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Big bonuses a mistake


Big bonuses
a mistake
We are coming off a rough year economically, with layoffs and stock losses mounting with each passing month.
It wasn’t until late fall that we all found out that, officially, we had been in a recession since spring.
So maybe that is why the state pension fund for retired school employees will be paying nearly $300,000 in bonuses to investment staff. How else do you explain why such hefty bonuses would be given in a year when most everyone else was cutting back or eliminating bonuses?
Maybe they didn’t realize we had been in a recession. But wait a minute. It is their job to know how hot the financial fires are burning.
In a Dec. 21 report, Joel Berg found that the bonuses for 2001 represent about a 20 percent increase over 2000. That fact was based on data from the Public School Employees Retirement System. This year’s bonuses are roughly double the $149,152 paid out in 1999, which many consider to be the last year of the boom-boom ’90s.
Rep. Steve Nickol, R-Hanover, pointed out that maybe the fund didn’t lose quite as much as other funds and, therefore, the fund’s internal managers were worthy of reward. In rough years, it is fair for investment managers to be measured by whether their peers did even more poorly. The retirement fund, known as PSERS, lost 7.2 percent in value for the fiscal year ending June 30, and that compares evenly with one industry benchmark.
However, explain the bonuses to those who didn’t receive any such cash incentives this year. Or explain the bonuses to the 135,000 retirees who will not receive a cost of living adjustment because of the slowing economy. Or explain it to taxpayers who will have to pay for much of the $465 million increases in employer contributions to the fund.
It was a mistake, clear and simple, of the pension fund managers to give out more this year than in years when the fund performed well. If it is morale that the managers were so concerned about, then maybe they should have been considering the morale of taxpayers.

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