Saturday, June 28, 2003
Remember the golden era of irrational exuberance, when stock prices were growing at rates that seemed to have little relationship to reality (and, as it turns out, didn't).
Those were the days. Days of buying art work valued at nearly $1 million, building a palatial new home, pocketing huge bonuses -- living, in short, high off the hog.
Well maybe everybody wasn't living like that, but the folks running Ohio's State Teachers Retirement System were.
The excesses at STRS are just being catalogued, but they are substantial and undeniable. And so far, no one is paying for those excesses.
The board that was supposed to oversee STRS operations apparently saw nothing. The board members didn't notice that while assets plummeted -- from a peak of $58.8 billion three years ago to $46.5 billion -- the ranks of STRS's employees were growing. The number of employees grew by 42 percent between 1998 and this year. And the board didn't see the $14 million in bonuses paid to employees since August 2000, while the assets were shrinking. And while they couldn't have missed all the art work that was purchased for STRS's renovated headquarters, they apparently didn't see the price tags, which totaled $869,000 for just eight pieces.
Meanwhile, who pays?
That kind of spending should have raised eyebrows in the best of times. It is unconscionable that it didn't cause a furor within the board, coming as it did at a time when pension payments and health care coverage were being reduced for retirees due to losses in the stock market. And of course, it is the retirees -- present and future -- for whom the STRS employees are supposed to be working.
It took outside observers, most notably Dennis Leone, the Chillicothe superintendent of schools, to raise the alarm.
This past week, an overwhelming majority of the Ohio General Assembly called for the ouster of STRS Executive Director Herb Dyer.
The STRS board declined.
Instead, it scolded Dyer, as a teacher might scold a student who neglected to do his homework. The board suspended staff bonuses and instructed Dyer to justify the hiring that he did since 1998. STRS obviously doesn't believe in corporal punishment. Its action doesn't even qualify as a slap on the wrist.
Deborah Scott, the board's chairwoman, said Dyer deserves a chance to redeem himself. As for the board members themselves, they have no intention to resign.
"This organization does not need to be destabilized at this time," Scott said. Apparently she didn't notice that Dyer -- aided and abetted by the board's own nonchalance -- has already done that.