Dan MacDonald reports on the June 17, 2021 STRS Board meeting

ACTIVES' FUTURE PENSIONS DECREASE; STRS STAFF SALARIES INCREASE

From Dan MacDonald

June 19, 2021

[First a reminder, the Board meeting is recorded and available at www.strsoh.org the Wednesday after the meeting and is posted for about 3 weeks. I am wondering if the opening of the meeting will be available. You should hear Steen’s request to add to the agenda and the discussions under the Legal Department.]

The June STRS Board meeting began at 8:30 a.m. and ended at 4:25 p.m. The meeting began with minutes approved, Executive Director Neville then made “opening remarks,” a new wrinkle, which covered what was being addressed for the day. Board member Steen then tried to add the completed Siedle’s Forensic Audit to the day’s agenda. He reminded members of their fiduciary responsibilities to the members and not the staff/organization. Board members claim “not enough time,” “need to get thoughts together,” “pending litigation,” “not through it,” “128 pages and I’ve only had it 8 to10 days.” The motion was defeated 2 for, 6 against. [It should be noted that Dale Price was not in attendance for the morning part of the meeting].

The Investment Department then gave its report. The semi-annual Broker’s evaluation basically said everyone was doing fine. The FY22 Investment Plan was then reviewed area by area. The department is predicting a 6% growth, normal is usually 2-3 percent, nationally and globally. One of STRS analyst then presented an Economics Outlook for FY22, a 6.84 percent rate of return is expected, but the internal auditor said in reality it’s 6.04%, a ten-year average. Steen challenged both numbers and asked how we will earn over 7%. Basically, he was ignored. [It needs to be pointed out the ROR through May is at 27.01% (gross)] Presentations with expectations proceeded in Economics, Fixed Income, Domestic Equities, International Equities, Real Estate, Alternative Investments, and Risk Management. Outside consultant Callan then approved the plan. Steen then pushed Callan on expected ROR and what it should be as an outside consultant, not on staff. Callan deflected and said the Board needed to decide there willingness for risk. Outside Consultant Cliffwater supported Callan and the Investment Department Plan, praising the quality of staff and internal management. The Investment Plan was then moved for acceptance. Steen challenged the plan on the premise that it was not good enough to meet the needs; STRS needs a better return goal. Steen then asked for a walk through on the difference between 6.04% long-term and 6.85% short-term. Ultimately the Board voted to accept the plan as given with all yeses and one abstention, Steen. As to the current fund balance, May saw a +1.69% return. The preliminary FY21 return is estimated to be 27.01% gross. Total investment assets ended may at 93.3 billion, higher by 16.3 billion from FY20. June 30 ends FY21

Member Benefits then presented changes and premiums for the health care plans starting January 1, 2022. 88% of plan enrollees will have a premium decrease. 12% will have a premium increase – 11,500 in the Aetna/Medical Mutual Basic plans for non-Medicare enrollees and 2,500 individuals in the Medical Mutual Basic plan for Medicare enrollees. [Premiums can be found at STRSOH.org under About Us and then Retirement Board then recent Board materials]

Under the Executive Director’s Report, Neville reported nearly 3,000 service retirement applications; a FY22 payroll estimate of 4%, a slight increase over last year; two legislative bills allowing board members to attend meetings virtually which have removed the provision although both are in conference committees. Temporary virtual meetings are in effect to July 1, 2021. Other items were reported. Rhodes asked when staff would return to building - July managers and needed associates and then August associates. Steen asked about space utilization and options including selling the building. Neville promised a report in Spring, 2022.

