Bob Buerkle's speech to STRS Board, October 14, 2010

A great deal has changed since the time the STRS Board began developing its "Contingency Plans". Since March, 2009 when the STRS Investments hovered in the low 42-45 Billion dollar range, STRS has paid out over 6.6 Billion Dollars in pension benefits. During this same timeframe the STRS Portfolio has increased by over 15 Billion more and now stands at over 61 Billion. That is nearly a 50% increase in STRS Investment growth even as pensions were still being paid and COLA's remained unchanged. Knowing these facts nearly anyone can deduce the reality that we have made great progress in 18 months. We may still need a contingency plan but for sure we no longer need the same plan this Board and Staff developed in 2009.

Even though we have had the best September for investments in 71 years, had a great first quarter and a very good start here in October, we are still not out of the woods yet. Also, there is always the possibility that the market could retrace some of its progress. This is always a possibility and I am sure that this is already factored into long term STRS actuarial planning.

What I am saying is that we need to slow this process down as long as we are making good investment progress. If we don't do this the current plan will overshoot our solvency needs and our actives and retirees will suffer more pain than is necessary.

So far I would say the intentional Legislative delays may have BOOKed us a BLESSING in disguise.

Additional comments from Bob Buerkle (not included in his 10/14/10 speech at STRS): An explanation of our pension plan vs. Social Security

At a Hamilton County ORTA meeting on September 27th Senator Bill Seitz said people in private pension plans do not get a COLA and they don't understand why we do. Legislators like Seitz should explain that we are in a State Plan as an alternative to Social Security. Our plan is in lieu of Social Security and that is what it should be compared to. Unlike the general public who may have a private retirement plan in addition to Social Security, we do not pay into or qualify for Social Security from our teaching wages and we have no private company sponsored plan.

In Ohio, by the way, our Pension is all paid for by us as part of our deferred wage compensation package that requires our money be sent in through employer payroll deductions. Also, we must contribute nearly double the amount of our own money to fund the pension that we have as opposed to what Social Security charges. That is why our pensions are usually larger than Social Security Pensions and envied by non-participants. If the general public wants a pension comparable to ours they will have to save an additional 12% of their gross earnings for 30 or more years and earn 8% market returns on their retirement accounts. This is what we do. By the way, all of you who have Social Security know that it pays you a compounded COLA. We do not get a compounded COLA. Our simple COLA raise never increases. Now the legislature wants to eliminate one third of our simple COLA.