change the Final Average Salary calculation of actives who retire beginning in 2011 from 3 years to 5 years. For ONLY retirees to take a hit in 2011 is soooooo wrong.
Dennis Leone


Another nail (or two) in ORTA's coffin?

ORTA president Dengler and past president Scatterday promote cut in our COLA (in address to the Summit County RTA, 6/7/10) while ORTA pushes nearly doubling life membership dues to $500: there's something wrong with this picture!
From John Curry, June 8, 2010
...and, the attack on our 3% COLA? Bob....surely they wouldn't do that, would they? Or.....would they? R.H. Jones stated, "To get back to the SCRTA (Summit County Retired Teachers Association) meeting, of course, ORTA President Bob Dengler and Past President Blinn Scatterday spoke for the cut in our 3% COLA. Personally, I think they are both wrong and the position that they took will hurt us. In my opinion, they have forgotten that they represent retired members of the STRS, not the active members." How much more of this will STRS retirees take before they try to regain control over the leadership of their ORTA??????????????????? I am so glad to say that I never joined ORTA and this gives me one more reason not to join!
From RH Jones, June 8, 2010
Subject: SummitCRTA meeting and PERI's attack on our 13th ck
Kathie and all:
I played it by music [a quote from a nephew] and hit a sour note; I will not be coming down to meet Attorney General Cordray at the CORE meeting, Im sorry to say. Here is why:
I have to spend more time in lobbying. Yesterday, as you may remember, I attended the SummitCRTA meeting whereby they were to vote on the unifying of the local SCRTA dues with the ORTA dues -- ORTA will be raising their dues to $30 annual and $500 Lifetime (ORTA Leadership Bulletin, June, 2010.) At the luncheon, a vote was taken and unfortunately the unification passed 67 for and only 37. There were 149 present, 104 voted on paper ballots.
Before the vote, Dr. Fluke and Lloyd Knudsen spoke very eloquently and to the point against it, and then I spoke against, as well. I thought that unity was a bad idea and a big mistake, since ORTA and not done much for us lately in the fight to keep our 3% COLA. Soon, I think, the result will be a drop in both the local and state membership.
It seems to me that forces within and outside are out to destroy our ORTA, our organization that in the past has lobbied hard for us to get the COLA in the first place. It was after the Jimmy Carters 14% inflation in the 1970s that ORTA fought for us to get a modest COLA and eventually the simple 3%. The ORTA must be given credit, too, for lobbying for the inflation-fighting 13th check, which is now being disrespected in this latest edition of the Public Employee Retirees, Incorporated (PERI) newsletter! It can be read on their website.
The PERI is saying, in effect, that STRS was overly generous in providing a 13th check, and it cost a lot of money out of the STRS general fund. The PERI said they lost a lot of members in opposing the 13th check, but they were correct in not lobbying for it. However, the PERI failed to mention that over the years since our STRS board first hired employees, the STRS has enriched the Ohio Public Employees Retirement System (OPERS) by millions, and more millions of dollars of our money -- that was the STRS employer share of the cost of the employees retirement package. The PERI has to be told that if STRS employer and employee retirement contribution went into our STRS retirement account, instead of OPERS, the STRS could now afford to pay us the 13th check!
To get back to the SCRTA meeting, of course, ORTA President Bob Dengler and Past President Blinn Scatterday spoke for the cut in our 3% COLA. Personally, I think they are both wrong and the position that they took will hurt us. In my opinion, they have forgotten that they represent retired members of the STRS, not the active members.
As a Life Member of ORTA, I should not have to be an officer to voice my opinion and feel strongly that I have a right to oppose that which I think is hurtful to the membership. Most certainly, losing 1% of our simple 3% COLA will hurt us retired teachers and that includes the retired administrators and full professors who dominate our ORTA offices.
RHJones, retired teacher

Monday, June 07, 2010

STRS uses the magic 8% this realistic?

From John Curry, June 7, 2010
Big Pensions Eye Lower Return Forecasts. Should You?, Jun 6, 2010
Carla Fried

The folks running some of the nation’s largest public pension plans are contemplating the need to lower the assumed investment returns for their pension funds. If you’re still holding onto great expectations for your IRA and 401(k), it’s likely you too should be eyeing lower return forecasts for your retirement funds.

California Reeling

It’s no secret that public pensions across the country are seriously underfunded. What might not be so widely known is that many funds use an assumed rate of return of 8 percent. And based on what’s happening in California, that may be too optimistic.

  • The $201.5 billion California Public Employees’ Retirement System (CalPERS) the nation’s largest public pension uses a 7.75 percent assumed rate of return for its fund; a target it has managed to meet for the past 20 years. But a bevy of CalPERS consultants recently came in with an average expected return over the next 10 years of 7.29 percent. CalPERS is currently reviewing the data before making a decision on whether to lower its assumed investment rate of return.
  • The $138 billion California State Teacher’s Retirement System (CalSTRs) the nation’s second biggest public pension heard from its cabal of managers and consultants that its 8 percent assumed rate of return should be lowered to 7.5 percent. CalSTERs tabled the recommendation for a lower assumed investment return until the fall (after Election day) effectively pushing off any move that would boost the plan’s required publicly funded contributions.
  • The San Diego County Employees Retirement Association (SDCERA) last month formally lowered the implied rate of return on its pension. But its consultants seem to be a bit more optimistic than the folks advising CalPERs and CalSTERs. The San Diego pension fund merely lowered its assumption from 8.25 percent to 8 percent. That 8 percent is more than 70 basis points higher than the average return the CalPERs consultants came up with for that plan. That’s no small difference. To put it in personal terms, a $250,000 IRA that grows at 8 percent for 10 years (assuming no new investments) will reach about $540,000 At 7.29 percent it grows to $505,000 percent.