After an Executive Session/Lunch break, the Board honored a 22-year retiring employee. The Finance Department then presented FY22 Budget for approval. Cheiron, an outside actuarial firm, first went over STRS’s assumed discount rate (DR) [similar but different to Rate of Return (ROR). Cheiron pointed out that STRS’s general fund has grown 5.9% over the last 20 years and our mature plan has a negative cash flow of 4 billion dollars per year. C+I=B+E Contributions plus Investment Returns = Benefits and Expenses. A long discussion ensued about the DR and its importance. An analogy was made to a faulty thermometer. If your temperature was measured at 99 degrees you might ignore getting help, but if the thermometer was faulty and your temperature was actually 104 degrees you are in trouble. So goes the DR. If the DR is set at the wrong amount, the general fund could be in trouble. Currently the rate is set at 7.45%, but the fund has averaged over 20 year a 5.9% growth. Throw in this year’s estimated return of 27.01% and one would think we are doing fabulous. Toss in “Inflation Protection” [a term just introduced at this meeting to address struggling retirees with inflation] and the DR becomes more important. [OK, Inflation Protection was mentioned but the concept has not at all been addressed or what it means or how it might exist. As a retiree, don’t sell out a COLA for a 13th check or some other cocky idea. A COLA lasts in your pension check, all others vamoose after issue.] Lots of participation in discussion – Steen, McFee, Rhodes, Walters, Price. Total silence by other Board members. A new DR was voted to 7%, a reduction from 7.45%, to be effective September 1, 2021. [This will cause actives who retire after September 1, 2021 to be jilted financially. Their pensions will be reduced a little when their moneys are annuitized. A little money over a long time becomes a lot of money]. The FY22 Budget was then voted and passed. STRS staff was again rewarded with merit-based pay increases. [Ying/Yang, right?]

The Legal Department then presented Board member Steen’s changes to the Board Policy Manual. These proposals were delayed from the November and February Board meetings. All 15 proposed changes were beaten down as “weaponizing word;” “can’t control legislation;” “need to be a fiduciary to all STRS & members;” “what are you implying;” “need flexibility don’t want to be specific;” “pushing power, too vague;” tying our hands;” “Do we follow Robert Rules of Order? – only as a guide, not required, Board needs flexibility;” “must speak with one voice;” “over reaching;” “against all changes;” “we have the ear of teachers;” “we were elected; appointees just know someone;” “Go back to school and get a teaching degree;” “tell me what you are really after;” “we reach out; we are workable;” “we are not a corporation, we are not CPA’s;” “getting in the weeds;” “too open;” “very broad;” “not our fight;” “mother in me, make a choice if you want to be elected;” “Chair’s prerogative to allow someone to speak over 3 minutes.” I know these are out of context, but the old guard was not about to allow any changes where all of STRS’s changes were accepted at the November meeting.

Routine Matters were routine with the exception of Vice Chair nomination for the Board. One person was nominated and then voted to the position, Carol Correthers, who was the incumbent recently elected into an active seat, term starting September 1, 2021.

Old/New Business: Board Member Steen was congratulated on becoming a grandfather on June 16th,

No meeting in July; next Board meeting August 19th.

STRS VERSION: STRS OHIO eUPDATE June 18, 2021

Board Names Chair, Vice Chair

During its June meeting, the State Teachers Retirement Board elected contributing teacher member Carol Correthers (Lorain City Schools, Lorain County) as its vice chair for the coming year. According to Board Policies, Robert A. McFee, who is currently serving as vice chair, automatically moves into the position of chair. McFee and Correthers will assume their new responsibilities on Sept. 1, 2021. Board members receive no compensation for serving on the board other than reimbursement for actual, necessary expenses.

Board Adopts Fiscal 2022 Investment Plan; Current Year Returns Exceed Expectations, Benchmarks

STRS Ohio Investment staff presented its fiscal 2022 Investment Plan to the Retirement Board. The plan describes staff investment strategy for each asset class in the system’s investment portfolio. The board’s external investment consultants, Callan LLC and Cliffwater LLC expressed their support for the plan. The board adopted the plan as presented. The fiscal 2022 Investment Plan projects returns for the upcoming year near STRS Ohio’s policy objective returns of 6.84%. Staff will evaluate the need to issue an addendum to the Investment Plan once market levels are set on June 30, 2021. STRS Ohio will post the fiscal 2022 Investment Plan on its website in early July.

