Cleveland's Channel 5 reports on teachers' concerns re: STRS pension fund
Ohio teachers, both current and retired, share concerns over STRS Ohio pension fund
Ohio Retired Teachers Association continues call for reform after $5.3 billion in fund losses in 2022
By: Joe Pagonakis
March 2, 2023
CLEVELAND — Some of Ohio's current and retired teachers continue to ask serious question about the financial health of the State Teachers' Retirement System of Ohio, better known as STRS.
Teachers like Terry Caskey, who has worked 25 years with the Parma school system, told News 5 she was appalled to learn state data indicated STRS posted a $5.3 billion fund loss in 2022, while issuing $10 million in staff bonuses.
Caskey said the data was even more concerning when considering the cost of living adjustments, or COLA's were suspended for more than 150,000 retired Ohio teachers for five years starting in 2017. In 2012, the qualifying retirement number was moved from 30 years to 35 years.
“They explained to us moving the qualifying age to 35 years was more about the baby boomers and they were living longer so we had to kick in, but really I believe it has come down to mismanagement of funds over time," Caskey said. “STRS is a fiduciary and they have a responsibility first to the teachers, the actives and the retirees. If they’re not okay, then nobody should be receiving any bonuses.”
The announced $5.3 billion in STRS losses again had the Ohio Retired Teachers Association Executive Director Robin Rayfield demanding reform. Rayfield testified at the Feb. 14 State Board of Education meeting, calling for change on how STRS bonus benchmarks are determined. Rayfield has also asked for more investment transparency from STRS after he said it refused to release crucial documents on how it's investing teacher contributions.
“It’s an unequivocal fact that Ohio teachers have the worst pension deal in America," Rayfield said. “The loss wasn’t $3 billion it was $5.3 billion. So we pay bonuses before the numbers have been verified, then numbers come and they’re always worse and the bonuses have been paid.”
Rayfield told News 5 the Ohio Retirement Study Council which provides STRS oversight needs to do a better job, even though its 2022 report gave STRS passing performance grades for how the retirement fund is being managed. Rayfield pointed out the council was several years late in making its recent 10-year evaluation.
Daniel MacDonald, a former Cleveland Heights-University Heights teacher who retired 2006, and told News 5 the 5-year interruption in cost of living adjustments cost him more than $20,000, agreed STRS needs to be more forthcoming with records when reporting losses.
“They aren’t transparent, things happen and they tend to hide what happens," MacDonald said. “If the fund doesn’t make money, if it isn’t more money than it was the year before, I question whether there should be incentives given.”
“Ohio retired teachers reached out to me because I had written this book called 'Who Stole My Pension,'" Siedle said. “These state and local pensions are not being transparent, they are misrepresenting their investment performance, making it look better than it really is, and the risks that they’re taking are much greater than the teachers are aware.”
Siedle agrees reform is needed in how bonuses are issued at STRS.
"The benchmarks here are hysterical, because they’re not benchmarks at all," Siedle said. “The pension fund investment staff is judged against their own performance so they basically can never lose.”
STRS defended its performance, Dan Minnich, Chief Communication Officer at STRS Ohio issued the following statement for our story:
In a recent special audit, of 29 allegations reviewed, the Auditor of State found only two with merit. Both were related to audits commissioned by the Ohio Retirement Study Council. Quoting from the special audit report, “STRS’ organizational structure, control environment and operations are suitably designed and well monitored, both internally and by independent experts.”
Over the past five years, STRS Ohio’s total fund annualized net return was 6.98%.
Over the past three years, the total fund annualized net return was 6.51%.
So far this fiscal year (2023), STRS Ohio’s total fund net return is 4.5%.
STRS Ohio investments ranked in the top 10% of public funds examined by an independent consultant for not only the past three and five years, but for the past seven- and 10-year periods—all at lower average risk than its peers.
The average new STRS Ohio retiree is 63 years old, receives a pension of nearly $55,000 a year, and he or she has access to the STRS Ohio health care plan. STRS Ohio continues to diligently—and successfully—partner with our members in helping to build retirement security
News 5 asked Minnich that since a one-time 3% COLA was approved in May 2022 for retired Ohio teachers, will a COLA be permanently restored. News 5 also asked why did STRS choose to withhold requested documents connected to its investment decisions, but both questions were not answered.
Instead, Minnich released the following statement from Carol Correthers, Chair of the STRS Ohio Retirement Board, concerning the performance of STRS Executive Director Bill Neville who was the subject a split 5 to 5 and one abstention no confidence vote on Feb. 16.
Bill Neville has my complete confidence. During the two-and-a-half years Mr. Neville has led STRS, retirees have received a 3% COLA; STRS retiree health care plan enrollees have received premium rebates of $250, $300 and $600, and 95% of enrollees are paying less in premiums in 2023 than they did in 2022; additionally, active teachers will no longer be required to work to age 60 to receive their pension. Importantly, STRS has maintained strong funding in both the pension fund and health care fund
Meanwhile, Andrew Engel, Director of Litigation with Advocate Attorneys LLP, which is part of the team which filed the lawsuit against STRS, which is now in appeal, told News 5 the case filed against STRS on behalf of Ted Siedle is for violation of Ohio's public records act.
posted by Kathie Bracy at 4:49 PM
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