NOTE: To find the most current posts, please scroll down to the two big red arrows. You can't miss them.

Angel of Grief

Garrison Keillor

Items of interest in the Archives: The 2013 STRS Board Election

Many people have been very interested in reading about the irregularities of the 2013 STRS board election. There are many posts related to this topic, beginning the first week of April 2013, after the ballots were mailed to retirees from STRS. You can find them by going to the Archives for this blog, over in the right sidebar, and clicking on dates beginning with April 7, 2013. Dennis Leone announced his candidacy for a retired seat in November, 2012. There is a lot of information about him in the Archives, beginning with November 12, 2012 posts. 5/28/13

.....so what REALLY happened in 2003 that touched off a firestorm at STRS that is still smoldering today? Read it here, from the Cleveland Plain Dealer. (Hint: It ain't over yet!)

More here (Akron Beacon Journal, 2003)

A MUST READ: Dennis Leone Reform Initiatives as an STRS Board Member  Between 2005 and 2009

To find current, day-to-day posts -- pull your scroll bar down a ways, just below the big red arrows (you can't miss them). Thanks.

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Note from this blogger.....

In case you weren't aware, I am quite willing to post opposing views on this blog; in fact, I welcome such opportunities. If you disagree with anything you see posted on my blog, please feel free to submit your views and I will gladly post them.

Kathie Bracy 
kbb47@aol.com 9/15/10.........................................

Find your state representative and senator here.

http://www.legislature.state.oh.us/

Gettin' a little tired.....

Some communications to Mike Nehf and Tim Myers, dating back as far as 2009, continue to go unanswered. Looks like it will be a long wait, but we haven't forgotten. You can see them here and here.

I know, it's weird.........

Many posts that appear "at the top" for a while are eventually moved down, where they can be found under their original posting dates. Also, if you are confused by the postdating, this is done to keep these posts up there; otherwise, they drift down when new posts are added. It's a "blog thing" which I have no other way to control. KB

Handy links: Contacts, information and more (short version)
This is an abbreviated version of the original 'Handy links' post. Click here to view a more complete list. (Some of it is old.)

STRS Board.....STRS website

Board calendar

E-mail contacts at STRS (old, but some may still work)

Map/directions to STRS, 275 E. Broad St. Columbus, OH 43215

STRS "Membership Survey" (spoof)
State legislators.......State of Ohio website

Latest OEA salaries (2011) over 100K; USDL report

Rich DeColibus' PowerPoint presentation STRS' PBI Program; Does it work?: click December 21, 2008 (blog Archive) and scroll down to December 23 posts.

Charts: PBI (bonus) payments

Popular links; click, then scroll down: charts, graphs, investment staff, lists, spreadsheets

$TR$ Inve$tment $taff $$$ (old)

SPECIAL (must read):

Dennis Leone's INVESTIGATIVE REPORT on STRS: May 16, 2003...Who is Dennis Leone?........(PDF version)...More on Dennis Leone .......(PDF version)

Dennis Leone: "Catcher of Thieves"

Dennis Leone's STRS Report to ORTA, March 2007

Dennis Leone's Testimony at the Statehouse 9/5/12
The Plain Dealer article that started it all

Dennis Leone: Factors Driving STRS 30-Year Planning and Revenue Assumptions (with charts)

Historic PBI vote, January 16, 2009

Charts: PBI (bonus) payments

CURRENT POSTS BELOW

Dennis Leone to STRS Board August 16, 2018: You need to provide better oversight

"As board members, YOU need to take a leadership role and provide better oversight, which means not just questioning, but challenging and requiring meaningful improvements to help retirees receive the COLA they were promised and so very much deserve." 

Dennis Leone's Speech to the STRS Board 

8-16-18

Members of the Board, my name is Dennis Leone. I served on this board in 2006, 2007, 2008, and 2009. I recall some of my fellow board members not taking their oversight responsibility seriously. I remember board members pretty much blindly accepting the recommendations and conclusions of staff and outside "expert" consultants on very important matters pertaining to payroll growth assumptions and investments. Are board members still doing this today, when perhaps they should not? It is so easy to accept, isn't it, what you are being told by staff and so-called "experts." It is lot harder to call into question what you are being told, and to say "no, I do not accept this and it is my conviction that we need to do better."