Chief Investment Officer Matt Worley shared with the board that the total fund investment return for the current fiscal year that ends on June 30 is among the highest in recent history. Worley said the preliminary total fund return through May 31 was +27%. If that return holds through June 30, he said that would be the highest fiscal year return since 1983. Worley also noted this return exceeds the total fund benchmark return of approximately 25.8%.

Following this update, Retirement Board Chair Rita Walters asked staff to evaluate the possibility of providing some level of inflation protection for retirees since the cost-of-living adjustment is currently set at 0% to maintain the fiscal integrity of the pension fund. Staff will address this request and provide information to the board in the coming months.

Board Approves Health Care Premiums; Most Enrollees will Pay Less than Last Year

The Retirement Board approved health care premiums for the 2022 plan year that will result in a premium decrease for about 88% of enrollees.  A complete list of premiums is posted on the system’s website or may be requested by calling STRS Ohio’s Member Services Center toll-free at 888-227-7877.

Board Follows Recommendation of Actuarial Consultant, Adopts Lower Actuarial Investment Return Assumption for June 30, 2021, Valuation

The Retirement Board’s actuarial consultant, Cheiron, presented information at the May and June board meetings regarding the economic assumptions the retirement system uses to measure the financial and actuarial health of the pension fund. Cheiron stressed the importance of using realistic assumptions, noting that unrealistic assumptions provide a false reading of the plan’s health. Cheiron reminded the board that its investment consultant, Callan LLC, expects lower than normal investment returns over the next decade. Callan’s return expectation for all asset classes has declined in the past year. Callan estimates STRS Ohio’s portfolio return over the next 10 years will be 6.02%.

Cheiron recommended that the board set its discount rate at no higher than 7.0% for the upcoming June 30, 2021, valuation. The discount rate is used to determine the present value of benefits due to be paid to members of the retirement system in the future. STRS Ohio also uses the discount rate as the actuarial investment return assumption. The board voted to lower the actuarial investment return assumption to 7.0% from 7.45% and will continue to evaluate this rate during the upcoming five-year experience review. Cheiron shared that, like most mature plans, STRS Ohio has negative cash flow because the system pays out much more in benefits (about $7.4 billion per year) than it collects in contributions (about $3.4 billion per year). This makes the plan more reliant on investment returns and underscores the need for realistic assumptions.

Board Adopts Fiscal 2022 Operating Budget that Reflects Slight Increase from Current Year

The Retirement Board voted to adopt system budgets for fiscal year 2022 (July 1, 2021–June 30, 2022). The fiscal 2022 operating budget totals $106 million, an increase of 1.7% from the current year budget. The budget includes increases for the actuary and investment consultants to conduct the upcoming five-year experience review and asset-liability study and increases to expand cloud backup of data to enhance business continuity capabilities and to lower future costs in this area. The board also adopted a capital budget for fiscal year 2022 that totals $9.1 million, an increase of about $4 million over the current year budget. This includes information processing and computer software costs to replace the system’s 25-year-old investment accounting system. Fiscal 2022 State of Ohio expenses include an increase in Ohio Retirement Study Council expenses to cover the upcoming fiduciary and actuarial audits conducted under the oversight of the Council.

Retirements Approved

The Retirement Board approved 485 active members and 76 inactive members for service retirement benefits.

Other STRS Ohio News

Open Seat on Retirement Board

Earlier this month, Robert Stein resigned from his current seat on the State Teachers Retirement Board. In addition, he will be unable to assume the board seat to which he was reelected for the term beginning Sept. 1, 2021. Information regarding filling the vacancy will be shared at a later date.

