Saturday, September 24, 2022

Link: Recording of STRS Board meeting September 15, 2022

This is posted on the STRS website. They will take it down in about a month.

Letters sent September 24, 2022 to State Auditor Keith Faber, Governor Mike DeWine and Teachers of Ohio

 My letter to State Auditor Keith Faber

Dear Mr. Faber,
I am a retired teacher, having retired 24 years ago from the Columbus City Schools.
I can't tell you how much I appreciate your digging deeply into the books and practices of the STRS staff. STRS’ questionable accounting practices, lack of transparency, misreporting of investment performance and controversial staff salaries and bonuses have been a serious concern of many teachers for a long time. Your attention to these matters brings us new hope.
Many teachers have been badly hurt by STRS' management practices which have resulted in retirees being stripped of their COLA when inflation is raging out of control, and STRS is now forcing active teachers to pay heavily into the system (14% of their salaries) and work more years for their retirement benefits.
It hurts all of us when they turn around and pay their already very highly paid staff members a whopping $10 million in bonuses. They aren’t even thinking about the most elderly among us who retired many years ago on meager salaries and can't make ends meet today. There's no way those people can be expected to go back to work in their 80s, 90s and 100s.
Thank you for all you are doing for us. Many of us are part of the Facebook group Ohio STRS Member Only Forum, with a membership about to reach 30,000 very soon. That's a lot of votes in the upcoming election. It is our fervent hope that you and Governor DeWine will help us get things turned around at STRS, most notably bringing reform and new leadership to our pension system, both of which are badly needed.
Thank you again for taking on the job of looking into matters at STRS that affect Ohio's hard working teachers, past and present. I can't tell you how important your audit of STRS is to thousands who trusted STRS for many, many years, only to have that trust flagrantly violated and their promised retirement snatched away from them. We are looking to you to do the right thing for all of us. You can be sure we will remember you in November.
Katherine Bracy
 My letter to Governor Mike DeWine
Dear Governor DeWine,
Unless you're living under a rock, you know about the corruption going on at STRS with the STRS staff recently receiving close to $10 million in bonuses while retired teachers were stripped entirely of their COLA in 2017 (with a tiny bit returned in time for the last Board election) and active teachers now forced to pay 14% of their pay to STRS and are now forced to work more years for full retirement benefits. The most elderly retirees are hurting the most, having retired many years ago on meager salaries.
You need to help us. Please, at least make a public statement to the effect that new leadership and reform are badly needed at STRS. That would help. You do care about us, I hope. And that election is coming up soon. I am part of a Facebook group of teachers about to hit the 30,000 mark. That's a lot of votes. It's called Ohio STRS Member Only Forum.
Thank you.
Katherine Bracy

My letter to teachers 

Below I have posted the text of an email ORTA sent to its members on September 23, 2022. I added the links. All STRS members are encouraged to write to the Governor, Mike DeWine, and the State Auditor, Keith Faber to enlist their help in bringing reform and new leadership to STRS. It is my hope that thousands of teachers, active and retired, will join in this effort. Every letter counts, and can affect your future. We specifically need to thank Mr. Faber for taking on the enormous task of looking into STRS' books and practices. Let him know you appreciate and are solidly behind him in his efforts.
From ORTA:

In case you missed it...

In an interview this week State Auditor Keith Faber shared that his year-long special audit of STRS is discovering “some worrisome things”.
The Auditor is quoted as saying, “We've got some concerns. I will just tell you that audit's going to have some concerns. We don't talk about audits while they're pending, but we have some concerns and things that we're identifying. But we are on it. We are working aggressively.”
Faber said the special audit should be done by the end of the year. He even went as far as to call for other oversight bodies to join him in taking a deeper look at the pension fund. We Agree!
We need our leaders and oversight authorities to shine sunlight on STRS’ questionable accounting practices, lack of transparency, misreporting of investment performance and controversial staff salaries and bonuses.
Earlier this year, Governor DeWine publicly supported the creation of this Special Audit Task Force… but has been noticeably silent since then.
Please join us in encouraging the Governor to publicly call for real reform and new leadership at STRS.
Click here to send the Governor a note.  
Also please join us in letting State Auditor Faber know how much his efforts are appreciated and how important his audit of STRS is to thousands of active and retired teachers throughout the state.
Click here to send the State Auditor a note.  
To read the article in its entirety, click here. 
Ohio Retired Teachers Association
250 E Wilson Bridge Rd, Worthington, OH 43085

Thursday, September 22, 2022

Rudy Fichtenbaum on administrative costs at STRS: 'Will the Real Costs Please Stand Up'

 Will the Real Costs Please Stand Up

Rudy Fichtenbaum
September 22, 2022
Immediately following the September Board meeting the STRS staff predictably issued an“eUPDATE” with more good news for members. STRS is like the fictional town of Lake Woebegone, where all the children were above average. With STRS the only news is good news.
Citing a CEM Benchmarking Report on administrative benchmarking, the “eUPDATE” stated that STRS earned the second highest score among 43 pension systems in the U.S. and Canada.Moreover, the eUPDATE also stated that STRS had administrative costs that were below the average of its peers and these costs have been decreasing 1.1% per year, while costs for peers have been rising. Of course, they neglected to report that their average cost for the previous 7 years was above their peers.
Here are the CEM Benchmarking graphs showing STRS’s performance over time and in relation to its peers. While we can identify the members in the peer group, we have no way of verifying the data that CEM reports for individual pensions except STRS because their data is proprietary.

