Bob Buerkle to STRS Board: A way to meet the 30 year funding mandate

From Bob Buerkle, January 19, 2011
Subject: Letter to STRS Board Members and STRS Staff

In the January, 2011 Legislative News Report by Terri Bierdeman we get a picture of the approved changes happening in 27 other State Pension Plans. Of the 27 plans covering 23 States we see that 18 of them have created plans that have “new rules for new hires”. In five of the remaining nine plans where changes are being imposed on retirees and current workers, lawsuits have already been filed. More lawsuits will follow.

In looking at the alternative scenarios discussed at the January 13, 2011 Board meeting they all create a new Tier with a lower formula as well as age, final average salary and service requirements for future retirees. If you plan to create a new Tier I would suggest the Board look at the savings if the new rules applied only to new hires. If your scenarios applied only to new hires I think they all would come up short of the 30 year funding goal unless you also added something like Georgia did. The Georgia Plan for new hires has no current guarantee to provide for a COLA for new hires after retirement. If STRS added this change for new hires, to the scenarios you are currently looking at, STRS would be able to meet the 30 year funding mandate.

If STRS took this approach our current workers and retirees would remain whole, and all future strategies and energies going forward could be devoted to improving the benefits for the New Hires to be as close as possible to what we currently have. STRS would avoid wasting millions of dollars on litigation, using the money that rightfully should be spent for the benefit of our members, rather than against our members.

Bob Buerkle
STRS Retiree
Former Retirement Chair,
Cincinnati Federation of Teachers