Wednesday, March 06, 2013

Bloomberg comment on pension bonuses

From Mario Iacone, March 6, 2013

The following information has been excerpted from a Bloomberg article,
 link of the Bloomberg Article 
The excerpt is:
...The pension with the next-highest bonuses, State Teachers Retirement System of Ohio, paid $8.1 million to 88 workers last year, data show. That included $3.1 million in bonuses earned in 2009 but deferred until the pension reached $65 billion in assets last year, the fund said.
The California Public Employees’ Retirement System, the largest public pension in the U.S., paid $4.1 million to 50 workers in 2011, the fund said.
By comparison, the three highest-performing funds over the past 10 years, the Pennsylvania School Employees Retirement System, Ohio Police & Fire Pension Fund and Pennsylvania State Employees’ Retirement System, didn’t have an employee paid more than $270,000, and none pays bonuses, the funds said....

Tuesday, March 05, 2013

Jim Stoll: Some questions for STRS

Jim Stoll to Nick Treneff, March 5, 2013
Mr. Treneff,
Here is the link of the Bloomberg Article which I referenced in my public records request email to you.... you are quoted in there along with Mr. Mitchell so I am assuming the $678,000 total compensation for Mary Ellen Grant is accurate?  That would be totally unbelievable to me but nothing the STRS administration or Board does should surprises us (your stakeholders) anymore....
How does that compensation mesh with Mr. Nehf's statement on the website of a year ago... that "Without changes STRS would not be able to pay future benefits?"   Yet we are paying someone $678,000....  Unbelievable.... Shame on all of you....  The definition of a Ponzi scheme is that "one cannot pay future benefits."   It seems more and more to your stakeholders everyday that this is what you are running up there.
Jim Stoll 
Sycamore Schools
Jim Stoll to Nick Treneff, March 5, 2013
Dear Mr. Treneff:
I would like to make a of public records request of all trading by our investment department relative to the following investments. Specifically, I would like a copy of all trades (purchases and sales and our net loss or gain..... which were made in two securities.  SDS and VXX.  I believe both are ETF's and It is my understanding that these were leveraged bets by Mr. Mitchell and the investment staff that the market would decline which obviously hasn't occurred. Also (#2) can you tell me where I could find these purchases / sales in the Board minutes... I have looked for them in the minutes I receive but can't find them? Have they been listed?
I'm trying to confirm the following information which was provided to me by someone doing research on STRS Ohio Investments that, "Under Mr. Mitchell's direct orders over the past year, STRS traders have bought and sold SDS and VXX with disastrous results. STRS has lost tens of millions of dollars in these two leveraged ETFs, all because Mr. Mitchell has wrongly made a short-term bet that the market will decline. "
Also, there was a Bloomberg news article (which) I'd be happy to send which states that Mary Ellen Grant of the STRS Investment Department received total compensation last year of $678,291.   Can you please confirm that figure for me.  If the figure is incorrect can you please provide what her Total Compensation was? Thank you.  Actually if you could simply provide Mary Ellen Grant's Total Compensation package amounts for years, 2010, 2011 and 2012 that would be great for comparison purposes as these were the years that the Board proposed and CUT benefits to all their constituents... would like to compare how that philosophy applied to their own employees.
Thank you Nick for providing the requested information in a timely manner.  If you could please acknowledge receipt of this email that would be greatly appreciated. If you need further information to complete the request please don't hesitate to call or email.
Jim Stoll 
Sycamore Schools

Texas Pension Manager Paid $1 Million Trails Peers Who Make Less; STRS' Mary Ellen Grant second in the country at $678K+