Dan MacDonald is Executive Director of Local 279-R, NEO AFT Retirees

Edward Sidle in Forbes: Money For Nothing: Ohio Teachers Pension Pays Wall Street Millions For Doing Nothing!

https://www.forbes.com/sites/edwardsiedle/2021/06/18/money-for-nothing-ohio-teachers-pension-pays-wall-street-millions-for-doing-nothing/?sh=649df291440e&fbclid=IwAR2KdPDOD6S_YrAO3eZ8rI-OTJGrbufw0RRm5KjJT76ooj9_wbLEYNit1mI

“My most recent forensic investigation of the $90 billion State Teachers Retirement System of Ohio on behalf of the Ohio Retired Teachers Association revealed that as of June 30, 2020, the pension had unfunded alternative investment capital commitments totaling $7,152,101,083.”

“What is remarkable is that the audacious scam of charging fees on committed uninvested capital has endured for so long at our nation’s struggling public pensions. In my opinion, Ohio teachers deserve far, far better.”

June 18, 2021

Forbes

Money For Nothing: Ohio Teachers Pension Pays Wall Street Millions For Doing Nothing!

Edward Siedle

Contributor

Retirement

Pension forensics expert and record-setting whistleblower award winner

Photo: Public pensions pay Wall Street billions in fees on committed, uninvested capital-- money for doing nothing

To most of the sane world, charging clients lots of money for doing nothing—providing no meaningful product or service—sounds like the very definition of fraud. But much of what happens every day on Wall Street is far from rational or fair. Money managers have devised perfectly legal ways of getting paid millions for doing nothing and investors—even the supposedly most sophisticated pensions—routinely consent to these outrageously abusive payment agreements.

Fees on Committed, Uninvested Capital

It is common practice for private equity and other alternative investment funds to seek to charge investment management fees on “committed capital.” In 2017, reportedly 91 percent of private equity managers demanded investors pay fees today on money investors had committed to invest over time, say, over the next 10 years.

In other words, after the investor makes a capital commitment to a fund, management fees are charged on the entire commitment amount, regardless of whether the capital is actually drawn or invested. Paying fees on committed, uninvested capital results in exponentially greater fees on assets under management on a percentage basis.

For example, imagine a pension contractually agrees (commits) to invest $100 million (capital) in a fund over the next ten years, but only actually deposits $10 million into the fund early on. If the fee is 2 percent annually on committed capital (including the uninvested amount of $90 million), the pension will be charged fees of 2 percent annually on $100 million or $2 million, not 2 percent of $10 million or $200,000—even though the manager is only actually handling (investing) $10 million of the pension’s assets initially. Note that in the example, 2 percent on “committed, uninvested capital” equates to an astronomical fee of 20 percent of the $10 million actually invested initially.

Fees on committed, uninvested capital amount to paying money for nothing—no service whatsoever is provided in exchange for the lavish fees. In my opinion, such fees add insult to injury since these types of investment funds already charge exponentially higher fees than traditional stock and bond managers.A 2015 forensic investigation of the Rhode Island state pension I undertook on behalf of the thousands of workers belonging to the American Federation of State, County and Municipal Employees Council 31 revealed that the pension was paying a group of money managers $30 million a year in fees on money that had yet to be invested—fees to Wall Street for doing nothing.

Read the rest of the article here.

Wade Steen: Strong words for STRS from an STRS Board member

"Ohio Teachers are the only public employees in the country contributing more than their pension is worth and many of our retirees are unable to enjoy a dignified retirement because we’ve broken our promise."

"I am empathetic to the staff’s fears, but at the end of the day, STRS exists to pay teacher retirement benefits. It’s disappointing that it’s come to this, but I have completely lost confidence in the staff’s ability to invest money, and even worse, their willingness to tell us the truth about the results."

From Wade Steen

June 17, 2021

Thousands of our members self-financed as an independent review of STRS that was conducted by the preeminent financial fraud whistleblower in the Unived States – Edward Siedle. The findings of Mr. Siedle’s report are deeply disturbing, but for those paying attention, not all that surprising.

Mr. Siedle has asked anyone with pertinent information regarding the STRS fraud to contact the Federal Bureau of Investigation at (613) 224-1183.

