ORTA's April Newsletter: All ORTA members need to read this, as do all who are interested in reforming our pension system, STRS Ohio

From ORTA Newsletter

April 16, 2024

From ORTA President Dean Dennis

Greetings Members, here is an update on what ORTA’s leadership has been focusing on. 

April is the month in which ORTA usually conducts their Spring semi-annual Board meetings and this year the meeting will be held at ORTA headquarters in Columbus on April 17th . The second meeting will be held this Fall. In these meetings, representatives from the five Ohio regions come together with ORTA’s Executive Council, review ORTA’s expenses, and budget, and oversee our policies and procedures.

Slated for this meeting will be a proposed change in our bylaws that will allow for more continuity at the leadership level. Currently, the ORTA Executive Committee (EC) comprises a President-Elect, a President, and a Past President. Annually, a Past President drops off the EC and a President-Elect joins the EC. As you can determine, each year brings forward a new EC. This isn’t ideal for leadership continuity. The proposed change facing the Board this April will be whether or not we should increase the terms of each EC member to a two-year term rather than remain at a one-year term.

Next is what is on every retiree's mind, what is happening with the COLA? There is an old joke that drives home the point. It goes like this, “How many psychologists does it take to change a light bulb?” The punchline is “Only one if the light bulb really wants to change.” Our problem is STRS management doesn’t want to change. Their investment practices have essentially remained the same. The STRS management strategy has been to improve their financial health by withholding our COLA and making teachers work longer before they can retire. This is why we need to keep electing Board Members until we have a majority that will move our funds into more transparent investments, such as index investing, and save us from spending unnecessary fees.

World-renowned financial analysis Richard Ennis, State of Ohio Auditor Keith Faber, and former Wright State Economic professor and current STRS Board member Dr. Rudy Fichtenbaum all have reviewed STRS’s investments. They all have concluded that are pension plan would have several billions more over the years if they had been investing more into index funds. Currently, STRS has too many billions of dollars tied up in opaque private equity investments. These investments are fraught with high fees, higher investment risks, and for the past decade poorer performance than the general equity market.

On a more optimistic note, STRS Ohio Acting Director Lynn Hoover recently addressed the Ohio Retirement Study Council (ORSC), which is a legislative oversight body, and accurately informed them that although active teacher contributions have increased by 40% their benefits were reduced. The Acting Director then informed the ORSC that STRS will ask the Ohio General Assembly for an Employer Contribution increase. The increase seems to increase the Employer Contribution from 14% to 18%. Note that in other non-Social-Security states, the average Employer Contribution is approximately 24% significantly higher than the current Ohio STRS 14% Employer Contribution which has been stagnant for 40 years. ORTA certainly will get behind this initiative but firmly believes that this is only one piece of the puzzle to restoring the COLA

From ORTA's Executive Director Robin Rayfield

"For over one hundred years, STRS has acted in a manner that ignores the concerns of its membership and seems to hold protecting its highly paid employees as its most important function." 

Greetings ORTA Faithful, 

The long road to reform at STRS has been marked with ups and downs over these last 6 years. On March 26th Wade Steen’s challenge to the governor’s removal of his appointment to the STRS board of trustees. I have said many times that public educators in Ohio have no better friend than Wade Steen. Although we do not know the outcome of this legal challenge, ORTA is confident that we have presented our concerns in a professional and straightforward manner. 

It is important that ORTA continue to stand up to the concerns with the management of our pension system identified over the last several years. For over one hundred years, STRS has acted in a manner that ignored the concerns of its membership and seemed to hold protecting its highly paid employees as its most important function. There was never any evidence of ‘shared sacrifice’ on the part of the STRS management and employees. Since ‘pension reform’ was introduced over a decade ago the net effect is that: 

•  Retirees have experienced severe reductions in benefits

•  Active members pay 40% more, work 5 years longer, and receive the same reduced benefits as retirees

•  Employees at STRS have received extravagant bonus payments (despite losses in the investment area) and steady base salary increases 

Interestingly enough, there are some members of STRS, management employees of STRS, and several STRS board members that offer revisionist narratives that STRS members were never promised an annual COLA , and that our concerns over the lost COLA are ‘sour grapes.’ I can verify that I was indeed promised an annual COLA when I retired in 2012. I can also verify that many friends discussed with me the fact that they retired when they did because they were aware of the change that would prevent them from receiving an annual COLA for 5 years. That was the motivation behind their decision to retire when they did. 

When we have produced the materials provided by STRS that clearly show that a COLA was promised and provided the copies of the laws of Ohio that clearly guarantee annual COLAs to retirees, these people simply say, ‘the laws changed.’ That is what is at the heart of the dispute. ORTA’s stance is that the lawmakers in Ohio cannot retroactively reduce our benefit years after that benefit was earned. That is the rationale behind the claim that STRS has broken its promise to educators in Ohio. 

ORTA is fighting to force STRS and/or the state of Ohio to make good on its promises for a dignified retirement for public school educators. ORTA is convinced that retirees and actives can and should receive what was promised. Long haul battles, such as the one we are fighting, are tiresome and it seems like we are getting nowhere fast. 