(Click image to enlarge)
Britt Harris arrived at the Teacher Retirement System of Texas in 2006 from the world’s biggest hedge fund with a mandate to improve the pension’s performance. He also brought a Wall Street attitude about pay.
Harris, the Texas fund’s chief investment officer, made $1 million last year in salary and bonuses, the most of any public pension employee in the 12 most populous U.S. states, according to data compiled by Bloomberg. Four other employees made at least $500,000, and the fund paid $9.7 million in bonuses in 2011, more than any in those states.
Funds where executives made far less posted better investment results than those produced by Harris and his staff over three and five years. They included, respectively, the Ohio Police & Fire Pension Fund, where the top-paid executive last year was William J. Estabrook, at $231,614, and the New Jersey Division of Investment, where director Timothy Walsh made $185,000 plus $7,500 for moving expenses, data show.
“These guys may claim to be worth their weight in gold,” said Edward Siedle, a former U.S. Securities and Exchange Commission attorney and president of Benchmark Financial Services of Ocean Ridge, Florida. “They absolutely can’t justify it.”
Falling Behind
While Harris says public pension compensation must be competitive with the private sector to attract top talent, the Texas fund -- seventh-largest in the U.S. with $112.4 billion in assets -- is falling further behind in long-term obligations to more than 1.3 million education employees and retired teachers, including Harris’s mother. The pay-and-performance disparities at public pension funds are among the findings of a data review in which Bloomberg compiled payroll records for 1.4 million employees of the 12 largest states.
Of the highest-paid pension executives in those states last year, all but two worked at the Texas fund or the State Teachers Retirement System of Ohio, data show. Yet the Texas fund’s 2.12 percent return over five years as of June 30, 2012, net of fees, was less than five other state pensions, including the New Jersey pension plan, which returned 2.46 percent. The Texas fund’s three-year results of 13.17 percent trailed Ohio Police & Fire, which returned 13.25 percent.
Harris, who became chief investment officer in December 2006, was hired by a board of trustees appointed by the governor. He said it isn’t fair to judge his returns before 2009. It’s only since then that his strategy has been completely in place after attracting the investment talent he needs, Harris said.
‘Come Home’
“You get a better car, then you’ve got to have a good driver,” Harris said in an interview. “This whole structure has been like a magnet to all these investors from around the country to kind of come home to momma, come home and serve the teachers.”
The Texas fund’s three-year return was just ahead of the State Universities Retirement System of Illinois and the Pennsylvania Public School Employees’ Retirement System. Their top-paid executives earned $221,346 and $269,302, respectively, the data show. Neither fund pays bonuses.
“Strictly looking at performance for pay, there are a lot of people who are paid only mediocre salaries that deliver excellent performance,” said Charles Skorina, an executive recruiter retained by the boards of institutional investors to identify and hire investment professionals.
‘Loose’ Correlation
He found “a very loose correlation between pay and performance in public plans,” based on an analysis of the pay of chief investment officers and pension returns over five years.
The Texas teachers’ pension plan was 81.9 percent funded as of Aug. 31, down from 82.7 percent funded in 2011, 82.9 percent in 2010 and 83.1 percent in 2009. These percentages show how much money the fund projects it will have compared with its obligations to retirees over the long term. When a fund falls further behind on them, taxpayers have to make up the difference. The U.S. median for states fell to 71.7 percent in 2011 from 82.6 percent in 2007, according to data compiled by Bloomberg.
While retired teachers in Texas don’t oppose bonuses to keep good staff, they think the payments are too high and reward too many employees, said Tim Lee, executive director of the Texas Retired Teachers Association in Austin.
“They don’t like the fact that people are getting bonuses and raises but our retirees haven’t had a raise for 12 years,” Lee said in a telephone interview. “If we are the best, then we must perform better than anybody else.”
Pay, Bonuses
Harris’s compensation included $480,000 in annual pay plus $565,792 in bonuses earned in 2009 and 2010, according to the pension. He is scheduled to make $900,752 in 2012, including his annual salary, plus bonus amounts of $222,277 and $198,475 earned in 2010 and 2011, the fund said.
