Bob Buerkle's speech to STRS with reminders of hundreds of millions of dollars stolen from teachers over the years

Bob Buerkle's speech to STRS Board

October 20, 2022

The Collaborative Role of the STRS Actuary

In order to project the expected profit margins for insurance companies, actuaries are responsible for pricing new products and determining the reserves that are needed to cover all demographic and investment risks.

The role of the STRS Actuary is similar but should not include the function of earning a profit, like what’s happened since 2013 and what also took place in 1994.  In these years STRS changed retirement rules that broke decades of pension promises, stealing hundreds of millions of dollars from our retirees.

In 1994, STRS Director Herb Dyer, also an actuary, greatly reduced the pension formula and the interest rate being paid on retirement accounts known as the “Money Purchase Plan,” the original STRS Pension Plan. These changes resulted in an estimated $500 million dollar theft from approximately 115,000 inactive members who were entitled to benefit from this Plan. Those over 60 or retired under this plan were GRANDFATHERED!  Money Purchase was similar to a DC or 401(k) plan, except their accounts could only grow by the STRS interest rate assumption. Then Dyer responded to the wrong retiree’s pension question, stating the remaining STRS money, was not the members' anymore, but could be used as the STRS Board saw fit. Legislators forced Herb Dyer out.

In 2012, at the request of STRS Management, Sub. S.B. 342 passed and was implemented in 2013.  I believe S.B. 342 was carefully crafted in such a way as to disguise the future theft of another $600 to $700 million dollars on the backs of half of the pre-2012 retirees. This may be in addition to the known savings of the 2013 pension reform, which the STRS outside actuary projected would save/steal $15.7 billion dollars over the lifetimes of current and future retirees.  The 15.7 billion comes from raising teacher contributions now and reducing everyone’s current and future pension income later!  This is theft!

Instead of taking away promised retiree money, STRS Management could have devoted their time and energy to lobbying the legislature for the additional funding needed to deliver on the pension promises already made to members. The full 2.2% pension formulas are the same for OPERS, SERS and STRS but OPERS and SERS require only 30-years of service to retire with an unreduced formula and they also provide an annual COLA to their retirees, while STRS requires 35-years of service and no longer provides an annual COLA. What a lousy deal this is for teachers. But the STRS Employees, that we pay for, don’t have to worry about this, because they are all members of the OPERS System.