Tuesday, June 29, 2038

NOTE: To find the most current posts, please scroll down to the two big red arrows. You can't miss them.

Friday, June 25, 2038

Thursday, June 24, 2038

Friday, May 28, 2038

Items of interest in the Archives: The 2013 STRS Board Election

Many people have been very interested in reading about the irregularities of the 2013 STRS board election. There are many posts related to this topic, beginning the first week of April 2013, after the ballots were mailed to retirees from STRS. You can find them by going to the Archives for this blog, over in the right sidebar, and clicking on dates beginning with April 7, 2013. Dennis Leone announced his candidacy for a retired seat in November, 2012. There is a lot of information about him in the Archives, beginning with November 12, 2012 posts. 5/28/13

Wednesday, February 27, 2036

.....so what REALLY happened in 2003 that touched off a firestorm at STRS that is still smoldering today? Read it here, from the Cleveland Plain Dealer. (Hint: It ain't over yet!)

More here (Akron Beacon Journal, 2003)

Wednesday, April 11, 2035

Thursday, March 10, 2033

To find current, day-to-day posts -- pull your scroll bar down a ways, just below the big red arrows (you can't miss them). Thanks.


Monday, September 15, 2031

Note from this blogger.....

In case you weren't aware, I am quite willing to post opposing views on this blog; in fact, I welcome such opportunities. If you disagree with anything you see posted on my blog, please feel free to submit your views and I will gladly post them.
Kathie Bracy 
kbb47@aol.com 9/15/10.........................................

Monday, February 24, 2031

Find your state representative and senator here.

Tuesday, May 15, 2029

Gettin' a little tired.....

Some communications to Mike Nehf and Tim Myers, dating back as far as 2009, continue to go unanswered. Looks like it will be a long wait, but we haven't forgotten. You can see them here and here.

Saturday, April 29, 2028

I know, it's weird.........

Many posts that appear "at the top" for a while are eventually moved down, where they can be found under their original posting dates. Also, if you are confused by the postdating, this is done to keep these posts up there; otherwise, they drift down when new posts are added. It's a "blog thing" which I have no other way to control. KB

Wednesday, February 24, 2027

Handy links: Contacts, information and more (short version)
This is an abbreviated version of the original 'Handy links' post.
 Click here to view a more complete list. (Some of it is old.)
STRS Board.....STRS website
Board calendar
E-mail contacts at STRS (old, but some may still work)
Map/directions to STRS, 275 E. Broad St. Columbus, OH 43215
Rich DeColibus' PowerPoint presentation STRS' PBI Program; Does it work?: click December 21, 2008 (blog Archive) and scroll down to December 23 posts.
Popular links; click, then scroll down: , , , ,

Tuesday, February 24, 2026

SPECIAL (must read):

Dennis Leone's INVESTIGATIVE REPORT on STRS: May 16, 2003...Who is Dennis Leone?........(PDF version)...More on Dennis Leone .......(PDF version)
Dennis Leone's STRS Report to ORTA, March 2007
Dennis Leone's Testimony at the Statehouse 9/5/12
The Plain Dealer article that started it all
Historic PBI vote, January 16, 2009

Sunday, February 23, 2020


Thursday, April 27, 2017

80-member investment staff at STRS? You've got to be kidding me!

This was in 2013; I wonder how many there are now? And what kind of bonuses they're getting while retirees are getting poorer and poorer? Click here to read more. 

New COLA Tree from Bob Buerkle

From Bob Buerkle, April 27, 2017
Here's what your new COLA Tree looks like
With the STRS Board vote on 04/20/2017 to completely eliminate our COLA they have set a future legacy that will leave our Retirees Impoverished.
In The Past - Consider a retiree with a 1979 retirement date and a $$20,000 beginning pension, enough to buy a new Cadillac. On their anniversary month beginning in 1980, STRS provided a 3% simple COLA and continued to do so each year until 2013. Over that 33 year period their pension rose to $40,000, nearly enough to buy a new Cadillac. Even so they had lost 5.1% in purchasing power. Still, at least they saw a doubling of their original pension over that period thanks to a well-managed pension system. Over 33 years your payments would total $1,003,200 under the old STRS COLA Plan.
Today - Now consider a 2014 retiree who will likely never receive a COLA. Their pension may start off at $40,000 but it will probably never increase. Even so, that's a pension about the same amount that the 1979 retiree now receives and nearly enough to buy a new Cadillac when they retire. However, with average inflation rates and no COLAs for the next 33 years, it is unlikely that your $40,000 pension could buy any model new car in 2047. Under the new STRS "No-COLA" plan your pension payments would total $1,320,000, not the $2,006,400 it should be. You'll lose $686,400 in missing COLA payments, stolen by current "Management of the STRS Retirement System".
A recent fidelity article said that a 3% compounded annual inflation rate will cut the value of a fixed benefit in half in 24 years. The last 100 years of U.S. inflation was 3.19% so you are sure to lose 50% of the purchasing power you retired with.
        Contact your legislators immediately

