Dean Dennis: Why STRS retirees do not have a COLA

Dean Dennis to Rudy Fichtenbaum

March 4, 2021

Subject: Re: STRS investment returns

Rudy, thank you for your dive into how STRS manages our investments. I can only echo Bob's response.

The majority of our Board doesn't take the time to question STRS. STRS is set in their culture and protects their huge bureaucracy. This in turn leads to unnecessary expenses, fees and risks. This is exactly why retirees do not have a COLA.

Bob mentioned Nevada. Nevada has a streamlined investment model that out-preforms STRS in both their returns and fee structure. Nevada's teachers retire after 30 year at any age with a 2.5 formula. Once they retire, their COLA kicks in at year 3, but then receive a compounded COLA. The COLA starts at 2% but increases each year until it is capped at 3%. Again this is a compounded COLA. 

Dean