The Dispatch covers more of yesterday's STRS board meeting

Proposal calls for teachers, districts to up pension tithes

Columbus Dispatch, September 2, 2009 3:18 AM
By Steve Wartenberg

A road map for long-term financial stability was unanimously approved yesterday by the State Teachers Retirement System's board of directors, but several steps must be taken before it can be put into place.

The plan comes with a cost: It would increase the sum current teachers and their employers pay into the pension fund, and it would reduce some benefits for retirees.

"I hope all our members understand we love them dearly," said board member Constance Ramser. "But sometimes when you love someone a whole bunch, you make them angry."

Still, the board's decisions "will make sure the pension is available to anyone who enters our profession 20 to 30 years down the road," she said.

The teachers pension fund is one of Ohio's five public pension funds that will appear before the Ohio Retirement Study Council on Sept. 9 to present plans to address shortfalls.

The retirement council, which advises the General Assembly, then will work with the legislature, which must approve changes in the pension plans.

The State Teachers Retirement System's total assets stood at $76.8 billion on June 30, 2007, but because of market declines, the total had dropped to $52.7 billion on June 30 of this year -- the end of the system's fiscal year. The stock market has risen since, and these assets had increased to $56.7 billion by Aug. 31.

If the board's proposed changes are adopted, the pension fund's liabilities would fall $9 billion to $85.5 billion. This would reduce its 30-year funding liability to 33.4 years.

Under Ohio law, public pensions must balance their income and expenditures so that they can pay current liabilities for pension benefits within a 30-year period. Although 33.4 years doesn't meet that standard, it's an improvement from "infinity," the most recent estimate.

Several current teachers and retirees attended yesterday's meeting, and most seemed to reluctantly agree that something had to be done.

"There had to be some changes to keep the system solvent," said Ryan Holderman, a retiree from Lebanon, in southwestern Ohio, who attended the meeting.

His concern was the change in the cost-of-living adjustment. It has been 3 percent a year, but starting in 2011, it would fall to 2 percent for current members and 1.5 percent for those who retire on or after July 1 of that year.

"We have close to 8,000 retirees who taught for 30 or more years and draw less than $30,000 a year," Holderman said. "And they're really dependent on that yearly cost-of-living adjustment."

The board also voted to phase in an increase in employee contributions starting in 2011 from the current 10 percent to 12.5 percent,and employer contributions starting in 2016 from 14 percent to 16.5 percent.

The plan would push back the age at which members can retire with full benefits and alter the way in which a teacher's final average salary is calculated.

"I think their plan is fair," said Melissa Cropper, a teacher in Georgetown, in southern Ohio, adding that her biggest concerns are the changes about when a member can retire with full benefits.

"But when you look at it from a systems point of view rather than an individual view, the changes had to be made," she said.

Several board members said they reluctantly voted in favor of the plan but said the changes are necessary and had to be approved before the Sept. 9 meeting with state officials.

"We feel we've been rushed into this, but that's the way it is," said board chairman Mark Meuser.

Kevin Griffin, a teacher in the Dublin school district, fears the cuts could scare off would-be teachers.

"I'm already concerned there's so little reason for kids today to want to become teachers," he said. "And if we keep on bashing salaries and reducing benefits, why would any kid want to become a teacher?"

swartenberg@dispatch.com

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