Jim N. Reed: Perspective on STRS Board proposal to ORSC

From Jim N. Reed, September 3, 2009
Subject: STRS Board Proposal to Ohio Retirement Study Council

Kathie, I may be missing something as I attempt to digest the recommendations of the STRS Board to the ORSC as to the direction our retirement system must take to "recover" its equilibrium following the disastrous loss of more than 40% of our assets during the last two years.

The recent proposals might be described as, according to "The Columbus Dispatch", "Pension Pain." The reporter continues, "Now to make up for lost ground, the state's public workers might have to contribute more, and retirees could see benefits cut." This has forced the pension systems "to consider painful changes such as cutting the benefits of retirees and requiring those still working to pay more."

Among the proposals are:

a) Increase employee and employer contributions

b) Increase the minimum retirement age

c) Increase the number of years used to calculate the final average salary (FAS)

d) Eliminate, reduce or delay annual cost-of-living adjustments (COLA)

Anyone notice the conspicuous absence of cost-cutting within STRS? The silence is deafening.

I do not subscribe to the opine of those who say this is a "No Fault" collision between retired and active educators and their retirement system.

A decade ago it was obvious the system was being surely paralyzed by the decisions of unethical Board members and its Executive Director (according to judicial findings).

More recently, the decisions being made by investment staff were obviously suspect to say the least even though they were being rewarded for less loss by an insane PBI policy and a continuation of a salary scale of which most educators are totally unfamiliar.

Most indigestible are recent comments coming from STRS spokespeople, Board members and the ORSC as they attempt to justify these recommendations for a recovery policy. Also hard to swallow are missing comments, recommendations that seem too conveniently ignored or withheld.

Ms. Ecklar, STRS spokeswoman, offered, "But there are only certain levers (to strengthen the plan) you can look at: investment returns, contributions and pension plan design." Oh, really. Only these? Why has it apparently escaped the attention of STRS management that an internal cost saving strategy would go a long way in restoring some lost assets and restoring some faith and trust from their employers (active and retired educators) in a once honorable retirement system?

Board member Ms. Ramser patronizes, "I hope all our members understand we love them dearly. But sometimes when you love someone a whole bunch, you make them angry." Oh, really! Having participated in several Board meetings over the past five years I have seen very little in the way of genuine concern and understanding for retirees from too many out-of-touch, unqualified Board members. Condescending and patronizing rebuttal have too often been the order of the day.

Assuring anyone who "enters our profession 20 to 30 years down the road" that the pension will be available is a sorry recruiting mechanism. Most current and retired educators chose their careers based on a passion to share a particular brand of knowledge with young people. Being an integral part of those young peoples' formative years was no a less driving force for their vocational choice.

Certainly, the professional educator must look to providing financial security for his/her family. Most of us recognized financial independence was not on our teaching path but it was not unreasonable to expect a secure, affordable retirement, especially in light of the excellent pension plan described to us as prospective career educators. As we neared retirement we were counseled by STRS staff to consider our retirement secure and that healthcare was the essence of that promise.

With what has happened at STRS in the past decade does Ms. Ramser really believe there will continue to be a trusting reservoir of prospective educators anxiously awaiting to enter a profession that has witnessed so many broken promises to its retirees?

Could the students in Ohio's classrooms be the biggest losers in this quagmire of mistrust?

Mr. Hutras, the Executive Director of the ORSC, admonishes, "They're trying to sustain a post-retirement healthcare component and without that, they wouldn't be in the situation they are in now." That's quite a wake-up call for all of those retirees who were promised secure and affordable healthcare as they neared retirement and used it as a gauge for making a life-altering decision after three or more decades in public service. (It's not as if no one had attempted to alert the STRS Board and Executive Director more than a decade ago that retiree healthcare was in jeopardy without some insight and foresight.)

Mr. Hutras goes on to describe healthcare as the "elephant in the room" no one wants to talk about. Oh, really! Retirees have been talking about it since the late '90's when we lost the spousal subsidy and saw our premiums skyrocket and benefits nose-dive. Knowledgeable retirees talked plenty about healthcare but their anxiety fell on deaf ears stuffed with arrogance and entitlement.

STRS-literates and educated Board members Dr. Dennis Leone and Mr. John Lazares warned of the indiscriminate spending but their prognostications were stifled by a continuing influx of OEA-endorsed and trained Board who became mere rubber stamps for the misguided directions of management. Dr. Leone and Mr. Lazares, in spite of their diligence in researching and publishing factual representations of what was actually going on inside STRS (using STRS's own numbers to corroborate the allegations of mismanagement), were branded as "malcontents" in the early years of forced transparency and then up-dated to "dissidents." Interested parties need only to look at the policy reforms generated by these two bulldogs of oversight during their terms on the Board.

And finally a couple of conclusions which seem self-evident. STRS will never reach its potential as long as the decision-makers (Board and Executive Director) lack a real understanding of how the average retiree feels about being disenfranchised once they leave the active ranks, left with few adjustments they can make in post-retirement to recover from the misinformation many used to measure their irreversible retirement decision.

STRS will never be as successful and secure as it might as long as the staff (our employees) has no genuine investment in STRS. As members of PERS they enjoy a litany of perks that are beyond familiarity of most STRS members. The investment decisions they make have little bearing on their own families' security unless one considers the reduction or delay of a six-figure bonus or a salary that eclipses that of the governor.

As long as ORC 3307.15 is viewed as only an ordinance that must be legally complied with and absent a sense of being a guideline to the ethical treatment of some 440,000 STRS members and their beneficiaries, stakeholders will continue to be at the mercy of decision-makers who may "love them dearly" but not even know who they are. Educators, active and retired, seek not sympathy. Fairness and justice do not seem unreasonable.

Jim N. Reed
1998 Retiree