Harris, 54, joined the Texas system after managing the pension fund at Verizon Communications Inc. (VZ) and six months as chief executive officer at Bridgewater Associates LP, the world’s biggest hedge fund, based in Westport, Connecticut.
He was hired to improve a fund with below-average performance that was not well diversified, Harris said. With approval from the state legislature, Harris began ramping up stakes in so-called alternative assets including private equity and hedge funds. Alternatives have risen to 32.1 percent of assets from 4.1 percent in 2006, according to the fund.
Attracting Talent
Harris said he also sought to attract investment talent appropriate for one of the world’s 20 largest pensions. That, he said, addresses the “travesty” and “sin” of a public pension fund paying less to an investment staff working for retirees than private-sector managers earn at smaller funds serving affluent clients.
Standing at a white board in front of the conference table in his Austin office, with a panoramic view of the Texas Statehouse, Harris drew a diagram showing the scale of investment compensation at all pension funds, public and private.
“These people right here are being cheated,” he said, pointing to public funds at the bottom.
“It’s crazy to think about the fact that the way the world works is the largest, most important funds are expected to compensate people the worst,” Harris said.
After hiring a consultant to complete a comprehensive review of pay, Harris said he increased base salaries to the top quarter of public funds and bonuses to match the bottom 25 percent of private funds.
Incentive Changes
He changed the incentive program, which had paid bonuses of as much as 75 percent of base salaries only to investment directors, managers and executives. Awards now range from as much as 5 percent of base salary for administrative staff to as much as 125 percent for top officials. Bonuses are paid over two years, as long as an employee remains with the system.
Bonus pay at the fund increased from $622,918 for 34 employees in 2007 to $9.7 million for 108 in 2011, which included incentives earned in 2008, 2009 and 2010 and paid last year when the fund reached positive returns, according to records provided by fund. This year, Texas Teachers paid $6.1 million in incentives and expects to pay $6.9 million in February, records show.
With bonuses, 63 of the fund’s employees, or about 10 percent, made more than Republican Texas Governor Rick Perry’s $150,000 annual salary without his state pension last year, data show.
Good Stewards
The Texas Teachers Board of Trustees has a duty to act in the best interests of the people they serve while being good stewards of taxpayer dollars, said Josh Havens, a spokesman for Perry.
“Governor Perry expects the board to do its job,” Havens said in an e-mail.
The pension with the next-highest bonuses, State Teachers Retirement System of Ohio, paid $8.1 million to 88 workers last year, data show. That included $3.1 million in bonuses earned in 2009 but deferred until the pension reached $65 billion in assets last year, the fund said.
The California Public Employees’ Retirement System, the largest public pension in the U.S., paid $4.1 million to 50 workers in 2011, the fund said.
By comparison, the three highest-performing funds over the past 10 years, the Pennsylvania School Employees Retirement System, Ohio Police & Fire Pension Fund and Pennsylvania State Employees’ Retirement System, didn’t have an employee paid more than $270,000, and none pays bonuses, the funds said.
Since Harris joined the Texas fund in December 2006, Texas Teachers has paid $20 million in bonuses, records show.
‘Go Along’
A 2009 memo submitted to the Texas system’s board of trustees by Michael Green, one of the fund’s former senior managers, said Harris’ approach to running the system can be summarized in two phrases: “You’re too skeptical” and “You’ve got to go along to get along.” Reached by telephone, Green declined comment other than to say he stands by the memo.
While Harris said he can’t comment because Green is a former employee, he said, “I don’t need to get along with anybody” and “this is a job that I want to be in, not that I have to be in.”
Top public pension fund executives make less than their counterparts at investment-management companies. Compared with the $1 million Texas system paid Harris last year, Waddell & Reed Financial Inc. (WDR), with $95 billion now under management, paid Michael Avery, its president and chief investment officer in 2011, total compensation of $4.6 million that year, according to the Overland Park, Kansas-based company’s proxy statement.
Bonuses Falling
Yet bonuses are falling for money managers in the private sector. Wall Street’s cash bonus pool is likely to fall for a second straight year in 2012 as the financial industry grapples with market turmoil, economic weakness and new rules, New York state Comptroller Thomas DiNapoli said.
