This harkens back to 2003 (as reported in the Cleveland Plain Dealer), when the Board gave generous staff bonuses and perks after losing billions, building a lavish new office building ($94.2 million), and decorating the new building with 8 pieces of art that cost over $869,000. OPERS at that time paid a bonus to its employees of $765,252 to its staff whereas STRS paid $5.7 million. There were recommendations for change - some of which were adopted.
And yet, here we are again. 100% bonuses? So if the lead investment staff person makes $466,00 in salary, his or her bonus was $466,000.
The Plain Dealer article made the point, in their 2003 article, that huge bonuses should not be given when the investments fare poorly. And yet - here we are.
Non-disclosure agreements preclude us from ascertaining what is paid, what are the fees, and what are the investment strategies?
Thank you again, David. The links to various documents in here effectively answer my questions about what's being proposed by the "reformers" in terms of investments: more passive investment (with which I agree). I can't believe this position has been obscure for so long to STRS members like me! Count me among those rooting for Rudy Fichtenbaum, et al., to continue to reveal what's going on behind the curtain that's been pulled over our eyes for years.
While I'm at it, I'd like to point out the common misconception (I heard it again recently on "All Sides" on WOSU) that the STRS COLA is a big drag on the fund because it's compounded annually. Actually, it's not compounded! The COLA (when there was one) is based on some percentage of your original pension payment, not last year's. This unusual feature of how STRS works likely lowers, I'd guess significantly, the long-term impact of the COLA on the funding ratio of STRS -- though of course it's impossible for anyone who's not an insider at STRS to determine how much of an effect this has for a given proposed COLA.
Very informative discussion, David. I don’t live in Ohio but many of the issues are universal. And thank you for pointing out the fallacy of school vouchers. Your guest has his work cut out for him.
This harkens back to 2003 (as reported in the Cleveland Plain Dealer), when the Board gave generous staff bonuses and perks after losing billions, building a lavish new office building ($94.2 million), and decorating the new building with 8 pieces of art that cost over $869,000. OPERS at that time paid a bonus to its employees of $765,252 to its staff whereas STRS paid $5.7 million. There were recommendations for change - some of which were adopted.
And yet, here we are again. 100% bonuses? So if the lead investment staff person makes $466,00 in salary, his or her bonus was $466,000.
The Plain Dealer article made the point, in their 2003 article, that huge bonuses should not be given when the investments fare poorly. And yet - here we are.
Non-disclosure agreements preclude us from ascertaining what is paid, what are the fees, and what are the investment strategies?
Time for transparency.
Thank you again, David. The links to various documents in here effectively answer my questions about what's being proposed by the "reformers" in terms of investments: more passive investment (with which I agree). I can't believe this position has been obscure for so long to STRS members like me! Count me among those rooting for Rudy Fichtenbaum, et al., to continue to reveal what's going on behind the curtain that's been pulled over our eyes for years.
While I'm at it, I'd like to point out the common misconception (I heard it again recently on "All Sides" on WOSU) that the STRS COLA is a big drag on the fund because it's compounded annually. Actually, it's not compounded! The COLA (when there was one) is based on some percentage of your original pension payment, not last year's. This unusual feature of how STRS works likely lowers, I'd guess significantly, the long-term impact of the COLA on the funding ratio of STRS -- though of course it's impossible for anyone who's not an insider at STRS to determine how much of an effect this has for a given proposed COLA.
Imagine what the drag on the fund is due to the bonuses then.
Very informative discussion, David. I don’t live in Ohio but many of the issues are universal. And thank you for pointing out the fallacy of school vouchers. Your guest has his work cut out for him.