I wish I could say the staff are transparent, but they’re not. Most of my requests for information have been flat out ignored. I asked for the inputs to calculate our benchmarks, that was denied. I asked for the inputs to calculate staff bonuses, that was denied. I finally just asked for our historical returns by asset class, and even that was denied.

The budget being presented today places STRS amongst the top 10 payrolls of all school districts in the State of Ohio. The past ten years we have paid this staff over a billion dollars to underperform investable passive indexes by $4 billion. This cannot continue.

Board Elect and Economist, Dr. Rudy Fichtenbaum, recently sent an analysis to various STRS stakeholder groups:

“Active management has cost STRS approximately $4.1 billion over 10-years which is an average of $410.3 million per year. These numbers are totally unrelated to the question of whether STRS accurately reports its expenses. The returns are STRS’ GIPS returns, so in effect this analysis assumes STRS is accurately reporting all expenses. If the GIPS returns are not net of all expenses, because STRS underestimates its expenses, then the underperformance would be even greater.”

Ohio Teachers are the only public employees in the country contributing more than their pension is worth and many of our retirees are unable to enjoy a dignified retirement because we’ve broken our promise. This is going bad and it’s our job to fix it. Fiduciaries have a duty of loyalty to the beneficiaries, not to the employees which serve at the membership’s pleasure.

A solution exists to restore COLA and lower both employee and employer contributions.

STRS senior staff have gone to great lengths to prevent the board from discussing this solution. The reason for this obstruction is likely because of inherent conflicts of interest – the staff are unwilling to confess their performance failures and recommend a solution which jeopardizes their employment with STRS.

I am empathetic to the staff’s fears, but at the end of the day, STRS exists to pay teacher retirement benefits. It’s disappointing that it’s come to this, but I have completely lost confidence in the staff’s ability to invest money, and even worse, their willingness to tell us the truth about the results.

Sincerely,

Wade Steen, CPA

Member -- Retirement Board

Steen letter June 17, 2021

 

Edward Siedle: Recommendations for 'High Cost of Secrecy' Forensic investigation of State Teachers Retirement System of Ohio

From Edward Siedle

June 16, 2021

Next Steps: Recommendations for High Cost of Secrecy Forensic investigation of State Teachers Retirement System of Ohio

Based upon the expert findings in the report, I recommend that pension stakeholders:

1. Submit report to the Securities and Exchange Commission Enforcement Division's Municipal Securities and Public Pensions Unit.

2. Submit report to Division of Securities, Ohio Department of Commerce.

3. Submit report to Ohio Attorney General David Yost.

4. Submit report to Federal Bureau of Investigation.

5. Submit report to U.S. Attorney for the Southern District of Ohio.

6. Submit report to Franklin County prosecutor.

7. Submit report to each member of the Ohio General Assembly.

8. Submit report to members and the Director of the Ohio Retirement Study Council.

9. Submit report to Ohio Governor DeWine. 

 Again, You Deserve Better!

Edward Siedle is a former SEC attorney, investment banking and securities industry professional, and longtime Forbes writer. He is the nation's leading expert in forensic investigations of money managers and pensions, focusing upon excessive and hidden investment fees and risks, conflicts of interest and wrongdoing. He was named as one of the 40 most influential people in the U.S. pension debate by Institutional Investor Magazine for 2014 and 2015.

Edward Siedle: The Death of Public Pension Transparency

The Death of Public Pension Transparency

June 16, 2021

By Edward Siedle, Contributor

Forbes

Absent full disclosure by investment firms to pension boards and staffs, these individuals cannot fulfill their fiduciary duty to diligently safeguard pension assets. Full disclosure of investment information by the pension to the public is necessary for the stakeholders to understand the investment program, as well as evaluate whether pension fiduciaries are prudently performing their duties.

https://www.forbes.com/sites/edwardsiedle/2021/06/16/the-death-of-publicpensiontransparency/?sh=74a1ada64d83 

Forensic investigations reveal that public pensions in states such as Pennsylvania, California, Tennessee, Rhode Island, North Carolina, and Ohio have long abandoned transparency, choosing instead to collaborate with Wall Street firms to eviscerate state public records laws and avoid accountability to stakeholders. Predictably, billions that could have been used to pay government workers retirement benefits have been squandered.

