Saturday, April 09, 2022

Robin Rayfield outlines reasons why change is needed at STRS

Comments by Robin Rayfield, Executive Director of the Ohio Retired Teachers Association: Reasons Why Change is Needed at STRS

Originally published in January, 2022 in an annual mailer put out by ORTA

January of 2022 feels a lot like January of 2021. We are still waiting to get out of the grips of the pandemic. If there is any consolation, it appears (for now) that the virus that we are fighting today is less deadly than the virus we were battling in 2021. I have weathered some health issues, but the doctor tells me I am doing well.

I did visit a few chapters in 2021. I made nineteen visits to chapters that were excited to hear about the findings of the forensic audit and what is taking place. I suppose that I should bring everyone up to speed with what we have learned throughout 2021 regarding Mr. Siedle’s work and our forensic audit.

What I have provided below are a number of reasons significant change at STRS is imperative:

1.   Mr. Siedle’s 128 page report The High Cost of Secrecy identified several issues with the operations of STRS. Most notably is the lack of transparency that is pervasive at STRS. The fact that members are not allowed to know details about our investment program is bad enough, but this lack of transparency extends to our trustees as well. How can our trustees perform their duties as fiduciaries if they are not permitted to know the details about our investments?

2.   Although STRS has rejected Mr. Siedle’s report in its entirety, the Auditor of State in Ohio has launched an investigation into STRS. The auditor is digging into whether fraud has been committed. Instead of taking a closer look at their own at their practices and culture, STRS management attempted to discredit Mr. Siedle. Now, understand that Mr. Siedle is the preeminent authority on forensic audits of public pensions in the world. Public pension employees are fearful of Mr. Siedle as he knows the tricks that pension leaders use to make themselves look better than they are. He also knows the consultants that are known through the industry as the consultants that will write a positive report… as long as the payment is large enough.

3.   Board member Wade Steen (appointed by the governor) has been an outspoken critic of the performance incentives for a few years. He asked that the ‘bonuses’ paid to STRS staff be delayed that a through review could be conducted to determine if the bonuses had been earned. STRS management and a thin majority of the board would not delay the payment of the bonuses. After the payment, board members learned that the staff and consultants had not been straightforward and honest in their discussions with the board. People were paid bonuses despite not having met any external benchmark.

4.   Retiree elected board member Dr. Rudy Fichtenbaum wrote a detailed report that contradicts STRS staff’s claim that STRS staff added $100,000,000 to the STRS portfolio through their ‘active management’. Dr. Fichtenbaum’s report indicates that STRS staff’s efforts reduce the portfolio by $400,000,000. This loss instead of gain is confirmed by an independent analysis by leading economist Richard Ennis.

5.   Former board member Bob Stein has also joined in the discussion of problems with STRS management and STRS consultants offering that he is no longer convinced that board members are receiving accurate information from STRS.

6.   An analysis of ‘risk and return’ over the last 20 years from Cliffwater (a highly paid consultant to STRS) shows that STRS has much higher risk and much lower returns than many public pensions in the US. This directly contradicts the claim that STRS has lower risk and higher returns.

7.   We know that active STRS members have the worst deal in the U.S.  Active members pay 14% in contributions but receive a pension that is only worth 10.5%. Where does the money go? NOT TO RETIREES! Retirees were promised (in writing and in Ohio law) a 3% COLA. STRS has not lived up to their promise. On the other hand, STRS employees have the best deal in the US. More employees at STRS are in the top two hundred of all public pensions, regarding compensation; more than any other pension in the country.

8.   STRS has not had a state-required audit in over 16 years (the law requires that the legislators conduct an audit every 10 years). The last audit (2006) resulted in eighty-eight recommendations. STRS addressed many of these recommendations, however, STRS did not address several ‘big' recommendations. Two of these recommendations that were ignored were:

a.  Bonus payments need to be tied to an external benchmark. Using your own performance as a benchmark is not acceptable. STRS still uses its own performance as a benchmark. In other words, bonus is earned regardless of the performance of our investment staff.

b.   STRS consultants must disclose potential conflicts of interest with Wall St. investors reducing the possibility that consultants could be paid by the investor (STRS) and the firm investing the money from STRS. This recommendation has not been addressed.

I recognize that our current situation is frustrating. It seems like the employees at STRS and the majority of the board at STRS do not care about retirees or active members. If you go to the meetings and observe our board, this indifference is apparent. I can offer some hope. At the last few STRS meetings the board has looked at what can be done to improve the situation for retirees and for active contributors. Some form of lowering the contribution rate coupled with some form of COLA have been discussed at length. STRS expects to receive a report from their external actuary that will shed light on how STRS has performed compared to the projections. If all goes well, we may know the real possibility of what can be done in March.

