Sunday, February 21, 2021

Rudy Fichtenbaum and Elizabeth Jones are also proudly backed by many of the 12,000+ members of the Facebook group Ohio STRS Member Only Forum for the retiree seats on the STRS Board.

Rudy Fichtenbaum for Retiree Member Seat on STRS Ohio Board

Rudy Fichtenbaum is a Professor Emeritus of Economics at Wright State University. He has a Ph.D. in Economics from the University of Missouri-Columbia, and was a faculty member at Wright State University from 1980-2015. He served as the National President of the American Association of University Professors (AAUP) from 2012-2020. He also served on the Executive Committee of AAUP at Wright State (AAUP-WSU), and as the Chief Negotiator, including during the contract negotiations leading up to the historic 2019 strike. He was also a member of the Executive Board of the Dayton-Miami Valley Central Labor Council, where he represented AAUP-WSU. He has represented the Ohio Conference of AAUP in the stakeholder’s coalition Health Care Advocates (HCA) to help save health care benefits provided through STRS for retirees. HCA eventually became Health and Pension Advocates (HPA), and he has continued to represent OC-AAUP at HPA where he has been an outspoken critic of healthcare and pension cuts.

As a Board Member of STRS, Rudy would work to restore the COLA for retirees and fight against additional cuts in healthcare benefits. He would fight against additional pension cuts for active members, including the creation of a two-tier pension system. He would also work to reduce investment and administrative costs and advocate for increased employer contributions to help reduce the unfunded liability in the pension.

Elizabeth Jones for STRS Ohio Retiree Member Seat

Elizabeth is a retired HS English teacher and guidance counselor, and the current President of the Cincinnati Federation of Teachers Retired, Local 1520-R. As Local 1520-R President, she has mobilized her membership to fight for the reinstatement of the COLA. During her career she was a leader in the Cincinnati Federation of Teachers and served as the local’s Collective Bargaining Chair. She is a member of Hamilton County ORTA and is active in the Cincinnati Education Justice Coalition and the Cincinnati AFL-CIO Labor Council.As a board member, Elizabeth’s top priority would be to reinstate the COLA. She would also work to ensure that charter schools pay into STRS from pay deductions the same way that traditional public schools do. She would like to revisit the changes to age and years of service requirements, which will become more feasible if retirees and other Americans organize at the federal level to lower the age for Medicare eligibility.

Ben Pfeiffer for Contributing (Active) Member Seat on STRS Ohio Board

Ben Pfeiffer is an award-winning Science Teacher at Clay High School in Oregon, Ohio. He is currently the President of Oregon City Federation of Teachers and a member of OFT’s Executive Committee and standing committee on retirement issues. He has organized members of his local union to attend and participate in STRS meetings and has been active in researching and authoring OFT Resolutions on retirement issues. He has also served his community as a member of the Jerusalem Township Volunteer Fire Department for 15 years.
If elected to the STRS Board, Ben would focus on making STRS proceedings more transparent, providing diligent oversight of STRS’s finances, and empowering members to be more informed and take action on matters that concern their financial futures. He is committed to protecting the interests of both active and retired members alike through the serious examination of audits, fund manager bonus structures, and STRS in-house expenses. Ben understands the uphill endeavor of bringing back COLA benefits and believes that these conversations can start with a willingness to commit to simply beginning the process with an eye toward making future COLA benefits whole. He is opposed to simple “dashboard” decision making when it comes to the livelihood and financial wellbeing of members and sees all fund fluctuations as an opportunity to surgically examine the operations of Ohio STRS. Ben firmly believes in integrating Board policies that put members interests first with advocating for legislative initiatives that will move the fund into a more favorable and stable future.

