Saturday, April 24, 2021

STRS FLASHBACK: Culture of Secrecy Still Pervades STRS Operations

From John Curry

April 24, 2021

I will withhold the date of this "classic" article until the end. Thank goodness the OFT has seen the error of its ways since then.....the OEA....NO WAY! I only wish we had media coverage today like was enjoyed back "in the good ole' days!"
Culture of secrecy still pervades STRS operations
Copley Columbus Bureau chief
COLUMBUS -- Aristotle is credited with writing, “All men by nature desire to know.”
On the same subject, Patrick Henry wrote, “The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them. ... To cover with the veil of secrecy the common routine of business, is an abomination in the eyes of every intelligent man.”
We might excuse Aristotle’s and Henry’s gender problem. Today, it would be more appropriate to use “people” or “persons” or “men and women.” But their underlying message is still sure — secrecy is an abomination.
As far as we know, George Washington never said, “No comment.” In all his writings, Thomas Jefferson never left for history the phrase “this is off the record” or “don’t quote me on that.”
In fact, Jefferson wrote, “My own opinion is that government should by all means in their power deal out the material of information to the public in order that it may be reflected back on themselves in the various forms into which public ingenuity may throw it.”
Our country’s founders would surely be disturbed with the position the State Teachers Retirement System has taken to keep information from its 413,219 members.
Despite being asked repeatedly by at least two newspapers, STRS will not release the names of those active members who have asked to be considered for an open seat on the nine-member board.
Lawmakers and educators — members of STRS — alike call that position a mistake and unbelievable.
Instead, in the STRS version of representative government, the eight remaining board members will decide in secret who the finalists will be. It could be one person; it could be as many as eight. They decided last night, and, today we are supposed to learn who those will be. Members then can contact the board to offer their preference. But members will not be given an opportunity to comment on everyone who applied.
Actually, the decision on the final replacement is already made. Though board members deny it, the state’s two large teachers’ unions will heavily influence the final decision. Reportedly, the Ohio Education Association, which has two of its state and national officers already on the STRS board, is allowing the Ohio Federation of Teachers to decide who the union preference is.
The OEA is already under fire for its position supporting former Executive Director Herbert Dyer and the board’s decisions regarding artwork, a fancy headquarters, extensive travel, bonuses and other spending. So to deflect accusations that it has undue influence, OEA cut a deal with the smaller union to come up with a candidate.
The federation has interviewed candidates and will recommend a woman for the position. She will be the foregone leader in the selection process if there is more than one candidate. And there will be, so the board can deflect criticism that the selection process was undemocratic. It’s a smokescreen.
No one will know who the other candidates were, nonetheless their qualifications. The STRS board will continue to operate as it has for years, ignoring its members and deciding for itself what those members will get.
The Dyer culture remains. Instead of saying “it’s the board’s money and they can spend it any way they want,” the board’s attitude is “we know what’s good for our members; who cares what they think?”
Why should nearly a half a million people be kept in the dark? What does STRS have to hide?
This conspiracy doesn’t stop with STRS and the unions, but includes Attorney General Jim Petro, who told STRS it can keep the list secret because of his skewed interpretation of the Ohio Revised Code. Of course, none of us will know exactly what Petro said because that communication is also secret.
This is the same Petro who tells the public he wants more accountability at STRS. This is the same Petro whose representative on the board was asleep for eight years while the board was spending money hand over fist as the pension fund lost billions. This is the same Petro who complained about the tone of a letter from the Copley Newspapers’ attorney asking for the names.
This is the same Petro who in a year or so is going to want all the teachers and retirees to vote for him when he runs for governor.
To paraphrase Abraham Lincoln, “Let the people know the facts and STRS will be saved."
This page was created August 15, 2003
Note from John Curry
To the readers of the historical article above, here is a very brief bio that will help you understand the Kostyu/STRS connection. Like Dr. Dennis Leone, investigative reporter John Damschroder, blogger Kathie Bracy (of the STRS-centered Kathie Bracy's Blog) and current STRS Board reform member Wade Steen, Dr. Paul Kostyu will go down in history as a name to be chiseled in stone at 275 E. Broad St. in Columbus, Ohio.
Bio - Dr. Paul Kostyu
In 1990, he joined the faculty at Ohio Wesleyan University. At OWU, Dr. Kostyu advised The Transcript (student newspaper) and taught media law, fundamentals of journalism, data journalism, senior seminar, journalism history, and editing & design. In 1999, he accepted a fellowship in the photography department at National Geographic Magazine. In 2000, he returned to journalism as a political reporter for Copley Newspapers, GateHouse Media, and Gannett Media, but continued to teach part-time at OWU.
During this time, he received a nomination for a Pulitzer Prize for his investigation of corruption in Ohio’s teacher pension system, STRS Ohio. He won numerous national and state awards for his investigations, use of public records, breaking news, and feature writing. His stories led to changes in Ohio law and a number of convictions of STRS Board members for ethics violations. He covered two national GOP conventions and interviewed presidents and presidential candidates. He appeared on ABC, CBS, MSNBC, among others, and was profiled by ABC’s “Nightline” and Agence France for his expertise on Ohio politics.