In the meantime, there are a few things to watch for:

·      The Auditor of State’s special audit report

·      A class action lawsuit filed by two retirees is in state court

·     Our forensic audit has sought to receive public records not provided by STRS through legal means at the Ohio Supreme Court

·     Ohio’s legislators are conducting a fiduciary audit of STRS. (Unfortunately, the ORSC has hired a company that is closely connected to STRS’s current consultant to do this fiduciary audit)

Please know that ORTA will remain engaged in this battle to stop the constant reduction of our pension benefits. Your continued support and assistance at growing our membership will strengthen our voice.

Friday, April 08, 2022

Dean Dennis: Am I Missing Something?

From Dean Dennis

April 8, 2022
OEA candidates and McFee and Rhodes state it's a MYTH that our active members are currently projected to receive less that they are currently contributing with their Employee Contribution. Then the next day, STRS also states the 77 cents for every dollar is also wrong. This certainly had the appearance of supporting the OEA candidates. You can bet I called STRS to complain.
For the 2020 Fiscal Year, Cheiron, our STRS Actuarial firm, stated the Normal Cost for our DB members was 10.86%. Simply divide 14% (Employee Contribution) into 10.86% and you get 77 cents as the value compared to $1.00. This is a negative return. I'm going to assume maybe STRS said the 77 cents was wrong because in Fiscal Year 2021 Cheiron stated the Normal Cost was now 12.06%. Perhaps McFee and Rhodes also used the 2021 Normal Costs to call the 77 cents as a MYTH but, that is still LESS than what active teachers are projected to receive on their 14% contribution when they retire. 
WHERE DOES THE OTHER 2% OR 3% go? It goes towards the unfunded liabilities created by STRS underperformance and the lowering of the discount rate. OEA candidates and STRS don't explain this, do they? Apparently, they think it's acceptable for members contribute 14% for a pension they project to cost less. 
Elect candidates who will be transparent and look out for you. 
Lastly, Mr. Rhodes and Mr. McFee also are telling you for every $1 you contribute it will result in $23 when you retire. No one I've talked to has been able to explain that math!

Dean Dennis: A Watchdogs Commentary: Why New STRS Trustees Are Needed

From Dean Dennis

April 8, 2022

This is an article I lifted for posting. The article is nearly 3 years old, but it is still relevant. As Members we cannot continue business as usual at STRS, nor elect "business as usual" trustees. This business as usual approach has led to active members paying 14% in contributions while the "normal cost" for their pension is assessed at 12%. Our active teachers are giving 2% of their pension towards liabilities created by STRS under-performance. This is a negative value; we need new Trustees. For the upcoming election, the STRS Ohio Watchdogs, the Ohio Retired Teachers Association and the Ohio Members Only Forum have endorsed Julie Sellers, Steven Foreman and Elizabeth Jones. The Ohio Federation of Teachers have endorsed Julie Sellers and Elizabeth Jones. Please read the eye-opening article below.

July 22, 2019
This may sound counter-intuitive, but here it is: Technically speaking, Ohio school districts do not contribute toward Ohio teacher pension benefits.
"How is this possible?" you might ask. After all, Ohio school districts are contributing 14 percent of each teacher's salary into the pension fund.
But wait, where is that contribution going? If you pull up the latest actuarial valuation report from the State Teachers Retirement System of Ohio, you can find out. Table I-1 (not shown in article) shows that the plan estimates the "normal cost" of the benefits are worth 10.91 percent of salary. That is, across all individuals who enter the plan, after accounting for their age or how long they might stay, the plan thinks the promised pension benefits are worth an average of 10.91 percent of each teacher's salary.
You'll quickly start to screw up your face, especially if you know that every teacher is currently contributing 14 percent of their salary into the plan. Fourteen is more than 10.91 percent, how can that be?
This is due to the fact that Ohio STRS has accumulated unfunded liabilities of $24.8 billion. Every single STRS member is contributing 3.09 percent of their salary (14 percent - 10.91 percent) to pay off that debt.
That's not all. In addition to the employee contributions, school districts are also paying in 14 percent of each teacher's salary into STRS. That money is going into the plan, but none of that is going toward benefits. All of it is going to being used to pay down the unfunded liabilities.
In essence, Ohio has created a system where teachers, on average, are getting less out of their pension plan than they themselves put in. To be honest, it's hard to even call this a "retirement" system at all. The system is functioning like a debt accumulation tool and a tax on teachers, with retirement benefits on the side.
Again, this may be sort of hard to wrap your head around, but it's true. The figures above are all based on what the state's actuaries think the Ohio STRS plan will cost over time. Ohio is the only state in such a bad situation overall, but Illinois teachers hired as as of 2011 are also paying more into the system, on average, than the state's pension plan thinks their benefits are worth. Other states may be in similar territory for new, less-generous benefit tiers, but they rarely report those data separately.
In contrast, Ohio also offers new teachers the option to join a defined contribution plan with a 9.53 percent employer match. For the vast majority of teachers, that's likely to be the better option.

