Dean Dennis sums up some of the egregious actions of our pension system and "higher up" elected politicians that harm some of our best STRS board members and the STRS membership

ORTA President Dean Dennis' Report

August 2024 ORTA Update

August 19, 2024

Greetings, Members.

I hope our active teacher members have been enjoying the summer and are readying themselves for another year of service to Ohio’s children as the 2024-25 school year starts. Public education is the backbone of our country. Our active teachers sacrifice so much for Ohio, including contributing 14% of every dollar they earn to help pay for a pension underfunded by our legislature.

Let's remember some important facts to keep this issue at the forefront of what Ohioans can do to help. Active teachers are projected to receive a retirement benefit that should cost an 11% contribution rate, yet they pay 14%. Most retired teachers were charged a contribution rate that included a 3% COLA upon retirement. However, what is genuinely intergenerational inequity had the 3% COLA reduced to 2% after they retired and then eliminated in 2017.

Ohio is a non-Social Security state, so inflation protection must come from the state. Sadly, the employer contribution rate for teachers has been locked at 14% for over 40 years. To put this into perspective, the national average employer contribution rate for teachers is above 29%. Intentionally, because they are concerned if they raise taxes, they won’t be re-elected, or unintentionally, for reasons only known to them, they are causing Ohio’s retired teachers to suffer financially. Here is who is not suffering financially—the STRS investment staff.

The July Board meeting approved the investment staff’s performance bonuses (PBIs). The senior staff presented how STRS moved from a top-quartile pension system to a top-10 % one. They shared how our financial staff was underpaid and how there could be an exodus of personnel if performance-based bonus incentives were withheld. If only the senior staff advocated for members to the same degree as they advocate for themselves.

Recall the 14-page STRS staff letter, hand-delivered to Governor DeWine, who forwarded the letter to the Attorney General (AG). This letter played a part in the staff PBIs. Based on the unfounded accusations in the letter, the AG brought suit against two board members, Fichtenbaum and Steen, for allegedly violating their fiduciary duties. The investment staff’s PBI bonuses were on the agenda at the July meeting. A representative of the AG's office sat with our board members at the meeting. With the majority of the board looking to reduce the PBI bonuses significantly, the AG’s office hinted that a significant reduction could jeopardize the entire board. The AG’s office implied they could be violating their fiduciary responsibilities. With the AG’s involvement lurking, the PBIs were passed with only a modest reduction.

Although the bonuses were approved, it has become apparent that our investment staff is far from underpaid. They might be the highest paid. The average STRS investment staff salary is reported to be $230,000. Add $10 million in bonuses divided by the 69 eligible staff members, adding another approximately $145,000 per staff member. This would be an average compensation of $350,000. A study needs to be done so there is just compensation for taxpayers and staff. There needs to be an end to this issue over PBIs and hard-to-understand benchmarks year after year.

Lastly, in case you missed it, board Member Wade Steen returned to the board, and after the June meeting, reform-minded Board Member Steven Foreman announced his retirement. For the August Board Meeting, newly elected, reform-minded board member Michelle Flanigan experienced her first meeting, replacing former board member Dale Price. If you attended or viewed the meeting, you saw she was well-prepared and involved. Her dedication and preparedness make her a promising addition to the board, bringing hope for positive change.

Sadly, Wade Steen’s last board meeting will be in September. Members and the public owe Wade more than words can express. Wade is a true friend to education, members, and the public. Governor DeWine never got things so wrong. On the positive side, retiree Steven Foreman’s replacement will be seated in September. At the August board meeting, board members selected Michael Harkness as Foreman’s replacement.

Mike Harkness is the First Vice President of the Akron Education Association (AEA), an independent association from OEA and OFT. Mike has been following the media and social media information about our pension. I found him to be informed and committed. He’s “100% dedicated to the system” and “not afraid to make tough decisions.” Mike believes people who have put in the years deserve protection. In short, Mike is “willing to fight for members.” I believe our board made a good decision in selecting Mike Harkness.