Another editorial in the Dispatch re: Ohio STRS

http://www.dispatch.com/content/stories/editorials/2014/01/20/pension-needs-adjustments.html

Short takes: Pension needs adjustments

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Dispatch editorials express the view of the Dispatch editorial board, which is made up of the publisher, the president of The Dispatch, the editor and the editorial-writing staff. As is the traditional newspaper practice, the editorials are unsigned and intended to be seen as the voice of the newspaper. Comments and questions should be directed to the editorial page editor.

Monday January 20, 2014

News that Ohio’s State Teachers Retirement System is even more off the mark in meeting its future obligations should prompt immediate action, not a wait-and-see, fingers-crossed approach.

In November, a consultant hired by the fund said it would take 36.1 years for the system that serves almost 500,000 current and retired Ohio teachers to pay off its unfunded liabilities. That meant that the fund was out of compliance with state law, which requires that public pension funds be able to meet their obligations within a maximum of 30 years.

But now, the situation has gotten even worse; the consultant, Segal Co. of Chicago, made a miscalculation during last year’s actuarial study. The funding period actually now stands at 40.2 years.

Because STRS already was out of compliance at the 36.1 years, its board is to present a corrective plan to the Ohio Retirement Study Council by Feb. 24. It should take into account the new projections and work to comply with state law. It is possible that members might have to take further benefit cuts or make higher employee contributions.

The state mandate isn't arbitrary. It is a protection for Ohio’s public employees, assuring them of the financial security they are counting on when they retire.

While Ohio’s retirement funds are not in immediate danger, others around the country have gotten into serious trouble by waiting too long to address unhealthy trends.

This four-year error is only a serious problem if the retirement system fails to take it seriously. Making adjustments today can ward off far more painful adjustments later.