Lloyd Knudsen's speech to STRS Board, June 18, 2009
Hello, my name is Lloyd Knudsen. I was a 30-year teacher in the Woodridge Local Schools of Summit County. Also, I am currently the President of the Retired Teacher’s Association of Medina County.
Over the next several months this board will face many difficult decisions regarding our STRS pension and health care programs. STRS retirees, current active teachers and our STRS employees all will be affected by your decisions.
To date, only the retirees have been financially impacted by the STRS health care crisis. Our STRS employees continue to receive quality health care through STRS and the active teachers continue to get quality health care through their local school boards. While retirees on STRS health insurance have seen their premiums go up, their coverages go down, and their spousal subsidy coverage eliminated altogether.
In order to make our STRS pension system solvent many active and retired teachers understand there will be some changes to the pension rules.
This board is currently considering reducing the retirees’ 3% annual simple COLA. If our COLA is reduced, it should be reduced only in small increments over several years. A COLA cut in half (whenever it happens) would create a sudden financial loss. Retirees have already suffered greatly with increased STRS health care costs. I hope you will consider that fact when making your changes to the pension rules.
Active teachers obviously are going to be asked to sacrifice the most according to your proposed pension changes. Actives may have to pay a greater percentage of their pay into STRS, they may have to work longer, they may get a lower percentage payout as well as a lower dollar payout upon retirement. These changes are dramatic. I would hope your adopted changes would be phased in gradually and would give teachers close to retirement an opportunity to retire under the current pension rules.
However, if teachers are going to be asked to sacrifice financially for a solvent STRS, the teachers believe STRS management and staff need to share in that sacrifice.
So what sacrifices have been made at STRS?
One, STRS will require their staff to work a 40-hour week beginning in January, 2010. Who knew STRS employees weren’t already working a 40-hour week?
Two, STRS initiated a “wage freeze” for their employees. Coincidentally, this wage freeze followed on the heels of substantial wage increases. I guess it kind of evens out.
Third, STRS announced a “hiring freeze”, no new employees would be ADDED. Now, most companies who have recently lost 40% of their value would probably be cutting staff, but not STRS. They don’t want to impact customer services. Maybe when a business loses $35 BILLION, services should be impacted.
And four, the STRS Board eventually voted to suspend investment personnel bonuses when the system loses money. The board majority didn’t agree that suspending the bonuses was the right thing to do, but they did agree it was the politically-correct thing to do.
My final thought. When this economic recession is over whether that occurs in 2010 or 2011, STRS will undoubtedly return to its old ways. The pay raises will be back, the bonuses will return bigger than ever, and the STRS staff will probably be expanded. Their “temporary” sacrifices will end. But rest assured,
ANY AND ALL pension changes this board makes for active and retired teachers will impact their financial futures forever.
Thank you for letting me speak to you today.
Over the next several months this board will face many difficult decisions regarding our STRS pension and health care programs. STRS retirees, current active teachers and our STRS employees all will be affected by your decisions.
To date, only the retirees have been financially impacted by the STRS health care crisis. Our STRS employees continue to receive quality health care through STRS and the active teachers continue to get quality health care through their local school boards. While retirees on STRS health insurance have seen their premiums go up, their coverages go down, and their spousal subsidy coverage eliminated altogether.
In order to make our STRS pension system solvent many active and retired teachers understand there will be some changes to the pension rules.
This board is currently considering reducing the retirees’ 3% annual simple COLA. If our COLA is reduced, it should be reduced only in small increments over several years. A COLA cut in half (whenever it happens) would create a sudden financial loss. Retirees have already suffered greatly with increased STRS health care costs. I hope you will consider that fact when making your changes to the pension rules.
Active teachers obviously are going to be asked to sacrifice the most according to your proposed pension changes. Actives may have to pay a greater percentage of their pay into STRS, they may have to work longer, they may get a lower percentage payout as well as a lower dollar payout upon retirement. These changes are dramatic. I would hope your adopted changes would be phased in gradually and would give teachers close to retirement an opportunity to retire under the current pension rules.
However, if teachers are going to be asked to sacrifice financially for a solvent STRS, the teachers believe STRS management and staff need to share in that sacrifice.
So what sacrifices have been made at STRS?
One, STRS will require their staff to work a 40-hour week beginning in January, 2010. Who knew STRS employees weren’t already working a 40-hour week?
Two, STRS initiated a “wage freeze” for their employees. Coincidentally, this wage freeze followed on the heels of substantial wage increases. I guess it kind of evens out.
Third, STRS announced a “hiring freeze”, no new employees would be ADDED. Now, most companies who have recently lost 40% of their value would probably be cutting staff, but not STRS. They don’t want to impact customer services. Maybe when a business loses $35 BILLION, services should be impacted.
And four, the STRS Board eventually voted to suspend investment personnel bonuses when the system loses money. The board majority didn’t agree that suspending the bonuses was the right thing to do, but they did agree it was the politically-correct thing to do.
My final thought. When this economic recession is over whether that occurs in 2010 or 2011, STRS will undoubtedly return to its old ways. The pay raises will be back, the bonuses will return bigger than ever, and the STRS staff will probably be expanded. Their “temporary” sacrifices will end. But rest assured,
ANY AND ALL pension changes this board makes for active and retired teachers will impact their financial futures forever.
Thank you for letting me speak to you today.
posted by Kathie Bracy at 10:02 PM
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