Points made by Bob Buerkle in his February 2017 speech to the STRS Board

From Bob Buerkle, March 21, 2017

Kathie,

Here are the points I tried to cover at the February STRS meeting and you can post them.

As usual, the 3 minutes of time that STRS allows speakers goes by so fast that you can never get through all of you points, let alone any in-depth understanding of our suggestions.

Here are a few of the points I brought up.  I did not give the STRS a written copy of my speech.

1. I gave the Board the history of the last 50 years of their actuarial assets, unfunded liability, the funding period in years (which have ranged from 14 years to Infinity) as well as the funded ratio which has ranged from a low of51% in 1979 to a high of 92% in 1999 & 2000. What this showed is that STRS was over 30 years of funding in 26 years (plus 4 more when we were at infinity).  It also showed that STRS had a funded ratio of 56% in 2012, the year new pension system legislation was passed.  However, in 4 other years STRS had a lower funded ratio and they were not considered to have a funding period at Infinity.

2. I also presented a revised copy of what has become known as the “COLA Tree” that visually explains how the COLA benefit adds up over the years.  In example #1, it shows that up until 01/07/2013 the Ohio Revised Code 3307.67 said that “The State Teachers Retirement Board shall annually increase each allowance or benefit payment …by 3%”.  I told the Board that because of the changes affecting retirees and active teachers, STRS is not, and can no longer be considered, a top quartile pension system.  Example #1 also shows that, in the past, a teacher fortunate enough to live 33 years into retirement would live to see their original pension double.  As my Example #2 COLA Tree shows however, is that retirees have lost over one third of their original COLA benefit and for those retiring beyond 08/01/2013 who receive no COLA for 5 years will never the 55 years required to double your original pension.  It also shows that all of the newest retirees with a $50,000 pension will lose $519,000 due to their shortchanged pension payments if they live 33 years after retiring.  That equates to over 10 times their original $50,000 pension benefit.  That’s exactly the same as having no pension for 10 years.

3. I did not have time to explain 5 reasons that retirees from 40 years ago received much better benefits than today’s retirees, including structurally, financially, kept promises and benefit improvements.

4. I also have ideas that I could not get to that could significantly improve their funding period and funded ratio.

Bob Buerkle