As anyone who has spent 30 seconds playing around with a retirement calculator knows full well, when your assumed rate of return is lower, the only way to reach your goal is to make some serious adjustments. You can save more (in the case of public pensions this means getting higher contributions from participants and taxpayers), invest in higher-risk assets in the hope of garnering better returns, or change the benefit formula.

As fellow MoneyWatch blogger Charlie Farrell points out, public pensions-and not just in California-have ominously gravitated toward riskier investments to juice returns. In addition to using leverage, pensions invest in all sorts of alternative investments, from real estate (a costly bet for CalPERs in recent years), currency, private equity, and even viatical settlements. Yep, seems that some Pennsylvania pensions have recently taken stakes in life settlement funds.

Adjusting your Retirement Portfolio Assumptions
While there’s no guarantee the varied toolbox for pensions guarantees higher returns, nor should we assume that any of us can do better than the pensions. The news out of California is further evidence that a rethink of your retirement assumptions is in order if you’re still holding onto the notion that your portfolio will somehow generate returns of 8 percent or more.

Consider that Jack Bogle recently told Morningstar he thinks stocks, on average, might generate an annualized return of 7 percent or so going forward. For bonds he’s not eyeing more than 5 percent. Depending on your particular asset allocation your overall return would likley be somewhere south of 6 percent. Plug that into your retirement calculator of choice and see how that changes your outcome. Making small adjustments today in your plan -investing more, or considering delaying retirement a few years-can go a long way toward heading off any shortfall.

Educators are now really feeling the pinch!

From John Curry, June 7, 2010
Next on recession's hit list: teacher salaries
Union members forgoing raises, cost-of-living increases
Columbus Dispatch, June 7, 2010
By Charlie Boss
Teachers and other school employees have felt the impact of a dismal economy. Jobs have gone unfilled, class sizes have expanded and there's no money for training and supplies.
But after years of tightening their belts, school districts now are reaching into the bulk of their expenses - salaries and benefits - to curb costs. Across the state and nation, more school boards and unions are settling on one- to two-year contracts with cost-of-living increases from zero to 1.5 percent, officials say.
"We've hit the point in the recession where, basically, most states are in the third year," said Michael Griffith, finance expert with the Education Commission of the States, based in Denver.
"In the first year, school districts have cut on the edges," he said. "In year two, districts have made deep cuts but held teachers harmless. Now, in year three, the only thing left is teacher salaries."
Last month, teachers unions in the Gahanna-Jefferson and Pickerington districts agreed to extend contracts through the 2010-11 school year with no increases to base salaries. (Teachers will still get step increases, which are awarded for experience and level of education.)
Dublin board members recently OK'd a three-year pact with the Dublin Educators' Association with raises ranging from 1 percent to 1.5 percent. The previous contract with the teachers union lasted for two years and included 3 percent raises in both years.
• In January, Reynoldsburg's two employee unions accepted a freeze on raises and step increases next school year.
• Last year, Worthington teachers agreed to freeze base salaries in the 2011-12 school year.
• In March, Columbus City Schools' nonteaching employees negotiated 1.7percent and 1.85 percent raises in a new two-year contract that has them taking more risk on their health-care costs.
Ten of 16 Franklin County school districts have union pacts expiring this year. Talks have started in the Bexley, Canal Winchester, Dublin, Groveport-Madison, Hamilton, South-Western and Westerville districts.
"It's just a sign of the times," Hilliard Treasurer Brian Wilson said. "All the districts are facing financial difficulties and are looking at what their communities can afford. That will certainly be an issue for us, as well."
Contracts for Hilliard's two employee unions are up Dec. 31.
The financial challenges have led to contract disputes in some districts.
Cleveland teachers protested last month over the lack of progress on a new contract. The school board decided to lay off about 800 employees, including 546 teachers, to help stave off a $53 million deficit. District leaders said teachers can limit job losses by agreeing to concessions, such as wage cuts, but the union has refused.
It's foreshadowing for what's to come in Ohio as districts and unions get deeper into negotiations, said Van Keating, who oversees policy and labor work for districts at the Ohio School Boards Association.
"You aren't going to see any seriousness of the struggle now," he said. "Where that is going to come into play is the start of the school year."
He said school leaders are aware of contract settlements elsewhere, especially when unions forgo raises.
Giving up a cost-of-living raise is not something educators take lightly, said Carla Fultz, president of the Pickerington Education Association.
"We call the zero the gift that keeps on giving," she said. "You don't get the percentage we lost back. In better economic times, we would have gotten a 2 or 3percent raise. The next time you negotiate, you're not going to get 6 percent."
She said this is the third time the union agreed to forgo cost-of-living raises in the 18 years she's been in the district.
Pickerington board members are trying to decide how much money to seek in a November levy request. Adding to the uncertainty is a projected $3.4 million drop in state funding for both the 2011-12 and 2012-13 school years because of the loss of federal stimulus money.
"It's very easy to see the handwriting on the wall and the difficulty the district is in," Fultz said. "It's really clear to us that now is not an appropriate time to ask for anything."
Larry KehresMount Union Collge
Division III
web page counter
Vermont Teddy Bear Company