Bob Buerkle's speech to STRS Board 02/17/22: Sometimes watching how STRS management and their advisors operate is like watching someone play “Whack-A-Mole.”

From Bob Buerkle

February 17, 2022

Sometimes watching how STRS Management and their Advisors operate is like watching someone play “Whack-A-Mole.” By the end of the 2012 FY, just 3 years after the 2008-09 Great Recession, STRS was on its way to recovery, earning a 3-year return of 12.51%. Then Whack; they dropped the 8% discount rate that had been in effect since the last recession was over and lowered it to 7.75%, then Whacked the current retirees; eliminated their COLA for a year, as of 07/01/2013, then brought it back at a reduced rate of 2%. 

Now on to the future retirees. As of 08/01/2013 the new STRS retiree rule began; no COLA for you for sixty months, Whack! That’s not enough punishment, Whack them again, and here we are 103 months later and they’ve never received their first COLA. These Whacko changes, this theft of our promised pensions, according to the 2013 CAFR, accounted for the bulk of the $15.7 billion in reduced STRS liabilities.

Beginning in 2015, after the funded ratio had improved from 56% to just under 70%, the active teachers were Whacked again and made to work an extra 5 years, phasing in one more year for each 2 years going forward. And if they were less than age 50 in 2015, well Whack them again and make them work until age 60, plus also have 35, 36, 37, 38, 39 years of service; whatever!

In the 2017 FY, when STRS had just earned 14.29%, they dropped the discount rate again, this time to 7.45%. This added another $6.5 billion to the pension debt. No matter, just Whack the retirees again, eliminate their COLA. And it is still missing five years later.

So, in the 2021 FY, the total STRS investment returns earned 29.16%, producing about $22 billion in new assets. Can’t have that.  Have to hide it. Got to do something quick. Call Callan, call Cheiron. Let’s tell the Board they have to lower the discount rate to 7%. That subtracts another $4.333 billion from the assets.  Put $8 billion into the smoothing reserves. Don’t restart the COLA, that would cost money. Even after all of this Whacky manipulation STRS still has a funded ratio of 87.8%, a funding period of just 14 years, and ranking first of all the Ohio Pension Plans, yet the only one which says they can’t, and are not, paying for a COLA.

Let me tell you what Jim Miller, the former Director of STRS Governmental Relations until about the 2000 fiscal year, used to explain to the OFT Retiree Committee. Paraphrasing, “you don’t want the pension system to become 100% funded because the legislature might very well look at STRS and Whack us as the designated Piñata.”