Board member Rudy Fichtenbaum: "If you don't know what the rules of the game are, how can you make an informed decision?"

Rudy's comments to the rest of the STRS Board at their October 21, 2021 Board meeting 

Listen to Rudy Fichtenbaum's comments about the suspension of the COLA then listen to Board members justify the suspension of the COLA.

Click on this link: https://fast.wistia.net/embed/channel/dsrecwflxg?fbclid=IwAR3v6wo5CPBMPE0aM0jr6vRgxt3S_CQtfndDGv_bZgoAwFvK3expp2nfK9g&wchannelid=dsrecwflxg&wmediaid=4rwbetlw3a 

Begins at 1:50:06

Thanks to Cindy Murphy.

Tom Curtis to active teachers: The OEA is the problem, stop paying them dues!!!

From Tom Curtis

October 30, 2021

ATTENTION ACTIVES: 

This post is in answer not only to active Donald Digman, but to all active teachers. First, in order to stop the corruption at STRS, the membership all has to come together under our watchdogs group. There is no other way and we must remain in solidarity, outside of the equally corrupt OEA. Stop paying them dues!

STRS has caused all of us irreparable financial damage we will likely never get returned. Please understand that retirees have been the only ones that have had the time and ability to bring about any change at STRS. We have been at it since 2003. We have made some ground, but only a few, because we have always been thwarted by the STRS and OEA.

We have not had actives helping because they have no time or inclination to do so. That is in part due to the fact that the OEA and STRS have been lying to their membership for 30 years about the true status of STRS. STRS has always spent our money to find companies that will produce very glowing reports about how great STRS is doing for their membership. The majority of that is propaganda.

STRS went South when Herb Dyer was the executive director during the 90's and up until he was removed from his position in 2003-04 no one listened to us retirees. The corruption atmosphere he created has NEVER stopped. This is also because our equally corrupt Ohio government and the ORSC over the many years choose to sweep it all under the rug. We had no oversight to go to and believe me we tried every venue of government and law enforcement we could find.

Actives have only been left to rely on the OEA and what they tell teachers. That is why you pay them dues. Well, look at how that turned out? The OEA has controlled the Board for 30 years. The OEA has been in collusion with the STRS management for 30 years. The OEA is totally responsible for the pension reform. The OEA never admitted to the blatant misspending at STRS, while they have had at least 5 members on the Board riding high on travel and entertainment for 30 years. Their Board members even charged bar bills on the STRS credit card back in the early 2000's and may still do so.

The OEA has never helped us retirees that have been trying to bring about change. Instead they have labeled us different names and discredited us. They don't want the gravy train to end. The OEA spent big money to get one of their people (Rita Walters) elected to a retiree seat on the Board and last year 20,000 to try to get her re-elected. For many retirees the COLA maybe their only concern and that is why that suit was put in place as it is. I sincerely hope retirees will continue supporting the plethora of changes that need to continue to be made at STRS. A clean sweep of the swamp needs to take place, ASAP.

If you actives don't chose to support us, then you are creating a division of the membership and where else do you have to turn? I tried tirelessly in 2003-06 to get actives involved in the future of their retirement system, obviously long before the pension revisions. Actives would not give me the time of day and continued on with their naivety that the OEA and STRS would never let anything go South with our pension system.

I will say I did exactly the same thing when I was an active. I trusted the OEA and STRS implicitly. It wasn't until one year after I retired that I began hearing rumblings that STRS was out of control and started to see my benefits provided at retirement being paired back. HC was the big issue then and still is. I immediately contacted OEA. The OEA would not even respond to me. I was no longer a dues paying teacher so what did they care. Besides their hands were dirty.

OK, this is already way to long, but I will tell you my first concern is that our STRS defined benefit plan remains intact for all future retirees, period! If I get a COLA next year, that means little to me. The future of our defined benefit plan and the removal of many of the 2013 pension reforms, most importantly a return to 30-year full pension is my main concern. That is a must! STRS simply wants to make you mentally or physically sick so you may die before you even get to draw a pension.

ACTIVES, please support us watchdogs, we are your only salvation. The OEA is the problem, stop paying them dues!!!