Tuesday, April 25, 2017

The rest of Bob Buerkle's 4.20.17 speech to the STRS Board

Since STRS public speeches are limited to three minutes, Because of this, Bob was not able to complete his speech at the time, but he did have copies to present to the Board and he did get his last sentence in. Here is the rest of his speech. Read it and weep; there's too much truth in it to cheer you up. Remember when they used to tell us STRS was the Cadillac of pension systems? Yeah, right. It's not even an Edsel today!
 *    *    *    *    *
STRS management and the Board have made a mess of our pension system. 
Thousands of teachers were forced to make quick decisions about retirement in order to beat the newly imposed retirement rules.  (in the last 5 years, the number of retirees increased from 125,000 to 159,000, a 27% increase over a short period of time). 
For every extra retiree that was forced out at the top of their pay scale, STRS receives only about half of the previous employee and employer contributions from their replacement.  This means that for many years the STRS will receive lower contributions from these replacement teachers than they would have if they had not forced so many people to retire early. 
Teachers were told that the formula would be lowered for service years beyond 30, the FAS would increase to five years from three, new age requirements were being phased in, and they would not receive a COLA for their first five years if they retired after 08/01/2013.   Now even that turns out to be a lie, since the STRS Board just eliminated the COLA for these recent retirees.  After all, they were told by STRS Counselors and even read in STRS Publications that they would receive an annual COLA without waiting five years before it started.  What a remarkable scam STRS has devised. 
Here's what retirees have learned about STRS. When you make investments that lose money, we lose benefits!  STRS balances its pension obligations by stealing our money from the retirement contract benefits that retirees were promised.

Monday, April 24, 2017

Retirees home in on the grim news.....

"Can you believe that we will never get a cost of living increase again? Retirees like me with only the STRS pension are going to be cooked. I may have  in a few years no choice but to commit suicide. Boy it sure would be horrible to ask actives with salaries we could have only dreamed about to pay more. We have nobody standing up for us.  My God Where is OEA or ORTA?  I guess I should just hurry up and die. That is now the STRS plan. Next I suppose they will take away my healthcare. My God, when will this stop?" 
*    *    *
 "This is a grim, disturbing, and devastating development. (X) paints a picture that is horrifyingly close to the reality that many retirees, especially those who retired prior to 1999, face. The loss of Medicare reimbursement coupled with this COLA cut are a blow to our financial welfare. There's no doubt that the next blow will come in the form of drastic health care changes. (X) and other members/leaders of CORE fought valiantly for ten years to stop this sort of debacle. They supported Dr. Dennis Leone and John Lazarus in their efforts to clean up the STRS Board and make them accountable to retirees even in the face of scorn and personal defamation at the hands of OEA and ORTA. Where is the new generation of retirees who are willing to stand in the gap and speak out against the draconian actions of the present STRS Board? I will repeat yet again that there should be at STRS an immediate freeze on all hiring, salary increases and bonuses until the COLA is restored for retirees."
*    *    *
"I believe the following statements are all accurate.
Retirees are the ones paying for STRS Investment mistakes
No usual and ongoing demographic changes caused this problem 
The 3% simple COLA did not cause this problem
No service formula benefits of any kind caused this problem, including the 88.5% for 35 years
The combined effect of all of the above did not cause this problem
(From Bob Buerkle)

Sunday, April 23, 2017

ORTA and OEA-R....haven't changed much in the last 8 years

From John Curry, April 23, 2017
"By the way…when was the last time you saw a representative of ORTA or OEA-R stand up, at an STRS “public speaks” portion of an STRS Board meeting and…speak as a representative for ORTA or OEA-R while calling the STRS administration or Board to task over an issue of misspending, mismanagement, or entitlement?"
I penned those words below back in 2009....and ....... at the last STRS board meeting not one soul from ORTA or OEA-R stood up at the public speaks portion of the board meeting to condemn the practices at STRS that has lost my fellow retirees their COLA....not ONE PERSON FROM ORTA or OEA-R SPOKE OUT!
*    *    *    *    *
SUNDAY, MARCH 08, 2009
Please pass the green beans!
From John Curry, March 8, 2009
To those STRS retirees looking for immediate relief...
...before the STRS Board "guts" more of our current health insurance program benefits and increases already unaffordable benefit premiums, I have some more bad news! Some of you, including myself, were hoping for almost immediate reform of our national health policy....a praiseworthy wish but...not a realistic wish. This time 'round, the President will turn over a significant amount of this "reform" to Congress. With Congress in the driver's seat comes the reality of lobbyists for the pharmaceutical manufacturers and the health insurance industry to ply their trades...at out expense. We will eventually get "reform," but it will come to us in the finished product as a "watered-down" package...one that will still allow a profit-over-service business model. We can and should take an active interest in the directions that these "reforms" will take. We can and should become educated with the current happenings in Congress and, most importantly, write our U.S. Congressmen (and women) about our feelings concerning them. Will we?
So, how did we get to where we are today with our current STRS healthcare picture? My take.... is it is a combination of forces that have caused neglect for the retiree for over a decade. We can start the decline of our healthcare program beginning back in the Herb Dyer days. In those times it was not really a well-kept secret that Herb and some of those in management at STRS really wanted to get out of the healthcare business...to pass it off onto the private sector.
This was compounded by teacher labor organizations who sat idly by while the management at STRS made their executive decisions with no hard questions being asked...nor hardly any questions being asked about the dozens and dozens of motions being passed monthly at STRS with an almost immediate unanimous rubber stamping by those who were supposed to be looking out for our (the retirees') interests - the STRS Board. Think about it....retired educators don't pay association dues to the OEA or the OFT, do they? The Ohio Revised Code 3307.15 didn't and doesn't apply to the OEA or the OFT. These organizations are just recently alerting the active educators as to an impending crisis with STRS healthcare...a crisis that began in the early 2000's but was certainly not actively broadcast to their rank-in-file membership until after the fact...and then the coverage was minimal. This was not broadcast to their membership, in particular, due to the fact that five of the former STRS Board members were criminally convicted for violating Ohio ethics laws...along with former Executive Director Herb Dyer. Things like this you just don't want to brag about, do you?
This was also compounded by the reality that those in executive positions at STRS were and are not educators....they are actuaries, investors, accountants, and business men and women. Some(note-not all) of them even have the Wall Street mentality that we have come to see being exposed these days in every newspaper and electronic media on the face of the globe. It was a good game for those while it was being played in an environment of lax regulations (no real STRS Board member oversight and hard question asking in our case) but....the greed and deception finally has been exposed for what it was...greed and deception. If the STRS administration didn't generate policy internally to present to the Board for adoption they brought in paid consultants who also worked in and lived by the Wall Street mentality of entitlement to do the same. Problem is, the ORC 3307.15 doesn't recognize nor condone an entitlement mentality, does it? If "our" associates, or at least those in management positions, were placed in and paid into the Ohio STRS with Ohio STRS retirement benefits things might have gone a different direction, might they have not? The same can be said for placing our Ohio politicians into the STRS retirement system rather than OPERS system they currently pay into....do you think that may have had something to do with the vast differences in the healthcare premium schedules of STRS vs. those at OPERS and the OPERS proactive planning for future healthcare obligations? I do!
The last factor that led retirees to where we are today is one that we can blame on ourselves, the retirees! Far too many of us have stood idly by and trusted our professional (?) retirement organizations to be a watchdog over the actions and day-to-day work at STRS. These organizations have, for the most part, served only as social gathering service clubs fostering a monthly opportunity to hash over old times with portions of meat and mashed potatoes with gravy and green beans. A tasty time-out in a retiree's monthly calendar with a smidgen of current, and the most important part but not realized by retirees, legislative report which was and is usually met with the more often heard request, "Please pass the green beans!" And then.....the legislative report is neither discussed nor thought about for another month because most retired educators, as well as actives don't pay attention to their retirement system's actions and planning (or lack thereof), do they? Guess what.....they are now! The best way, unfortunately, to get the attention of a retiree is to reduce benefits or increase deductions on that monthly paycheck, isn't it? By the way…when was the last time you saw a representative of ORTA or OEA-R stand up, at an STRS “public speaks” portion of an STRS Board meeting and…speak as a representative for ORTA or OEA-R while calling the STRS administration or Board to task over an issue of misspending, mismanagement, or entitlement? It’s been a long time, hasn’t it? We do have, along with Dr. Leone, some new members on the Board that are open to your suggestions...remember that. Now, please pass the green beans!
Oh, that was SO much fun!!! Let's go after their healthcare next.