Transparency builds trust and it's critical in a crisis. 

~ Julie Sweet

Friday, April 23, 2021

Philadelphia Inquirer: PSERS's pension strategy questioned

Submitted by Bob Buerkle

April 23, 2021
For the past decade Dean Dennis and I, as well as others, have been recommending that STRS should invest 70-75% of their portfolios mainly in stock, like they used to. In the first two paragraphs of this article about the Pennsylvania SERS Pension Plan there is commentary that a similar outcome would have resulted for them if they had done this instead of investing in high-cost Private Equity and Alternative Investments. The link to the entire article is included below.                                                                                                                                                                                  Bob Buerkle
From the Philadelphia Inquirer:
PSERS’s pension reversal has former allies questioning its strategy
Published Apr 22, 2021
On Monday, when the state’s largest pension fund voted to charge school employees more for their retirement, the fund was compelled to do so because it had missed its 10-year investment goal by the narrowest of margins: two 100ths of a point.
Had the fund invested more in stocks as it used to, it would have made up its shortfall and prevented the extra charges, records show. Instead, the $64 billion fund invested in high-cost private equity and alternative investments that drove down PSERS’s performance numbers, triggering a need to require more contributions from recently hired school employees.
Read the rest of the article here

Thursday, April 22, 2021

ORTA to sue STRS for records for forensic audit

Press Release from the Ohio Retired Teachers Association

Ohio Retired Teachers Association to file lawsuit seeking records for ongoing forensic investigation of Ohio State Teachers Retirement System

April 21, 2021

Through a grassroots donation campaign that began on October 28, 2020, The Ohio Retired Teachers Association (ORTA) engaged Edward Siedle of Benchmark Financial Services to conduct a forensic audit of the $80 billion Ohio State Teachers Retirement System. Mr. Siedle, who is a former SEC attorney and internationally recognized pension expert, has performed over $1 trillion in forensic reviews of public pensions across the United States and regularly uncovers mismanagement and fraud. He has received record-breaking whistleblower awards from federal regulators for assisting government in prosecuting Wall Street wrongdoing. Public pension systems across the U.S. are notorious for paying high fees for risky investments and getting poor performance.

On February 19, 2021, the law office of Marc Dann, Ohio’s former attorney general, submitted a public records request on behalf of Mr. Siedle to STRS requesting records related to the pension’s investment managers, investment consultants, performance compliance auditor, investment cost monitor, financial auditor, custodians, as well as board and staff.

While STRS Ohio has provided hundreds of pages of documents the pension has refused to provide certain key documents about STRS investments in Private Equity and Hedge Funds. Those Documents are critical to Mr. Siedle’s ability to understand the value and appropriateness of such high-risk investments. The records withheld, many of which were withheld at the request of the investment managers themselves are clearly public records and Ohio law requires that such records be provided to the public upon request.

