'Ohio Federation of Teachers President Sue Taylor said the union hadn’t yet seen the details of the plan'
From John Curry, January 27, 2011
Teacher pensions to change?
By Julie Carr Smyth
Associated Press, January 27, 2011
Associated Press, January 27, 2011
COLUMBUS – Ohio public school teachers would pay a larger share of their retirement costs, work until they’re older and see pension benefits cut under changes approved Thursday that aim to keep their primary pension fund solvent by saving $10.9 billion.
The State Teachers Retirement System board approved a host of changes to the benefit program that serves the bulk of the pension fund’s 470,000 members, more than 15,000 of whom work in Greater Cincinnati. The changes must be approved by lawmakers and the governor.
Spokeswoman Laura Ecklar said the package marks the end of a two-year effort to find a way to keep the pension fund afloat for the long haul. “The bottom line is, without changes, sometime in the future the fund wouldn’t be able to pay benefits. And, difficult as it was to develop this plan and recommend reducing benefits, it is necessary to do,” Ecklar said. “And it still provides a reasonable, reliable pension for our retirees.”
The plan calls for increasing minimum age and service requirements necessary to qualify for retirement benefits and requiring teachers to pay 13 percent of their salaries into the system while receiving reduced benefits and smaller cost-of-living increases. Those payments are made in lieu of paying into Social Security.
Ohio Education Association spokeswoman Michele Prater said the state’s largest teachers union does not support the plan. The union represents about 130,000 teachers, including at least 12,570 in the Cincinnati region.
The STRS board has plenty of company.
Like most public pension systems nationwide, the Cincinnati Retirement System – the only city-funded pension plan in Ohio – faces serious financial challenges.
Heavy losses in the 2008 stock market meltdown, combined with generous benefit enhancements over the years, soaring health coverage costs, retirees’ increasing longevity and other factors, have left the system facing a $1 billion-plus long-term shortfall. Unless major changes are made, experts warn, the $2.1 billion system could be insolvent within two decades.
To stabilize the system, the city’s pension trustees are considering proposals that, among other things, would raise retirement ages, lower annual cost-of-living increases and shift a greater share of health costs to retirees. The trustees are expected to forward their recommendations to City Council for action next month.
Republican state Rep. Lynn Wachtmann, chairman of the House Health and Aging Committee, said Wednesday that he plans to introduce a pension reform bill next week. The legislation is slated to include proposed eligibility and benefit changes to all five of Ohio’s public pension funds.
Gov. John Kasich has signaled he could play hardball on the issue, including opposing pension reforms he does not see as going far enough.
Ecklar said a combination of factors made current pension formulas unsustainable – including the hit to investment losses during the recent economic downturn and longer lives for retirees and their survivors.
Local teachers were wary of the STRS plan.
“Just like with anything else, there’s a lot of fear involved. They’re worried about, ‘How will this affect me when I retire?’ ” said Tim Adams, a sixth-grade teacher at Fairfield Intermediate School and president of the 545-member Fairfield Classroom Teachers Association.
“Personally, I want to be able to retire, and when I retire, to be able to get the money that I invested back,” said Adams. But, “If I’ve got to choose between not having a retirement or a reduced retirement, I’ll take the reduced retirement,” he added.
Some teachers are balking at the prospect of adding years to their expected working careers before they can retire.
“Anyone who has been a teacher or has lived with a teacher knows that it’s an exhausting job,” said White Oak Middle School teacher Melissa Nelson, who is also president of the teachers union local at Northwest schools. She has taught 20 years and had planned for about 10 more. But she’s not sure she’ll stay beyond that if her retirement gets pushed back by five more years.
“Some people may be working up to 60 or 70 years old. But the job is too exhausting for most people to be able to continue it at the same excellence level at that age,” she said.
Ohio Federation of Teachers President Sue Taylor said the union hadn’t yet seen the details of the plan.
The union represents about 20,000 teachers including 2,300 in Cincinnati.
Recommendations approved Thursday would reduce the difference between assets held by the pension fund and what it owes in pension payments to $27.9 billion – an amount the fund could feasibly pay off in the legally required 30 years.
To get there, the board voted to set a minimum age of 60 with 35 years of service as the new threshold for full pension eligibility. Under current rules, teachers can retire at any age once they’ve served 30 years. Members still could be eligible for partial early retirement benefits at 55, but after 30 years of service rather than the current 25.
The new age and service requirements would be phased in over eight years. Members still would be able to retire at age 65 with 5 years of service.
Teachers retiring after 35 years at age 60 or older would receive 77 percent of their final average salary as pension, a reduction from the current rate. The average salary would be calculated over five years rather than the current three, which could reduce payouts further.
The plan does not include any changes to the amount teachers’ employers, including school districts, colleges and universities, pay into it.
Enquirer reporters Denise Smith Amos, Cindy Kranz, Jessica Brown and Barry Horstman contributed.
posted by Kathie Bracy at 9:22 PM
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