Tuesday, July 12, 2022

Fortifying Main Street: The Economic Benefit of Public Pension Dollars in Small Towns and Rural America

Fortifying Main Street:  The Economic Benefit of Public Pension Dollars in Small Towns and Rural America illustrates the impact of benefit dollars from public pension plans according to several different measures: as a percentage of GDP by county; as a percentage of total personal income by county; and by categorizing counties as metropolitan, small town (micropolitan), or rural.

By Dan Doonan, Nathan Chobo and Tyler Bond

July 2022

Click here for more, including a download button for the full report: 


The report finds that a positive economic contributor to these communities is the flow of benefit dollars from public pension plans. In 2018, public pension benefit dollars represented between one and three percent of GDP on average in the 2,922 counties in the 43 states studied.

Authored by Dan Doonan and Tyler Bond from NIRS, along with Nathan Chobo from Linea Solutions Inc., this study builds on previous research and examines data in 43 states from a majority of public pension plans in the states.

The report’s key findings are as follows:

  • • Public pension benefit dollars represent between one and three percent of GDP on average in the 2,922 counties studied.
  • • Rural counties have the highest percentages of their populations receiving public pension benefits.
  • • Small town counties experience a greater relative impact in terms of both GDP and total personal income from pension benefit dollars than rural or metropolitan counties.
  • • Rural counties see more of an impact in terms of personal income than metropolitan counties, while metropolitan counties and rural counties see an equivalent impact in terms of GDP.
  • • Counties that contain state capitals are outliers from other metropolitan counties, likely because there is a greater density of public employees in these counties, most of whom remain in these counties in retirement.
  • • On average, rural counties have lost population while small town counties and metropolitan counties have gained population in the period between 2000 and 2018, but the connection between population change and the relative impact of public pension benefit dollars is weak.

To ensure accuracy, the data for this report was collected directly from each pension plan.

Special note from STRS Board member Rudy Fichtenbaum, who submitted this article and created an excerpt just for Ohio (see the full report)

July 12, 2022
"This would be good to send to all of those legislators in small counties in Ohio. It would also be worth pointing out that every dollar that goes to a retiree will likely be spent because in retirement most people are spending more than they are taking in i.e., they are living off of pensions, Social Security (for those who get it) and retirement savings (for those who have it). This study shows that the pensions are more important to the smaller cities and rural areas (Red areas) than to the big cities (Blue areas)." [Download the full report to view the Ohio maps.]

Check out these salaries: the five state pension systems in Ohio


See if you can guess which of the five state pension systems pays their staff the highest salaries, then click the link above to see if you're right. These are the latest figures, taken from the 2020 statistics. 

Monday, July 11, 2022

Just so you know... some data distributed at a recent STRS Board meeting (thanks to John Curry)


Facebook Group Ohio STRS Member Only Forum ('MOF'): Mission Statement by founder Joe Lupo, May 2017

This group has a vested interest in the Ohio State Retirement System (STRS) and it's fiduciary duty to properly manage "OUR" funds in the best interests of both active and retired members. Based on the past and present actions by the STRS Director and the STRS Board, it is now necessary to take action to RESTORE COLA and RESTORE STRS. We are now engaged in doing what should have been done years ago. Every system needs accountability and oversight. There must be changes, and those changes need to be made now. We can no longer wait and allow what is has happened and is happening to continue any longer. We must act now to insure that ALL STRS members have a financially sound retirement system...now and in the future.

~Joe Lupo

Edward Siedle: Ohio Teachers Pension Private Equity Secrets: Unlimited Leverage, Outlandish Fees, Conflicts Of Interest And Questionable Valuations


Ohio Teachers Pension Private Equity Secrets: Unlimited Leverage, Outlandish Fees, Conflicts Of Interest And Questionable Valuations

