Thursday, June 28, 2018

Dean Dennis to STRS Board: Reform your investing approach

June 28, 2018
Note to STRS Board of Directors: Reform STRS's Investing Approach
Dean Dennis
Cincinnati, OH
JUN 28, 2018 — STRS has over a 100 people in their Investment Department. STRS pays the investment firm, Callan Associates, over $700,000 annually for investment advice. Callan recommended an Earnings Assumption Rate reduction of under 7% to the STRS Board, however the STRS Board adopted a 7.45% Earnings Assumption Rate. Even this was a reduction from the prior 7.75% Earnings Assumption Rate. The STRS Board did this despite always earning over 8% for every 30 year Earnings Period. Let's contrast this to Tampa's Fire and Police Pension Fund.
Tampa's Police and Fire Pension Fund utilizes a single manager. They have done so for 43 years. They have averaged over 12% annually, significantly more than Ohio STRS. Please listen to the interview with Tampa's Police and Fire Chief Investment Officer and contrast their success with ours.
Perhaps our members who have been encouraging Ohio STRS to not get involved with alternative investments, such as Hedge Funds, are right. Perhaps our members who have been encouraging STRS to invest main in Index Funds designed to reflect the market returns. Members do not want our investment department taking so many risks attempting to beat the market.

Monday, June 25, 2018

Six Recommendations to STRS Board from CFT President Julie Sellers, June 21, 2018

Julie Sellers' speech to the STRS Board, June 21, 2018
Good Morning Members of the Board,
My name is Julie Sellers and I am the President of the Cincinnati Federation of Teachers. I am here today to request that the Trustees fulfill their responsibilities of managing the pension funds for Ohio’s Teachers in a transparent manner. I also understand the legal necessity to preserve the fiscal integrity of the pension fund and make sure it is solvent for every retired AND active member. But make no mistake, I believe that the STRS Board needs to hold the employees of STRS responsible to make sound investments with our hard earned dollars. I do not believe that this has always been the case, employees for STRS have consistently received bonuses in the six figures while active members are working longer, contributing a greater percent of their earned income (14%) and getting less in return. That does not make sense. Until some of our cuts are restored, you STRS, must reign your spending.
Current teachers must now work until they are 60 years old and have 35 years in the system. This means that many teachers begin their careers when they are just 21 or 22 years old so actually they MUST work 38 or 39 years before they can retire. That adds up to a combined scored of 98 or 99 for most people. This used to be a score of 30. That is well above other states; most have a required score of 70-80. Teachers’ life expectancy will not be greater than it is today. Currently, members were mandated with the changes would not have received a COLA for 5 years so their clock was already ticking towards that 5 year marker. Now, with your recent 5 year COLA Freeze they will have an additional 5 year freeze on top of the years they were already frozen – maybe 6 or 7 years. The changes to the actives did not seem fair to me when the initial changes took place and they still do not seem fair. Teaching is a hard job and it can suck the life out of you. This is making a teaching career one that many are walking away from which is further destabilizing the fund.
But, on the other hand, as I look around this room, I see many retirees. Is it fair or realistic that they will not receive a COLA increase for 5 years? During the recession and with Ohio’s draconian cuts to education, almost everyone in this room went for 5-6-7 years without a raise. This was difficult for every family paying into this system. Not only did we have pay freezes but you were increasing the employee contributions by 1% per year, so employees were taking home less each and every year! Now as these folks are in retirement, you are again mandating for them to take another freeze.
I attended a board meeting about a year ago when you were trying to justify the 5 year COLA freeze and you gave data that most retirees have multiple income streams. I have talked to many teachers since that meeting and most have not been able to save for retirement like they had hoped due to the years of employee contribution increases and freezes on our salaries. Many younger employees are in a lifetime of student loan debt, and are still trying to purchase their first home. I do not think that you should make the assumption that the COLA freezes will not impact the lives of our current or future retirees.
I also believe that you are not using accurate investment returns and actuarial projections. You should not be waiting for five years to revisit the COLA issue. I would like to remind you, that the STRS funds are not your money. These funds belong to the current retirees and active members and we need for you to look out for the financial well-being of us all.
This must be a delicate balance between actives and retirees.
1. The mandatory age of 60 AND 35 years of service must be decoupled to address the many diverse options that teachers have; address second careers, young beginning careers or older beginning careers.
2. The 13th check should not be an option. When this was paid it cost billions of dollars that would have made our current system today more solvent.
3. It is not realistic to NOT give a COLA for 5 years or more. Check the assumptions annually.
4. ANY school that receives vouchers of public funds should be mandated to pay into the pension system for their certificated personnel.
5. Any Charter School who has not paid for their employees funds into the system should be shut down and any property or resources should be used to repay STRS because this disrupts the system.
6. Stop investing in Hedge Funds. Their fees are too high and you have to pay if the investment makes money or not. This is not a good return on our investment.
Julie Sellers

