Cleveland.com: Guarding actuarial health should be job one for teachers’ pensions

From the Toledo eBlade

May 19, 2025

Guarding actuarial health should be job one for teachers’ pensions

A GUEST EDITORIAL BY CLEVELAND.COM

OHIO TEACHER pensions at both local schools and community and state colleges are handled by the State Teachers Retirement System of Ohio. Founded in 1920, the STRS says it is “one of the largest public pension funds in the United States,” managing about $90 billion in pension funds for half a million teachers and retirees.

But internal upheavals have led to policy swings between austerity and benefits generosity that could interfere with good actuarial oversight of the huge pension system.

Instead of shoring up its future by extending the years needed to be able to retire on a full pension, the system has twice recently shortened that time. And that’s happening just as state lawmakers are contemplating a crackdown on actuarial standards for all five of Ohio’s public pensions.

Plus, why make it easier to retire earlier on a full pension in a state with a teacher shortage, and where the accumulated wisdom of a seasoned teacher can be priceless for the students served?

The system also needs greater attention to its long-term health.

Cleveland.com’s Anna Staver reported that last month, state Rep. Adam Bird, of Clermont County in southwest Ohio, had announced launch by the state’s Retirement Study Council of a 50-state study of how others handle teacher pensions.

Amid these warning signs, STRS also has a leadership vacuum.

A swell of retiree anger after five straight years of not getting cost-of-living-adjustments (from 2017-2022) spurred a shake-up in the 11-member STRS board that’s led to years of turmoil.

Ohio Attorney General Dave Yost filed a lawsuit a year ago, seeking the removal of board members Wade Steen (who has since rolled off the board, leaving an open seat), and Rudy Fichtenbaum, who’s currently board chair. The lawsuit alleges the two men “breached their fiduciary duties” by trying “to steer as much as 70% of STRS’s current assets ... to a shell company that lacks any indicia of legitimacy and has backdoor ties to Steen and Fichtenbaum themselves.”

Steen and Fichtenbaum deny the allegations; the case is pending in Franklin County Common Pleas Court.

Meanwhile, the system’s longtime executive director, Bill Neville, has left and his position remains vacant. STRS is now being run by an interim executive director.

That may be contributing to the system’s misplaced decisions to gin up benefits and push earlier retirements rather than improve its actuarial outlook.

Last December, the system paid out a onetime supplemental benefit to eligible retirees — financed by $306 million in investment earnings, STRS announced. That was the same time, that the system “lowered the years of service teachers needed before retiring” at full benefits.

In April of this year, the fund said that on July 1 it would add permanent 1.5 percent cost-of-living adjustments to the benefit of eligible retirees who’d started collecting benefits on or before June 1, 2021.

And effective June 1, STRS lowered to age 32 the cutoff for a full pension, and to age 27, retirement on a reduced pension.

Yet the system now says it needs a 4 percent boost in pension contributions above the 28 percent being paid in on a 50-50 basis by teachers and their school employers — but without saying by whom that increased contribution would be paid.

That sets up a battle between teachers unions, who think school systems should finance the added 4 percent, and school districts facing possible funding cuts in the next two-year budget.

Meantime, state Sen. Mark Romanchuk, a Mansfield Republican, has introduced a placeholder bill, Senate Bill 69, that awaits specifics on how to “Reform the state’s public retirement system law.”

But it’s evident lawmakers want to see tighter actuarial standards.

STRS’ Interim Executive Director Aaron Hood told the STRS board in March that the state’s five public pension systems may be asked to reduce from 30 to 20 years their funding requirement — e.g., the amount of time they need to close the gap between assets and potential liabilities.

All of this adds up to one thing: STRS needs to prioritize its actuarial health over actions designed to mollify teachers and retirees.

The pension system needs to make consistently wise decisions to preserve its assets while serving teachers’ interests, without giving away the store through unnecessary and counterproductive earlier and earlier retirement ages.

This article may be read here.