Tom Curtis

RVK: Investments for pensions doing very well in 2021 (guess who's No. 1)

From Bob Buerkle

October 29, 2021 

Investments for pensions doing very well in 2021

STRS returns are best of all 5 pension plans again! (this comment added)

Press-News, The (Minerva, OH)

Ohio’s five public pension systems are seeing robust investment returns so far in 2021 with increases ranging from 8.8% to 11.5% in the first two quarters, according to a new report by RVK, Inc.

The systems also saw strong returns in 2019 and 2020, after losses in 2018. Collectively, the five systems now hold $251 billion in investment portfolios.

The Ohio Retirement Study Council, a bipartisan pension watchdog panel, is scheduled to dig into the RVK report at its meeting Thursday.

In the first two quarters, the funds saw increases of:

11.5% for State Teachers Retirement System of Ohio.

11.3% for Highway Patrol Retirement System.

11.2% for Ohio Police & Fire.

9.7% for School Employees Retirement System.

9.6% for Public Employees Retirement – Health Care Fund.

8.8% for PERS – Pension Fund.

Five of the six beat their benchmarks, which are used for apples to apples performance comparisons. Thanks to a robust stock market in 2019, 2020 and so far in 2021, the funds have exceeded their assumed rates of returns.

PERS is Ohio’s largest public pension system with $119.3 billion in investments and STRS is second with $94.8 billion. Ohio Police & Fire has $18.5 billion, School Employees Retirement System has $17.8 billion and the highway patrol system is the smallest with $1.1 billion.

The funds serve 675,000 government employees, 1.1 million inactive members and 485,000 beneficiaries.

Source:  NCPERS   October 26, 2021

Expanded version by Laura Bischoff posted in The Columbus Dispatch, October 12, 2021 https://www.dispatch.com/story/news/2021/10/13/ohio-public-pension-funds-enjoy-strong-returns-2019-2020-and-2021/6102323001/  

Court Case Against STRS Ohio Moved From Federal Court to State of Ohio

From Dean Dennis

October 27, 2021

From Facebook

Court Case Against STRS Ohio Moved From Federal Court to State of Ohio

Our COLA lawsuit against STRS Ohio is now filed in Franklin County, Ohio. Two months ago, Federal Judge Black ruled that the case was best argued in Ohio. Attached below* is the new Complaint for your review. Since Bob Buerkle and I are plaintiffs, our comments will need to be limited. As I've stated before, we have a strong case and an excellent legal team.

*The PDF copy of the new Complaint can be accessed from the Facebook groups Ohio STRS Member Only Forum (private group) or the STRS Ohio Watchdogs (public group). 

Tom Curtis re: Looting of Ohio Pension Funds

From Tom Curtis

October 27, 2021

Letter to several newspapers

Letter to the Editor,

I am a retired teacher and tax payer from Canton, Ohio. I am deeply concerned about the lack of oversight of the State Teacher Retirement System (STRS), by the Ohio Retirement Study Council (ORSC) and by our Legislature.

This should be of high concern for all tax payers! STRS pension contributions come from two sources. School system’s tax dollars contribute 14%, matched by a 14% contribution by each teacher. Ohio teachers and taxpayers contributions (totaling 28%) is the 3rd highest contribution rate in the US.

There has not been a fiduciary audit of STRS commissioned by the ORSC in over 14 years. Ohio law requires the ORSC to have an audit every 10 years. The last was is in 2006. All of the 5 Ohio pension systems are endangered by the Ohio Retirement Study Councils’ (Chaired by Rep. Rick Carfagna, Co-Chaired by Sen. Kirk Schuring) failure to have required audits performed. The ORSC does not respond to requests from teachers asking why they have not performed their lawful duty and fiduciary responsibility to Ohio citizens. The ORSC rarely responds to any questions. There is apparently no oversight over the ORSC.

This year, STRS members were so upset with the management of STRS, the Board and the ORSC, retirees raised $75,000 of their own money to commission a forensic audit of STRS conducted by a nationally renowned pension whistle blower, Edward Siedle, a lawyer and former investigator of the Securities and Exchange Commission (SEC).