Robin Rayfield to STRS Board June 21, 2018: Hold employees' raises/incentive pay till the COLA is restored or a pathway established

Robin Rayfield
STRS Comments June 21, 2018
Thank you for the opportunity to speak at the STRS Board of Trustee's meeting. As the Executive Director of the Ohio Retired Teachers Association I represent thousands of STRS beneficiaries.
First let me say 'Thank you' to Director Nehf, Nick Treneff, and Paul Snyder for meeting with Bee Lehner (ORTA President) and myself at ORTA's office on May 30th. I appreciate your willingness to develop a dashboard to reflect a pathway to COLA. I look forward to our next meeting.
My work at ORTA has helped me understand that 'pensions are complex and have many moving parts that are subject to change without notification'. Complex problems often require complex solutions that also have many moving parts.
Currently, ORTA members have demonstrated patience and understanding as the hard-working employees and trustees at STRS work to fortify our pension system and insure that the pensions we all work so hard for will continue for generations to come.
Now, as STRS considers its budget for the next year, I would like to point out that only two of the groups of stakeholders in the STRS pension system have been forced to suffer during this time of strengthening the pension system. Only STRS recipients have felt the pain of the loss of COLA. Only active contributors have felt the increase of member contributions or the requirements to work longer to receive their pensions. Neither the legislators, nor the employees at STRS have felt the economic impact of the loss of COLA or increased work requirements and increased contribution levels.
As I meet with and speak with STRS recipients at local ORTA Chapters around the state I hear the same questions: 'What is the status of our COLA?' or 'How can the employees at STRS receive salary increases while we do not receive our promised COLA?'
As you consider the budget for the next year, I suggest, as a show of good faith, that the employees at STRS share in the sacrifice STRS members are suffering through. In other words, I suggest that STRS employees receive no increases in salary or incentive pay until COLA is restored or at least until the pathway to COLA is established.
I close with this simple thought. As a superintendent of schools I could not accept a pay raise, nor could my administrative team or supervisors receive pay increases, unless the employees of the organization received an increase. I recognize that a school district budget is not a great analogy to a pension system such as STRS, but the principal of shared sacrifice is an appropriate analogy.
Thank you for your past work and I look forward to our work together to solve the current problems that our pension system faces.

A timely quote from an STRS retiree

" It is an outrage if the board hands out any more bonus checks to people (which I bet are planned in the newly adopted budget …..and it is equally an outrage that STRS total assets is still below the $81 billion we had in in 2008 when the stock market problems hit. It also is disgusting that when we hit $81 billion, the DOW was sitting at 12,000 points, which has jumped to over 24,000 points in the past 10 years.  The investment staff is simply NOT doing the job."

Sunday, June 24, 2018

Dean Dennis: Active and Retired Teachers Attend Ohio STRS Meeting To Protest COLA Cut

