Bob Buerkle: STRS is bullying our members

Bob Buerkle’s speech to STRS Board
May 16, 2019 

The Bullies at 275 East Broad Street

From FY 2003 through FY 2011 STRS used an earnings assumption rate of 8%, which was reasonable since our 30-year average investment returns were over 8.6%. Our unfunded debt in 2003 was $17 billion and we were 74% funded. Today we are 76-78% funded. Of course, a 3% COLA was always paid during these years. For FY 2012 STRS decided that the investments could only earn 7.75%. This unnecessary lowering of our earnings expectations added more than $15 billion dollars to our debt! Can I really say unnecessary? Well, I think so, since we averaged 12.82% between 2010 and 2012, why did we have to lower the Earnings Assumption Rate downward from 8% to 7.75% on 07/01/2012? Then for the next 5 years STRS averaged a 9.2%return, but STRS chose to lower the EAR again, this time to 7.45%. In the 2 years since then we’ve earned 11.93%. In six weeks and for the last 10 years, as of 07/01/19, STRS will have averaged just over 10%. That’s more than 25% greater than your current EAR! 

After 41 straight years of COLAs, STRS sought and was legislativelly granted the authority to adjust and pay or not pay future COLAs. We all know how disastrous that has turned out.

On March 19, 2015 the STRS Board voted to pursue 100% funding. The actuary said that at the current 7.75% expected investment return at the time and at 29 years remaining in the funding period, STRS could expect to meet its goal over a 30-year time frame (think 2045), improving the funded ration by about 1% per year and reducing the unfunded period by about 1 year each year. Two years later STRS was making such rapid progress that they had to act to slow their progress down by lowering the earnings assumption rate again, this time to 7.45%. This worked to slow their progress towards 100% funding because this move created another $11 billion of debt. To solve the new debt liability STRS chose to eliminate the COLA. By the way, since 1981, when more of our STRS Portfolio was allowed to be invested in stocks, our current 7.45% Earnings Assumption Rate is the lowest it has ever been.

The historical cost of COLA payments to all retirees is about 25% of total pension payments. STRS has been keeping most of our COLA since 2013, but now they are keeping all of it. Without COLA payments your pension will never increase. The only account that will grow is the STRS account.

I have a question for our retirees here today. Do teachers like bullies? NO! In fact, we loathe bullies. Let’s face it, STRS is bullying our members. They are forcing their will upon us. Bullies take, take, take and are never satisfied. Look at what they have done to us. Soon teachers will need to work 5 to 9 years longer and also be age 60, have 5 to 9 fewer pension years, pay much more in contributions, receive no COLA until age 65 (IF EVER, LIKE US!), and receive 25-50% less in total pension payments than retirees received over the past 30 and 40 year periods.

Teachers stand up against bullies, and we are standing up against you today. We will not let you continue to run roughshod over us and our colleagues. Expect more reactions from us, our colleagues and our fellow retirees because FOR EACH OTHER, WE CARE, WE SHOW UP, WE FIGHT AND WE VOTE!