Thursday, June 09, 2022

Joe Lupo on STRS' "Pay for Praise" and propaganda

From Joe Lupo 

June 9, 2022

I have continually stated in the past, that the STRS "Pay for Praise" reports and studies are nothing more than PROPAGANDA! What ALL STRS members should be more concerned about is that they are spending our pension funds on these reports which are not worth the paper they are written on. Instead of trying to make believers out of us that they are doing a great job based on their continuous flow of propaganda, they should spend their more time and effort making us believers by doing a great job.  Enough said...

Wednesday, June 08, 2022

Wha-a-a??? This is a Fiduciary Performance Audit?? It looks more like a Nothingburger to me! How about a REAL audit, Funston? After all, your bid was the HIGHEST of the three that the ORSC chose from!! CLEAN UP YOUR ACT, PLEASE!!!

From John Curry

June 8, 2022

     STRS Nothingburger Funston "Audit" 

Toledo Blade editorial: Audit on state retirement plans opens some eyes

Toledo Blade

June 7, 2022

"STRS knows who it invested with and how much it provided, but it is blind to holdings in the portfolio and expenses associated with those investments. Without that information, the performance and expense is impossible to verify. What can’t be verified should not be trusted."

An audit of the State Teachers Retirement System of Ohio told some stories, yet failed to tell the whole story.

We’ve waited six years beyond the legal deadline for an independent fiduciary audit of the STRS. Bloomfield Hills, Mich.-based Funston Advisory Services was paid $663,800 to examine the $100 billion fund. The fund provides retirement income for a half million current and retired Ohio teachers.

STRS is under fire by members, who don’t pay into Social Security and have all retirement benefits riding on the state fund, for a 100 percent loss on a $500 million investment in Panda Power, a Texas independent electric company.

Simultaneously, the state auditor’s Public Integrity Unit is investigating whether STRS understated alternative investment management fees in 2018. That decision may have enabled bonus payments of $7.8 million to internal investment staff.

Nationally prominent pension lawyer Ted Siedle, hired by the Ohio Retired Teachers Association, issued a report concluding that the costs for investment management would have been much cheaper using low cost index funds. Mr. Siedel says index funds would have added $400 million a year to the STRS bottom line.

The Funston audit disputes the Siedle study, saying STRS is in the top 25 percent of all public pension funds, achieving the performance with lower than average fees for pensions and has produced nearly 20 percent annual returns in a private equity portfolio.

Funston’s report mirrors what the leadership of STRS claims. What it doesn’t tell you is the actual investment results on the $20 billion alternative portfolio is provided by the outside investment managers. STRS knows who it invested with and how much it provided, but it is blind to holdings in the portfolio and expenses associated with those investments. Without that information, the performance and expense is impossible to verify. What can’t be verified should not be trusted.

The Funston report does include some good recommendations. Funston recommends STRS establish a third-party valuation process for alternative investments to ensure transparency. In addition the audit recommends external manager fee reporting which include performance and incentive fees, partner profit shares, and pass-through expenses from portfolio companies to the retirement fund.

Ohio has five pension funds with $266 billion covering more than 2 million people. None of them can independently validate the fees, expenses or asset values of their alternative investments. The Funston recommendations, as limited as they are, should be applied across the board immediately.

John Curry re: 06/07/2022 Toledo Blade editorial: Once again, Ohio's taxpayers are being ripped off

From John Curry

June 7, 2022
Thank you, Toledo Blade Editorial Staff, for this release. What the article doesn't say is that the company who did this audit, Funston, submitted the HIGHEST BID of 3 auditing companies and was awarded the bid by the Ohio Retirement Study Council. Funston’s bid ($775,000) was more than twice the price of its nearest competitor ($307,000) and ten times as great as the only other bidder ($75,000). 
This choice of Funston definitely has an odor to it. The Ohio STRS was paying for the results they wanted before the audit even began! Even though the Ohio Retirement Study Council "accepted the bid," Ohio Taxpayers AND teachers were paying for the highest bid. 
You see, the bill was paid by STRS and 14% of every teacher's wages is paid by school taxes to the retirement system....this is matched by an additional 14% paid by each teacher. Far too many of these dollars are going to Wall Street hedge funds whose amounts are kept from the public's view by classifying them as being "trade secrets" even though they are public moneys! 
Once again, Ohio's taxpayers are being ripped off.

Tuesday, June 07, 2022

A message for exiting STRS Board members


Sunday, June 05, 2022

Toledo Blade: STRS audit fails to tell the whole story


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