After months of denials of requested information and slow walking the responses, the decision has been made to file a lawsuit to compel transparency.

The lack of cooperation by STRS is even more surprising given that the pension is well-aware that ORTA’s forensic review was commissioned, as well as paid for by participants, with the stated objective of improving management and oversight of the pension. Pension fiduciaries legally required to discharge their duties with respect to the funds solely in the interest of the participants and beneficiaries should welcome an independent review by a nationally recognized expert. Further, given the longstanding, profound fiduciary breaches and disclosure failures that have already been identified at the pension, it is clear STRS can benefit from an independent review by an expert not of its own choosing.

Transparency has ceased to be a priority at STRS but remains of great importance to taxpayers in Ohio as the pension collects money paid by taxpayers through its public pension system. “Knowing how much STRS has invested in each asset and how much those assets are worth is critical to understanding the health of our public pensions,” says Robin Rayfield, ORTA’s Executive Director

For more information please contact:

Dr. Robin Rayfield Executive Director Ohio Retired Teachers Association 614-431-7002

Edward Siedle Benchmark Financial Services 561-703-5958

Bob Buerkle: The truth about STRS; two ways our "esteemed" pension system is ripping us off

From Bob Buerkle

April 22, 2021
Reemployed Retirees - What a Deal For STRS!
Every year STRS pockets Millions of dollars on the backs of those retirees who have become reemployed as teachers.
The first way STRS makes Millions on reemployed retirees is obvious; they aren't getting the COLA that they were promised.
The second way that STRS is ripping off our reemployed friends is that all 14% of the Employer Contributions that STRS receives is retained by STRS. The working retiree receives nothing for their extra work, except for a tiny annuity, based solely on their own reemployment contributions and very inferior by comparison to their original STRS annuity. They have a second, maybe better option. They can receive their own contributions back plus a little interest and convert it into an IRA, when they finally stop working.
According to the most recent 06/30/2020 STRS Actuarial Valuation Report, there are 19,553 reemployed retirees. That number alone should tell our Legislators and everybody else that a substantial number of our former co-workers need more money than their "COLA-LESS STRS Pensions" are providing for them. If the average salary of these reemployed retirees is just $50,000 a year, STRS is retaining $136,871,000. That's $136.88 Million dollars, stolen from these reemployed retiree teachers, because STRS feels it has a greater right to this money than those who worked for it? This means that our reemployed retirees have had over $1.232 Billion dollars of employer contributions stolen from them since 2012.
STRS tells us it is a “Top Quartile Pension System.”  Do you agree?

Tuesday, April 20, 2021

Bob Buerkle: A hard question and a prediction for STRS

From Bob Buerkle

April 20, 2021
What follows my two paragraphs and my picture below are the first two paragraphs of an NCPERS article. Just so our readers know, STRS belongs to this organization. 
My question is this: Since STRS was already at 77% funded before the pandemic, can we expect that our current "Funded Ratio" will also improve by the same national average increase of 16% this fiscal year? If that were true STRS would soon be 93% funded! 
What will STRS Management tell us next? I suspect they will try to complete their self-fulfilling prophecy by recommending that the "Investment Return Assumption" rate be lowered again, which will add billions of more phantom debt, alter the true picture of our significantly improved funding progress, keep teachers working longer and charging them more for lesser benefits and finally, tell retirees that a COLA is still not affordable.
Bob Buerkle
Market Surge Boosts State Pension Funds
By Lou Cannon - RCP Contributor
April 18, 2021
Rebounding from a 30-year low in March 2020, state pension plans have survived the pandemic, thanks to the soaring stock market.
CalPERS, the nation’s largest public pension plan, posted a 12.4% return for the 2020 calendar year. Overall, U.S. state pension plans reached an aggregate funded ratio of 78.6% in December, a leap of 16 percentage points from the 30-year low of 62.6% in March 2020, according to Wilshire Consulting, an investment research provider.
Read the rest of the article here.