Saturday, April 22, 2017

Wanna see what people are saying about the COLA cut?

Friday, April 21, 2017

Dennis Leone: Comments on Bob Buerkle's 4/20/17 speech to STRS Board

Dennis Leone to Bob Buerkle
April 21, 2017
Thank you Bob.  You gave a great, accurate speech……….AFTER the vote.  Amazing.  The STRS Board decision is PERMANENT, irrespective of what anyone might think. I recall saying and writing in 2013 that the so-called 5-year temporary freeze on the COLA for new retirees beginning that year was a sham, and that the COLA would be completely eliminated for them by 2018 – which is when 2013 retirees were due to begin receiving it –  because Board members would cleverly take the posture of “Oh well, they’ve never received a COLA anyway, so what’s the big deal.”
I hope to attend the next STRS Board meeting, and start my chain of frequent public records’ requests pertaining to staff salaries at STRS.  I wish to know if ANY employee will get a raise now from pension system money, and I will howl if it happens.  If raises are given, this will trigger letters from me to lawmakers, and believe me when I say that it will get their attention.  Also, here is an unintended consequence of the STRS Board’s decision, and something that no one on the STRS Board even thought about it:  With retirees now with an absolute fixed income that is FROZEN, retirees  will be less likely to vote for ANY school levies, especially those that hit property taxes.  Without knowing it, the STRS Board has hurt itself, which in turn, hurts retirees long term.  Had the STRS staff and Board members listened in 2006 and 2007 to repeated warnings that their payroll growth assumptions, year and year, were horribly overestimated, and had the 2012 legislative changes adopted by the Board occurred five or six years earlier as they should have been, we all would be in a lot better shape today. 
The Board’s decision to eliminate the COLA also gave the finger to the oldest retirees who have the least.  No one the STRS Board gives a damn about my 88-year-old mother-in-law, whose COLA was the only way she hoped to cover increased costs for things like car insurance.  At a minimum, the Board could have done something to protect the COLA of our oldest retirees who have the least.  I may be wrong, but I suspect that all 11 STRS Board members have their health insurance through their employer or through their wife’s employer.  I doubt that any of them are paying the full freight as many retirees are, and as I did when I served on the board in 2005-2009.  The STRS Board is out-of-touch again, as it was throughout the 1990’s and during the early 2000’s.  Sad.  I guess we all should be happy that the current STRS Board and staff aren’t using pension money for booze, parties, $1,000 dinners, bonus checks for 500 employees, and lavish trips to vacation resorts like the Board and staff did years ago.  I saved a 2002 letter that former STRS Executive Director Herb Dyer sent to a retiree:  Dyer wrote “the pension system’s money is the Board’s money to spend as they see fit,” and “perhaps retirees should go out to dinner less often.”  A few weeks after that, when the letter was shared with the Ohio General Assembly, there were 101 lawmakers who called for Mr. Dyer’s resignation.  How quickly we forget.
Dennis Leone

Thursday, April 20, 2017

Question: How do you pronounce "Buerkle"?

Answer: Like "Berkley". Now you know.

