The hidden cost of the "Hefty bonuses," STRS employees ARE contributing members to the OPERS retirement system!

From John Curry, November 4, 2008

Below is the chart that the Columbus Dispatch featured on their front page (Nov. 2, 2008) editorial re. STRS bonuses paid. There is an additional cost to STRS that many people don't realize. What is it? Well, it's the additional amount of moneys paid to OPERS from STRS (that's our money, folks) for the OPERS deduction (for these investments associates' retirement) on these bonuses that STRS paid out. OPERS contribution rate for employers is currently set at 14% so, let's take a look at how much STRS paid out for each of these "top ten" STRS investments bonus recipients to OPERS :
(Click images to enlarge)

An additional consideration:

If one or more of these associates uses these dollars as one of their "best three years" for retirement purposes, you can imagine what that does to their final average salary..... just based on these bonuses and not counting their regular salary, upon retirement. The Wall Street investors don't enjoy this kind of a perk, do they? Could that be one of the reasons for the low turnover rate of investments associates at STRS? They really like their job, don't they? I'm sure they are just "chomping at the bit" to find greener pastures...NOT! I'd say we are pretty generous at a time when many retirees are pill-splitting and going without at a time when STRS lost 25 Billion dollars in investments, wouldn't you?

John

From Dennis Leone, November 4, 2008
Subject: RE: Dennis...a question on the bonuses

It is worse than you think John. PERS does not have the anti-spike rule that STRS has. The anti-spike rule was put into effect at STRS in the late 1980’s when university professors were “spiking” their final average salaries by loading up on summer teaching assignment in the final 2 years before retirement. Now, if an STRS active member shows increases, let’s say, of 3%, 3% and 20% in his/her last 3 years, STRS will pull down that final year increase to 3% to provide a more accurate picture for pension purposes. It makes sense because when the active pulls in 20% during that final year (like a supt bonus) he/she paid contributions for that higher amount for only one year……not 30 years. PERS does not have an anti-spike rule…………so huge increases are averaged in.

D. Leone