The findings were 121 pages long and finds that STRS shades data to present a false light on performance and ignored audit recommendations that would have protected the pension from looting by fund managers and undeserved bonuses to mediocre investment employees.

STRS has broken several benefit promises given to retirees at retirement without grandfathering any when changes were made. We were promised a 3% cost of living increase. The last year that 3% COLA was given was 2013. No COLA’s have been given since 2017. STRS claims they do not have enough funds. Yet, they recently approved over $6.7 million of performance bonuses to the STRS investment staff and have given multi-millions in bonuses to investment staff over the past two decades.

STRS overstates performance and understates fees and expenses. They did not implement the findings of their last audit in 2006, such as adding additional auditors. They refuse to be transparent in their investments. One alternative investment, Panda Power lost STRS over a half a billion dollars. That information took three years to be revealed.

Thomas Curtis

Canton, Ohio

John Damschroder: Ohio teachers use Facebook to force pension audit

Fremont News Messenger

https://www.thenews-messenger.com/story/news/2021/10/27/damschroder-ohio-teachers-use-facebook-force-pension-audit/8548824002/

October 27, 2021

John Damschroder

Columnist

Ohio teachers use Facebook to force pension audit

The controversy at Ohio’s State Teachers Retirement System (STRS) looks like a day at the beach compared to the problems at Facebook.

The global social media giant has been accused of assisting the the insurrectionists who attacked the U.S. Capitol, assisting foreign governments attempting to influence U.S. elections through misinformation, causing an increase in teenage suicide and eating disorders, all through the use of algorithms designed to trigger anger, because hot emotion causes users to stay longer, creating more advertising profit for Facebook.

REDISTRICTING: Ohio governor, other officials file statements in redistricting case. Here's what we learned.

It’s hard to find a positive story about social media, but the thousands of retired Ohio teachers who’ve created two large and fast growing groups to monitor their retirement system — STRS Ohio Watchdogs and STRS Members Only  — have produced an outcome that is hard to imagine without Facebook.

Forensic audit underway; accounting for investment costs

Because hundreds of these STRS monitors reacted within minutes to my suggestion they contact the Special Investigations Unit of the state auditor’s office, STRS confirmed a forensic audit was underway, during their board meeting last week.

Tiffany Ridenbaugh, the Chief Forensic Auditor in the Special Investigations Unit, wrote to STRS Executive Director William Neville saying the probe is based on numerous complaints evolving from the $75,000 investigation of STRS done by former Securities and Exchange Commission attorney Edward Siedle for the Ohio Retired Teachers Association (ORTA). The Siedle report concluded STRS routinely underreports the true costs of externally managed alternative investments and thus overstates the returns it achieves. 

At issue in the forensic audit is accounting for investment costs in 2018. Siedle and STRS Trustee Board member, Fremont native Wade Steen, a certified public accountant with 30 years’ experience in government finance, indicate STRS reported costs of $279.1 million, a small gain on investments for the year and paid staff bonuses totaling $7.8 million.

The Siedle Report says the investment expense for the year was $463.6 million and Steen produced a graphic with screen shots of the records showing those costs, unreported by STRS, producing a loss for 2018 and making the bonuses improper.

'I don't lose sleep over the management of our assets, but I do worry about misinformation'

In August STRS Executive Director William Neville told board members all of the investment expenses are fully recorded and validated; “I don’t lose sleep over the management of our assets but I do worry about misinformation.” But like Facebook, STRS no data to refute assertions based upon data.

Director Neville doesn’t have the credibility to reassure Ohio’s retired teachers all is well with their pension, as he has passively allowed staff to collect salaries and bonuses research shows to be at the top of the scale nationally.

Moreover, STRS is one of the few funds in America paying bonuses, perhaps because the conflict of interest between valuations of private market investments, that enrich both fund managers and pension staff, without external validation, is obvious outside the capital of corruption Columbus has become.

As Facebook fights for redemption in the national media and during Congressional hearings, it would do well to tell the story of how it empowered Ohio teachers to literally force state government to do its job on oversight of their pension. 

As STRS faces investigative scrutiny on the truth in its financial records it would be well advised to cease claims of top tier performance as all the benefits flow to staff anyway. STRS must show us that what it tells us is true. The Special Investigations Unit audit, which by law becomes public when the case is closed, has the credibility to provide that much-needed outcome.

