Dennis Leone on your COLA: ORC likely to be revised

Dennis Leone to Ryan Holderman, August 7, 2009
Subject: Re: What the ORC has to say about our STRS COLA!

Yes, Ryan, ORC 3307.67 likely will be revised. Here is how I believe the matter will play out: All 5 pension systems have been instructed to present recommended plans to the Ohio Retirement Study Council (ORSC) by September 9 to address future pension system solvency. While there will be different components for each pension system in the 5 recommendations, all will be rolled into one bill -- likely co-sponsored by Lynn Wachtmann and Todd (both members of the ORSC). For sure, a new bill WILL pass and it will amend
3307.67. It would not surprise me if the final version of the bill will have identical language for all 5 pension systems pertaining to certain thins, like the COLA and the future purchase of out-of-state service credit. The bill may have different language, however, for each pension system for things like a minimum retirement age, required active contributions, and required employer contributions.

What concerns me to the most if that the STRS plan most definitely will contain OEA-desired language to raise the school board contribution rate by
2.5%. Every lawmaker I have talked with is willing to raise the active contribution rate -- even by as much as 3% -- but they are totally opposed to raising the employer contribution rate. OEA, stupidly, has taken posture that the active rate should not go up unless the school board rate goes up too. So what might this mean? It will mean that order to achieve the total dollars needed to ensure pension solvency in the future, the Legislature will have to cut more in another area. And where do you think that will be? My guess is the COLA. OEA will be just as naive about this as was about the true cost associated with the 35-year/88% rule, which has been a ridiculous
9-year, $1 billion failure. Craig Brooks is the only board member who understands the potential down side to STRS insisting on a 2.5% school board contribution rate increase, and how such -- when rejected by the Legislature -- will translate into other areas (like the COLA) being hit harder.

Dennis Leone STRS Retiree Board Member

From Ryan Holderman (no date)

Dear Dr. Leone:

I recently sent the information below to several CORE constituents. Several have asked if this bit of the ORC has been revised, amended or repealed. I, frankly, do not know the answer to that question and have not been able to find information about it on the web. Can you shed some light on it?

Would ORC 3307.67 have to be repealed or amended by the legislature before STRS could reduce the COLA?

Sincerely, Ryan