STRS Ohio Watchdogs

Chew on this!

Ohio's Legislature Needs to Adjust STRS Elected Board Seats

There are 162,000 active teachers members in STRS and 157,000 retired teachers in STRS. This breaks down to a ratio where 51% are active members and 49% are retired members. Our Legislators currently allow active teachers to have 5 elected Board members for a representation ratio of 1 Board seat for 32,400 members. Our Legislators currently allows retired teachers to have 2 Board members for a representation a ratio of 1 Board seat for 77,500.

There is something clearly wrong with this picture. This disproportionate representation needs to be addressed by Ohio's Legislature.

Immediately.

Audit_Notification_Letter_-_STRS.pdf

Special audit planned into Ohio teachers' pension fund

The Statehouse News Bureau | By Karen Kasler
Published October 20, 2021 at 4:08 PM EDT

The state auditor is planning a review of the pension fund for Ohio’s teachers. This comes as the board for the State Teachers Retirement System gets together for its monthly meeting Thursday.

A letter obtained by the Statehouse News Bureau says the auditor’s office is considering a special audit based on a report by Ted Siedle, who was hired by retired teachers questioning STRS’ stated fund performance and management fees.

Siedle, a former SEC asset management lawyer and head of a firm called Benchmark Financial Services, wrote a report that blasts STRS for lack of transparency and legislative oversight and mismanagement of billions he says could restore a cost of living adjustment suspended in 2017.

“One of the key problems that STRS has that they've lost the trust of their participants. Schoolteachers don't trust them anymore," Siedle said.

STRS blasted Siedle’s report as baseless and said it’s handed over 22,000 pages of documents, and has also said the pension fund has outperformed the market over the past decade.

STRS has confirmed the special audit and said it's cooperating with the auditor's office.

Read this article online.

October 7, 2021
Everyone Is Urging SEC To Stop Public Pension Mismanagement, Looting By Wall Street


By Edward Siedle, Contributor, Forbes

My investigation of the $90 billion-plus State Teachers Retirement System of Ohio commissioned by the 19,000 members of the Ohio Retired Teachers Association was completed in June. The damning preliminary findings have now been reported to Ohio legislators, regulators and law enforcement.

The report concluded the state pension had long abandoned transparency; legislative oversight of the pension had utterly failed; Wall Street had been permitted to pocket lavish fees without scrutiny; investment costs and performance may have been misrepresented; and failure to monitor conflicts may have undermined the integrity of the investment process, as billions that could have been used to pay retirement benefits promised to teachers have been squandered.

Read this article online.

September 23, 2021
STRS Fiscal Year Investment Costs Raise Questions of Credibility

By Dean Dennis, Founder
STRS Ohio Watchdogs

In the August 20, STRS eUPDATE, STRS stated the 2021 Fiscal Year (FY) Total Gross Returns were 29.28% and the Total Net Returns were 29.16% . This is, "after all management fees and costs, including carried interest and other fund expenses." This breaks down to investment costs of 12 basis points (bps). This was a good year, returns were near record highs, bonuses were paid and investment costs were low.

Investment costs were exceptionally low, and our Trustees should be skeptical.

STRS advertises they are one of the top tier premiere pension systems in the United States. They make this claim with the support of many of their paid consultants. One such consultant is CEM Benchmarking. CEM works with over 400 fund sponsors worldwide providing objective actionable benchmarking insight. A pension system would hire CEM to make sure pension costs are reasonable and provide value. CEM, using STRS's numbers, supports the STRS top-tier pension claim.

STRS members question the STRS claim. A top-tier pension system pays a COLA. STRS no longer pays one. A teacher who retired after 2013 has never seen a COLA. All retirees have gone at least 5 year without a COLA. The best pension systems don't rate last in the United States by providing the least value for employee contributions. This disconnect rallied STRS members to raise $75,000 of their own money to hire nationally renowned forensic auditor Edward Siedle of Benchmark Financial Services (BFS), to perform a forensic audit of STRS.

The money was well spent and identified many issues. Top among the issues was money being lost to Wall Street in fees, cost and carried interest. This was detailed in the BFS report titled, The High Cost of Secrecy. Shortly after the release of the Siedle report, STRS Ohio released their own report titled, STRS Ohio Response To Benchmark Financial Services (BFS) Report.

Unintended, the STRS Ohio Response to the BFS report raises red flags about the credibility of STRS Fiscal Year (FY) 2021 investment costs of only 12 (bps). Here's why.

