More thoughts from Dennis Leone.....

January 25, 2011

I hope a Board member will ask the STRS staff to put together projections for eliminating the COLA for ALL FUTURE NEW RETIREES. We are talking about the current 175,000 active members, which means that the long term impact will be very, very substantial.

Think about how much more money the active teachers are making than current retirees. How many of them even know that they are due to receive a yearly COLA upon retirement? Almost none. Removing it would be "taking away" something they have never had and are not even expecting. If Tim Myers and folks try to imply that active teachers are planning on their COLAs upon retirement, the real truth is that probably 99.9% are NOT. They don't even know it exists. I didn't.

It is very dangerous for the board to adopt a plan that, ON PAPER, solves the 30-year unfunded liability problem, but the truth is that the plan is driven by a quiet, invisible HOPE and a PRAYER that the 4 charts will somehow improve on their own. It isn't going to happen.

A solution is possible and retirees do not need to be slaughtered by it. If the suggestions I offered at the end of my report are used, along with some of the other things the Board has under consideration (i.e. age requirement, and perhaps a 0.5% cut or 1.0% cut in current retirees' COLA, etc.), then the liability problem is fixable.

Dennis Leone