John Damschroder, a Fremont native who worked in Gov. George Voinovich’s administration, writes about business and economic development in Ohio.

Ohio Teachers Pension Faces Special Audit Over Scathing Report

Chief Investment Officer
October 25, 2021

By Michael Katz

Ohio Teachers Pension Faces Special Audit Over Scathing Report

The state auditor says the information supports ‘a reasonable basis’ for conducting a probe of the retirement system.

The $95 billion Ohio State Teachers Retirement System (STRS) is facing a special state audit over a report that accuses the pension fund of secretly collaborating with Wall Street firms, lacking transparency, and wasting billions of dollars.

In June, Benchmark Financial Services released preliminary findings of a forensic investigation of Ohio STRS titled “The High Cost of Secrecy.”  The report ripped into the retirement system, saying it “has long abandoned transparency, choosing instead to collaborate with Wall Street firms to eviscerate Ohio public records laws and avoid accountability.”

The Ohio Auditor of State’s Office recently sent a letter to Ohio STRS Executive Director William Neville saying it has received “numerous complaints” regarding the report and that it had conducted a preliminary examination into the matter.

“The information obtained to date supports a reasonable basis for conducting a special audit,” the letter said. “As such, the Auditor of State is initiating a special audit of the State Teachers Retirement System of Ohio.”

The pension fund may also have to foot the bill for the audit, as state law allows the state auditor to charge for audit services.

Benchmark was hired by the Ohio Retired Teachers Association (ORTA) earlier this year to conduct the forensic investigation. ORTA had raised $75,000 to contract pension audit expert and former Securities and Exchange Commission (SEC) attorney Edward “Ted” Siedle to conduct the report.

Ohio STRS has vehemently rejected the findings of the Benchmark report, saying it “contains numerous misstatements and allegations which are unsupported by evidence,” adding that “it is unconscionable for the author to make repeated baseless allegations.”

Read the rest of the article here.

Related Stories:

Ohio Teachers Pension Fund Rejects Forensic Audit Findings

Ohio Retired Teachers Association Sues Ohio STRS for Transparency

Ohio Teachers Pension Sued over Eliminated COLAs

Dan MacDonald to STRS Board: Actives need their benefits enhanced and retirees need their 3% COLA

Dan MacDonald's speech to STRS

October 21, 2021

Good morning.  I am Dan MacDonald, an STRS retiree who served for 38 plus years and currently Executive Director of Local 279-R, NEO AFT retirees.  

Doing some personal research and going to websites, the State Employees Retirement System of Ohio, SERS, is 71.49% funded and needs 24 years to pay off its unfunded liabilities.   Ohio Police and Fire Pension Fund, OP&F, needs 29 years to pay off its unfunded liabilities, right under the 30-year limit set by Ohio state law.  The Ohio Highway Patrol Retirement System, HPRS, is 67.9% funded and needs 23 years to pay off its unfunded liabilities.   Ohio Public Employees Retirement System of Ohio, OPERS, which has over 100 billion in its general fund, is 82.9% funded and needs 18 years to pay off its unfunded liabilities. 

What do our four Ohio pension funds have in common?  They are paying a COLA.   OPERS has requested a change to their COLA, going from one year to two years after retirement to be paid along with a two-year freeze to all, but these changes need to be approved by our state legislators. 

Then there is our STRS.   When paying a COLA, it takes five years after retirement.  Are the other pension systems in Ohio Boards that incompetent, or do their Boards push back on consultants and staff?  We are to believe Cheiron/Callan, etc. and their actuarial numbers and “forecasts”, a new term used today. Do the other Ohio pension funds not believe their actuaries, consultants, and their projections, “forecasts”? Obviously, the other Boards interpret their fiduciary responsibilities differently to their members, and not allegiance to STRS staff and consultants.  

Actives need their benefits enhanced and retirees need their 3% COLA. 

Thank you.

Dan MacDonald's report on the STRS Board meeting of October 21, 2021

From Dan MacDonald

October 21, 2021

STRS October Board Meeting

The October 21, 2021 STRS Board meeting was called to order at 8:30 a.m.

