(Hamant to Ecklar) Fw: Response to August 13, 2010 STRS Letter

Nancy Hamant to Laura Ecklar, August 31, 2010
CC: NehfM@strsoh.org, HaydenT@strsoh.org, craig_brooks@sbcglobal.net, BurchR@strsoh.org, tmyers@bright.net, jmcgree@columbus.rr.com, correthersc@strsoh.org, deborah.deslisle@ode.state.oh.us, MartinD@strsoh.org, bobstein@bobstein.us, HillMA@strsoh.org, priced@strsoh.org
Subj: Re: Response to August 13, 2010 STRS Letter
(See letter here)

Dear Ms. Ecklar:

Thank you for sending information regarding the actuarial valuation process for the STRS Pension fund.

Without a doubt, the proposed COLA reductions for current and future retirees is the "most significant of all the levers the board evaluated"--$6.6 Billion (COLA reduction) of the $9 Billion (total) proposed to address the STRS Pension Fund's unfunded liability. The $6.6 Billion COLA reduction to current and future retirees amounts to 73% of the amount needed to reduce the unfunded liability.

Therefore, $2.4 Billion is the amount to be generated by the other four levers: 1. an increase in contributions;
2. an increase in final average salary years; 3. a change in eligibility for retirement; and 4. a change in the benefit formula (benefit enhancement). A breakdown of the savings (or costs) for each of these four levers within the $2.4 Billion is important in understanding the effectiveness of each.

Also, the reduction to the COLA is the only proposed lever to be started in 2011. What is the cost to rescuing the unfunded liability of the STRS Pension Fund due to the other levers not starting until
2015?

As I stated in my letter/email of Aug. 25, 2010, the STRS Pension Fund unfunded liability absolutely must be resolved. However, it must be resolved equitably for all STRS members.

Again, thank you for your explanations.

Sincerely,
Nancy B. Hamant