In the STRS report, rebutting the BFS report, on pages 27 and 28, STRS defends their FY 2018 investment costs of 37 basis points. However, these costs were adjusted upwards by their own consultant, CEM Benchmarking, to 40.1 basis points. Making matters worse, the BFS report states STRS investment costs really are around 61.3 basis points and CEM states similar peer pension systems average investment costs are 54.5 basis points.

Clearly, if STRS investment costs were higher than the 54.5 bps average it would challenge their top-tier pension system reputation.

To reinforce their FY 2018 investment cost claim, STRS states in their BFS rebuttal that CEM "correctly reported our actual investment costs as $279.1 million or 36.9 basis points." Digging deeper, embedded in their investment cost claim defense, one of the reasons they were not 61.3 bps as stated by Siedle, or 40.1 bps, as adjusted by CEM, is because they didn't include carried interest arguing, "carried interest is not a fee." STRS held steadfast that their investment costs were 14.5 bps lower than their peers.

So with that, one controversy is now being replaced with another.

Here's why there is reason for skepticism; how can FY 2021 STRS investment costs only be 12 basis points and include carried interest? In 2018 investment costs, thought to be too low, were redacted by their own advisor, CEM. Without including carried interest, investment costs were stated as 36.9 basis points. In 2021, STRS states investment costs "after all management fees and costs, including carried interest and other fund expenses" are only 12 bps.

How is this credible?

Let's hope our Board Chair and other trustees find out and can offer an explanation.

September 12, 2021
Editorial: Report Finds STRS Didn’t Check Its Math

Editorial Board
Toledo Blade

“Surprise, surprise, surprise,” as TV character Gomer Pyle used to say.

That’s the only possible response to the news that the state’s teachers pension fund trashed the findings of an independent review of how the fund handles, or truthfully, mishandles, the monies with which they are entrusted.

The review was conducted by Ted Siedle on behalf of the Ohio Retired Teacher’s Association. Needless to say the review found problems — some of them already well-documented. Mr. Siedle is a former attorney for the Securities and Exchange Commission.

It doesn’t take a study to figure out that losing half a billion dollars on one investment alone shows a level of incompetence that must have taken a great deal of effort to achieve.

Click here to read the editorial online.

Ohio teachers protesting at State Teachers Retirement System of Ohio August Board meeting. JOHN CURRY

September 10, 2021
State Teachers Retirement System Of Ohio Resorts To Pension Theatre To Defend Costly Secretive Investments
By Edward Siedle, Contributor, Forbes

Fully two and a half months after my firm, Benchmark Financial Services released a report commissioned by the Ohio Retired Teachers Association entitled The High Cost of Secrecy: Preliminary Findings of Forensic Investigation of the State Teachers Retirement System of Ohio,” the staff of STRS finally prepared an analysis of the BFS report “for discussion at the STRS Board meeting” on August 19, 2021. This first in-person meeting of the pension board in over a year was open to the public and hundreds of angry Ohio retired school teachers showed up to let it be known they had lost confidence in pension managers.

“This was not a board response. To my knowledge, the board was never told staff was drafting such a response.” Newly-elected board member Dr. Rudy Fichtenbaum, an economist, said, “It appears to me to be neither an official response of the pension nor its board.”

I encourage anyone with an interest in public pensions generally, and Ohio’s public pensions specifically, to read the BFS Report, the so-called STRS Response, and the final BFS Response to STRS Staff, to gain an awareness of the troubling issues which are emerging related to the management of these severely underfunded funds. Come to your own conclusions about whether secrecy, pervasive conflicts of interest, abusive Wall Street business practices, hidden and excessive investment fees, and potential violations of law may be undermining the financial performance of these retirement funds. Whether you’re counting on public pensions for your retirement security or supporting them as a taxpayer, understand your money is at risk.

Click here to read Siedle's full article.

Scroll down to read The High Cost of Secrecy and other documents cited in Siedle's article.

September 8, 2021
Your State Pension Is Not Fully Protected Under Law

By Edward Siedle, Contributor, Forbes

State and local government pensions assure workers and retirees that they enjoy the same protections as the comprehensive federal law, ERISA provides to corporate participants. That’s simply not true. Don’t count on state law to protect your retirement security.

However, if pensioners globally take an active role in scrutinizing their pensions, asking probing questions, identifying irregularities, funding investigations through “crowdfunding” and sharing all they have uncovered with regulators and law enforcement, regulators and law enforcement will become more familiar with pension matters and more likely to make pension protection a priority.

