Dennis Leone responds to an STRS retiree re: pension concerns

From Dennis Leone, April 4, 2011
Subject: RE: pension suspension

[XXX] – Kathie Bracy forwarded your email to me for a reaction. As retiree John Curry said in his response to your concerns, Ohio law is SUPPOSED to protect our annual pensions. While a legal challenge could be made that they can’t be reduced by the Ohio Legislature in the future, our lawmakers certainly have the power to change existing law. STRS is a creature of the Ohio Legislature, going back to 1927. There have been several times in the past 20 years – to illustrate the Legislature’s power – that lawmakers proposed raiding the STRS coffers to help erase other deficits in Ohio. Each time this was considered, however, there were enough votes to stop it from happening.

Frankly, I worry more what the STRS Board can do and might do. If there is another significant stock market crash due to some big external event, I really don’t know how it is possible for our pensions NOT to be cut. Yes, the STRS board would have to get Legislature approval for such a cut, but I believe that it definitely would happen it is ever recommended by the STRS Board. When I served as an board member, it always upset me when my fellow board members and STRS staff members preached “all is fine” and “your pensions are secure.” This was shortsighted on their part, and their optimism was driven by great stock market returns STRS experienced in 1990s and early 2000s. All of the changes now on the table for the future (increasing what actives pay, increasing the minimum age of retirement to 60, changing the final average salary calculation from 3 years to 5 years, eliminating the stupid 88%-35 year benefit) all are things that should have been done in years past, even when times were good. I personally oppose reducing our COLA, and I feel more should be done to protect the oldest STRS retirees who have the least, but I am convinced that at least a 1% reduction in our COLA (if not more) will happen for sure, and very soon.

So you know, in all of the talks I have had with legislators and STRS Board members in the past year, not one person is advancing a plan to actually reduce our annual pensions. My take is that such will NOT happen, at least not in the immediate future. If there are new stock market problems, or if there a significant reduction in what STRS “assumes” will be received annually from active members (due to fewer members or reduced raises), I think we will have to kiss our annual COLA goodbye completely. I hope this won’t happen, and I will do everything I can to fight it, but I think we have to be prepared for it.

Hope the above was at least informative.

Dennis Leone
STRS Board Member, 2005-2009

From an STRS retiree, April 1, 2011
Subject: pension suspension

Dear Kathy Bracy,

I am a retired teacher, as are most of my friends. We are very disturbed by the latest actions of the legislature here in Ohio and fear for the future of public education, as well as the for the future of career educators. We have followed the changes being made to the pension and the proposed changes. What has never been made clear to those of us already in retirement is how much will impact our pensions. We know that rising health costs will impact them and also that we can not expect cost-of-living increases. But can the State of Ohio legislators legally decrease or, most frightening, suspend the paying out of pensions altogether. This has come up in our discussions and we can not find it addressed any where. Is that because no one knows if the existing pensions could justifiably be decreased or phased out? Your take on this would be greatly appreciated

[XXX]
Dublin