Teachers around Ohio are starting to wake up to the culture at STRS...

Over 40k teachers around Ohio have been shining the spotlight on the perks at STRS. As we've seen on the Facebook Members Only Forum and STRS Ohio Watchdog website, below are the highlights of the ridiculous benefits STRS employees receive year after year, all paid with OUR MONEY
Reminder - OEA Candidates have never voted no on any of these:


The average STRS Employee Makes $153,000 Per Year:
  • This is up from $119k in 2015 (see chart below)
  • We have received one COLA in that time span
  • STRS Staff raised their own salaries every single year
Matthew Worley's Total Compensation is Close to $1,000,000:
  • Base Salary = $373,000
  • 2021 Bonus = $446,481
  • OPERS Pension Plan = 14% of total above*
* Yes, you read that correctly, STRS employees don't even use STRS pension plan, they pay into OPERS. Odd to say the least. 

** Worley was also responsible for the $525 Million investment in Panda that went bankrupt. To clarify, Worley used STRS money to invest in an amateur wrestling league in Texas. The league went bankrupt and STRS lost 100% of the investment. Half a billion dollars of our money down the drain.
STRS Financial Perks are Abnormal
  • 108 employees at STRS make more than the Governor of Ohio.
  • Full-time & Part-time employees can receive 100% tuition reimbursement (in the past STRS staff have given their children part-time summer jobs, and then we teachers covered their tuition)
  • Their building, also known as "The Palace" has a luxury day care center, a fitness center (which cost us $400k to build), heated sidewalks (cost us $185k), a brick paver garage, and even a $250k splash pad for their kids to use in the summer (not open to the public).
SOURCE: STRS Fiscal Budget Report 

Wednesday, April 06, 2022

Rudy Fichtenbaum and Wade Steen respond to email sent out from STRS

 Response to STRS Email About Elections

Dr. Rudy Fichtenbaum and Mr. Wade Steen
'Whoever is responsible for sending out this email should resign immediately because he/she/they have violated Board Policies dated September 30, 2021, p. 52 which says: “No associate of STRS Ohio shall use his or her official authority or influence for the purpose of interfering with or affecting the result of a Board election….”'
April 6, 2022
Today STRS Ohio sent out an email saying the claim that teachers received only 77 cents back on every dollar they contribute to the system is not correct. According to a study done by Anne Sapenfield, Director of the Wisconsin Legislative Council entitled “2020-21 Comparative Study of Major Public Employee Retirement Systems” STRS is the only pension out of 87 with a negative employer normal cost which she shows as -3.14%. This is the same number that appears in the STRS 2020 Annual Comprehensive Financial Report (ACFR). The employee normal cost (contribution) is 14%. The sum of those two numbers is 10.86%, which is the value of the pension. So, 10.86%/14% = .776, which is the ratio of the value of the pension to the amount contributed. This means for every $1 contributed the value of the pension received is 77.6 cents. Those are the facts.
The rest of the email is all about what a great job STRS is doing for its members. Ask yourself, why in the middle of an election is the STRS staff sending out an email disputing a fact that is incontrovertible?
Of course the email also contains the usual litany of propaganda telling members how great a job STRS is doing.
So, ask yourself if everything is so great, why is it active teachers have the worst deal in the country and why is it STRS retirees are the only retirees, among the 5 Ohio public pensions, without an ongoing COLA.
Clearly this just a blatant attempt to try and influence the election that is now underway.
Whoever is responsible for sending out this email should resign immediately because he/she/they have violated Board Policies dated September 30, 2021, p. 52 which says: “No associate of STRS Ohio shall use his or her official authority or influence for the purpose of interfering with or affecting the result of a Board election….”
Finally, for the record that neither of us is associated with any organization that is sending untraceable emails to members.

