Dennis Leone’s speech to the STRS Board February 16, 2017

Is the COLA a gift? 

There may be some current board members who consider the COLA a gift, like the 13th check was. For all those who retired prior to 2013, the COLA was a legal, statutory, guaranteed part of their pension. Ohio law did not say that the Board “may” provide retirees with an annual COLA of 3%, it said the Board “shall” provide retirees with an annual COLA of 3%. By securing Legislative permission to eliminate it for one year, and reduce it to 2%, in subsequent years, the Board broke a promise to thousands of retirees. My COLA was promised to me. While the change in the Ohio Revised Code certainly permits the board to do as it wishes with new retirees, there could very well be a future legal question pertaining to whether such a new law also can take away what had been guaranteed and promised to retirees. The one year the COLA was eliminated completely, my 88-year-old mother-in-law had to borrow money to pay for her increased car insurance and her increased home insurance, and I doubt that any STRS Board member or STRS staff member had to borrow money for that purpose. Now there is Board discussion pertaining to the possibility of reducing the COLA again. Where is the Board commitment to protect my 88-year-old mother-in-law – and the oldest retirees who have the least?

Payroll Growth 

As an STRS Board member for nearly 4 years between 2006 and 2009, I repeatedly objected to the Board’s acceptance, and the staff’s acceptance, of projected payroll growth data offered by hired outsiders. I said repeatedly that the Board’s consultants were not correctly interpreting the realities facing Ohio school districts, and my publicly stated concerns were confirmed. Year after year, STRS has significantly over-estimated payroll growth. It was a miserable 1.33% aggregate average between 2005 and 2013, when the Board was using an assumption of 3.50%. Had the Board and staff been responsive to the advice that was contrary to the advice offered by non-school consultants, and had the Board implemented its 2012-13 action plan in 2006, or 2007, or 2008, STRS would be in far, far better shape financially than it is today. 

Recipients of 88% Benefit and COLA Related to Same 

Between 2000 and 2015, retirees with 35 years of service received the famous 88% benefit. It was a profound insult to pre-2000 retirees with 35 years of service to be held to a 77% benefit. The reality of this is that for the past 17 years, those who got the 88% benefit also have been receiving a COLA based on 88% of their final average salary, while the pre-2000 retirees with 35 years have been receiving a COLA based on 77% of their final average salary. Given the truth of this, it would be another stab in the back of the pre-2000 retirees with 35 years to get hit with another COLA reduction. The Board should eliminate that COLA for the 88% benefit recipients completely, or – at the very least – have future COLAs for this group recalculated and based on 77% of their original final average salary. Given the conditions summarized above, the STRS Board and staff owe it to retirees to consider options other than reducing the COLA that was statutorily promised to them when they retired. It is simply unacceptable for you to conclude that our COLA has to be solution. I need to add one more thing: Just before lunch this morning, I listened to a Board consultant who shared data about how many retirees are currently working, as if that might be important information to for the Board to consider. I certainly hope the Board is not going to demonize retirees who are working part-time to improve their standard of living…….a part-time job is NOT a justification to reduce a retiree’s COLA.