Dan MacDonald and Dean Dennis summarize the February 2021 STRS Board meeting

Enlightening STRS Investment Committee Meeting: A Board Member Loses a Vote but Proves To Be a Winner
By Dean Dennis
February 17, 2021
A meeting that was dedicated to Real Estate investments ended on a telling vote. The most interesting part of the 3-hour meeting came in the last 30 minutes.
Board Member Wade Steen wanted to make a motion towards the end of the meeting. It was unrelated to Real Estate investments. Board Member Steen's motion was directed at STRS Performance Base Incentive bonuses. As you might recall the 2019 Performance Based Incentive (PBI) bonuses were controversial.
STRS Management presented the 2019 PBI bonuses to our Trustees for approval. When this happens our Trustees, or our STRS Board Members, assume the Benchmarks for the staff bonuses have been met. Our Board approved the bonuses only to later learn that apparently there was a "misunderstanding" between the STRS Management and the Trustees as to the interpretation of the Benchmarks. Fast forward to today's meeting (2/17/21).
Board Member Wade Steen made a motion that the Board have 50 days to review, understand and ask questions before the vote to approve STRS Staff PBI bonuses. Board Member Yoel Mayerfeld supported and seconded Wade Steen's motion. Then things got interesting. New Board Member Claudia Herrington suggested bonuses should be paid on performance but also seemed concerned that STRS Staff should not be delayed in getting their bonuses. Another member brought up that there could be a transition of new board member(s) voting on PBI bonuses that weren't members when the earlier Benchmarks for the bonuses for approved. Wade Steen thought it was more important to take the time to feel confident that the Benchmarks were met and ask needed questions. He felt taking that time was important. At one point Board Member Bob Stein stated that the $9 million spent on PBI bonuses was, “no big deal." He later went on to suggest maybe the Board shouldn't be approving the PBI bonuses and the STRS staff should handle the bonuses. The discussion was so spirited that Board Member Steen commented, "I like to see the same passion when it comes to discussing COLA." The 5-member Investment Committee voted down Board Member Steen's motion with only Yoel Mayerfeld supporting Wade Steen. Voting no were Claudia Herrington, Rita Walters, Scott Hunt.
Dean Dennis, Cincinnati Retiree
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Dan: STRS Board Meeting of February 18, 2021
Between committee work and the Board meeting, this report covers two days. I’ve chosen to let Dean Dennis, Cincinnati retiree, report on the Investment Committee that met on Wednesday. See another article. 
Dan MacDonald's Report:
Thursday started with an audit committee meeting that named two companies as external auditors, one of which will be chosen by the Auditor of the State of Ohio, and will be the new auditor firm for STRS OH. The Board meeting followed this brief 15-minute committee meeting. The Investment Department reported a plus 3.06% return for December and for the first half of FY21 the general fund return is a plus 15.98%. For the 2020 calendar year, the general fund was up 12.26% despite all the global impacts although the ROR for FY 2020 was only a positive 3.14%. January’s rate of return was a negative 0.1% due to the square off of Wall Street and Robinhood app and the likes of GameStop in the final week of January. The general fund is $86.6 billion, up $9.5 billion for FY21.
John Morrow, STRS’s Chief Financial Officer, will retire the end of April after 31 years with STRS. He will be replaced by Matt Worley, 27 years with STRS, and currently Director of Fixed Income and Alternative Assets. New directors will be named to each of these asset classes.
The Proxy Voting Policy was reviewed. Callan, a consultant, then went through “Benchmarks” for each of the asset classes: International Equity, Real Estate, Alternative Investment, Domestic Equity, Fixed Income, and Total Fund.
Benchmarks are important for a variety of reasons one of which benchmarks determine the payout of the Performance Based Incentives to STRS’s investment department members. Ultimately four of the five remained the same and the Total Fund uses them all in its calculations. Lots of discussion focused on leverage and non-leverage. [Leverage is an investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment. Leverage can also refer to the amount of debt a firm uses to finance assets.] Ultimately the benchmarks were adopted by vote. Callan then gave its quarterly report which showed STRS out performed most of its peers.
Executive Director Neville reported on 13 items. You should be aware of “Peer Research…” As FY 2020 valuations and CAFRs are published, the chief actuary updates a database of more than a 100 large U.S. public sector defined benefit plans that have at least $4billion in liabilities. Discount rate assumptions continue to decline with the median now approaching 7.15%. STRS Ohio is the only public plan with more than 470 billion in liabilities to have a discount rate assumption higher then 7.25%. The average for this group of 18 plans is about 7.0%. [This is addressing Rate of Return (ROR). STRS assumes we will earn 7.45% yearly on investments. If the Board would reduce our ROR it would result in altering the calculations in STRS’s “dashboard” which is used to determine the financial health of the pension fund. Look over December’s and January’s returns and 2020 ROR and FY 2021 current ROR.]
