Sunday, January 13, 2013

Dr. Leone addresses STRS concerns of a teacher looking at retirement

From Kathie Bracy and Dennis Leone, January 13, 2013

Hi (xxx)--
Thank you for writing. I forwarded your concerns to Dennis Leone (former STRS Board member, 2004-2009, currently running again), as he is the best one I know to address them. Here is his response; while there are no good answers, unfortunately, I hope this gives you some insight into what's been going on at STRS:
Kathie –
I have reviewed Mr. (xxx's) email below. He feels the same way many retirees do about a lot of changes that have occurred since 1999 – the 88% benefit enjoyed only by those retiring after 1999, the 13th check disappearing in 2000, health insurance for retiree spouses being taken away completely in 2003, huge annual increases in STRS health insurance costs to members at the same time 600 STRS staff members are getting giant increases in pay and benefits, and – most recently – major cuts in our annual Cost of Living Adjustment (COLA).
Now, as Mr. (xxx) points out, retirees in the future will need to be older before they can retiree, and they will receive no COLA at all for the first 5 years of their retirement. Many retirees have looked into possible litigation since 1999 on the basis of broken promises, but none have been able to get to first base. It is simply because since STRS is a creature of the Ohio Legislature, changes can occur at the pleasure of our elected lawmakers. In fact, it is worse in some states where the state legislature has “borrowed” money from the state pension systems to do other things, only never to pay it back. There have been past years in Ohio when certain legislators wanted to tap STRS funds for their pet projects, but – fortunately – they failed.
I personally believe that the changes affecting future retirees like Mr. (xxx) would not be as severe if the STRS Board had developed contingency plans when stock market returns were so good in the late 1990s and early 2000s. For example, a minimum age 55 for retirement is a regulation nearly all states but Ohio have had for decades. That could have been phased in around the 2000 in Ohio, and STRS would be in much better shape today.
The board and STRS staff were not interested in making pension solvency decisions in years past because, in my opinion, it would have been an unpleasant task. OEA would have fought against any changes anyway. OEA even fought me as an STRS Board member in 2009 when I pushed for restrictions pertaining to when STRS investment staff members can qualify for bonus checks.
Litigation now to stop the new regulations at STRS? It would be a very difficult task. Maybe there is a law firm somewhere with particular expertise in this area. I am not aware of one, and certainly not in Ohio. I worry sometimes about lawyers who act like they can do things legally, but all they end up doing is getting retirees to give them money.
Dennis Leone
It is also my understanding if the new age requirement did not occur in the future (even though a different version should have been implemented 10 years ago), all of us would see our base pensions CUT in the future.
I hope you will read my blog some more to see why six STRS Board members and one Executive Director back in the early 2000s (when many of the policies hurting all of us today were put in place) were found guilty and convicted of ethics violations. We will all pay for their greed for a long time to come.
Larry KehresMount Union Collge
Division III
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