April 20, 2017 STRS Board Speech by Bob Buerkle, former CFT Retirement Chair

Wharton’s Insurance and Risk Management professor Kent Smetters notes that “Federal law prohibits firms from taking away pension benefits already earned” but companies are free to change their policy for future years at any time.  
“Many insurance company annuities enable you to plan for inflation by offering a cost-of-living adjustment”.  When you purchase a COLA contract rider you can elect to have your income increase annually by a selected percentage, typically from 1-5%.  (From Fidelity Investments Newsletter, March, 2017) 
If any insurance company reneged on their promised annuity payments, including those with COLA’s, Lieutenant Governor Mary Taylor, Director of the Ohio Department of Insurance, would come down on them like the “Ohio Blizzard of 1978”. “The publicity and fallout would be massive and certainly lead to the downfall and takeover of any insurance company, not only in Ohio but in any state, where such a company defaulted on their promised contractual benefit payments” says Bob Buerkle, former Cincinnati Federation of Teachers Retirement Chair and Insurance and Annuity licensed since 1985.
In 2002 Ohio Legislators passed a law requiring STRS to annually pay a 3% simple COLA each year.  This was the law.  The effect of the law appears in Ohio Revised Code and STRS regulation 3307.67 prior to 01/07/2013.  Effective on that date the law changed going forward to a 2% COLA after a one year freeze for retirees prior to 08/01/2013 and no COLA for 5 years for new retirees after that date.  Laws can be prospectively changed so that they can be effective for future retirees who sign pension contracts after that date.  That is not what happened to STRS Retirees who had retired under the old COLA law. They lost their contractually promised 3% COLA retroactively. 
Here's what retirees and current teachers have learned about STRS.  When you make investments that lose money, we lose benefits!  STRS balances its pension obligations by stealing our money from the contract benefits that we were promised at retirement.  This should never happen in a defined benefit plan.

What STRS proposed in 2012, was to retroactively change previously guaranteed pension contracts, that included a 3% simple COLA.  This was also done in such a way that it altered the Defined Benefit Contracts that retirees had selected and changed us to a quasi type of Defined Benefit/ Defined Contribution structure that allows STRS to place the risk of losses on the backs of the DB Pensioners, as if we were DC plan members.
“Social Security is an awesome annuity” says Wharton’s professor Kent Smetters.  That’s because of two main features. First, Social Security will increase your age 66 base annuity benefit by 32% if you delay your first check to age 70, or 4 years beyond full retirement age of 66.  (This increase is 50% greater than the old 22.5% STRS formula enhancement for delaying your pension for 5 years).  The other main reason the Social Security benefit is awesome is because it provides a guaranteed and compounded COLA.  Therefore, inflation should never be able to reduce your original pension purchasing power. It also means you don't have to find a job in your 80’s.  
Since STRS members pay 125% more than Social Security workers, what valid reason can this Board give for the ruination of our pension system beyond losing our money?

Dayton Daily News on STRS COLA-cutting action 4.21.17

Tuesday, April 04, 2017

Kathie Bracy: Letter to ORTA Membership Committee Chairman Bruce Hodges

In a message dated 4/3/2017 11:56:24 P.M. Eastern Daylight Time, KBB47@aol.com writes:
Hi Bruce --
Good letter, except that I'm a bit bothered by your last paragraph. My gut feeling is still what ORTA needs, instead of seeking nifty new ways to increase membership, is a refocused attitude and approach of supporting retirees with fervor, which includes directly taking on the STRS Board and staff. The STRS Board would like nothing more than for ORTA to be a “Can’t-We-Just-Get-Along” mouthpiece for the STRS Board, telling its members the STRS Board and staff are doing all they can for retirees, blah, blah, blah. No one EVER at ORTA has directly criticized the STRS Board and staff for their poor decision making. It is then, and only then, that STRS responds.  
I'd like to refresh your memory a little. I don't know if you've ever read Dennis Leone's 13 page report from 2003 and his change initiatives during his tenure as an STRS Board member between 2005-2009, which are proof of that. ORTA, instead, has criticized those who criticize the STRS Board and staff for two reasons: (1) Such criticism makes ORTA look like they aren't doing anything; and (2) Much of the criticism pointed at the STRS Board involves the same misconduct by ORTA Board members and ORTA staff. Joe Endry convinced ORTA long ago that criticizing STRS decision-making would only hurt ORTA. So ORTA has made its choice, which is to criticize those who demand change and better decision-making at STRS. In the meantime, retirees lose.
In addition to the two reasons stated above, ORTA made conscious choices to ignore proposals and initiatives that were authored and pushed by Dr. Leone while he was on the STRS Board (see the attached two documents) ALL of which were designed to support retirees and improve the overall management of STRS.  
ORTA also chose to look the other way and not speak in support of Dr. Leone’s repeated warnings between 2005 and 2009 that the STRS Board was wrongly overestimating payroll growth and investment returns. He also attempted to implement a stopgap procedure for STRS to pull out of investments that were significantly going south. In other words, he wanted losses for accounts like Enron to -- at some agreed-upon point --  trigger STRS' withdrawing in order to avoid further losses. NO, said Steve Mitchell, the Board majority and the so-called "experts" advising STRS; as a result, STRS lost millions more. ORTA sat silent through all of this, and these are the poor decisions that have come back to haunt us NOW, in April of 2017!
The bottom line is had the STRS Board listened and made its big 2013 changes between 2005 and 2009, we would NOT be in the mess we are in now.  ORTA simply chose NOT to become involved.  ORTA hates to hear it, but it is the absolute truth, and the masses of retirees know it. Bruce, if we really want to increase ORTA's membership, we MUST deal with the elephant in the room: being completely honest with the membership and going after STRS much more aggressively than ever before. To do otherwise simply smacks of "business as usual, let's all just get along!" Will today's ORTA have the fortitude to push for real change? I am keeping my fingers crossed.
Kathie Bracy
[Currently a member of the Ohio Retired Teachers Association board as Trustee from Franklin County]