Transparency in government has long been acknowledged in America as essential to a healthy democracy. On the federal level, the Freedom of Information Act opens up the workings of government to public scrutiny, giving citizens information they need to evaluate and criticize government decision-making.

All 50 states also have public records laws which allow members of the public to obtain documents and other public records from state and local government bodies. State public records laws are built upon the United States’ historical position that the records of government are “the people’s records.”

"Transparency is also critical to the prudent management of trillions of dollars invested in America’s state and local government pensions. Indeed, the single most fundamental de?ning characteristic of our nation’s public pensions is" transparency. 

Of all pensions globally, our public pensions—securing the retirement security of nearly 15 million state and local government workers, funded by workers and taxpayers—are required under our public records laws to be the most transparent.

Public pensions primarily invest government workers’ retirement savings in securities and funds which are regulated on the federal and state level. Our nation’s securities laws require that securities issuers and fund advisers register with regulators, disclose financial and other significant information to "all" investors, including public pensions, as well as prohibit deceit, misrepresentations, and other fraud. The statutorily mandated disclosure information is commonly provided in the form of prospectuses, offering memoranda, annual reports, performance reviews and other documents.

Absent full disclosure by investment firms to pension boards and staffs, these individuals cannot fulfill their fiduciary duty to diligently safeguard pension assets. Full disclosure of investment information by the pension to the public is necessary for the stakeholders to understand the investment program, as well as evaluate whether pension fiduciaries are prudently performing their duties.

Read the rest of the article here. 

STRS withholds public records; Edward Siedle files suit

From Dean Dennis

June 15, 2021

Lack of Transparency Leads To Another Law Suit Against STRS

Edward Siedle is calling out STRS for trying to evade information that is needed to evaluate our pension assets, fees and expenditures. This information is also needed by our Trustees so they can properly fulfill their fiduciary responsibilities. Some questions for our Trustees: 1) Do you know the valuations of each of our 135 plus Alternative Investments? 2) Do you receive complete and un-redacted information on our investment agreements that will enable to fulfill your fiduciary responsibilities upon making such requests?

See lawsuit below.

Dean Dennis: An appeal to legislators about the situation at STRS

Dean Dennis to Ohio Legislators

June 15, 2021

Legislative Friends,

Please share our problems at STRS with your colleagues.  Since my last communication with you there has been unfavorable national press addressing how STRS manages its members' monies from NBC and Yahoo Business News. STRS has refused to offer any material evidence defending itself against the High Cost of Secrecy forensic report upon the request of HPA. Additionally, another lawsuit over STRS's lack of transparency has been filed. https://www.supremecourt.ohio.gov/pdf_viewer/pdf_viewer.aspx?pdf=905384.pdf 

STRS simply continues to detach itself from reality by claiming it is a top tier pension system.  Meanwhile, active teachers receive 75 cents on the dollar for their employee contributions and retirees are staring at a decade without any COLA.

I think the (attached) rebuttal from Edward Siedle to STRS summarizes our problems pretty well.  Again, please feel free to share our problems with your colleagues. STRS members certainly deserve more. Any suggestions would be appreciated. Feel free to call me 513-379-8838.