John Damschroder: I would be shocked if Ohio STRS isn't much worse.....

April 20, 2021

John Damschroder: "I would be shocked if Ohio STRS isn’t much worse in every aspect of this story. Pennsylvania oversight has engagement from statewide elected officials. In Ohio the RFP for

required audits go out 5 years after the deadline. It will be 7 years late. Meanwhile the forensic audit is going to show STRS has no idea what it pays in fees and has been quoting low cost status based on a made up number by CEM. The full but confidential report at STRS is diametrically opposed to the executive summary. They also have meaningful media coverage in Pennsylvania as opposed to what we’ve seen in Ohio." 

PSERS board reverses course and raises pension payments made by Pa. school employees
The Philadelphia Inquirer, April 19, 2021
 by Joseph N. DiStefano
In a costly reversal, the state’s largest pension plan said Monday that it would require school employees to pay more to support their retirement after the fund’s executives admitted reporting inflated investment results.
The board of the Public School Employees’ Retirement System voted, 12-1, to raise the amount that school employees hired since 2011 typically pay into the fund from 7.5% to 8%. Those hired since July 2019 would see a larger jump to 8.25% of their salary. The increases will take effect in July and last for the next three years.
Read more here.
John Damschroder, a Fremont, Ohio native who worked in Gov. George Voinovich’s administration, writes about business and economic development in Ohio.

Monday, April 19, 2021

John Curry compares "Top Dog" salaries: OEA vs. OFT (OEA active teachers -- ever wonder where your hard-earned dues money is going? Find out here -- the tip of the iceberg!)

From John Curry

April 19, 2021

A Tale of Two (Ohio Teacher) Unions 
If you go to this U.S. Department of Labor website
you will be able to enter the respective employer numbers for both the Ohio Education Association and the Ohio Federation of Teachers and find, among other information, the salaries they pay to all their employees and their position titles. 
For the OEA enter the employer number 512-490
For the OFT enter the employer number 513-310 
When you do this you can compare and contrast the pay scales of both unions. To save you some work I have looked at both and drew a few conclusions below. The data below is from the most recent filings of both unions...the summer and fall of 2020. Here are some of my findings (enlarge the pix with this posting and you can verify). 
Let us begin with the position of President:
The President of the OEA is Scott DiMauro. His listed salary was $195,165
The President of the OFT is Melissa Cropper. Her listed salary was $122,511
The Executive Director of the OEA was Sheryl Mathis. Her listed salary was $202,983
The Secretary-Treasurer of the OEA was Mark Hill (former STRS Board member). His listed salary was $169,382.
The "Treasurer" of the OFT was Brian Kessler. His listed salary was $5,559! That's right, $5,559.... I didn't miss a digit or two....this is a part time job at OFT!
The OEA has listed their number of full time members at 96,244.
The OFT has listed their number of full time members at 15,253.
The OEA had listed 109 employees making over $100,000 per year.
The OFT had listed 5 employees making over $100,000 per year. 
Please take the time to scour (like I did) these LM-2 reports...they are quite revealing! Please compare and contrast. I think you'll find significant differences.
Please excuse the quality of the above photos as I don't have a high 5-digit secretary nor a six-digit media expert to put this together.
Addendum (FYI):
The OEA contributed $0.00 (ZERO) toward the STRS forensic audit.
The OFT contributed $10,000 toward the STRS forensic audit.