Also, from the Director’s Report – SaveOnSP Program: STRS Ohio is adding Express Scripts’ SaveOnSP program on March 1, 2021, to help non-Medicare enrollees save money on a limited number of specialty medications and reduce the overall pressure of specialty medications on premiums. SaveOnSP identifies who are taking a specialty medication that has a coupon on the SaveOnSP Drug List. The participant is then enrolled in the program through a simple phone call. Once enrolled, the participant’s copay for the covered drug is reduced to a %0 copayment instead of the lesser of $450 or 15% of the drug cost. Non-Medicare enrollees taking medications on the program’s drug list were mailed letters from Express Scripts alerting them to the saving opportunity. [If you threw away the letter, contact Express Scripts at 1-888-416-3326 or give a call to STRS at 1-614-227-7877. Again, the program is SaveOnSP.]
After a Lunch/Executive session break, there was a presentation by Ms. Hoover and Mr. Grinnell reported on “Enterprise Risk Management.” The presentation covered the largest risks facing the system and how to mitigate the risks. It was shared that STRS is a $100 billion system with $80 billion in assets and the Board needs to look at Impact, Probability and Time Frame as it determines the amount of risk the Board directs the staff to take. The presentation pointed out to the staff that aggressive assumptions can lead to big concerns. [Think restoring COLA; think adjusting positively Member Benefits via Multiplier, Years of Service, Age, etc.; think ROR (adjusting the fund’s assumption of its Rate of Return]. [Remember also that the Dashboard improved indicating the fund is doing better so maybe STRS needs to place some probability into the equation so it is more “realistic” as in the fund could turn south in a moment and the Dashboard is not reflecting reality as it currently exists.]
Gary Russell reported from Member Benefits. STRS’s pension plan was compared to 129 other plans. For instance, Illinois has a 3% yearly compounded COLA, but its contribution rate is 57% and its funded ratio is 39.6%. Texas has a COLA but it was last paid in 2013 and then only to those retired before 2004.
Massachusetts pays a COLA only on the first $13,000 of a pension. In other words, pension plans are all over the place with years of service, age, multiplier, COLA. Mr. Russell did point out that if you are retired 20 years you purchasing power loss is a negative 4.96% based on CPI-W; if you are retired 15 years, you have a purchasing power loss of a negative 3.34% based on CPI-W; and finally, if you are retired 10 years, you have a negative 5.05% purchasing power loss based on CPI-W. [For those retired more, or less, no stats were given]
Communication Services was the last department to present. The annual member survey completed by Saperstein Associates was shared. The survey is the 18th in a series dating back to 2003. 302 retirees were interviewed by phone from November 16 – 24; the average length of the interview was 16 minutes. 303 actives were interviewed November 5-14 with an average interview time of 14 minutes.
STRS is looking good according to the surveys. “Vast” majority of members have a positive overall impression. Most retirees see the amount of their contribution relative to the benefit they receive as an excellent or good value. About 3 of 5 enrolled retirees consider their health care plan as good or excellent. [I need to pointed out that Saperstein did remark that the minority group was quite vocal of their displeasure].
Routine Matters was followed by the General Counsel, Stacey Wideman, going over the Board’s Policy Governance Model. This this get bogged down with discussion, rationale, and finger pointing in an attempt to do policy changes. Ultimately the matter was tabled until June, 2021 with an up or down vote on each proposed alteration of policy language. [Basically, the finger pointing was because Mr. Steen presented a plethora of changes and counsel and Board members indicating that “transparency” is covered and certain functions are not Board functions and displeasure toward Steen. Steen, I think, suggested the Board might be expanded by adding more retiree seats to balance retiree members vs active members. Dr. Gatos, a consultant, attempted to bring sides together. Ultimately, the Chair, Rita Walters, suggested tabling. A vote was taken and passed. The meeting was then “ADJOURNED!”]
The next Board meeting has set aside dates for March 17, 18, 19. Also mark your calendar for April 14, 15, 16 for the Board meeting that will address the Budget and probably another year of merit-based pay raises for STRS staff. The Performance Based Incentive amounts will also be addressed at this meeting.
Dan MacDonald, 279-R Executive Director
STRS Communication Department version (shown below)
STRS E-Update
Feb. 19, 2021
Investment Consultant’s Report Shows STRS Ohio’s Investment Returns Outperform Benchmark and Most Peers Over Various Time Periods