Tuesday, March 28, 2017

Dayton Daily News: Pension cuts looming for Ohio teachers and retirees

Pension cuts looming for Ohio teachers and retirees
Laura A. Bischoff  Columbus bureau 
Dayton Daily News, March 28, 2017 
Pension cuts looming for Ohio teachers and retirees
Columbus — The financial strength of the State Teachers Retirement System — the second largest pension fund in the state — is being questioned after actuaries told trustees to make big changes. Now, teachers and retirees may face benefit cuts.
STRS Ohio’s expected annual investment return — 7.75 percent — is too rosy, retired teachers are living longer than expected and payroll growth isn’t keeping pace with assumptions.
Trustees agreed to change assumptions after Segal Consulting recommended the changes based on a review of five years worth of data. The assumed rate of return will be dialed back to 7.45 percent — though some board members wanted to be even more conservative and set it at 7 percent.
STRS Ohio is the retirement system for 490,000 teachers and retirees. It had $72.1 billion as of June 30, 2016.
All told, the changes will pile on an additional $6.5 billion in accrued liabilities — a gap in money available to pay promised benefits. Ohio pension systems are required to be able to pay off their unfunded liabilities within a 30 year window.
But changing the assumptions used by STRS means the system’s funding period will jump from 26.6 years to 59.5 years. This will require STRS to come up with a new plan to get back within the 30-year window.
“They're trying to make the best decisions they can with the bad hand they were dealt,” said John Cavanaugh, executive director of Ohio Retired Teachers Association.
STRS told members in its March newsletter that the board is looking at changing benefits “to preserve the fiscal integrity of the pension fund.”
One option on the table is to cut or suspend the Cost of Living Adjustment for teachers and retirees. A 2012 change in state law allows pension boards to change the COLA without approval from the General Assembly.
A vote on the COLA is expected at its meeting in Columbus on April 20, though it could be delayed, said STRS spokesman Nick Treneff. “The COLA is a big lever because it impacts all the retirees and all of the members,” he said. The COLA now is 2 percent of the base pension, starting on the fifth anniversary of retirement.
The STRS board also voted to change up its “asset mix,” so that its investment portfolio has less risk and volatility. That configuration, though, means it’ll likely bring a lower rate of return: 6.84 percent over the next decade, according to consultants.
Cavanaugh said retired teachers have been calling his organization with concerns.
“As you can imagine, no one is thrilled with a potential cut in their COLA,” he said. “We also understand that they have a several billion dollar math problem that they're trying to solve.”
In 2012, Ohio lawmakers adopted the most sweeping pension overhaul in state history, impacting 1.7 million government workers and retirees. The changes brought significant cuts to pension benefits and required employees to work longer. The overhaul was needed to shore up finances of the public retirement systems.
Like in other states, Ohio’s public pensions are defined benefits systems. The pension benefit is based on age, years of service and final average salary and it’s guaranteed. Defined contribution plans, such as 401(k) funds, are more common in the private sector.
Public employees in Ohio do not participate in Social Security.

Tuesday, March 21, 2017

Bob Buerkle on the STRS funding crisis

From Bob Buerkle, March 21, 2017 
Written by Bob Buerkle in January, 2017
 I've been following the latest discussions at STRS about their funding since last spring.  Everything that they have been proposing is going to be so costly that there is no chance that STRS can be under 30 years of funding unless they steal more money from the retirees again. 
First it was to try to manipulate numbers wherever necessary in order to be able to claim that the Health Care Fund, (which isn't even a pension plan requirement), could be solvent for 65 years. If this becomes a reality, which it should not, then the health care cost sharing will be reversed from 20 years ago. Retirees will pony up 90% of the cost and STRS will kick in the other 10%.  SOLUTION: Drop this 65 year plan.  Since STRS is phasing in the age 60 with 35 years requirement, the health care plan will only be necessary for 0-5 years before retirees must go on Medicare.  This compares with up to 15 years of pre-Medicare coverage that STRS provided in the past.  
Next it was actuarial psycho-babel known as "Closed Funding" so they could possibly survive another "once-in-a-100-years" Great Recession.  I think the chances of this happening again in this century are about as likely as seeing Halley's Comet again in the next 20 years.  This is an impossible goal to achieve without more pension benefit take backs in the future.  SOLUTION:  Take appropriate action if another Great Recession ever does return.  Penalizing retirees for something that may never happen again is not in the best interests of our pension recipients.  If our STRS investment experts could lose less money than the general market during large pullbacks that would be most helpful.  Better yet, invest 10% of our money in Government Bonds and everything else in Warren Buffett's Berkshire Hathaway stock which has returned over 20% per year for 50 years, including all the ensuing recessions.  Just investing in the S&P 500 Index would also have satisfied all of our actuarial needs. 
Most recently STRS now wants to lower the earnings assumption from 7.75% to 7.5% or even as low as 7%.  Such a change would immediately propel the STRS funding ratio close to or at infinity again.  By doing this the STRS Management and Board can say "we now have to drop the COLA again" so they can right the STRS Ship.  SOLUTION: Leave the earnings assumption alone.  They already reduced it from 8% to 7.75% which cost us about 15 more years tacked on to our funding period and eliminated our COLA for a year, followed by a one-third reduction for as long as it might take for humans to populate another planet.
I believe the following statements are all accurate.
Retirees are the ones paying for STRS Investment mistakes
No usual and ongoing demographic changes caused this problem
The 3% simple COLA did not cause this problem
No service formula benefits of any kind caused this problem, including the 88.5% for 35 years
The combined effect of all of the above did not cause this problem
Bob Buerkle

Points made by Bob Buerkle in his February 2017 speech to the STRS Board

From Bob Buerkle, March 21, 2017
Here are the points I tried to cover at the February STRS meeting and you can post them.
As usual, the 3 minutes of time that STRS allows speakers goes by so fast that you can never get through all of you points, let alone any in-depth understanding of our suggestions.