After minutes were approved and the Investment Department was called to present, Board member Rudy Fichtenbaum challenged the new disclaimer statement on the investment report. Chief Legal Officer Wideman responded that the statement was placed to protect the Board from the public who misrepresents and alter slides and info.

Board member Steen jumped in also sharing its first-time appearance and asked what “triggered” the event.  Wideman responded that there was no event, just good business practices. Board member Price pointed out that the disclaimer resembled Callan’s, Cliffwater’s and other consultants’ disclaimers, but did ask if anyone at STRS considered telling Board members about the disclaimer before its sudden appearance. Fichtenbaum suggested that its wording be altered to clarify the intent of the disclaimer. Wideman stated it would be reviewed.  [Shenanigans continue; I’ll be shocked if it ever comes up again by STRS staff].

The Investment Department reported a negative 1.33% return to the fund for September.  FY22 return [since July] is a positive 2.12%. Total investments assets ended September at $95.1 billion, higher by $280 million for FY22. Asset class presentations followed for alternative investments, domestic equities, and international. Under International assets, the department head asked the Board to consider hiring an ACWI ex-US growth external manager and hiring a dedicated China A-share external manager. Consultant Callan ended the report praising the team efforts to beat benchmarks and willingness to try new strategies for better returns.

The Executive Director’s Report covered 7 areas. The Ohio Retirement Study Council Report showed that STRS Ohio’s returns ranked STRS first among the Ohio five pension funds, for the months since June 2021 and also for five-, seven-, and 10-year time periods. [STRS is proud; Neville didn’t point out STRS is the ONLY fund not currently paying a COLA]. STRS is under a special audit by the Ohio Auditor of State’s office from complaints received related to the Benchmark Financial Services report. [Think Ted Siedle’s forensic audit paid for by members]. Steen and Fichtenbaum asked questions about the special audit and its scope and Steen, as chair of the audit committee, pointed out Board policy doesn’t cover the jurisdiction of the audit committee in special audits. He wants his committee involved.]McFee and Rhodes, two active seats, are up for election in the spring, as well as Walters, a retirement seat. The other areas were all “Bravo, STRS staff.” 

Under Public Participation 7 spoke. Most were on COLA, but one spoke against investment involvement with China and its government entanglement with its companies; another spoke against STRS Investment Department’s stake in HIG Capital and HIG’s poor track record with companies filing bankruptcy and being prosecuted for fraud.

Actuarial consultant Cheiron reported for the Finance Department after lunch. Cheiron, of course, used STRS’s new projected rate of return of 7% [from 7.45%], and of course that leads to less income to the general fund, BUT still projecting that if 7% is reached yearly, the fund would be fully funded in eight years. In its summary, Cheiron pointed out that “the plan is still vulnerable to future adverse experience,” the 7.0% investment assumption exceeds the investment consultant’s long-term expectation, a negative cash flow that exceeds 4% of assets is happening, a fixed employer contribution rate, and concluded “any consideration of benefit improvements should be delayed at least until after the completion of the upcoming experience review.” [Think late spring 2022]

The Funding Policy Dashboard, which is a statistical measurement used to direct the Board regarding the Fund’s solvency, went from a negative three to a negative one. Sixteen Plan Design Levers were also shared and their impact on the general fund. [Think the impact of a COLA, increasing/decreasing the Contribution rate, a one-time supplemental benefit, changing the benefit multiplier or final average salary determiner, etc.]

 The health of the Health Care Fund was then presented. It’s healthy, 174.73% funded. Dashboard went from a plus 7 to a plus 5, mostly because of government changes in subsidies.

The Board concluded with a one-time authorization of a premium rebate of $300 for each individual covered by the STRS retiree health care program in September 2021 to be paid in November’s pension payment.  Routine Matters approved expenses and other business.

Under new business, Steen and Fichtenbaum thanked “the Chair,” for allowing a future presentation on how to increase the general fund and both stated, that no matter the actuarial report, they both would present and support a COLA.

The next meeting is scheduled for November 18^th; it is the annual Educational and Planning meeting and not a Board meeting. The next Board meeting is scheduled for December 16^th.