At the February meeting of the State Teachers Retirement Board, STRS Ohio’s investment consultant, Callan LLC, reviewed the results of its quarterly performance report for periods ending Dec. 31, 2020. The report showed STRS Ohio’s investment returns ranked in the top 25% of Callan’s public fund sponsor database for the three-, five-, seven- and 10-year periods and exceeded its total fund benchmark returns for each of these time periods. The report also noted STRS Ohio’s calendar year return for 2020 was +12.26%. Callan’s public fund sponsor database includes more than 300 U.S.-based public funds.
2020 Survey Results Show Members have Positive Overall Impressions of STRS Ohio
The Retirement Board reviewed the results of the 2020 membership survey that was conducted in November. The survey included a random sample of 302 retired members of the system and 303 active members — giving the results a sampling error of no more than plus/minus 5.7 percentage points. Key findings from the survey included:
· A vast majority of members — more than nine out of 10 retirees and more than eight out of 10 active members — have positive overall impressions of STRS Ohio.
· 85% of retirees and 78% of active members agreed that STRS Ohio has earned the trust and confidence of its members.
· About eight out of 10 retirees see the amount of their contributions relative to the pension benefits they receive as an excellent or good value.
· Most members reported positive overall impressions of the Retirement Board.
· About 90% of active and retired members believe STRS Ohio is open and honest in its communications and believe STRS Ohio keeps them well-informed about pension- and retirement-related issues.
· About 80% of active members indicated they are setting aside additional savings for retirement beyond their contributions to STRS Ohio.
· About 90% of retiree households have at least one source of income in addition to their STRS Ohio pension; 76% report having at least two additional sources of income beyond their STRS Ohio pension. Common additional sources include investments, Social Security and spouse’s pension. On average, retirees indicated STRS Ohio provides about 60% of the total household income.
Board Reviews Benefits Comparison of Teacher Retirement Systems
STRS Ohio staff presented a comparison of pension benefits provided by U.S. teacher retirement systems along with contribution rates. While no system ranked as best in all categories, STRS Ohio compares well overall against the other 12 states that do not contribute to Social Security. Information was compiled through system websites and financial reports, plus data from the National Council on Teacher Retirement, the National Association of State Retirement Administrators and interviews with system staff.
When compared to the other non-Social Security states, STRS Ohio:
· Has helped retirees keep up with inflation (members who retired in the last 20 years have a current benefit that represents about 95% of the purchasing power of their original benefit).
· Offers a service retirement benefit (as a percent of final average salary) that ranks at the 50th percentile for a member retiring in 2021 with 33 years of service.
· Has a total contribution rate that is the fourth lowest of 14 rates (some systems have more than one rate in place).
· Is one of seven retirement systems to provide subsidized health care coverage.
· Has a comparatively high funded ratio at 77.4%.
Retirements Approved
The Retirement Board approved 266 active members and 170 inactive members for service retirement benefits.
Other STRS Ohio News
Retirement Board’s Virtual Meeting Recorded, Will be Posted to System Website
The State Teachers Retirement Board has met virtually since its May 2020 meeting, with meetings open to the public via a link to GoToWebinar. The link is available through the Public Meeting Notice that is posted on the system’s website. Beginning with the February meeting, STRS Ohio will post a recording of the meeting along with the meeting presentations on the Most Recent Board Meeting Materials page on its website in the Retirement Board section. The recording is expected to be available early in the week following the board meeting to allow for closed captioning to be added.

Forensic Audit: Game On!

From Dean Dennis
February 19, 2021
Former SEC attorney and pension investigator Edward "Ted" Siedle has begun the forensic review of STRS which our Forum and the Watchdogs Forum coordinated with ORTA and ran through ORTA who commissioned the audit.
At the outset, it is clear to Ted that the pension is not as transparent as it needs to be. A tremendous amount of information regarding management of the investments has not been made public and he will need additional information from STRS. His first document request was sent today to STRS by attorney Marc Dann. Hopefully, STRS will recognize the value of the ORTA-sponsored review and choose to fully cooperate, rather than litigate.
Please take a moment to look at the document request (see below) to appreciate the depth of investigation required to determine whether our pension is being handled prudently.


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