Dr. K. Fluke's speech to the STRS board 08/16/07

From RH Jones, August 19, 2007
Subject: Dr. K. Fluke's speech to the STRS board 08/16/07

To all:
Dr. K. Fluke’s speech is in my opinion an exposé of the Fordham Institute’s flawed “research”. His letter below, I send to you with permission from him, my SummitCRTA Legislative Committee Chair.

RHJones, a very, very, proud member of CORE

Dr. K. Fluke’s STRS board speech of 08/16/07
Re: Golden Peaks and Perilous Cliffs (Rethinking Ohio’s Teachers’ Pension System) by Robert M. Costrell and Michael Podgursky, Thomas B. Fordham Institute

The Fordham Institute study is a one-sided, self-serving report. To my knowledge the above publication was not requested or endorsed by the Ohio State Teachers Retirement System and was given to Ohio legislators. Questions – are the other retirement systems being researched and publications provided? According to the writers of the Ohio STRS report, they are college professors with virtually nothing indicated about their backgrounds and experience. What is their retirement system and how does it compare with Ohio’s STRS? Would they like to be analyzed?

This publication attempts to present the case that Ohio’s STRS might be subject to fall off a cliff or reverses. This writer’s view is one that does not attempt to fix that which is not broken. Ohio STRS as rightly indicated is the oldest public retirement system on Ohio. It has provided for annuitants (retirees) during the 1929-1939 Depression. Yes, the capable STRS board members may make changes to policy as needed. This is understood.

This publication does not endorse the Defined Benefit Plan that is selected by over 80% of STRS annuitants. They are persons who want the security of an annuity at retirement and access to health care. Many are not familiar or interested with equities and the stock market and want the security of capable investments by the STRS investors.

Mention was made about the 13th Check, available if exercised under Ohio Statutes. Also, mention was made of the Ad Hoc provision. Yes, these are necessary to adequately provide for inflation. It appears that the Fordham Institute is recommending cancellation of these benefits. A 3% cost of living does not truly balance with inflation. Historically, STRS has provided the 13th Check and currently is unable to do so. The Ad Hoc raises have been generally provided every ten years. This study completely omitted looking at any options for STRS health care and completely omitted the inadequate funding of Ohio Schools for the last 16 years.

This study totally impersonalized the Ohio State Teachers’ Retirement System and is attempting to analyze from a business perspective.

In conclusion, it is my opinion that the Fordham Institute and publication writers represent a neo-conservative philosophy and thinking to privatize everything for the benefit of a few. This is evident in the lack of the Defined Benefit endorsement but support of Cash Balance or Defined Benefit Contribution Plans. The present Ohio STRS Defined Benefit Plan is outdated. Some changes may be needed and capable STRS board members will address these.

Time will tell about retirees who want to do their own thing about retirement planning and those who enroll with the STRS Defined Benefit. Research is not providing the answer now.

With over 20 years as a STRS annuitant and 15 years as a Summit County Legislative Chair, I had experience with 13th Checks and Ad Hocs, etc. My support of the Ohio STRS is total.

K.W. Fluke, Ph.D.
Legislative Chair, Summit County Retired Teachers
Akron, Ohio