However, to check the veracity of the CEM Benchmark claims, I turned to the Public Pension Database (PPD) housed at Boston College ( This database covers 219 public pensions in the U.S. This data has been used by many scholars to analyze U.S. public pensions. I chose a peer group of all the U.S. pensions included in CEM’s peer group.
Unfortunately, CEM chose to include one Canadian pension in the STRS peer group, Ontario Teachers, so my peer group omits them.
I defined administrative cost the same way CEM Benchmarking did i.e., administrative costs divided by the combined number of active and retired members in each pension (leaving out inactive members). If data was missing in the PPD, I went to the appropriate Annual Comprehensive Financial Report, which is the source of data used in the PPD, and filled in the missing data. Here is what I found.

The first graph shows administrative costs per member for 2021. STRS OH had the second highest cost for administrative expenses among its peers at $202 per member, compared to an average of $105 per member. So STRS administrative costs are nearly twice that of its peers in 2021. Does omitting Ontario teachers skew the results? It is likely that administrative costs for Ontario teachers are above the average cost of the peer group since Ontario is a high-cost area.However, to raise the average cost of the peer group to that of STRS, by including Ontario teachers, their administrative cost would have to be $1,400 per member, and that seems implausible, especially since the Canadian $ is only worth $0.74 U.S.
The second graph shows STRS’s administrative cost since 2014 along with the average administrative cost per member for peers. Over the entire 8-year period costs at STRS were on average 1.8 times more than for its U.S. peers. Moreover, STRS’s administrative costs per member increased during this period at an average annual rate of 1.1%.
In summary, STRS reported that its administrative costs per member were lower than its peer group and were declining by 1.1% per year, while I found that STRS’s administrative costs were significantly higher than its peers and were increasing 1.1% a year. As the Dark Knight said,“Sometimes the truth isn’t good enough. Sometimes people deserve more. Sometimes people deserve to have their faith rewarded.”

Monday, September 19, 2022

Dan MacDonald's comments to the STRS Board September 15, 2022

Good morning. I am Dan MacDonald, an STRS retiree with 38 years of service. I am also the Executive Director of Local 279-R, NEO AFT retirees. Welcome to the newly seated board members. Today I handed a HIPAA letter, not STRS HIPAA form, along with the billing complaint to the Deputy Executive Director of Member Benefits and Chief Benefits Officer [oh, one can’t use names in this portion of the meeting]. The last time I did this, about two months ago, there was no contact with the member or me. STRS has the power to get answers from our benefit providers when STRS so desires. Only recently has the benefits department not addressed issues that I have brought forth. Some of my members are not able to travel to this forum.

They do call AETNA and Express Scripts but are not satisfied with opaque answer they received, if any. They also call STRS and are not happy with the answer they received. This particular retiree is concerned because AETNA is billing $25.00 instead of $15.00 for appointments with her primary care physician. She admits for one reason or another, on the facility end, that she met with a physician’s assistance or a nurse practioner, but is questioning a $25 co-pay. Ten dollars is not much for some of us, but is a world of difference to others. The appointment was for her PCP. According to the retiree, she has not gotten an answer through AETNA nor STRS.

In another case, no HIPAA letters being presented, Express Scripts desires a pre-authorization. The retiree has sought in the past pre-authorization and is now seeking again. She’s called Express Scripts who said they have the doctor’s info and are working on it; she called STRS and was told there was nothing they could do.
On a different note, at last month’s Board meeting, committee assignments were made. I gather that an auditor’s report suggested one thing, but the Board acted in a different direction on the advice of the STRS legal counsel that there was nothing “illegal” about the appointment. I am hoping from this Board on, an explanation of why an auditor’s advice not be followed be questioned during the Board’s meeting other than it is not “illegal.” Transparency or organizational manipulation?
At June’s Board meeting, a one-hour lunch turned into 2.5-hour Executive Session break completed with a rushed motion to amend the executive director’s employment agreement. No discussion. The agenda certainly didn’t indicate anything but the Investment Department report was to be happening. Silence from all Board members except for the motion and vote. No public discussion. Transparency or organizational manipulation?
In conclusion, I’d like to thank a Board member for his article, The STRS Propaganda Machine, for his thorough explanation of an issue to which he is constantly being cut short. [I’d have preferred a different title.] I’d suggest to figure a way the article be presented and placed in the Board minutes. Perhaps a motion. Would that address transparency or organizational manipulation?
As always, actives need their benefits enhanced and retires need their COLA restored.