VIDEO: Meet OFT's STRS Candidates webinar April 5, 2022

Click here to view the video:

Vote for OFT-endorsed candidates for STRS Board seats Julie Sellers (active teacher) and Elizabeth Jones (retired teacher)

...and don't forget

Tuesday, April 05, 2022

Rudy Fichtenbaum responds to STRS Board chair Rob McFee's "Why now?" post on FB

Posted on Facebook April 4, 2022 by Rudy Fichtenbaum

Rudy Fichtenbaumc

A Response to Rob McFee’s “Why Now?”
Dr. Rudy Fichtenbaum
April 4, 2022
A couple days after the March meeting Rob McFee posted on Facebook “Why now?” in which he said, “During the meeting Mr. Fichtenbaum implied that the only reason our board was considering a COLA at this time for our retired members was because of the Board election.” He then goes on at the end of his remarks to say that my opinion was “insulting to every board from 2017 until now.”
I could spend the entirety of this post complaining about the ways in which my integrity has been attacked or the insulting and demeaning treatment I receive at nearly every Board meeting. But the real people who are being insulted are the membersSTRS is not about the staff, and it is not about the Board; it is about the members.
Changing the age requirement and giving a one-time 3% increase to retirees is a cynical attempt to get active members and retirees to vote to reelect Board members who have lost touch with the members.
What is insulting to members is to read Facebook posts from Rob McFee telling them that the way we can restore benefits is through excellent investment returns, knowing full well that that the Board just approved a plan that is expected to earn 6% on investments while knowing we need to earn 7% or the unfunded liability will increase, and the funding ratio will go down.
What is insulting to members is that the Board is talking about writing a promissory note in the future, knowing that when the note comes due there will be insufficient funds. We have all seen this before. This is the ultimate insult to members because it assumes members are too stupid that to figure out that promising to restore COLAs in the future, without earning more money, is just an empty promise.
That’s why both Wade Steen and I say at almost every meeting to our consultants and staff, we need to find a way to earn more money without taking more risk.
It is an insult to members to brag that the funding ratio is 88% or that STRS outperformed 96% of 200 pensions in the Callan database. If we are doing so great why do active members have the worst deal in the country, contributing $1 to the pension so they can get $0.77 when they retire and why is STRS the only pension in Ohio without a real COLA?
It is insulting to members to post on Facebook while you are campaigning and turn off the comments! Are you afraid of hearing from members? If everything is so great turn the comments on and let’s hear what the members think.

A Must-Hear: Robin Rayfield tells it like it is!

"The current OEA-endorsed candidates' leadership are the root cause of what's wrong with our pension. We urge you to vote for Foreman, Sellers and Jones."

"Everyone involved is getting shafted EXCEPT the people who work at STRS!"

"The reason for this endorsement is active teachers have the worst deal in America and retired teachers are not getting what they were promised... It's time for change!"

Listen here:

Monday, April 04, 2022

Teachers: Do you really understand exactly how STRS is being mismanaged (and how you're being cheated out of thousands)?

A few words from this blogger...
Active teachers: Do you REALLY want to return those incumbents to the STRS Board who have been cheating you out of a ton of your hard-earned money and making you work MORE years for a pension that is worth LESS than what they're making you pay into it? You need to vote them out and get Julie Sellers and Steve Foreman in there to represent YOU, for a change! Those incumbents sure haven't been doing that.
Retired teachers: Do you really want those OEA incumbents to keep kicking you around and cheating you out of THOUSANDS OF DOLLARS OF YOUR MONEY? They're throwing us crumbs right now, but the one-time COLA doesn't BEGIN to cover what you were PROMISED when you retired! Rita LOVES the STRS staff and all those OEA people, but does she give a hoot about YOU? I don't see her fighting for what we're entitled to, do you? It's OK with her for you to continue losing THOUSANDS OF DOLLARS OF YOUR MONEY. A one-time COLA, and they think they're being benevolent. Hello! Have they noticed there's out-of-control inflation going on out there, which that one-time COLA doesn't begin to cover? WHERE'S OUR BACK PAY WE ARE ENTITLED TO? Heaven help us ALL if Rita gets elected. Get her out and get Liz Jones elected if you want even a prayer of change on that Board. The STRS Board as it is now is a SHAM except for the few good people on it! You know who they are.

Did you hear what they're saying?

Read More STRS Ohio News
Read more here: 
News and Media: 
By the Numbers:
Fix my Pension: 

Liz Jones is a candidate for a RETIRED TEACHER seat on the STRS Board. Her name will appear on the ballots sent only to RETIRED STRS members.
 Julie Sellers and Steve Foreman are candidates for two ACTIVE TEACHER seats on the STRS Board. Their names will appear on the ballots sent only to ACTIVE TEACHER STRS members.
 Active teachers vote only for active teacher candidates (Julie Sellers and Steve Foreman).
 Retired teachers vote only for a retired teacher candidate (Elizabeth "Liz" Jones).
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