Dean Dennis to STRS Board, 3/16/2023: Some critical findings from State Auditor Faber and financial expert Richard Ennis

March 16, 2023 - Dean Dennis, retiree from Cincinnati Public Schools, ORTA President Elect 

• You need to keep the promises to the people who were made reliant, based upon those promises.  

• Based upon those promises, people structured their lives accordingly and they should be entitled to the benefits of that bargain. 

That was the message from State Auditor Keith Faber a week ago at a meeting of the Ohio Retirement Study Council.

His other takeaways: a lack of transparency, whether actual or perceived, which has spawned the distrust, misunderstandings, and accusations that made the special audit necessary. 

He also shared that STRS should strive to be as transparent as possible regarding the funds held in their trust. He suggested reconsidering trade secret provisions that shield investment decisions from scrutiny, to eliminate the distrust harbored by many beneficiaries towards the STRS investment staff. He further stated it would be beneficial to reconsider performance bonuses, noting that the one thing his office really flagged was the use of awarding bonuses by using internal benchmarks.

ORTA and social media groups agree with our state auditor. We also take seriously the findings of widely recognized financial expert Richard Ennis, who points out that STRS is underperforming industry-accepted benchmarks. Like our state auditor, Ennis believes STRS's active management of funds has cost the pension fund members tens of billions of dollars. 

Trustees, our members cannot make the needed changes. Only you can. Members can only elect seven trustees who they believe are listening to them, and vote the others out. To our appointed trustees, we hope you hear our concerns and grasp the extent of our financial injuries. When we have concerns as to whether you are listening to us, we can only lobby those who appointed you.

Last month there was a vote of confidence taken, regarding our executive director. It didn't pass. We thank our Board for taking that vote, making it quite clear which trustees were open to reform as opposed to those who are content with business as usual. "Business as usual" has gotten us to a point where our teachers are forced to pay 14% of their salaries for a projected 12% return in value upon retirement. 

Lastly, regarding inflation relief. On behalf of members we want to give a thank you to the trustees who voted for the one-time COLA last year. Not on the Board last year were trustees Falls, Foreman, Jones and Sellers. Trustee Steen was not in attendance. So a thank you to trustees Correthers, Fichtenbaum, Herrington, Hunt and Price for your "yes" votes.  

Cathy Steinhauser to STRS Board 3/16/2023: We want our permanent COLA back

 

Suzanne Laird to STRS Board, March 16, 2023: Cut the blarney; cut the bonuses

Suzanne Laird's speech to the STRS Board, March 16, 2023

Good morning, Members of MY Board,

It’s almost St. Patrick’s Day, and I wonder how many educators in Ohio feel lucky?

Current teachers must work longer for less and retirees still have no permanent COLA.

Gee, how lucky can we get?

I do feel lucky to have a few Board members who actually attempt to challenge the shenanigans around  here and I am desperately hoping our newly appointed Board member is astute at recognizing how the STRS Social Media Elf may have kissed the Blarney Stone waaaay too many times.

I suppose we should consider ourselves lucky in that, unlike the Panda Power debacle, which was hidden from us for years, last month, we quickly uncovered the the fact that our investment leprechauns have been dabbling in cryptocurrencies, and this week, those same elves lost a huge pot o’gold in the Silicon Valley Bank collapse!

Ah, but Callan’s connivers will try to convince us there is “very little risk” in our portfolio.

The Social Media Elf will magically spin these losses into marshmallows and rainbows!

Don’t you dare fall for it! It’s mid-March, but this madness must end now.

Two huge losses (that we know of) in the first quarter of 2023?!

If you allow even one bonus this year, or one penny in raises, you will be incentivizing this bad behavior. Auditor Faber got it right: transparency must be increased and those golden bonuses scrutinized. You now have the evidence that the investment staff is not as skilled as they claim, and are relying on luck.

The teachers of Ohio aren’t asking for magic, we’re asking for exactly what we were contractually promised. We want to be the envy of the other pension systems, proud and lucky to be treated with the respect we deserve.

Cut the blarney, cut the bonuses.

Special thanks to STRS and OEA for the continuing skyrocketing numbers in the membership of the Facebook group Ohio STRS Member Only Forum. We couldn't do it without you. Happy St. Patrick's Day!

Robin Rayfield on STRS's huge loss in the Silicon Valley Bank failure

Message from ORTA to Members

March 15, 2023

STRS loses millions more in Silicon Valley Bank failure

By now many of you have heard that the largest bank failure since the Great Recession took place over the weekend as Silicon Valley Bank (SVB) collapsed.

