Thursday, December 03, 2020

If these abuses were happening before 2003, how much is happening NOW? Where's the OVERSIGHT?

This list was compiled in 2003 by Dennis Leone (STRS Board member 2005-2009). In today's dollars, these figures would be astronomically higher. WHERE IS THE OVERSIGHT TODAY?

Facts Regarding Spending Abuses at STRS Since 1995

 By Dennis Leone

The following represent a number of spending abuses discovered by Dennis Leone that occurred at STRS between 1995 and 2003.  The abuses occurred even though assets at STRS dropped $12 billion, retirees lost their 13th check, health insurance premiums for retirees significantly increased, active members of STRS saw their STRS contribution rate increased from 9.3% to 10.0%, and school districts were implementing budget reduction plans to make ends meet.  STRS expenditures included:

 1.  $94.2 million on the new STRS headquarters.

 2.  $869,235 on artwork, sculptures and polished stones for the new STRS building.

 3.  $818,000 on a child care services center for the children of STRS employees.

 4.  $500,000 per year to run the child care services center.

 5.  $426,000 on a fitness center in the STRS building.

 6.  $88,397 per year to provide food services for STRS employees.

 7.  $428,056 on 16 cars, vans, and SUV's.

 8.  STRS Board policy that permitted staff members to drive STRS vehicles for personal use, and the family members of said employees to drive said vehicles.

 9.  52 American Express Credit Cards and 39 BP gas cards used by Board members and STRS staff members.

10.  Alcohol purchases occurred by staff members and Board members attending conferences -- using STRS credit cards.

11.  $18,810 on "Discovery Park" gala event, including the purchase of Instamatic cameras for attendees.

12.  $15,100 on new STRS building dedication, including alcohol and gifts for attendees, as well as airfare and lodging for out-of-town STRS visitors.

13.  $4,100 on a private retirement party for an STRS Board member.

14.  $5,594 on poinsettias to decorate STRS during the holiday season in 2002.

15.  $1,000 dinners for 12 board members/staff members on 2 occasions, again with alcohol.

16.  $7,116 for baseball tickets, concert tickets, movie rentals, and Kings Island tickets for STRS employees in the summer of 2003 for "team building."

17.  $530,284 spent by Board on trips and meetings around the country in 2000, 2001, and 2002.

18.  Multiple trips taken by Board members and staff to places like Honolulu, Palm Springs, Kiawah Island, and Anchorage.  A planned trip to China in 1995 was cancelled after it was suggested that it would have the appearance of junketeering.  

19.  Frequent occurrences of at least 6 Board members going to the same meeting, sometimes twice a year, costing STRS over $9,000 each year.

20.  $36,736 spent by a Board member Jack Chapman in a single year for trips all over the country.

21.  $1,017 airplane ticket for a Board member that would have cost $258 if it had been purchased 30 days in advance of the conference.

22.  $1 million cash payback per year to full-time STRS employees for 18 days of unused staff vacation days and unused sick leave.

23.  Total administrative expenses at STRS increased 17.4% per year between 1996 and 2002.

24.  Total STRS employees increased from 414 to 725 between 1996 and 2002.

25.  A total of 1,035 employee bonus checks were issued to STRS staff in 2000, 2001 and 2002.

26.  $24.4 million was awarded in bonus checks to employees between 1998 and 2003.

27.  $3.2 million had to be paid by STRS to PERS because of bonuses alone since 1998 to satisfy that pension system's 13.31% annual employee contribution requirement.  STRS employees are members of PERS.

28.  34 STRS employees in 2002 received bonus checks in excess of $40,000 (with 18 of those getting bonuses in excess of $70,000).

29.  One STRS employee received bonus checks of $110,000 and $68,800 in 2001 on top his base salary of $164,000.

30.  Over 150 STRS employees had base salaries over $100,000 in 2002, with 32 of those making over $155,000 -- topping the salaries of both the governor and the chief justice of the State Supreme Court.

31.  A total of $39,251 was paid to the Perry Local School District by STRS in 2002 and 2003 for sub teacher costs for Board member Michael Billirakis (when he attended STRS meetings), even though he did not have a position in the school district.  NEA pays Perry Local the dollar amount associated with the salary and benefits for Billirakis, enabling him to be listed as an employee.

32.  Excess STRS furniture was sold to STRS employees in 2000 and 2001 for $27,703, and instead of this amount going back into the pension fund, it was given to charities.

33.  The regular work week for STRS employees is 37 1/2 hours, and they get full benefits is they work 20 hours.

34.  If an STRS employee adopts a child, the STRS Board awards a $5,000 cash gift to said employee.

35.  Between 1999 and 2004, the STRS Board paid out $2.1 million in educational stipends for STRS employees to take college courses.  This amount was double what the other 4 public pension systems in Ohio paid out combined over the same time period.  STRS pays up to $7,000 per year (per employee) for undergraduate or graduate work.

