STRS featured in Dispatch
From John Curry, April 24, 2012
Teachers’ plan to shore up pensions has them paying more, getting less
By David Eggert
The Columbus Dispatch, April 24, 2012
ShareThis Ohio teachers would pay more into their retirement funds and retirees would get no cost-of-living increases in their pensions for a year under a revised plan being pitched to shore up educators’ statewide pension system.
The reform package is the fourth version sent to lawmakers for their approval since 2009. The Ohio Senate finally could vote as early as May, though that is not certain, and the House is unlikely to do anything until after the November election.
Teachers’ salary contributions to their retirement funds would rise from 10 percent to 14 percent over four years, more than the 13 percent rate proposed earlier.
Another revision — requested by legislators and groups representing educators and employers —would smooth out a potential “cliff” to address concerns that eligibility requirements could have changed too drastically in a short period of time.
Under the new plan, unanimously OK’d last week by the board of the 470,000-member State Teachers Retirement System, teachers could retire at any age until mid-2015 and get a full benefit if they have worked 30 years. The years-of-service requirement would gradually rise, though, so that after mid-2026, teachers could not stop working and receive a full benefit until they are 60 and have 35 years in.
Annual cost-of-living raises in pension checks would drop from 3 percent to 2 percent, with retirees receiving no increase at all in the 2013 fiscal year. Teachers retiring in August 2013 or later would not get a cost-of-living raise for five years.
“We know that every individual is not going to be happy with the results,” STRS spokesman Nick Treneff said yesterday. “But we think we have a good understanding among active teachers, retirees and employers that changes needed to be made to ensure our solvency going forward, and these changes are in the best interest of all the plan participants.”
The new plan — designed to save $13.3 billion in accrued liabilities — is supported by Healthcare and Pension Advocates for STRS, a coalition of unions and employers that opposed earlier versions of the funding plan.
“I think we really have found the sweet spot where the burden is being shared in an equitable way,” said Bill Leibensperger, vice president of the Ohio Education Association, the state’s largest teachers union.
He applauded Senate President Tom Niehaus’ desire to pass pension reform before the summer break.
“I would encourage all lawmakers in both the Senate and House to come together on this quickly. One of the greatest frustrations has been that the longer it takes to come up with a solution, the more expensive it gets.”
Ohio law requires the state’s five pension funds to be able to pay off their obligations in no more than 30 years. The teachers’ system, however, currently cannot do so for nearly 38 years because of a number of factors, including retirees living longer, rising health-care costs and the 2008 stock-market collapse.
Like other plans needing to meet the 30-year requirement, the teachers’ pension fund first submitted funding proposals to the legislature in 2009 that called for higher retirement ages, bigger deductions from employee salaries and lower cost-of-living adjustments. A proposal to also make school districts pay more was scrapped because of opposition from Gov. John Kasich and others.
Angela Meleca, spokeswoman for Niehaus, R-New Richmond, said “considerable progress” has been made in talks among Republicans and Democrats and with the pension funds. But she said Niehaus is looking at whether there is enough time to have hearings and final votes by the end of May.
“We’re trying to determine if we can get this done by the summer recess considering the volume of all the policy initiatives we are trying to work on moving through,” Meleca said.
posted by Kathie Bracy at 12:33 PM
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