Here are a few of the points I brought up.  I did not give the STRS a written copy of my speech.
1. I gave the Board the history of the last 50 years of their actuarial assets, unfunded liability, the funding period in years (which have ranged from 14 years to Infinity) as well as the funded ratio which has ranged from a low of51% in 1979 to a high of 92% in 1999 & 2000. What this showed is that STRS was over 30 years of funding in 26 years (plus 4 more when we were at infinity).  It also showed that STRS had a funded ratio of 56% in 2012, the year new pension system legislation was passed.  However, in 4 other years STRS had a lower funded ratio and they were not considered to have a funding period at Infinity.
2. I also presented a revised copy of what has become known as the “COLA Tree” that visually explains how the COLA benefit adds up over the years.  In example #1, it shows that up until 01/07/2013 the Ohio Revised Code 3307.67 said that “The State Teachers Retirement Board shall annually increase each allowance or benefit payment …by 3%”.  I told the Board that because of the changes affecting retirees and active teachers, STRS is not, and can no longer be considered, a top quartile pension system.  Example #1 also shows that, in the past, a teacher fortunate enough to live 33 years into retirement would live to see their original pension double.  As my Example #2 COLA Tree shows however, is that retirees have lost over one third of their original COLA benefit and for those retiring beyond 08/01/2013 who receive no COLA for 5 years will never the 55 years required to double your original pension.  It also shows that all of the newest retirees with a $50,000 pension will lose $519,000 due to their shortchanged pension payments if they live 33 years after retiring.  That equates to over 10 times their original $50,000 pension benefit.  That’s exactly the same as having no pension for 10 years.
3. I did not have time to explain 5 reasons that retirees from 40 years ago received much better benefits than today’s retirees, including structurally, financially, kept promises and benefit improvements.

4. I also have ideas that I could not get to that could significantly improve their funding period and funded ratio.

Bob Buerkle

Monday, March 20, 2017

Bob Buerkle's speech to STRS Board, March 16, 2017

To STRS Board Members and 512,583 other STRS Members:
Everybody can understand that when your investment experts did not prevent the loss of 48% of our pension fund during the "Great Recession," some long term repair had to be put in place.  The STRS Board took the easiest way out.  They hit the easy button.  First they killed the COLA for a year for retirees.  They also killed the COLA for five years for retirees after July 1st, 2013.  Then they reduced the COLA by a third thereafter for every retiree.  Now the STRS Board is seriously looking at a vote to cut the 2% COLA by another 50% to 100% at their Board meeting on Thursday, March 16th, 2017.
STRS claims that they are acting as our fiduciaries.  A fiduciary is supposed to have your best interests foremost in their mind.  They should use every option available to them in order to deliver on the promises they have made and which deliver on our expectations regarding our financial needs.  They did not!
Question: How could it be possible that retroactively reducing promised pension benefits was in our best interests?  This funding crisis could have been solved using the same strategies that New York, Georgia, Colorado and 29 other state pension systems used to solve their financial problems.  For the most part their rule changes applied only to new hires, while they left the promised benefits to retirees and current workers intact. These options were explained to the STRS Board by Bob Buerkle and others but the Board ignored their recommendations.  Bottom Line:  STRS had tools available to them that they never considered using.
As an STRS Board member your job is to be the best fiduciary you can be and represent all current teachers and all retired teachers.  It is not, and never has been, your job to be a fiduciary to anyone who is not a member, anyone who has never been a plan participant, anyone who has never paid the required STRS contributions from their paychecks.  It is also not your job to be a fiduciary to any “maybe I want to be a teacher when I grow up” third grader.  Those future new hires will have to be offered a new pension plan that STRS can afford after the promises to current workers and retirees are fulfilled.
The only fiduciary obligation you have is to the current vested members working towards retirement and the current retirees who are already there.  You might very well think that you are doing the best thing for our members and they should be appreciative of your efforts.  Instead, current workers, who are looking at the additional 5 to 8 years of required work before they can get an unreduced pension, coupled with all of the COLA betrayals for future and current retirees, think differently.  The STRS solution choices have also created great animosity between actives and retirees as well as Employers who must now budget for 5 to 8 year career extensions for their highest paid teachers.  STRS actions, if not reversed, will force every Ohio School district to find taxpayer support in the form of new levies that STRS has forced them to seek.
The 2008 “Great Recession” was a once in a hundred years “Black Swan” event, but you act like it will soon occur again.  Thinking like that is wrongheaded and unnecessarily punishes all STRS Members.
STRS needs to rethink, rework and undo the damage being done to all current and retired workers, as well as with every school district in Ohio.
Instead of voting on more carnage towards our members, stiffen your backbone and stand up to Legislators for us.  Table any proposed changes and direct the Actuary and your Investment advisers to develop a 30 and a 35 year Investment return plan to mirror the S&P 500 returns, along with a new retirement plan for new hires.  As fiduciaries for our members, any plan that does not restore all lost COLA benefits within 3-5 years should be considered unacceptable to the STRS Board.
Submitted by Bob Buerkle 
2003 Cincinnati Retiree 
Former CFT Retirement Chair
(Click images to enlarge)

