Dean Dennis to STRS Board: This isn’t ethical. We need your help

Dean Dennis’ Speech to STRS Board
April 18, 2019

My name is Dean Dennis. I retired with 35 years. I am the STRS Chair for the CFT-Retirees Chapter and the spokesperson for Ohio STRS Member Only Forum.

The STRS membership is nearly equally comprised of retired and active teachers.

Here is a 16 oz container [holding up a water bottle]. It represents the STRS retirees. It’s 100% full, or funded, due to retired teachers having contributed to STRS for 30 years or more, along with their employers. For at least 30 years you have had these contributions for investments and used them to average earnings of over 8%.

For every 30 year funding period, you always earned over 8%, although you have always assumed you would earn less. So in short, you exceeded your investment goals.

Investment goals are set to meet monetary promises to retirees, a COLA being one such promise. A COLA has been promised since 1971; it was even built into the STRS pension formula. Of note: in 1971, STRS was 59% funded.

Here is another 16 oz container. This represents the active teachers. It’s only 40% full, or funded. This is because the average active teacher in Ohio has only made contributions for 12.5 years. Therefore, STRS will still be receiving an additional 20 years of their contributions. Active teachers cannot be 100% funded from their monies while in the process of making contributions. If this container were to become 100% funded, it should only happen from total investments over a very long period of time and from good stewardship. It should never happen by diverting deferred compensation monies earned by and promised to retirees.

Now here is a 32 oz container [larger water bottle]. This represents both the retirees and active teachers when combined. Combined, the container is about 70% full or funded. Being 70% funded and having a 30% liability is actually the norm for a public pension system. The 30% liability exists because the retirement system makes future pension promises to new hires. This creates a needed liability. In public education active teachers become retirees and are replaced by new hires; there is always a flow of new contributions coming in. it is a dynamic system.

In closing, at the March Board meeting you stated your objective was to become 100% funded. I asked, “How are you going to do this when 170,000 of active teachers, on average, owe STRS more than 20 years’ worth of contributions towards their pensions?”

We know the answer; in fact, we are experiencing it. Your 100% funding objective cannot be shared by those you serve by the way you’re going about it. It’s just wrong. It’s worse than any collective bargaining agreement being violated.

Your retired peers are being irreparably harmed while being robbed of their deferred compensation: their COLA. This isn’t ethical. We need your help.

Thank you.