Saturday, August 17, 2019

Bob Buerkle to STRS Board: Why do retirees continue to be denied a COLA?

Bob Buerkle's speech to STRS Board
August 15, 2019

5 STRS Board Actions that Continue to Hurt Retirees

STRS missed the payroll growth assumption.  The 3% figure they had the actuary use missed the actual 4% growth rate by 25%, making the liability of our pension system look larger than it really is.  

The low inflationary period we have been in will not last forever.  The average inflation rate for the past century is a compounded rate of just over 3%. STRS Retirees could suffer greatly in the future because of this action. 

Retirees have had their COLA reduced to 0% by STRS actions. The STRS COLA was never compounded.  ORC 3307.67 says that STRS “SHALL” pay a 2% “Simple” COLA annually. This change in Ohio Revised Code has cut another third from the original benefit that was promised during your career and up through the COLA change of 2013. Meanwhile, massive bonuses, one over $400,000, are still paid to STRS Employees.

STRS lowered the Earnings Assumption Rate to 7.45%, which is about 3% less than our actual returns of 10.25% since the change was implemented 3 years ago.  It is also over 3% less than the average STRS returns for the last 10 years.

Finally, STRS investment portfolio return results, could have been as much as 30% higher by simply investing more in the same equities, all because the STRS chose to reduce their “Stock Exposure” from 73% down to just 51%.  (73% – 30% = 51%)  Was this done to slow our recovery and justify STRS actions?                           

Even with these policy changes, STRS has just completed another Fiscal Year and the results show that the ten-year investment return average is now 10.61%.  That is 315 basis points more than Callan Associates, the STRS investment advisers, have projected they would earn on the total portfolio. 

The Question is, why do retirees continue to be denied a COLA?
Larry KehresMount Union Collge
Division III
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