Sunday, September 18, 2022

Dan MacDonald's report on the STRS Board meeting of September 15. 2022

From Dan MacDonald

September 18, 2022 

Dan MacDonald and Rob Walters attended the September 15, 2022 STRS Board meeting which featured three new Board members - Steven Foreman, Elizabeth Jones, and Julie Sellers. All were active throughout the meeting.
After greeting the new members and approval of August minutes, the Investment Department reported a negative 2.46% return for August. The preliminary FY23 total fund return was estimated at positive 1.33%. Total investments ended August at $88.1 billion.
There was a brief but lively discussion of having an investment consultant search and how it should be handled. Callan and Cliffwater contracts could be extended or terminated. The last consultant search was in 2009. These firms have had their contracts extended for 13 years. An RFP will be issued before December and It was determined that the investment committee, not the whole Board, will make recommendations of firms to the Board.
Investment then presented the annual review of the securities lending program. It was explained why FY22 earnings decreased approximately 37% over the year with overall loans increasing. Callan then presented 9 draft “high level” investment beliefs which the Board first discussed in March. The beliefs are meant to be a communication tool to stakeholders that are reflective of STRS’s view of global investment markets.
After the 9 were presented, feedback and other considerations opened lively discussion by most Board members especially around ESG considerations - Environmental, Social and Governance. Jones and Sellers are to present next month on ESG from a seminar they attended. Again, there were concerns about the forming of beliefs in committee or the whole and the Sunshine Law. More fire was added to the pot by Steen’s definition of success – a restored COLA.
The Executive Director’s Report reported that Defined Benefit Plan and Combined Plan members will receive their Annual Statement of Account mid-September. Members who are eligible for retirement have a July 1, 2022 benefit estimate on their statement. Active members with at least five years of service credit receive four projections on their statement offering comparison for reduced and unreduced benefits. Benefit projections reflect the elimination of the minimum age 60 requirement.
Neville also pointed out that FY22 budget was $3.3 million less than approved. He also presented some interesting actuarial info – As of June 30, 2022 STRS has 209 benefit recipients who are age 100 or older – of which 179 are female and 30 are male. Most of these centenarians are service retirees while 61 are beneficiaries of retirees or survivors of active member who died and three are disability recipients. The oldest recipient age is 110. This member retired in 1980 at age 68 after 25 years of service. Her final salary average was $21,000; her original benefit was $873 and has increased to $2,197. She began teaching for an annual contract of $5,300. The retiree who has been receiving benefits the longest is a disability recipient who began receiving a benefit in 1957 at the age of 27. The monthly benefit has increased from $162 to $1,078. STRS has been paying this recipient for 65 years. Active members also have longevity in the classroom with 16 members having 50 or more years of service and 247 members exceeding 40 years.
Neville shared 3 more areas and had the STRS auditor share demographic information on the 500,000 people STRS represents. He covered payroll growth by year, the number of active participants by year, age range of new hires, salary increases based on service years, mortality, number of new retirees by year, benefit graph by amount.
Public Participation consisted of 10 individuals. A POP 5 – Protect Our Pensions individual introduced herself. Two OEA-R speakers addressed the Board in defense of Carol Correthers, Board Chair, and the misinformation found on the internet and concerns about the new board. Another speaker defended previous Boards.
Dean Dennis, Cincinnati retiree and President Elect of ORTA, challenged anyone to present to him inaccurate or misinformation on the STRS Watchdogs or STRS Members Only sites. The rest of us addressed concerns over healthcare, COLA, incentives.
After lunch the Member Benefits Department had CEM of Toronto, Canada report on the costs and services of the department compared to its peers. STRS admin cost were $101, peers $108 and $19 below the universe average. STRS service score was 92, peers median 82. This was followed by a Defined Contribution Program review which looked at the Defined Contribution and Combined plans with member demographics investment choices and fees and info on retirees in these plans.
Executive Director Neville then updated on the Fiduciary Performance Audit again stating there were no red flags but 172 recommendations. There was a suggestion to create a governance committee. November’s Educational and Planning meeting will begin to address the recommendations.
Routine Matters then Old/New Business. New Business then took up 90 minutes of time. First Neville requested that consultant actuarial firm Cheiron have their contract extended 3 years through 2026. Lots of discussion with October’s meeting determined to take a vote. Then new board member Elizabeth Jones moved to start video/audio of meetings at the October meeting with a 5-year archive. Postpone by 6-5 vote. Other new board members plus Steen made motions.
Motion to have materials on-line for membership 7 days before meeting, settled at 48 hours posted to website. Move to have Board members receive material 10 days before meeting…lost, vote 5 to 5 with Herrington not voting.
Move to have color copies available to audience in attendance at Board meetings … Neville said he would do it.
Motion to have October and February Board meetings on a Saturday so actives can attend … voted down. Motion to call an Emergency Meeting if 4 Board members request … voted down 6-5. Motion to remove glass barrier wall between audience and Board … Neville to do research with reason it was there to begin, cost and timeline report in October.
Next meeting: Thursday, October 20, 2022
SERS Votes 2.5% COLA for its members. At the SERS Board meeting on September 15, 2022, its Board voted a 2.5% COLA.
Larry KehresMount Union Collge
Division III
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