Dean Dennis: The STRS Board or Ohio’s Legislature Should Freeze all STRS Bonuses and Salaries

Dean Dennis to the STRS Board, May 17, 2018

Assume that you take in money for 30 years for investment purposes. Then for the next 25 years you have to make annual payments off the investments. So you take in money for 30 years, then pay out for 25 years. Divide 25 by 30, and you get a ratio of 83%, which indicates that you have the monies for pure investment purposes about 17% longer than your payout liabilities.

Now let’s make teachers work 5 years longer. You now take in monies for 35 years for investment purposes, but now only have to pay out for 20 years. Divide 20 by 35 and you get a ratio of 57%, which indicates that you have the monies for pure investment purposes about 43% longer than your payout liabilities. From these two examples, you have gained over 25% in your investment margins. This obviously will significantly decrease your long term liabilities. STRS, by doing this, secured an insurance policy. It was done at the expense of teachers yet to retire. They then secured another insurance policy by withholding their COLA for their first 5 years of their retirement. This is wrong.

Let’s couple the above facts with these undisputed facts. Over every 30 year funding period in the history of STRS, they have exceeded returns of over 8%. So how can they justify lowering their 30 year earnings assumption to 7.45%? This is why our COLA is gone. STRS lowered their achievement standards. Can teachers lower their standards and expect their B students to get C’s, and then reward themselves when they earn a B?

Last year 94 members of the STRS investment department earned annual bonuses in addition to their salaries. Thirty-seven of these bonuses exceeded $100,000. Eight bonuses were over $250,000. Here we are, retired teachers, some with annual COLAs less than $1,000, and STRS is withholding COLAs. Most of us will lose 8 years of COLAs that were promised to us before STRS even reviews reinstating the COLA again in 2022.

Teachers, their families and friends, demand that the STRS Board or Ohio’s Legislature freeze all STRS bonuses and salaries until STRS can come up with a plan to restore our COLAs and make us whole. How STRS is rewarding themselves and treating retired teachers is simply wrong.