Out of all the public pension funds in the United States – guess which one had the largest holdings (by far) in this failing bank according to reports.

That’s right – STRS.

According to public filings Ohio teachers will lose millions of dollars in yet another example of STRS leadership asleep at the wheel.

Not only is STRS gambling away our hard-earned dollars, but they are horrible gamblers.

Enough is enough.

STRS fund mismanagement has resulted in lost COLA’s and broken promises for retired teachers while active teachers are being forced to pay more and work longer for less benefits.

It’s time for STRS Executive Director Bill Neville to save Ohio public education from further embarrassment and resign his position.

Earlier today, ORTA’s Executive Director testified in front of the State Board of Education informing them of this latest gambling loss and the recent vote of no confidence in the STRS Executive Director made by the STRS board.

Please click here to send a note to your representative on the State Board of Education  calling for real leadership change at STRS and the end of the Neville administration.

Your voice matters. Together we are making a difference.

Make Your Voice Heard

 Ohio Retirement for Teachers Association

250 E Wilson Bridge Rd, Worthington, OH 43085

614.431.7002

Visit ORTA.org

Robin Rayfield's March 2023 report to ORTA members

ORTA Executive Director Robin Rayfield's report to members

From ORTA Newsletter

March 15, 2023 

STRS Update

Finally! Over the last couple of months information supporting the many criticisms ORTA has leveled at STRS have been verified. Auditor of State Faber conducted a special audit of STRS.

The audit was directed at determining if STRS engaged in fraud. Faber’s report indicated no fraud and that STRS had followed its policies when awarding bonuses to its investment staff. Of course, STRS ‘shouted from the rooftops’ that the auditor found no evidence of fraud. However, what was not in the headline of the report, and unfortunately somewhat buried in the lengthy report was support of many of the claims ORTA has made.

Faber Highlights

Auditor Faber was critical of the transparency at STRS and encouraged changes.

Most importantly, Auditor Faber confirmed the notion that the actions of STRS with regards to investments were not effective. In fact, the auditor noted that STRS would have been much better off with a passive approach to investing as opposed to the risky active management approach STRS uses. Specifically, Auditor Faber agrees with ORTA that our pension system ‘lost’ to a indexed benchmark in 13 of the 22 years since 2009. Please understand that had STRS simply invested in index funds, at little to no cost, STRS’s bottom line would be $12.5 billion more than it is.

For all the aggravation and angst over paying unearned bonuses, and paying consultants to say wonderful things about STRS, our pension system would have $12.5 billion more if we simply used a passive investment strategy.

Recently, STRS management attempted to downplay the media reports by renowned pension expert Richard Ennis confirming what Auditor Faber said about STRS investments. Unfortunately, Mr. Ennis’ credibility in the pension world greatly exceeds anyone at STRS. Let provide a quote from Mr. Ennis sent to the STRS board… .

The convention among large public pension funds in the US, like Ohio STRS, is for the staff and consultant to work together to contrive a benchmark that no one else could reproduce if their life depended on it. One that is opaque, complex, and purely subjective. One that is tweaked regularly by staff/consultant to hug the portfolio composition. One that demonstrably understates a fair return for the risk assumed. And one that invariably gives the misleading impression that the fund is outperforming passive management — adding value — when it is not. That, unfortunately, is today’s convention.
[See “Lies, Damn Lies and Benchmarks,” Journal of Investing, forthcoming.] VIEW HERE

We have a powerful message

STRS has lied continuously to keep its members in the dark. We have five STRS board members that are demanding change, including transparency and changes to investment. There are five status quo members that are fighting any changes at STRS. Newly appointed board member Alison Lanza Falls’ (appointed by the Treasurer of State Sprague) position is unknown. STRS board candidate Pat Davidson is committed to reform at STRS. Current incumbent candidate Art Lard is staunchly committed to the current status quo. This spring will be an interesting time at STRS…

Other ORTA Activities

ORTA offered testimony during the public participation portion of the February State Board of Education meeting. ORTA Executive Director Robin Rayfield spoke at the meeting of the State Board of Education in February asking for support for the five reform minded members of the STRS board. ODE holds one seat on the 11 member STRS board. Their current representative, Dr. Hunt, is a strong supporter of the current management team at STRS and votes in favor of the STRS management 100% of the time. Rayfield explained the current situation and provided reasons for the current situation. His comments were well received, however, only time will tell if the State Board of Education will step forward to help educators in Ohio.

And as always, if your membership is up for renewal, reminder you can do everything online at orta.org/join

- Dr. Robin Rayfield