The average Wall Street bonus fell 13 percent to $121,150 in 2011, the lowest since 2008, and down almost 40 percent from a peak of $191,360 in 2006, according to estimates by DiNapoli.
Harris didn’t take an estimated bonus of $167,835 in 2009 after the TRS fund experienced a 27 percent drop in its market value in 2008. The fund pays bonuses even if the fund loses money -- deferring the payments until returns are positive again -- as long as employees beat their investment benchmarks, according to the plan.
Core Culture
Under Texas Teachers’ program, bonuses are calculated based 80 percent on investment performance against asset-class benchmarks and peer groups, with 20 percent based on how each employee rates against “core culture items” of candor, curiosity, accountability, teamwork and leadership, and promoting a constructive work environment, said Susan Wade, director of professional development.
Lee at the Texas Retired Teachers Association sent a letter to board trustees in June seeking to lower the amount of bonuses employees are eligible to earn, to raise the benchmarks used to qualify for a bonus and to limit the number of workers who qualify. The board didn’t agree, said Lee, the association’s executive director.
Among large, statewide pension plans, about one-quarter to a third have some sort of performance incentive program for their investment staff, said Keith Brainard, research director at the National Association of State Retirement Administrators.
Anecdotal Reports
Brainard said he hears growing anecdotal reports about retirement funds having difficulty attracting and retaining qualified investment staff, and that Harris and many asset managers could easily double or triple their compensation in the private sector. If they were working for an external money manager, most people wouldn’t be concerned, he said.
About 80 percent of the Ohio teachers’ $65 billion fund is managed internally by about 100 investment professionals, said Stephen Mitchell, deputy executive director of investments.
That includes Mary Ellen Grant, the fund’s highest-paid employee last year at $678,291. She oversees a staff of 35 that handles almost 90 percent of its real estate holdings, while other funds rely on more expensive external managers, spokesman Nick Treneff said. The fund’s three-year return on investments, net of fees, was 12.40 percent and its five-year return was 0.97 percent.
While relying on internal staff can inflate compensation totals, it’s more cost effective than paying external managers, Mitchell said in an interview in Columbus. He said an analysis by CEM Benchmarking concluded the Ohio Teachers’ fund saved $91 million in 2011 alone by managing assets internally compared with peer median costs to use external managers.
“Our costs are very low for what we do,” Mitchell said.
No Guarantee
Even so, there’s no guarantee that active management and higher compensation will produce better results, and funds can get competitive returns with passive management using external managers, said William Mabe, head of the State Universities Retirement System of Illinois. Mabe earned less than a third of what Grant was paid in 2011 and a quarter of what Harris made.
Mabe’s fund posted returns that ranked third-best among 20 funds in the 12 largest states over three years and 8th highest over five years, while Mabe’s compensation was lower than that of the top executives of all but three of the 20 plans.
“At the end of the day,” Mabe said in a telephone interview, “returns are really what matter.”
To contact the reporters on this story: Mark Niquette in Columbus at; Martin Z. Braun in New York at
To contact the editor responsible for this story: Jeffrey Taylor at
(Click image to enlarge)
Caption: Dec. 13 (Bloomberg) -- Britt Harris, chief investment officer of the Teacher Retirement System of Texas, talked with Bloomberg's Mark Niquette about the fund's performance and employee compensation. In 2011, Harris earned $1 million in salary and bonuses and four of his staff members earned at least $500,000. Returns over three, five and 10 years trailed those at funds including the State University Retirement System of Illinois, and the New Jersey Division of Investment and retired teachers haven't had a raise in a decade. Harris says pay must be competitive with the private sector to attract top investment talent, and the fund is heading in the right direction with the system he put in place. Harris spoke on Oct. 19 in Austin, Texas. (Source: Bloomberg)
Public Pension Fund Compensation Ranks at the Top
State pension funds that pay their executives the most don’t always produce the best investment results, according to data compiled by Bloomberg that includes 1.4 million payroll records for employees of the 12 largest U.S. states. Pension-fund officials were the highest-paid non-university employees in states including Texas, Ohio, Virginia and Georgia, the data show.
To read more, click here.
(Click images to enlarge)