Edward Siedle, Contributor
July 10, 2022
The SEC’s website warns private equity investors to be vigilant about fees and expenses, as well as alert to conflicts of interest. A lawsuit filed on behalf of members of the Ohio Retired Teachers Association demands that the $100 billion State Teachers Retirement System of Ohio end a year-plus of stonewalling teacher public records requests and disclose the very same information about its private equity holdings which the SEC considers vital to protecting workers’ retirement savings. Brushing regulatory concerns aside, STRS Ohio and its Wall Street investment advisers remain intent upon maintaining secrecy regarding tens of billions in state pension assets invested in over a hundred of these costly, high-risk private funds.
In order to better educate investors, the SEC’s website today provides an informative discussion of the risks of investing in private equity funds, with helpful links to certain enforcement actions the regulator has brought related to specific industry abuses.
At the outset, the agency notes that although private equity funds may be advised by advisers that are registered with the SEC, private equity funds themselves are not registered with the SEC. As a result, private equity funds are not subject to regular public disclosure requirements.
Under What should I know?, the agency specifically warns investors about illiquidity, investment fees and expenses and conflicts of interest.
The SEC warns that because of their long-term investment horizon, an investment in a private equity fund is often illiquid and it may be necessary to hold the investment for several years before any return is realized. Private equity funds typically impose limitations on investors’ ability to withdraw their investment—often 10 or more years.
I’ve seen some funds which I refer to as “cradle-to-grave” that limit investor withdrawals for as much as 50 years. You’ll be dead before you get your money back.
Fees and Expenses
When investing in a private equity fund, the SEC notes that an investor usually receives offering documents detailing material information about the investment and enters into various agreements as a limited partner of the fund. These offering documents and agreements should disclose and govern the terms of the investor’s investment throughout the fund’s life, including the fees and expenses to be incurred by funds and their investors. These materials, which the SEC advises all investors (including participants in public pensions) read carefully, are the very same documents which members of the Ohio Retired Teachers Association have long demanded to see and STRS Ohio and its Wall Street money managers has steadfastly refused to disclose.
Without access to these documents and agreements, it is simply impossible for active and retired teachers, as well as taxpayers, to determine whether STRS Ohio officials and the external private equity advisers it hires are prudently managing pension assets. One has to wonder: if the pension and Wall Street are diligently fulfilling their fiduciary duties, why the fierce opposition to transparency?
Who’s hiding what?
Thankfully, the SEC answers the above question by providing a link to certain enforcement actions the agency has brought involving fees and expenses that were incurred by funds and their investors without being adequately consented to or disclosed. Investors should be vigilant about the fees and expenses incurred in connection with their investment, says the SEC.
Again, STRS Ohio participants cannot be vigilant if they’re not allowed to see the “secret” documents related to their retirement savings.
Conflicts of interest
Private equity firms often have interests that are in conflict with the funds they manage and, by extension, the limited partners invested in the funds, warns the SEC. Private equity firms may be managing multiple private equity funds as well as a number of portfolio companies. The funds typically pay the private equity firm for advisory services. In addition, the portfolio companies may also pay the private equity firm for services such as managing and monitoring the portfolio company. Affiliates of the private equity firm may also play a role as service providers to the funds or the portfolio companies. As fiduciaries, advisers must make full disclosure of all conflicts of interest between themselves and the funds they manage in order to get informed consent.
Again, information regarding all conflicts of interest—which the SEC advises all investors read carefully—is the very information which members of the Ohio Retired Teachers Association have long demanded to see and STRS Ohio and Wall Street has steadfastly refused to disclose. Without access to this information, it is impossible to determine whether STRS Ohio officials and the external private equity fund advisers are prudently handling pension assets.
Why the fierce opposition to transparency?
Who’s hiding what?
Once again, the SEC provides a link to certain enforcement actions, related to an adviser’s alleged failure to disclose certain conflicts of interest to the funds it manages. Through its various relationships, including with affiliates and portfolio companies, there exists opportunity for advisers to benefit themselves at the expense of the funds they manage and their investors. It is important for an investor to be aware and alert about the conflicts that exist, or that may arise, in the course of an investment in a private equity fund, says the SEC.
Again, teachers participating in the pension cannot be aware of and alert as to conflicts of interest disclosed in documents they are not allowed to see.
Unlimited Leverage
While the SEC website does not include warnings about use of leverage or borrowing by private equity funds, all such fund documents I have drafted as a lawyer, or reviewed over the course of my career, permit unlimited use of leverage. Unlimited leverage greatly increases risk of loss and, worse still, in my experience public pensions universally fail to adequately monitor leverage on a timely basis related to private equity assets. That is, public pensions have no idea just how highly levered their private equity portfolios are at any given moment.
Given that public pensions are already severely underfunded and are increasingly turning to leverage in a desperate gamble to boost investment returns (as well as ooften pension staff compensation), it is critical that participants and taxpayers themselves monitor use of leverage. Stakeholders cannot assume pension officials and Wall Street are diligent.
Again, STRS Ohio particpants cannot be aware and alert as to leverage levels disclosed in documents they, as well as likely pension officials, are not allowed to see.
Valuation Uncertainties
Given the illiquid nature of private equity assets, advisers are permitted tremendous latitude in how they value the assets they manage. Basically, advisers are allowed to unilaterally determine values and there is no assurance the assets can or will be sold at those values. Worse still, advisers are subject to a conflict of interest in valuing assets under management because the greater the assigned value, the higher the asset-based fees they are paid.
Since, STRS Ohio refuses to disclose to participants the nature and amount of assets held in private equity portfolios, it is impossible for teachers and taxpayers to determine whether the valuations are appropriate or, more likely, inflated, as well as whether pension officials are diligently monitoring portfolio valuations.
Read the rest of the article here

Sunday, July 10, 2022

Some people have pretty cushy jobs at STRS

From John Curry

July 10, 2022

Don't laugh, you paid for it. This data was downloaded from CheckbookOhio.gov and compiled on one page.

Do we really need a $94 Million building plus all of these expenses and employees to run a retirement system? These salaries don't include bennies.
$102K for "Manager of Security and Safety?"
$102K for "Supervisor of Maintenance & Custodial?"
$151K for "Director (of) Building Services?"
We don't want a show palace, we just want an efficient retirement system building that makes the most money for our retirement system.

Ladies: Notice that the six figure salaries and fanciest titles go only to men here

From John Curry
July 10, 2022
Got Secretaries? STRS does! Here is their FY2022 payroll. Enjoy! Thanks to the Ohio Open Records Laws one of our members received this from STRS in a Freedom of Information Request.

Want to know how they spend our money in Dallas? Take a look!

From John Curry

July 10, 2022
We have opened up a lot of "newbie" eyes today with one of the STRS pay schedules obtained from the Auditor's "Ohio Checkbook" website. We have thousands of these newbies who never saw previous postings on this Member Only Forum so let us take a look at some spending that the STRS did a few years back in just one U.S. city - Dallas. Here is the STRS credit card usage in less than one year in "The Big D!" Read it and weep. Yes, the "Special Audit" people, from Faber's Office, have this information. Maybe you can justify this.....MOF Moderators can't! Read it and weep!

Consumer Price Index 2012 - 2022

From John Curry

July 10, 2022

How bad?

Larry KehresMount Union Collge
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