Wednesday, December 02, 2020

Dennis Leone: Some words for today's STRS Board

From Dennis Leone

December 2, 2020 

The Board has a potential huge PR problem with this F-rating, coupled with gigantic bonus checks for the investment staff (many of which were based on benchmarks staff members set for themselves). You saw recently, as everyone did, that the DOW got over 30,000 last week. I wish to point out to the Board, firmly, that I was on the Board in 2008 when things suddenly went downhill in the stock market.
Here is my point: Just before that happened, the DOW hit 14,000 and our total assets at STRS were OVER $80 billion. The news media has reported recently that our total assets at STRS are NOW back up to $80 billion. It took STRS 12 years to get our assets to climb back up to our previous high of $80 billion, even though the DOW more than doubled in value during those 12 years.
This is an incredible embarrassment. The Board should be demanding better performance from the investment staff instead of giving them gigantic bonus checks. A solid argument could be made that NO bonus checks should have gone out during those 12 years when our total assets were not back to what there were in 2008. All of those dollars given in bonus checks over the 12 years should have been divided among all retirees, especially since our COLA was eliminated.
Dennis Leone
STRS Board member 2005-2009

Sunday, November 29, 2020

Default Settings: How Ohio can nudge teachers toward a secure retirement

From the NY Times, 2017; would today's plan show up in an even DEEPER blue for Ohio?

The State of State Teachers’ Pension Plans
As teachers across the country retire, their pensions are being subsidized by newly hired teachers to a surprising degree. Teachers’ pension plans have always rewarded long-serving veterans at the expense of short-termers. But now, as more and more plans develop shortfalls, states have been imposing cost-cutting measures, and recent research shows that the newest hires are bearing the brunt of the changes, raising questions of fairness.
The Plans Received Low Marks
The Urban Institute has graded America’s state-run pension systems on their performance in a few areas: their financial strength; how well they provide retirement security to short-term or long-term workers; the workplace incentives they offer various age groups; and whether participating branches of government are funding them properly. Grades for all types of public pensions are available on the Urban Institute’s website, where they can be filtered for individual strengths and weaknesses.
Source: The Urban Institute and Bellwether Education Partners
No states got an A and only six states received a B: Arkansas, Delaware, Florida, New York, Oregon and Wyoming. Most states — 33 — received a C, while six got a D. The last six — Connecticut, the District of Columbia, Kentucky, Massachusetts, Ohio and Rhode Island — each received an F.
Getting an F could mean the plan offers few rewards for younger workers, is less than 60 percent funded or pays meager retirement income relative to salary, among other problems. Rhode Island improved its plan enough in 2013 to get a B on the new version, but it still has so many people in the older, failing plan that the overall grade was an F.
How Plans Encourage Teachers to Retire in Their 50s
The typical teachers’ pension plan is backloaded, meaning teachers build up benefits slowly in their early years, then speed up and earn the biggest portion just before they retire. But teachers also contribute to their plans at a steady rate, and in the early years of a teacher’s career, a person’s contributions are often worth more than the pension credits earned. If teachers stay on long enough, they will eventually hit a break-even point, where the value of the pension that has been earned is greater than what was paid for it. Few teachers are able to do this, research shows.
Source: Robert M. Costrell (University of Arkansas)
Going in the Wrong Direction
To save money, many states have reformed their teachers’ pension plans. In most cases, these changes have pushed the break-even point farther out into the future. In Massachusetts, they pushed it so far out that no teacher can ever earn a pension greater than the value of one’s contributions, no matter how long he or she works.
Source: The Urban Institute and Bellwether Education Partners
Notes: The years it will take a teacher who was 25 when hired to accumulate pension benefits that will exceed an individual’s contributions. Data includes defined-benefit plans only.
New Hires Make Up the Difference
A traditional pension can be a very attractive benefit, at least for those who work long enough to get back more money than they contribute. But because of high teacher turnover, mobility from state to state and other factors, only a minority of all newly hired teachers succeed in doing that. Some states make it easier than others.
Source: The Urban Institute and Bellwether Education Partners

Overheard at the water cooler . . . . .

"Ohio is an “F”. Wonder if STRS will put that in their next newsletter? I have said for years that STRS is bigger Ponzi scheme than Bernie Madoff. STRS pays out little over 7 billion yr but takes in little over 4 billion. It’s not sustainable especially for those younger teachers. Sad state of affairs."

Larry KehresMount Union Collge
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