STRS benefits recipients, you knew this one was coming, didn't you?

From John Curry, February 25, 2014

http://www.dispatch.com/content/stories/local/2014/02/25/strs-funding-letter-doesnt-satisfy-legislator.html

STRS’ funding letter doesn't satisfy pension-board chairman

By Will Drabold

The Columbus Dispatch

February 25, 2014

Managers of the State Teachers Retirement System submitted a letter — not a plan — with possible ways they could pay off unfunded pension liabilities within 30 years, and that’s a violation of state law, according to Rep. Lynn Wachtmann, chairman of the panel that oversees the state’s five pension funds.

But system administrators, who managed the system’s payout of $6.5 billion in benefits to about 149,000 retired teachers last year, say they beat the 90-day deadline by submitting the letter to the Ohio Retirement Council on Friday and complied with the law.

Wachtmann, a Republican from Napoleon, said he wants a plan to reach the 30-year requirement, which he says the letter does not provide.

The council can question the legality of the move by the retirement system’s board but cannot force it to adopt a funding plan. Only the legislature can do that.

Nick Treneff, communication director for the teachers retirement system, said the letter meets state law because it is progressing toward and considering ways to meet the 30-year rule.

That rule, stipulated by the Ohio Revised Code, is often likened to paying off a mortgage, where the system pays down its debt in installments.

“I think this is a very unexpected and unprofessional response,” Wachtmann said. “The (system’s) director himself knew exactly what the expectations were.”

The letter cites pension reform that the system implemented last year, which reduced the time it would take the system to pay off its unfunded pension debt from infinity to 40.2 years.

The letter also details recent discussion by the board about reaching the 30-year requirement, including temporarily shifting $100 million annually from the system’s health-care fund to its pension fund, which would reduce the funding period by four years. The letter also says that strong investment performance so far in this fiscal year could shave off four more years.

“We’re pretty close to 30, and we’re going to stay the course and stick with our pension-reform plan,” Treneff said yesterday.

Not all council members agree with Wachtmann. Rep. Dan Ramos of Lorain, the ranking Democrat on the council, said he believes the system needs to have more time to implement its “ once-in-a-generation” pension-reform plan.

“The fact that we’ve gone from infinity to 40 years, although obviously not there yet, is an incredible first step,” Ramos said.

Wachtmann, whose council does not meet until mid-March, a week or so before the next meeting of the retirement-system board, said he will raise his concerns with House Speaker William G. Batchelder, R-Medina.