Pension board members advised to cancel Hawaii trip

Read about it here.

Monday, March 04, 2013

Ten years ago.....the Akron Beacon Journal tells the story

Retired teachers applaud folk hero
Chillicothe school superintendent's persistence sheds light on excesses of Ohio retirement system
By Stephanie Warsmith
Beacon Journal staff writer

August 11, 2003 
CHILLICOTHE - To many retired teachers in Ohio, he has become a hero.
In Dennis Leone's mind, he is just a concerned, small-town superintendent who couldn't believe a persistent rumor: The State Teachers Retirement System was spending money lavishly while he and other Ohio school leaders faced shrinking budgets and difficult cuts.
The truth turned out to be worse than the gossip: nearly $20 million in employee bonuses in the past three years; $530,000 spent during that time by board members on travel expenses; and $94.2 million put into a new STRS headquarters in Columbus.
At the same time, STRS assets -- now at $47.2 billion -- were declining, and the 400,000 active and retired teachers who pay into the pension fund were being asked to pay more for health care benefits.
``The board's spending practices are completely foreign to the members they serve,'' said Leone, a 28-year educator who was a candidate for Akron superintendent two years ago.
Since Leone first uncovered the STRS spending practices, three bills have been introduced in the state legislature to provide more oversight, the pension fund's executive director has stepped down -- taking $550,000 with him -- and a financial audit of the fund has been ordered.
Many say the extraordinary turn of events might not have happened if Leone hadn't been determined to uncover the truth.
``He has been the crusader of this cause,'' said Sen. Kirk Schuring, a Jackson Township legislator who introduced one of the pending STRS bills. ``I think every member of STRS -- both the active and retired ones -- owes Dennis Leone a debt of gratitude.''
Budget crisis
At the same time that Leone was verifying rumors about excessive STRS spending, he was facing a budget crisis in his 4,000-student district an hour south of Columbus.
He needed to slash $1.7 million and knew that could involve school closings and layoffs. It was necessary because of state cuts and declining tax revenue from Mead Paper Co. -- one of Chillicothe's largest employers -- which laid off 500 people and closed part of its plant.
``The parents don't like it. I don't like it. It's the reality of what I have to do,'' Leone, 53, said recently as he headed to a middle school being converted into a massive elementary school to save money.
Leone said that facing what he describes as the most difficult time in his career made him more determined to probe STRS.
In early February, he wrote a letter to the STRS board asking 12 questions about rising health care costs for retired teachers and STRS spending practices. He waited six weeks and got no response. Then he went to the March STRS board meeting and voiced his concerns.
``I said, `My district is in difficult financial times and I expect to have to close some schools. I would like to know what you're doing to cut costs,' '' Leone recalled.
Two weeks later, Leone got an e-mail from Herb Dyer, the former executive director of STRS who stepped down Tuesday with a $550,000 severance package. Retired teachers and more than 100 state legislators had called for Dyer's resignation -- partly because of his manner in responding to their queries.
``When I have time to respond to such a long list of questions in writing, I will consider doing so. That is not apt to be any time soon, Mr. Leone,'' Dyer's e-mail said.
At the April STRS meeting, Leone read that response to board members. Ten weeks had passed since he first requested information.
``I looked at the board members and said, `Tell me what would happen to you if you or your principal responded to a parent like that,' '' Leone said to the eight-member panel that includes four active teachers and one retired teacher.
Leone asked when he would get answers. Board Chairwoman Deborah Scott turned to Dyer and asked: ``Well?''
By early May, Leone finally got the information he requested. Using documents he stores in an overflowing box in his office, he put together a report that educators statewide would read.
Shocking discoveries
Among his findings were:
• Administrative expenses at STRS climbed 17.4 percent per year between 1996 and 2002.
• 34 STRS employees received bonuses of more than $40,000 last year.
• $487,000 a year was going toward child care for STRS employees working in the new office building in Columbus.
Leone e-mailed his report to every Ohio principal and superintendent. Many chose to forward the e-mails to teachers and retired educators. Several who got the report had been asking similar questions about STRS spending and higher health care costs and -- like Leone -- were having a tough time getting answers.
