Toledo Blade: STRS Board to consider COLA
Teachers pension board considers cost-of-living raise
The Blade
March 14, 2022
COLUMBUS — Ohio’s pension fund for teachers is expected to vote on a one-time cost-of-living adjustment for retirees, cancel a plan to raise the retirement age, and reduce the contribution rate for active teachers.
The State Teachers Retirement System argues that its strengthened bottom line has made these changes possible while a group of retirees suggests that their sacrifices are the reason.
‘On Thursday, the board will consider:
• A one-time 2 percent COLA for retirees, the first raise seen by some retirees for several years. The move is expected to cost the fund about $120 million a year.
• A permanent reduction in the pension contribution rate of active teachers from 14 percent to 13 percent of their pay.
• The cancellation of a plan to postpone retirement until the age of 60 beginning in 2026. The plan to require that teachers put in 35 years at the desk would still be implemented. Currently, a teacher may retire at any age after 34 years of work.
“Our actuarial funding position has improved dramatically, especially with last year's 29 percent-plus investment returns,” STRS spokesman Nick Treneff said. “They wouldn't be in this position if the pension reforms of 2012 and 2017 hadn't lowered liabilities.
“We've paid down liability much faster,” he said. “The outsized return added about $18 billion to the bottom line of the fund.”
The fund currently has assets of about $95 billion for some 500,000 active, inactive, and retired members.
Ted Siedle, the former Securities Exchange Commission attorney and financial forensics investigator, was hired by the Ohio Retired Teachers Association to conduct an in-depth review of the fund's health and investment practices. The review determined that the fund was overpaying in fees and bonuses for the underperformance of its investment portfolio over the years, a finding the fund disputes.
“The proposal fails to address the fundamental finding that there is ample money — ample money — to pay the cost-of-living adjustments,” Mr. Siedle said. “They just have to take from Peter — Wall Street — to pay Paul — the teachers.”
Public employees do not pay into the Social Security system, so teachers rely predominantly on their pensions in retirement.
As part of a broader plan to meet the state's mandate that public pension funds have long-term plans to meet their obligations, STRS phased out and then eliminated retirees' annual cost-of-living adjustments beginning in 2013.
The system, like other public pension funds, depends on investment earnings to bridge the gap between what they bring in from employer and employee contributions and what it must spend in benefits.
Dean Dennis, a retired Cincinnati Public Schools teacher and an administrator with the association that hired Mr. Siedle, said teachers have lost the cumulative benefit of annual COLAs for at least five years, something a one-time 2 percent jump now won't come close to undoing.
“People are working longer, getting less, or going without cost-of-living adjustments,” he said. “That's the only thing that's gotten them back on track. They're taking pride for a 29 percent return from 2021, but you know the S&P returned 40 percent. They underperformed by 11 percent and act like they're geniuses.”
Read the rest of the article here.
posted by Kathie Bracy at 4:51 PM
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