I want to remind everyone that just a few years ago there was only one voice at STRS that spoke loudly about fulfilling the promises STRS made to its members, Wade Steen. Now there are five voices that are calling for reforms at STRS. We are one board member short of a majority! We are optimistic that board members seeking reforms at STRS will have a majority when Wade is reseated. 

I have received notes from concerned ORTA members about the level of emails received from ORTA. I am sensitive to people that feel that we are ‘reaching out’ too often to our members. We have similar concerns from people that do not want to receive information from ORTA’s partner AMBA. Please understand that we are aware of these concerns and trying to find a balance with this issue. 

Of course, with the STRS election underway, ORTA’s endorsed candidate, Michelle Flanigan will have supporters that also reach out. ORTA wants to assist Michelle, as the stakes are extremely high for our members. If you are concerned by the number of emails you receive from ORTA, please contact the ORTA office at 614-431-7002 or rrayfield@orta.org and we will remove you from our list. 

If you want to know more about the battle we are waging for reform at STRS please check out the ORTA website at https://www.orta.org/  

ADVOCACY UPDATE 

I received a call from an ORTA member in March who asked, ‘What does ORTA do for its members?’ This person was upset that he receives unwanted mail from ORTA selling insurance products. His concerns are understandable in that we all receive unwanted marketing mail from a variety of sources. Every day I receive mail enticing me to purchase car warranty offers, political campaigns materials, low interest credit card offers, and more. 

ORTA certainly cannot help with many of these unwanted solicitations; however, ORTA can help with people receiving unwanted offers for insurance products from our partner AMBA. Simply call or email ORTA if you do not want to receive these offers and ORTA will have you removed from the mailing list. All we need is your name and address and we can remove you from the contact list. 

The conversation with the person who called also asked a specific question, ‘What does ORTA do for its members?’ My response was ‘Advocacy.’ ORTA is fighting to reform STRS and provide the benefit that was promised during your career. Listed below are some of the more observable actions taken on behalf of retirees and active contributors of the STRS pension system: 

•  ORTA spoke out against the loss of benefits in 2017. ORTA fought hard to change the original ‘pension reform’ language from elimination of COLA to suspension of COLA. This change forced STRS to reconsider the loss of COLA in 2022 leading to a 3% COLA.

•  ORTA attends every STRS board meeting and speaks out against the mismanagement that is commonplace at STRS. We have challenged the payment of PBI (bonus) to investment staff that have not met true benchmarks.

•  ORTA collected financial contributions for the Edward Siedle Forensic Audit. This audit and his report, The High Cost of Secrecy, shed light on the opaque investment strategies at STRS and exposed previously hidden fees and costs with the investments of our retirement funds. The forensic audit triggered an audit by the State of Ohio Auditor’s Office that confirmed STRS loses money each year when compared to a less expensive, passive, index-based investment strategy.

•  Through the efforts of Mr. Siedle, ORTA seeks to learn what the fees and costs associated with investments at STRS are. Mr. Siedle’s report confirmed that the fees and costs associated with $20 billion are not known by anyone other than the STRS management. Not even the STRS board members are allowed to know this information!

•  ORTA has endorsed successful, ‘reform minded’ candidates to the STRS board. The last five people elected to the STRS board are people ORTA endorsed. Without the illegal interference of Governor DeWine, the reform-minded members of the STRS board would hold a majority. Any of the reforms that have been accomplished have been achieved with the support of ORTA.

•  With regards to the illegal removal of Wade Steen (pro-teacher member of the STRS board), ORTA established the Pension Defense Fund to assist in the legal challenges STRS members face. Our efforts have been successful. Wade Steen’s challenge to DeWine’s removal action resulted in a 10th District Magistrate’s ruling that the governor does not have the authority to replace Steen without cause. On March 26, the magistrate’s ruling was heard by a three judge panel that seemed to agree with the magistrate’s ruling. We will not know until this panel confirms this in the future; however, Mr. Steen’s legal team remains confident.

•  ORTA is currently endorsing Michelle Flanigan for a seat on the STRS board. The election materials were mailed on April 1st . We hope that you will encourage your active contributor friends to vote for Michelle Flanigan.

•  ORTA has also lent its support to the Vouchers Hurt Ohio group. You may be aware that the majority party in the Ohio Legislature and the Governor are financing private schools. Each dollar that goes from the public to private schools not only hurts our system of public education, but this transfer from public schools to private schools has a dramatic impact on the funding STRS receives. 

In closing, I also want to mention that ORTA also attempts to keep our members informed and aware of any news related to our pension. ORTA has built relationships with both Facebook groups dedicated to providing information about the STRS pension system. Working with Ohio STRS Member Only Forum and STRS Ohio Watchdogs, our messages are getting out. The process of reforming a pension system that is one hundred years old and holds over $90 billion is slow. ORTA’s goal is to influence this reform to help all educators in Ohio, retired and active.

Ohio Retirement for Teachers Association

250 E Wilson Bridge Rd, Worthington, OH 43085
614.431.7002

https://www.orta.org/