Marilyn Gibbs and Marianna Lijoi, two Northeast Ohio teachers, were among them. Gibbs is a retired teacher from Plain Local Schools in Stark County, while Lijoi is a librarian living in Kent and working for Willoughby-Eastlake City Schools in Lake County.
The women, longtime friends, rallied others they knew and got in touch with Leone. They wanted to know what they could do to help.
``You don't just spend someone else's money and then tell them it's not their money,'' Gibbs said, referring to a comment Dyer made to another retired teacher when he said the STRS money was the board's to ``distribute as they see fit.''
As others contacted Leone, he built a network of about 20 teachers across the state who began urging local media outlets to investigate.
``I credit him with working hard to get the information,'' said Lijoi, who is helping to organize a rally at the Statehouse before the STRS board meeting Friday. ``He didn't assume anything. He went to STRS and made them talk to him.''
Motives questioned
Not everyone was happy with Leone's efforts.
In a letter mailed to union presidents statewide in June, Gary Allen, the head of the state's largest teachers union, questioned Leone's motives. The Ohio Education Association president also said Leone's logic was ``hard to follow.''
``Anyone can point fingers and create division, especially with the advantage of hindsight and when communicating about such an emotionally charged issue but the OEA refuses to operate in that destructive of a way,'' Allen wrote.
The letter angered many teachers, who e-mailed and wrote Allen. Gibbs and Lijoi even traveled to Columbus to meet with the union leader.
Allen declined to discuss why he questioned Leone's motives.
``I don't want to go into that,'' he said.
Allen said the OEA's main concern is about emphasizing the spending concerns about STRS, rather than focusing on the larger issue of health care.
Under state law, retired teachers are guaranteed a pension but not health care. Medical coverage has been provided using surplus money in the STRS pension fund.
The STRS board approved sweeping changes to health care coverage in May, citing investment losses and rising medical costs. Beginning in January, some retired teachers will be spending up to half their pension checks on health care. And that coverage is only for the next year.
``They have focused their energy on the culture and operations at STRS,'' Allen said. ``You can deal with all these things... and there's still going to be the issue of how to have adequate health care in 2004.''
Leone's supporters defend his motives and his work.
``He has 28 years in education and someday wants to retire and be able to afford health care coverage,'' Gibbs said.
Instant celebrity
The release of his report in May turned Leone into an instant celebrity among educators -- something he wasn't expecting.
The former high school and college javelin thrower has spoken to retired teachers across the state. Thick stacks of letters and e-mails grow daily.
Leone's wife, Nikki, said she was awakened one morning when a woman called because she hadn't gotten her pension check. She suggested the woman contact the company that issues the checks.
``It makes me feel very sad to hear the panic in the voices of elderly people who have worked hard all their lives,'' she said.
At the June STRS board meeting, several teachers mentioned Leone when they got up to speak. When he went to the podium, he got a hearty round of applause from the teachers in the audience.
``It was never my intention to seek publicity,'' Leone said recently as he drove to another retired teachers meeting.
More changes urged
Leone released a second report Friday to STRS board members, superintendents and principals. It outlined more than 30 recommended changes.
These included laying off 140 of 688 STRS employees, eliminating most bonus checks, selling the artwork in the headquarters and having no more lavish parties or dinners -- some that cost thousands of dollars. He said any savings should be used on retirees.
Leone said he will continue to watch over the STRS system, though he's not sure if he'll continue digging.
The superintendent, who earns $105,000 a year, would like to hand over his watchdog role. The state inspector general would be given oversight of STRS under a pending bill.
When the school year begins, Leone will have a lot to keep him busy. Two days after he released his first report on STRS, the Chillicothe Board of Education voted to close three schools and lay off 45 principals, teachers, cafeteria workers and custodians. The school board will vote this month to place a property tax issue on the November ballot.
Just as retired teachers worry about the future of the STRS fund and their health care, Leone is concerned about what will happen in his district. His hope is that STRS and Chillicothe schools surmount their challenges.
``I am very nervous about the future,'' Leone said. ``I don't know where things will be two years from now.''

