Friday, December 18, 2020

The Ohio Federation of Teachers Donates $10,000 to the Forensic Audit Fund

OFT Supports Independent Audit for STRS

Ohio Federation of Teachers
Dec 18, 2020

Earlier this week, OFT’s Executive Committee voted to support an independent audit of STRS that is being organized by our allies at Ohio Retired Teachers Association (ORTA).The Executive Committee also voted to contribute $10,000 to the fundraising campaign for the audit.
Why is OFT supporting this audit?
STRS is an $80 billion pension fund serving more than 495,000 active, inactive and retired Ohio public educators. For a fund this large and complex, we feel it is beneficial to support a third-party audit and learn more about STRS’s finances. An outside audit isa good accounting practice, especially considering that STRS has had the same auditor for 15 years.
Having more information will be useful to us as we fight for the reinstatement of the COLA, however we do not expect the audit to reveal that STRS is at or near the 85%funding threshold that STRS has previously set as a requirement before considering are in statement of the COLA.
We also do not expect to uncover malfeasance. Though we trust that STRS is generally managing their finances well, we feel it’s important to verify that through this third-party audit.
Will OFT be involved in the 2021 STRS Board elections?
We are committed as a union to fight for the strongest possible pension system for our active and retired members, and having reliable voices on the STRS Board is critical to accomplishing this. 
We urge all active and retired members to engage in the upcoming STRS Board elections. There are three spots up for election in 2021: two for retired members and one for active members. We’ll need member activists to help circulate petitions to get these candidates on the ballot and to get out the vote — click here if you’d like to be part of this effort.
What else is OFT doing to protect and enhance retirement benefits?
OFT’s Retirement Committee has proactively advocated on behalf of retirees at STRS and in the legislature.
OFT has sent letters to the STRS Board to consider the full impact of reducing the rate of return on active members and retirees. We have encouraged review of the STRS dashboard to determine if it accurately reflects the correct mix of indicators to help the Board make sound policy decisions. And we brought hundreds of OFT retirees to STRS board meetings to support reinstating the COLA.
Legislatively, OFT had two bills introduced that would create greater transparency for pension funds. One bill would record pension board meetings. The second bill would provide more information about the fees associated with private equity funds.
Please let us know if you have any questions about this audit, the upcoming STRS elections, or our efforts to protect and expand retirement benefits.

Ways you can donate to the Forensic Audit fund

From Dean Dennis: 
Donate By Phone: (614) 431-7002
Donate Online:
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From Dan MacDonald:
You do not need to belong to ORTA [Ohio Retired Teachers Association].
Make your check payable to ORTA, memo "Forensic Audit Donation", and send to ORTA’s office:
250 E. Wilson Bridge Road, Suite 150
Worthington, OH 43085
(*Please include an email address with your payment. We will use this to only send you a payment conformation for your donation.)