Dean Dennis’ speech to STRS Board February 16, 2017

Members of the Board, 

On February 16, I drove from Cincinnati to present before the Board. Having paid into the STRS Defined Benefit Plan for 35 years, I was quite upset over the mismanagement that caused the 1% deduction in the COLA for retirees who planned on the 3% promise. Worst was the COLA freeze teachers now retiring will have to endure, not to mention the entire revamping of the retirement schedule. It was my understanding that under the Defined Benefit Plan, STRS assumed all the risk. Changing the language to effect benefits after one retires I believe to be illegal. I'll share my wife also taught for 35 years. We were not expecting to lose half-a-million dollars in our retirement; especially after a combined 70 years of funding our pensions. The expectation under the Defined Benefit Plan, especially once retired, is that a benefit would stay the same, or increase, but would never be reduced (ORC 3307.67 states COLA's shall increase 3% annually). I believe past practice also establishes this. That said: 

On February 16, I presented before STRS. It is my very strong belief that over the years our Board's have allowed a smaller and more efficient investment staff to grow and become a bloated less efficient financial operation. We also are spending unnecessary monies on consultants as a result. From a person who understands investments, STRS has become upside down. Instead of managing the investment department, you now are reacting to their inefficiencies. They need to be reacting to your management. Due to their mismanagement, you are once again considering cutting member benefits. Don't over react too soon. You need to give the market time to recover. We set our goals for 30 years, why do we not trust the 30 year market cycles? 

Please listen; if you see a team that sets a benchmark goal that shoots for less than 8% annually, then you don't need that team. It shouldn't take a staff of 70 plus investment professions to find the symbols (VOO), (SPY), or (VFINX) and invest in the S&P 500 index. You are tolerating too many unnecessary investments using target assumptions that underachieve our benchmark needs. With 8% returns we can easily meet our funding goals. We should not be using the monies of our members to pay people to experiment by trying to beat the market indexes. It is very well documented that over 66% percent of money managers consistently under-perform the S&P 500 index. Employing over 70 people, paying them, and then giving them bonuses to under perform an index that has been around since 1926 is both irresponsible and reckless. I'll share again what I shared at the meeting (with3 minute time restraint). I'll state it in bold. 

There has never been a 30 year period in the long proven history of the S&P 500, where the S&P 500 index hasn't gained at least 8% annually. In fact, over 60% of the time it averages over 10%. There have been 60 such thirty year periods. This should be easy to understand.  In fact ask your investment advisers from Callan, like I did. I spoke with three individuals from Callan and they seemed to be in agreement with my premise. If you have any doubts please set a meeting, I'm happy to drive to Columbus again. To farther drive home my point, I can also show you that over the last 20 year period that the S&P Mid Cap index has nearly doubled the S&P 500. We should be doing better and spending less in doing so. 

So, the S&P 500 index should be your baseline annual investment benchmark utilizing an 8% return objective. If you feel compelled to consider other investments, then they should always be above this benchmark. Listening to our investment team get rewarded while the rest of us are getting punished should be a red flag. It wasn't lost on some of us that while the investment team was getting positively acknowledged during the presentation for exceeding the performance of some of their peers; we were aware that our investment staff's performance lagged the market by nearly 2%. Last year the S&P 500 returned 9.8%, why would we even consider moving our benchmark down from 7.75%? The only reason that makes sense is that the investment staff can't be trusted to keep up with the market indexes or invest in them. 

Lastly at this point the 30 year unfunded liability needs to be adjusted to 35 years. Unfortunately due to under performing investments future teachers will have to work 35 years to qualify for full retirement.  Having to entice future teachers into our system when they have to work for 35 years and then wait until the age of 60 to retire jeopardizes our retirement system even farther. However, there is hope if we don't react hastily and get back on track. I for one am willing to help. 

Please find attached the S&P 500 document referenced during my presentation. It breaks down annual investments in 5 year increments up to 25 years. 


Dean Dennis, 
Retired CFT Field Representative

Dennis Leone’s speech to the STRS Board February 16, 2017

Is the COLA a gift? 
There may be some current board members who consider the COLA a gift, like the 13th check was. For all those who retired prior to 2013, the COLA was a legal, statutory, guaranteed part of their pension. Ohio law did not say that the Board “may” provide retirees with an annual COLA of 3%, it said the Board “shall” provide retirees with an annual COLA of 3%. By securing Legislative permission to eliminate it for one year, and reduce it to 2%, in subsequent years, the Board broke a promise to thousands of retirees. My COLA was promised to me. While the change in the Ohio Revised Code certainly permits the board to do as it wishes with new retirees, there could very well be a future legal question pertaining to whether such a new law also can take away what had been guaranteed and promised to retirees. The one year the COLA was eliminated completely, my 88-year-old mother-in-law had to borrow money to pay for her increased car insurance and her increased home insurance, and I doubt that any STRS Board member or STRS staff member had to borrow money for that purpose. Now there is Board discussion pertaining to the possibility of reducing the COLA again. Where is the Board commitment to protect my 88-year-old mother-in-law – and the oldest retirees who have the least?

Payroll Growth 
As an STRS Board member for nearly 4 years between 2006 and 2009, I repeatedly objected to the Board’s acceptance, and the staff’s acceptance, of projected payroll growth data offered by hired outsiders. I said repeatedly that the Board’s consultants were not correctly interpreting the realities facing Ohio school districts, and my publicly stated concerns were confirmed. Year after year, STRS has significantly over-estimated payroll growth. It was a miserable 1.33% aggregate average between 2005 and 2013, when the Board was using an assumption of 3.50%. Had the Board and staff been responsive to the advice that was contrary to the advice offered by non-school consultants, and had the Board implemented its 2012-13 action plan in 2006, or 2007, or 2008, STRS would be in far, far better shape financially than it is today. 

