Monday, March 20, 2017

Bob Buerkle's speech to STRS Board, March 16, 2017

To STRS Board Members and 512,583 other STRS Members:
Everybody can understand that when your investment experts did not prevent the loss of 48% of our pension fund during the "Great Recession," some long term repair had to be put in place.  The STRS Board took the easiest way out.  They hit the easy button.  First they killed the COLA for a year for retirees.  They also killed the COLA for five years for retirees after July 1st, 2013.  Then they reduced the COLA by a third thereafter for every retiree.  Now the STRS Board is seriously looking at a vote to cut the 2% COLA by another 50% to 100% at their Board meeting on Thursday, March 16th, 2017.
STRS claims that they are acting as our fiduciaries.  A fiduciary is supposed to have your best interests foremost in their mind.  They should use every option available to them in order to deliver on the promises they have made and which deliver on our expectations regarding our financial needs.  They did not!
Question: How could it be possible that retroactively reducing promised pension benefits was in our best interests?  This funding crisis could have been solved using the same strategies that New York, Georgia, Colorado and 29 other state pension systems used to solve their financial problems.  For the most part their rule changes applied only to new hires, while they left the promised benefits to retirees and current workers intact. These options were explained to the STRS Board by Bob Buerkle and others but the Board ignored their recommendations.  Bottom Line:  STRS had tools available to them that they never considered using.
As an STRS Board member your job is to be the best fiduciary you can be and represent all current teachers and all retired teachers.  It is not, and never has been, your job to be a fiduciary to anyone who is not a member, anyone who has never been a plan participant, anyone who has never paid the required STRS contributions from their paychecks.  It is also not your job to be a fiduciary to any “maybe I want to be a teacher when I grow up” third grader.  Those future new hires will have to be offered a new pension plan that STRS can afford after the promises to current workers and retirees are fulfilled.
The only fiduciary obligation you have is to the current vested members working towards retirement and the current retirees who are already there.  You might very well think that you are doing the best thing for our members and they should be appreciative of your efforts.  Instead, current workers, who are looking at the additional 5 to 8 years of required work before they can get an unreduced pension, coupled with all of the COLA betrayals for future and current retirees, think differently.  The STRS solution choices have also created great animosity between actives and retirees as well as Employers who must now budget for 5 to 8 year career extensions for their highest paid teachers.  STRS actions, if not reversed, will force every Ohio School district to find taxpayer support in the form of new levies that STRS has forced them to seek.
The 2008 “Great Recession” was a once in a hundred years “Black Swan” event, but you act like it will soon occur again.  Thinking like that is wrongheaded and unnecessarily punishes all STRS Members.
STRS needs to rethink, rework and undo the damage being done to all current and retired workers, as well as with every school district in Ohio.
Instead of voting on more carnage towards our members, stiffen your backbone and stand up to Legislators for us.  Table any proposed changes and direct the Actuary and your Investment advisers to develop a 30 and a 35 year Investment return plan to mirror the S&P 500 returns, along with a new retirement plan for new hires.  As fiduciaries for our members, any plan that does not restore all lost COLA benefits within 3-5 years should be considered unacceptable to the STRS Board.
Submitted by Bob Buerkle 
2003 Cincinnati Retiree 
Former CFT Retirement Chair
(Click images to enlarge)

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