COLUMBUS - The troubled State Teachers Retirement System yesterday set the stage for a 7 percent budget cut, reductions in staff and board travel, and an extension of a freeze on staff performance bonuses.
The board will take final action today before an expected overflow crowd of active and retired teachers. They are angered over system spending at a time when its investment portfolio faded 21 percent in three years and they've been asked to pay more toward health care.
The teachers are expected to rally first at the nearby Ohio Statehouse. The system has $47.2 billion in assets with about 424,000 active and retired members.
Last week, the board essentially voted to pay its executive director, Herbert L. Dyer, $550,000 through Feb. 29 to go away. Mr. Dyer had upset teachers and legislators for suggesting retirees eat out less often so they could afford the higher health-care premiums.
“Herb Dyer was a sacrificial lamb,'” said state Sen. Lynn Wachtmann (R., Napoleon), chairman of the Ohio Retirement Study Council. “The fact that Herb Dyer is no longer here doesn't make it all better. He was acting at the direction of the board on everything he did.”
The cuts, however, do not reflect $500,000 added to the system's separate state budget to pay for a performance audit ordered by the retirement study council. The semi-legislative council called for the audit after reports that the board continued to provide performance bonuses to staff, spend lavishly on artwork for its new downtown Columbus headquarters, and travel as the fund's assets declined.
Although the board voted to continue the freeze on performance bonuses, it voted to begin discussions about resurrecting bonuses for investment staff who outperform market benchmarks, even if the end result is a negative return.
They're also asking Attorney General Betty Montgomery, who has a representative on the board, for an opinion as to whether the system is legally obligated to pay bonuses promised last year before the freeze was enacted in June.
“If a person worked under the understanding that was what they were going to get, I think they should get it,'' said Joe Endry, the retired teachers' board representative. “It's not the fault of the employee if these standards were incorrect.''
Jack Chapman, a teacher representative on the board, walked out when the board voted to limit travel by board members to three out-of-state trips a year with a price tag of $6,000 per member. The policy makes an exception for board members traveling in “due diligence” of their duties, an exception Interim Executive Director Damon Asbury insisted is not a loophole to circumvent the new limits.
Mr. Chapman became the poster child of the board for what critics characterized as an abuse of the system's broad travel policies.