Saturday, July 27, 2013

Wachtmann vs. STRS - Article II (Why are we not surprised?)

From John Curry, July 27, 2013
Ohio lawmaker at odds with pension system
July 27, 2013
A lawmaker from northwestern Ohio and a state employee pension system are at odds over increased contribution rates that took effect earlier this month.
State Rep. Lynn Wachtmann of Napoleon, R-81st, who serves as chairman of the Ohio Retirement Study Council, says the State Teachers Retirement System of Ohio is breaking state law by upping employee contributions into alternative retirement plans, which are open to public college and university faculty.
He wants STRS to cease and desist post haste.
“This policy is merely robbing Ohio professors of money that they have rightfully earned,” Wachtmann said in a statement last week. “STRS’s failure or refusal to suspend this policy is unfair to the educators it affects and is disrespectful to the rule of law in our state.”
But STRS counters that the changes, adopted by its board earlier this year, are legal and proper.
“STRS Ohio disagrees with the recent allegations levied against the retirement system and maintains the recent increase in the ARP mitigating rate was made in accordance with Ohio law,” according to a statement released by Nick Treneff, the system’s spokesman.
STRS administers retirement benefits for primary- and secondary-school teachers and college and university professors. Most of those members are enrolled in a defined- benefit plan, or pension. Others opt to participate in defined contribution plans, comparable to 401(k) plans, or alternative retirement plans, which are open only to full-time college and university faculty.
As of June 2012, there were more than 168,000 participants in the STRS pension program. Another 7,954 opted for defined contribution plans, while 5,398 faculty members enrolled in alternative retirement plans. Earlier this year, STRS OK’d an increase in employee-contribution rates into the latter two programs, upping them to 11 percent from 10 percent.
Wachtmann said state law allows STRS to increase that mitigating rate for defined-contribution plan members but not for those enrolled in alternative retirement plans.
The Ohio Retirement Study Council, which he heads, instead has “exclusive authority” to adjust those rates, he said, citing an attorney general opinion on the issue.
Wachtmann wrote, “STRS is acting outside its legal authority and should immediately suspend such action. … It is very disturbing that STRS is ordering Ohio’s public colleges and universities to knowingly break the law. I share their concern in maintaining the ability to attract and hire the best and brightest educators in the country, something that may be hindered by STRS’s current and defiant act.”
Treneff said STRS officials met with Wachtmann this week and plan to meet again with him to discuss the matter further.
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