SIX GOOD REASONS FOR ACTIVE and RETIRED EDUCATORS TO GET HIGHLY INVOLVED

From Mario Iacone, April 11, 2011

ONE

TWO PERCENT (2%) REDUCTION in BOARD / EMPLOYER CONTRIBUTIONS as part of the Kasich Budget Package. Kasich claims that schools will save 229 million which means that the pension system(s) stand to LOSE 229 MILLION OR MORE IN CONTRIBUTIONS, YEARLY because STRS, as a result of the Kasich budget change, will probably not get the 3% increase in teacher contributions for which they asked. SEE #6.

TWO

FEWER ACTIVE TEACHERS CONTRIBUTING TO STRS DUE TO LAYOFFS. Substantial reductions in teaching staff are occurring throughout the state.

THREE

FOUR PERCENT (4%) PAYROLL GROWTH HIGHLY UNLIKELY. Future STRS benefits are based on a 4% payroll growth. If such growth does not occur, pension benefits will have to be adjusted to make up for the loss. SB 5 may really accelerate the end of payroll growth and probably cause decreases because it will enable the layoffs of veteran teachers and does away with the step increases.

FOUR

EIGHT PERCENT INVESTMENT RETURN NEEDED TO MAINTAIN BENEFITS. All we can do about this is hope that there is no significant downturn in the stock market for many years.

FIVE

NO NEW MEMBERS ADDED TO DEFINED BENEFIT PLAN. This would happen if our Defined Benefit plan is changed to a Defined Contribution plan (401K type plan). Presently, highly unlikely, but, some very conservative legislators keep bringing it up.

SIX

STRS MAY LOSE THE 3% EMPLOYEE CONTRIBUTIONS INCREASE CURRENTLY NEEDED TO OBTAIN THE 30 YEAR FUNDING PERIOD because the Kasich budget already increases employee contributions by 2% to offset the 2% employer decrease. State Rep. Lynn Wachtmann, who proposed the bill already in the legislature....................does not think the legislature will increase employee contributions by 3 percent on top of the increase to 12 percent that Kasich proposed.

HIGH DEGREE OF INVOLVEMENT MAY DETERMINE WHETHER active and retired educators wind up with the BEST CASE SCENARIO or the WORST CASE SCENARIO regarding the FUTURE AMOUNT OF THEIR PAYCHECKS.