Sunday, March 03, 2013

STRS Flashback - 7 Years Ago - Those costly bonuses continue costing!

From John Curry, March 2, 2013

Canton Repository
December 7, 2005
By Paul E. Kostyu,
Copley Columbus Bureau Chief

COLUMBUS - For about $427,000, members of the state teachers’ pension fund board can make a class-action lawsuit, which already has cost the pension system $3 million, go away.

The board is expected to discuss Thursday a final settlement to the lawsuit brought by 260 noninvestment employees when the pension system didn’t pay their bonuses in 2003.

“I won’t say anything about the lawsuit,” said Robert B. Brown, chairman of the board.

But Dennis Leone, a member of the board who voted against a $3 million partial settlement last month, said terms have been offered and he’s “upset with the proposal. I’ve felt that way since November.” He would not discuss the details.

Copley Ohio Newspapers has learned the State Teachers Retirement System board will be asked to agree to:

• Paying the employees’ 8 percent share toward their retirement based on the bonuses they received in the earlier settlement. This is expected to cost about $148,860.

• Adding four current or former employees to the list of employees covered by both parts of the settlement.

• Paying an additional $275,000 in attorney fees to the employees’ lawyer, Michael R. Szolosi Sr. of Columbus. His total from both settlements will be $900,000.

• Paying additional litigation expenses not covered in the first settlement, which was $13,000. The final bill is expected to be at least $3,000.

In return, the board would not face punitive damages for withholding the bonuses.

A 2003 investigation by Copley found that bonuses were awarded for tasks, called “stretch goals,” that many considered part of employees’ regular jobs.

The retirement board suspended and then abolished the bonus program. It also voted not to award the bonuses to noninvestment staff, overriding decisions to do so by the former and current executive directors. It also ignored the advice of its state attorney. The employees then sued.

John Lazarus, another board member who voted against the initial settlement, said he would vote against this one as well.

““I didn’t think it was right to pay the bonuses,” he said, “and the board had no obligation to pay them. I’m against it whatever the final agreement comes out to be.”

Szolosi would not discuss the details of the settlement, but said Tuesday he’s been told the board would vote on the settlement Thursday.

He said a fairness hearing has been set for Dec. 15 in Franklin County Common Pleas Court, giving any noninvestment employee unhappy with the settlement a week to raise an objection. Szolosi said he didn’t expect any to do so.

“I’m personally optimistic the board will approve this settlement reached by the lawyers,” Szolosi said. “There would be no further risk of punitive damages. They would have managed a significant risk by eliminating it.”

Once a settlement is reached, the board can expect still another bill, which also could reach six figures — from Attorney General Jim Petro, who assigned Columbus attorneys Roger Schantz and John Stock as special counsel to defend the pension board.

“I am of the opinion that those responsible for these expenses should assume the financial burden not the pension fund,” Leone said, referring to the more than $3,427,000 total settlement amount.

Asked if he meant former Executive Director Herbert Dyer, who set up the bonus system, former board members who approved the system and Petro, Leone would not say.

“I’ll be specific with names at the meeting,” he said.

Laura Ecklar, a spokeswoman for the board, Schantz and Petro’s office did not return phone calls seeking comment.
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