Forensic Audit Fund as of 12/18/2020


Dan MacDonald: Personal Summary of December 17, 2020 STRS Board Meeting

Personal STRS Board Summary 12/17/20

By Dan MacDonald
The STRS December 17, 2020 meetings were lengthy. The day started at 8:30 and ended about 5:10. Blessings on all who made it through the whole day with me. The day began with a meeting of the Audit Committee that shared which departments had been audited this year, which postponed, which are projected. The word “audit” is becoming a conundrum. STRS needs to define the word because board member Wade Steen keeps pointing out its misuse. The departments were “reviewed,” with no findings but 15 recommendations. Steen wants ownership of the numbers shared, what is included in the numbers and what is not, and is having a hard time discovering this vital information. For instance, Steen asked if the day care center is subsidized or self sufficient and whether the nepotism policy has ever been audited. [Oh my,] the meeting was moved to executive session. [Transparency is as clear in STRS as a frosted window or a locked door.]
The Board meeting began at 10 a.m. After the minutes approval, the review and approval of the semi-annual broker evaluation and associated policies occurred followed by the meat of the Board meeting, Callan’s educational presentation of “Benchmarks” for the asset classes and the total fund and Callan’s recommendations. Areas covered: Domestic Equity, International Equity, Fixed Income, Real Estate, Alternative Investments, the Total Fund. Why are these benchmarks important? They determine the marks that must be met for a full payout of Performance Based Incentives [PBI] to members of the investment department. If I am not mistaken, there is a 5-year smoothing of yearly performance; think of retirement and using 5 years to determine your Final Average Salary. S&P 1500 Index, MSCI, Custom Government Benchmark, Bloomberg Barclays US Aggregate Index, Russell 3000 Index, PitchBook, ILPA, ODCE, Cambridge, blended benchmarks are yardsticks for different asset classes. After 3 hours plus of questioning and discussion on lags, passive hedge, unhedged, unique amongst peers, liquidity, levered, unlevered, design our own, etc., Callan pointed out in some areas there aren’t benchmarks that are “perfect fits.” [The only “perfect fit” at STRS is the yearly payout of PBI’s and 3 percent merit based salary raises]
After lunch, the Investment Department concluded its presentation. October’s returns dropped the General Fund by 1.1 percent; the second consecutive month of decline. November’s return was the best monthly return in 20 years, a positive 7.75 percent. The total fund return through the first five months of FY21 is a positive 12.4 percent. The General Fund reached a new high of $84.7 billion. Following this good news, Executive Director Neville gave his staff reports/achievements for November and December. Following his report, the Finance Department presented a comparison of FY2000 to FY2020. In 2000 the market value funded ratio was 97.9 percent and the unfunded liability only $4.5 billion. In FY2020 the market value funded ratio is 75.5 percent and the unfunded liability is $22.3 billion. [What does this mean? No benefit enhancements for many years to come and disaster to less than 50 percent funded right around the corner. Scare tactics. Assumptions were “less favorable than assumed.” Who made the assumptions? The Board, the staff, and the consultants! On a slide the Finance Department listed Experience vs. Assumptions. Investments off by $13.9 billion (yet Investment staff get PBI’s); Retirements costing extra $6.2 billion (didn’t STRS think about the impact of reducing benefits on actives would have this effect); Mortality $3.1 billion (yes retirees, you are living too long and you actives you also need to work 35 years and then die immediately); Assumptions Updates $10.2 billion (whatever they are); by the way the finance department wants to severely drop the Rate of Return - “There is a good chance some of these losses will continue, as the current investment return assumption is higher than the expected return.” [A reminder, two retiree Board seats are up for election in the spring and one active seat.]
The meeting ended with Routine Matters which has become a time of the meeting no one should miss.
A motion to accept actuarial valuations although two metrics on the scorecard fell outside their limits [whatever that meant; no explanation; nothing in regular meeting that I remember, TRANSPARENCY MIA]
A motion to approve changes to the Board policies ended up being tabled to February since Steen attempted to change some of the language which he had shared with his colleagues.
Not listed on the slide was a motion to bring in the Attorney General on some issue [TRANSPARENCY] not to be shared with actives/retirees.
A motion to begin recording meetings [audio and slides only] starting in February. [Some confusion here as to how long they would be saved and shared. Dale Price brought up Ohio Channel but that was unheeded, audio/slides only, not the full Board and staff on view.]
The next Board meeting is scheduled for February 17, 18, 19. Steen, more than once, attempted to have a January meeting.
The day concluded with an Investment Committee meeting which featured the staff on the Direct & Co-Investment Strategic Initiative Program giving an update on a new STRS opportunity under Alternative Investments – Opportunistic Investments which looks very good in its initial stages although it needs additional staff to expand.
In union, Dan MacDonald, Executive Director, Local 279-R, NEO AFT Retirees
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P.S. Topic jumping … now is the time to jump on the Band Wagon and send a few bucks to ORTA for a forensic audit of STRS OH. If you are on Facebook, join “Ohio STRS Members Only” and keep abreast of this fundraiser [already $50,000 of the $75,000 raised 12/18/20] along with your colleagues about STRS and their antics.
You do not need to belong to ORTA [Ohio Retired Teachers Association]
Make your check payable to ORTA, memo "Forensic Audit Donation", and send to ORTA’s office:
250 E. Wilson Bridge Road, Suite 150
Worthington, OH 43085
(*Please include an email address with your payment. We will use this to only send you a payment conformation for your donation.)
I personally know Robin Rayfield, their Executive Director, who convinced their Executive Board to set up a special account. For more information go to, their website, and click on “Advocacy Through Action.”
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From Robin Rayfield:
Nice recap, Dan. I battled through the entire day’s meetings and I am not sure just what I learned. I did hear one thing that stuck with me. I think it was Bob Stine, that said something to this effect ‘It appears that our benchmarks for determining performance incentives are not useful for their intended purpose’. So, we simply pay the incentives. That is a given.
Larry KehresMount Union Collge
Division III
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