Recipients of 88% Benefit and COLA Related to Same 
Between 2000 and 2015, retirees with 35 years of service received the famous 88% benefit. It was a profound insult to pre-2000 retirees with 35 years of service to be held to a 77% benefit. The reality of this is that for the past 17 years, those who got the 88% benefit also have been receiving a COLA based on 88% of their final average salary, while the pre-2000 retirees with 35 years have been receiving a COLA based on 77% of their final average salary. Given the truth of this, it would be another stab in the back of the pre-2000 retirees with 35 years to get hit with another COLA reduction. The Board should eliminate that COLA for the 88% benefit recipients completely, or – at the very least – have future COLAs for this group recalculated and based on 77% of their original final average salary. Given the conditions summarized above, the STRS Board and staff owe it to retirees to consider options other than reducing the COLA that was statutorily promised to them when they retired. It is simply unacceptable for you to conclude that our COLA has to be solution. I need to add one more thing: Just before lunch this morning, I listened to a Board consultant who shared data about how many retirees are currently working, as if that might be important information to for the Board to consider. I certainly hope the Board is not going to demonize retirees who are working part-time to improve their standard of living…….a part-time job is NOT a justification to reduce a retiree’s COLA.

Sunday, March 19, 2017

RH Jones: Tell retired teachers to attend the April 20 STRS Board meeting

From RH Jones
March 19, 2017
By phone, by email, or by US Mail please tell every retired teacher you know to attend the April 20th STRS Board meeting.  In their newsletter, they said that they would probably vote on the loss of our COLA. Numbers of retired educators packing the STRS grounds, building, and meeting room should help to let them know we cannot have any cuts to our COLA. 

Friday, January 27, 2017

Handout to STRS Board members at their Education and Planning meeting 1/26/17

The Speech I Would Have Made If This Had Been a Regular STRS Board Meeting
Good afternoon. My name is Kathie Bracy; I am a member of the Ohio Retired Teachers Association and a Trustee to that board from Franklin County. Some of you will remember me, as I have attended many STRS Board meetings over the years. 
I am here to defend the COLA for all STRS beneficiaries who retired before the year 2000. You may recall that was the year the STRS Board enacted the 35-year/88% pension formula, ensuring a very comfortable retirement for those who qualified. Some of those very people were sitting on the STRS Board at that time and voted for this! I'll leave it to you to guess why.
Although the formula was discontinued in 2015, the 88 percenters are still living quite comfortably, financially, and always will. If the STRS Board is considering making COLA cuts, the COLA for this group should be the first to go. Some of those people are receiving $3,000-$4,000 COLAs every year, something the pre-2000 retirees will never see! There is absolutely no justification for continuing to pay out hefty COLAs to those who are already getting extremely generous pensions for the rest of their lives. 
Then there are those whose annual pensions exceed $120,000. How badly do these people need a COLA? Maybe, if they want to plan a trip around the world instead of a weekend at one of Ohio’s state parks. Time to cut their COLA, too. Out the door!
The future retirees are the next group that should receive no COLA at all. Members of this group are getting salaries far higher than pre-2000 retirees ever dreamed of! They too will be in much better financial shape to handle their living expenses than the pre-2000 retirees. That should be pretty obvious.
Those who retired before 2000 are facing steadily increasing costs for home insurance, auto insurance, utilities, healthcare and more, just like everyone else. But the budgets for these people are being strained far beyond what many of them can handle; you know that! The COLA should NOT be cut for this group, period! Think of the lady who retired 30 years ago on a meager pension, who is already struggling to put food on the table and pay her bills. How is she supposed to keep up? The COLA is the ONLY raise the pre-2000 retirees get!
And while we’re on the subject, it would not hurt the STRS Board to consider restoring the 3% COLA to the oldest and poorest (and probably the sickest) retirees among us. I would venture to guess even Scrooge would do that much if he were on this Board.
Lastly, I ask you not to even consider making equal cuts across-the-board. This would hurt thousands of retirees who are already hard-pressed to make ends meet while it would barely make a dent for those receiving the generous pensions that the pre-2000 retirees will never see. I see absolutely no justification for this, morally or otherwise.
Thank you.
Kathie Bracy
Columbus, OH
January 26, 2017

Tuesday, January 13, 2015

RH Jones: ORSC to try to take back 13th check?

From RH Jones, January 13, 2015

On page 2 of the Winter 2015 ORTA Quarterly, Ann Hanning reports last in her list of the Ohio Retirement Study Council (ORSC): “removing the authority of the STRS board to issue a 13th check.” This is not the first time that the ORSC has considered backing the 13th check take away legislation. In 2004, the ORSC tried to “take back” this lawful benefit; and, if you readers would remember, on 10/19/2001, ORTA’s Executive Director of that time, David P. Travis, spoke before the STRS board in support of the 13th check (the Year-end [Christmas] Supplemental Clean-up check).

Time and space do not permit me to expound on all the benefits to this wonderful financial supplement; but, in short, I can write that: this is the only single benefit available to all STRS retirees fairly based the issuance, by a retiree friendly STRS board, of from 1 to 11-units, then multiplied on their professional years of service and years into retirement. Obviously, the older retirees who are retired with a considerably less final average salary (FAS) are the ones who need this Ohio Revised Code (O.R.C.) “on the books” the most; many of whom are experiencing large increases in nursing home or home care costs, HC/Rx costs, and increased taxes.
We retired teachers expect the ORSC, our ORTA, OEA-R, and our locals to support the keeping of our 13th check in the O.R.C. And we retired teachers understand that there is a need to improve funding for our HC/Rx and our simple calculated COLA. However, it is common knowledge that the 13th check can be issued yearly, determined by the STRS board as future funding becomes available. There should be, therefore, no reason to cut this benefit from the O.R.C. 
Respectfully submitted,
Bob Jones, retired OH teacher
Larry KehresMount Union Collge
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