Active and Retired Teachers Attend Ohio STRS Meeting To Protest COLA Cut

By Dean Dennis
Cincinnati, OH
JUN 24, 2018 — On June 21st at 7:30 am, a busload of retired and active teachers dressed in black and equipped with protest posters boarded and left for the STRS building in Columbus. They joined the car loads that came to Columbus to send a clear message to STRS administrators and Board members about our COLA loss.
The meeting was well attended by organizational leaders. In attendance were ORTA (Executive Director Dr. Robin Rayfield), OFT (President Melissa Cropper and Darold Johnson), CFT (President Julie Sellers and members) and many of Ohio's retirement chapters.
The message sent was clear, 1) active teachers should not have to wait 5 years for a COLA after having to work more years than prior retirees, especially coupled with having their contribution increased to 14%. 2) STRS should not breach the COLA promises made to current retirees, especially AFTER they have retired. 3) STRS needs to stop risky investment practices and stop trying to beat the market which has always outperformed STRS over the long term. 4) STRS needs to cease bonuses and salary increases to their employees until the COLA can be restored.
When the public participation segment of the STRS meeting started, the hundred plus members, dressed in black, stood showing protest signs and banners as our members spoke. ORTA Director Dr. Robin Rayfield went first with a powerful well articulated speech letting STRS know that everywhere he goes, his members ask him when is the COLA going to be restored? He followed up with a theme that every speaker echoed. How can STRS deny our members their promised COLA, yet provide STRS staff such large six figure bonuses and six figure base salaries while our members suffer?
Next, speaker CFT President Julie Sellers spoke and eloquently represented the active teachers. She reminded STRS how hard the teaching profession is and how many of our members will now be in their mid sixties before than can gain their full pension. Next, speaker was Dean Dennis who read excerpts from a letter from Representative Bill Seitz, House of Representative Majority Floor Speaker. The letter was a letter of support for "the harsh decision made by STRS to reduce to zero for at least 5 years the COLA adjustment for all existing and new retirees." He stated that in his wildest dreams that he never thought that STRS would reduce to ZERO the COLA. His letter concluded by stating "the General Assembly may have the appetite to resolve this inequity by taking back, in whole or in part, its prior authority over COLAs."
Next, Bob Buerkle gave an excellent speech titled, "Where is the Justice at STRS?" The speech pointed out numerous inequities regarding how STRS treats their employees better than our teacher members. It essence, he told STRS, "you can take our money, but you can't deliver." Bob Buerkle was followed by Mike Mulchay and Roger Peebles who gave examples of STRS misspending practices. They both chastised STRS for passing out excessive bonuses while not being able to provide a COLA.
The last speech was given by Tom Frank, a young Cincinnati teacher. Mr. Frank, speaking for his generation, pointed out that he would be turning his money over to STRS for over 35 years in order to reach age 60 for his full pension. In addition, if he lived out his life expectancy he could have over a 60 year relationship with STRS. He made it clear he didn't want STRS enriching themselves with his money, chided them for getting into hedge funds and he wanted to be able to trust them. It was both a passionate and excellent speech.
After the public speaking concluded, nearly a hundred attendees gathered on the sidewalks in front of the STRS building for a final protest test rally. The rally was covered by Columbus News 10.
A thank you to everyone who attended the STRS meeting and protest. It was very impressive. It was evident to everyone who attended that the STRS administration and the STRS Board Members were not expecting the turnout or expecting the passion. We certainly made a strong impression and our protest was conducted responsibly. Let's keep adding Members to our Forum and Signatures to our Petition. We're gaining momentum!

Columbus Dispatch: Pension workers’ raises upset retirees

Columbus Dispatch, June 24, 2018
Pension workers’ raises upset retirees
Retired Ohio educators and others are livid with the leadership and board of the School Employees Retirement System of Ohio amid an ongoing fight.
The board last week approved a pool of money (equivalent to 3 percent of overall payroll) for merit raises, including a 3.1 percent raise for Executive Director Richard Stensrud to boost his pay to $257,750 a year. A total of 170 of the system’s 181 employees will receive raises of 0.7 to 3.7 percent.
The cause of the discontent: The board voted last fall to impose a three-year freeze on cost-of-living increases for 80,000 retirees, who receive an average monthly pension check of $1,233, Ludlow reports.
Lois Carson, a 30-year secretary with Columbus City Schools nearing retirement, gave the board an earful: “We trusted you with our pension. You froze it. You have money to give yourself a 3 percent raise based on merit. Based on what you did investing our money. So you’re increasing your pay. Not on your money ... on my money.”
The Ohio Association of Public School Employees is suing to restore cost-of-living allowances, accusing SERS of “fraud and misrepresentation.” The system denies the charges and is fighting the suit.
SERS spokesman Tim Barbour said the raises given to employees help avoid turnover and were less than the average 5 percent annual raise received by still-working members of the retirement system.

Here is a link to the lawsuit of OAPSE against the School Employees Retirement System for freezing their COLA at zero....

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