Read the full article online.

September 8, 2021
Grendell & Plummer Introduce HB 14

Rep. Diane Grendell and Rep. Phil Plummer introduce Ohio House Bill 14.

Short title: Regards state retirement system duties, fees, and salaries

Long title: To amend section 145.11 and to enact sections 145.096, 145.117, 145.118, 742.117, 3307.155, 3309.151, and 5505.066 of the Revised Code regarding state retirement system fiduciary duties, Public Employees Retirement System management fees and employee pay, and creating the Committee on Pension Salaries and Fees.

Rep. Phil Plummer sits on the Board of the Ohio Retirement Study Council (ORSC).

Read Ohio House Bill 14.

September 6, 2021
Jim Provance: Ohio teachers pension fund rejects independent review's findings

Ohio's nearly $95 billion pension fund for teachers has pushed back against preliminary findings of an independent review funded by retirees that claims the system lacks transparency and has paid excessive fees and performance bonuses for investments that have “massively underperformed.”

Mr. Siedle was hired by the Ohio Retired Teachers’ Association, which had independently raised $75,000 to fund its own audit of STRS books and practices to see if what they'd been told about the fund's current and projected health are true.

A public records lawsuit will ask the Ohio Supreme Court to force the State Teachers Retirement System to release information that investment firms have claimed is proprietary or a trade secret.

Click here to read the full article online.

STRS: It's Our Money, Not Yours!

STRS is costing us billions by having an IRA (investment return assumption) that is significantly lower than what is actually earned. This has cost retirees their COLA and has forced active teachers to increase their employee contribution to 14% of their salary. In return, they work more years and receive less benefits. It's time to stop the madness and time to become proactive!

STRS: Restore Our Promised COLA!

It is only through a COLA that retired teachers can keep up with inflation. Many of Ohio's teachers work in rural areas and retire with very modest pensions. They rely heavily on their promised and earned COLA. The State Teacher Retirement System (STRS) and elected officials have broken their promises to Ohio's retirees and have placed an unfair burden on Ohio's current teachers.

Teachers Attend STRS Ohio Retirement Board Meetings

During the pandemic, STRS Ohio Board meetings were held virtually. Members attended via webinar software but were not permitted to address the Board during Public Participation.

In-person meetings of the Board resumed on August 19th.

Many thanks to Ohio's teachers who have travelled to Columbus to attend the Board meetings!

Carousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel imageCarousel image

Kathie Bracy's Blog

Kathie Bracy’s blog is a forum for Ohio educators, sharing thoughts regarding their health care and pension system, STRS Ohio. Kathie’s blog is a virtual repository of STRS Ohio history since 2003.

Many of the documents and articles featured in Kathie’s blog are contributed by John Curry. John manages a clearinghouse of emails, documents, and articles about STRS Ohio.

Visit Kathie Bracy’s Blog at http://kathiebracy.blogspot.com

Ohio Retired Teachers Association (ORTA)

ORTA’S mission is to monitor, advocate for, and protect the pensions and benefits of its members. The Association shall encourage individuals to improve the social and economic changes and issues relevant to their retirement.

Click here to visit ORTA's YouTube channel.

Meet the Leaders of Our Pack

John Bos is a retired teacher and administrator from Shawnee Public Schools. John is an advocate for quality affordable health care for retirees.

Kathie Bracy is a retired elementary teacher from Columbus Public Schools and the author of Kathie Bracy's Blog, a virtual repository of STRS history since 2003.

Bob Buerkle has been lobbying the Ohio Legislature on behalf of Ohio's teachers since 1982. Bob is a retired teacher from Cincinnati Public Schools.

Buddy the Bulldog is our mascot.

John Curry was a founding member of Concerned Ohio Retired Educators (CORE). John is a retired teacher from Wapakoneta City Schools.

Dean Dennis founded the STRS Ohio Watchdogs in January 2020. Dean serves on the Legislative Committee of ORTA. He is a retired teacher from the Cincinnati Public Schools.

Cindy Murphy is our webmaster and social media coordinator. Cindy is a retired educational media specialist from Cuyahoga Falls City Schools.

Robin Rayfied is the Executive Director of ORTA, the Ohio Retired Teachers Association. Robin is a retired teacher from Pike-Delta-York Local School District.

Julie Sellers is the President of the Cincinnati Federation of Teachers. Julie is a teacher for the Cincinnati Public Schools.

Visitor Survey

We'd like to know who is visiting our website. Please fill out our visitor survey.