Wayne Clark to STRS Board: Fiscal Calendar vs Annual Calendar COLA Suspensions

October 16, 2017 

Dear Chairman Hill and Members of the Board,

Copied below and attached is Bob Buerkle's and my newest version of a chart that illustrates how the use of the Fiscal Calendar method instead of using the Annual Calendar method to suspend retirees' COLA produces a huge financial loss for the July through December retirees. The sooner you financially reconcile with the July through December retirees the better!

Respectfully,

Wayne Clark
STRS retiree 

STRS July - December Retirees Suffering Huge Additional Losses Compared to Other Retirees

The examples below reflect retirees that retired in 2012 with a $40,000 pension and a $1200 annual COLA.  The first two January-June and July-December columns (A and B) show that the STRS retirees would have been granted the same dollars if STRS had implemented the COLA suspension on January 1, 2014 (using the Annual Calendar) and reinstated the new 2% COLA on January 1, 2015.  The result of STRS's implementing suspensions on July 1st (using the Fiscal Calendar) is illustrated in Columns C and D.  STRS's use of the Fiscal Calendar for suspension implementation results in an $8400 loss for the July - December retiree.

COLAs began being paid on retiree anniversary dates in 1971 at 1.5%, but since 1979 and until July 1, 2013, an annual COLA of 3% was paid each year to nearly all retirees every year since.   

The SERS System is asking for a January 1, 2018 COLA cessation date.  It would eliminate the financial inequity that the STRS plan has promoted.

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