Sincerely,

Dean Dennis, ORTA Legislative Committee Member

                       STRS Member Only Forum, Spokesperson

                       STRS Ohio Watchdogs, Administrator

Attachment: Forensic Investigation of STRS Ohio: The High Cost of Secrecy by Edward Siedle, posted on this blog June 7, 2021

Edward Siedle's Forensic Investigation of STRS Ohio: The High Cost of Secrecy

Edward Siedle's Forensic Investigation of State Teachers Retirement System of Ohio, June 2021: The High Cost of Secrecy 

https://s3.documentcloud.org/documents/21274557/teacher-pension-analysis.pdf?fbclid=IwZXh0bgNhZW0CMTAAAR2vhaSBNyGIFXlkO-mJfXx--4abIMnVS1URKAZGh97VvLpfFXnz3wuVpyM_aem_AaGBBW-1SmAsGAu3jdCPePsVASD6FIcvAFRisTaBuHtWOLVYs1zSobDgMDwQxQeEqZZPDtKqnA458tBzHQ35MN7E 

Forensic Expert Edward Siedle Responds to STRS Ohio Rebuttal of High Cost of Secrecy Investigative Report

From Edward Siedle

June 13, 2021

Forensic Expert Edward Siedle Responds to STRS Ohio Rebuttal of High Cost of Secrecy Investigative Report

As the nation's leading expert in pension forensics, I would have liked to conclude in my report released last week, The High Cost of Secrecy that the State Teachers Retirement System of Ohio is professionally-managed and the retirement security of those who depend upon the pension is assured.

Unfortunately, I could not then and cannot now. Nothing the pension has said to rebut my findings is remotely persuasive. In my opinion, STRS insiders and their Wall Street helpers either don't know what they're doing or, worse still, are fully aware their actions are not in the best interests of stakeholders but simply don't care.

To recap:

There is only one reason to oppose transparency and embrace secrecy: Because you have something to hide.

STRS apparently believes it has plenty to hide. Over the past six months, the pension has failed to respond to the overwhelming majority of my requests for documents. Only the most mundane records have been released, in an effort to distract from the fact that all -- 100 percent -- of the critical investment documents I requested detailing widespread industry abuses and potential violations of law have been withheld.

STRS disingenuously claims to have provided more than 800 documents and 22,000 pages in response to my records requests. In the words of economist and newly-elected STRS board member, Dr. Rudy Fichtenbaum:

Claiming that you are being transparent by counting pages is absurd. Transparency is not merely about the quantity of information it is also about the quality of information.

Since commencement of my investigation, one board member I interviewed has resigned and two others have openly expressed their own frustrations obtaining information from the secretive pension. STRS isn't even transparent with its own board!

There is only one reason to delay statutorily-mandated fiduciary audits year-after-year: Because you have no intention of curing the longstanding deficiencies you know the audits will expose.

There is only one reason to refuse to fully disclose all investment costs: Because the all-in fees the pension pays Wall Street are unjustifiable and far too high.

How to defend paying Wall Street $143 million for doing nothing?

Keep it secret.

There is only one reason to use bogus "actual" performance so-called "benchmarks" for the riskiest investments and mystery custom peer group comparisons: Because the true investment performance results are dismal.

There is only one reason to misrepresent to stakeholders that GIPS compliance verification for a pension which invests heavily in alternatives (that are not themselves GIPS compliant) provides any meaningful benefit: Because GIPS compliance verification presents some perceived public relations advantage to a pension widely distrusted. That is, to STRS, the appearance of integrity is more important than diligent oversight of investments.

There should be no reason to ignore external investment consultant conflicts of interest that may have cost STRS over $1 billion annually or approximately $20 billion over a ten-year period -- an amount nearly equal to the under-funding of the pension. Yet -- despite specific warnings dating back to 2006 -- compliance with conflicts of interest safeguards has never been enforced at STRS. You have paid the price -- your COLA slashed and then outright eliminated -- for this willful neglect.

You deserve better. 

Later this week I will release my recommendations for action to hold those responsible for the mismanagement and billions in losses accountable. If your retirement security is important to you, prepare to join with others to take action.

Edward Siedle is a former SEC attorney, investment banking and securities industry professional, and longtime Forbes writer. He is the nation's leading expert in forensic investigations of money managers and pensions, focusing upon excessive and hidden investment fees and risks, conflicts of interest and wrongdoing. He was named as one of the 40 most influential people in the U.S. pension debate by Institutional Investor Magazine for 2014 and 2015.