Tuesday, August 04, 2009

Straight Talk from Your CORE President

From Dave Parshall, August 4, 2009
There never has been a more important time for CORE than this coming fall starting with the August STRS Board Meeting. The decision making process that will affect all STRS members will begin in earnest. The board has to submit a plan to the ORSC that will bring us back to a 30 year unfunded liability. The plan is due by mid- September. The ORSC will consider the plans from all of the State Retirement Systems and then make recommendations to the Ohio Legislature which alone has the authority to make needed changes. The legislative process will begin in September. A strong lobbying force by CORE will be needed, so get in line to help. For what is at stake read below.
During the April, May and June Board meetings discussions were held, but no final decisions were made about which cuts or increases would be suggested. It is clear to everybody that no single group is going to truly like what has to be done. But as a current retiree, I expected the board to show some sense of fairness that reflects their understanding of what it is like to struggle with a fixed low income at this time in our history. To date only Dr. Leone and, at times, Mr. Brooks have shown such an understanding. Active teachers, especially those who have many years to go before retirement, have far more choices and time to make them than current retirees. Keep in mind to date the STRS cuts have all been at the expense of retirees who of course do not pay dues to OEA or OFT.
So far, the two main sticking points seem to be the 5% increase in the amount paid into STRS by actives and school boards, and how to reduce our COLA. The board, pushed by OEA/OFT and ORTA ,wants active teachers and Ohio’s School Boards to split the amount. The OEA leadership stated at one Board meeting that the school boards have to share the cost equally because teacher welfare is part of the cost of educating children. In the best of times, I would wholeheartedly agree, but these are the worst of times.
H.R. 315 died for two main reasons. The Ohio School Boards where strongly opposed to it, and because of the revenue enhancement enacted by STRS (the 88% rule). CORE was repeatedly told these reasons when we were lobbying for the bill and that was before the great recession hit. There is no chance that the Ohio Legislature will ask school boards to pay more into a teacher pension fund when many of them are cutting teaching positions and are receiving reduced funding from the state. The full 5% needs to come from actives. What the legislature will do is anyone’s guess. But, they are being told that our so-called COLA (not a true COLA) has the greatest cost saving potential, and this will be an easy target. This all plays right into the hands of those who don’t like educators' pensions in general. Call it pension envy or whatever; it is real. This alone will doom the entire package because nothing else will be enough without the full 5% increase. To think otherwise is politically naive.
What to do with the COLA? One plan, that they were seriously considering, states that you would not get a COLA until the age of 65, and then it would be a reduced COLA.
OEA/OFT and ORTA have shown little interest in grandfathering changes to our COLA. ORTA has stated they would consider it, but as usual have taken no clear official position or action. Their statements have been confusing to say the least. Could they be waiting for an approval from OEA or the ORTA membership?
I would like to suggest a simple plan to grandfather a change to our COLA that is fair and shows sensitivity to current retirees with low pensions. Age should have nothing to do with your COLA. It should be based on what your final average salary was because that is what is used to figure the COLA amount. See below:
Everyone with pensions of $40,000 or less should be grandfathered at the 3% level until or if their annual pension reaches $40,000. All pensions of $41,000 to the $50,000 level should have the COLA reduced to 2%. Pensions above $50,000 should receive no COLA. The plan levels should be reviewed and revised every 5 years to account for changing market returns and future increases in pension levels do to vastly improving teacher salaries and consequently their final salary average. (Keep in mind that the last figures I saw from STRS were that the average pension was then $47,000, and that was more than a year ago). This plan allows for a reduction in a fair way for both current and future retirees that are struggling to make ends meet.
So far, it looks like the retirement age will be raised to age 60, and the 88 % rule will finely be phased out over five years, and after 2015 it will be gone. If Bob Slater is right, and I have no reason to not believe him, it has cost our system 1 billion dollars to date. But even, if it costs us just one dollar it should be eliminated, for it never should have been enacted in the first place. It was and is morally wrong to enhance the pensions of a few. We all know the story of the previous corrupt Board, many of whom of course, would take advantage of the rule they invented. Many that are still in favor of it today do so because they also want to take advantage of this enhancement. The reason for the rule change in the first place was to keep teachers from retiring early and thus paying into the fund longer. A simple increase in the retirement age would have been far more cost effective.
One final point, if we only focus on the 3O year horizon we will doom the present. We don’t need to fix this thing over night and do real harm to the faithful teachers who were told that they would have a retirement second to none during their whole careers while accepting low salaries. Teachers today in rural school districts still make far less than their large urban district counterparts. Many STRS board members don’t seem to realize this. 30 years is a long time and many things will change.
A friend of mine went in last week for her next to last meeting with an STRS representative and was told she may want to retire in September to take advantage of the 88% rule and not wait until June. This just illustrates how crazy this whole thing has become. The discussions have been to grandfather the change until 2015, which I agree is fair. Why STRS is now suggesting that the changes will be made by September is a mystery to me.
After reading this, even if you disagree with me personally, I hope you can see why it is time for as many as possible retirees to become involved. CORE will meet on August 20th during the lunch break of the STRS board meeting in the Sublett room off the cafeteria. Because of all the issues to be discussed besides the routine agenda items, it may never be possible to tell which day the COLA will be discussed. Public Speaks is on Thursday. The discussions will extend into the Friday meeting. I encourage as many of you as possible come to the meeting and sign up to speak even if you have only a few words to say. They need to hear from someone beside the same speakers month after month. If you can’t get involved now, when would you?
Those of you who come to the CORE meeting will have an opportunity to donate to the Dr. Leone’s thank you gift fund. You can also send a check made out to CORE with the words Leone fund written on the memo line at the bottom of your check. Mail your check to CORE at 1258 North State Route 134, Wilmington, Ohio 45177-8823. See you on the August 20th at the STRS building at 276 East Broad Street in Columbus.
Dave Parshall
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