Sunday, April 18, 2021


In my opinion by Tom Curtis

Us, being the benefit recipients (BRs), inactive, active and retired.
Them, being STRS staff and the elected OEA-dominated Board members.
I am sure most of you understand that the purpose of the STRS retirement system, founded in 1920, is a defined benefit plan designed to help preserve BRs' financial future and that of future retirees. The defined benefit plan is funded by active teachers (14%), employers (14%) and investment gains of our contributing funds. Because of this, our pension provides us with a monthly check until our death and possibly our spouse, or other dependent, if we chose to set it up that way at retirement.
Unknown to the vast majority of the 490,000-plus benefit recipients, our retirement funds have been under attack for over 30 years, due to mismanagement and flagrant misspending by the STRS staff and Board members. This has been proven by retirees for the past 20-plus years and continues today. Retiree Bob Buerkle has been attempting to bring about change since the 1990s, when Herb Dyer was the STRS executive director. It was during Dyer’s tenure that the mismanagement and misspending of our funds began.
The STRS Board has been dominated by OEA-supported members for over 30 years: the same OEA union that the vast majority of Ohio’s teachers have supported year after year through their union dues. Yes, this is the same OEA that we all loved, and that we trusted to be the watchdogs of our retirement fund; the OEA that was given the highest respect by its union-paying members, because it bargained for teacher benefits. However, as many unions in the USA have done, OEA has overstepped its bounds and allowed all of the misspending and mismanagement to become business as usual and to continue yet today at STRS.
This Board must be changed. It can only be changed by voting these OEA people off of the Board and electing people who will use critical thinking skills to question what is being presented to the Board. The STRS staff and Board members manipulate numbers in a manner that is not favorable to their members. The fact that the Board tells us that our 86-billion dollar pension system can supposedly no longer provide us with a simple COLA is unacceptable. The numbers just don’t compute. If this true, then the management and misspending is far greater than any of us BRs realized.
Unfortunately for BRs, the OEA has had both the money and power to retain nearly every Board seat, both active and retired, seemingly forever. Few candidates unsupported by the OEA for the last 30-plus years have been able to get elected to those seats because of the megabucks and the influence of OEA.
Until 1999, our retirement fund was able to provide BRs with a guaranteed pension and other promised retirement benefits. We were promised a 100% subsidized health care plan for BRs and their dependent spouse and/or dependent children. In 2004, STRS removed all of the subsidy for spouses and dependent children and reduced the BRs' subsidy 25%. That left BRs to pay 100% of the cost of HC for their spouse and dependent children and 25% more for their own coverage. Health care is crucial to retirees and their families. Retirement without health care is not retirement!
Many of us retirees have been trying to bring about change in our STRS, due to their flagrant mismanagement and misspending, with minimal help from the more than 100,000 retirees, most of whom had little or no way of hearing about what was really going on with our pension system.
The STRS newsletters have told us for years that STRS was financially sound and there were no funding problems. That was and is not true. STRS tries to placate us with all of the awards they receive for outstanding management and transparency of the pension system. Really? Please keep in mind that these awards are given based upon the numbers and information that STRS staff present to those sources that present these awards. Who pays for this? BRs don’t want to continually read about the awards, we want to hear about the return of our simple COLA.
It is futile to think that change is going to come about if the people, processes and procedures involved continue to be the same: business as usual, with a Board dominated by the OEA-elected members. I reiterate: thinking things will change is futile if the elected players do not change. You cannot get better results if you keep using the same old ways of doing business for 30 years. Many benefit recipients say they want change in our retirement system. Change cannot happen when there is a status quo of the players year after year, again those being OEA-supported Board members.
The STRS system is valued at 86 billion dollars today, possibly the greatest valuation in the history of STRS, yet the Board tells us the system cannot pay retirees the simple COLA we received for many years until 2017, when it was taken away by the Board for what the Board called an undermined period of time.
I ask all voting STRS members to vote for the non-OEA-supported candidates now and in future elections. The OEA-dominated STRS Board has consistently failed us concerning its fiscal responsibility to BRs.
I support and ask you to vote for retiree candidates Rudy Fichtenbaum and Elizabeth Jones and active member candidate Benjamin Pfeiffer.
Thomas Curtis, Retired BR and strong advocate for change since 2002.
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