I recall vividly in 2008, when the total STRS assets hit $81 billion, and when the DOW stood at 14,400. Yes, the stock market went south and we went down to $65 billion, but isn't is curious to the board that today - 10 years later - the DOW stands at 25,000, but we STILL are not quite where we were in 2008 when the DOW reached a high of 14,400.

Here is something I do recall from 2008, and you need to listen to this: We lost a ton of money with our Enron stock. I recall asking during board meetings in this room why we had not bailed from Enron, when so many others had. The answer the board was given by the staff was "no, our consultants tell us that is not the right things to do………we need to hang in there." So we didn't bail, as we should have, and we lost millions and millions more. I recall pushing for a new policy in 2008, which I could not get, that would have required STRS to pull back from stocks that were losing a certain percentage of their value. No, the staff and "expert" consultants did not want to do that either, so we didn't.

The data and recommendations the board accepted in the past for annual payroll growth assumptions have been embarrassing. In the 8-year span between 2005 and 2013, we received a miserable annual average of 1.33%.....not even close to the 3.5% assumption the board was told by staff and "experts" to use. Did the staff survey Ohio superintendents or treasurers and ask them to share what they thought might be the base raises and step increases during those years. Never, not once. In my 23 years as a superintendent in Ohio, I never once received such a survey from STRS. The board, instead, accepted conclusions from staff and outside "experts," who - quite frankly - did not know what the hell they were talking about in this area.

Are there investment recommendations you have accepted that you should not have? Is it wrong for you to conclude that we should being doing better, and producing more investment revenue to support retirees and undo the board's absolute broken promise to 143,000 retirees for an annual COLA? This has been the only way many retirees have been able to keep up with increased costs for home insurance, car insurance, and health insurance. It is sinful that you have given bonus checks to staff when you have given no increase, nothing, to retirees. But I guess if you continue to accept what you are told that the bonuses are necessary in order to keep the best and the brightest employees, then indeed you have fallen for the same malarkey that many board members did during my 4-year term.

Please study carefully the attached Bloomberg report, which offers 5 meaningful suggestions for pension boards to juice up their investment returns.

But my suggestions are more simple. As board members, YOU need to take a leadership role and provide better oversight, which means not just questioning, but challenging and requiring meaningful improvements to help retirees receive the COLA they were promised and so very much deserve.

Thank you.

Bob Buerkle's speech to STRS Board August 16, 2018

Click on the image an enlarge on your screen.

Dean Dennis' speech to STRS Board August 16, 2018

Click and enlarge on your screen. 

STRS Board Calendar

https://www.strsoh.org/aboutus/board/calendar.html

Retirement Board Meeting Dates

• Aug. 15, 16 & 17, 2018
• Sept. 19, 20 & 21, 2018
• Oct. 17, 18 & 19, 2018
• Nov. 15 & 16, 2018 (Board Education & Planning)
• Dec. 12, 13 & 14, 2018
• Feb. 20, 21 & 22, 2019
• March 20, 21 & 22, 2019 (Board Meeting & Investment Seminar)
• April 17, 18 & 19, 2019
• May 15, 16 & 17, 2019
• June 19, 20 & 21, 2019
• Aug. 14, 15 & 16, 2019

The State Teachers Retirement Board meets monthly (with the exception of January, July and November) at the STRS Ohio offices in Columbus. Meetings are open to the public.

While the Retirement Board generally meets on the third Thursday and Friday of the month, the meeting dates are subject to change. Additional meetings may also be added to the calendar. For the official board meeting dates for each month, watch the STRS Ohio News section on the home page for public meeting notices.

NEXT STRS BOARD MEETING

Thursday, August 16, 2018

275 E. Broad Street

Columbus, OH 43215

Best to arrive by 10:00 a.m.

Black shirt again? Wouldn't hurt.

ACTION NEEDED: STRS Board of Directors Has Run Out of Excuses

PETITION UPDATE

Dean Dennis

Cincinnati, OH

JUL 12, 2018 — As of this posting the Respect Ohio's Retired Teachers petition has 8,920 signatures. While good, more signatures are needed. A goal of 10,000 signatures is desired before the end of August when the Ohio Legislature returns back to session and before the Ohio STRS Board meets on August 16. 

While everyone who is receiving this Update has signed the petition, we are asking everyone to try their best to share the petition  www.restoreourcola.com on their social media pages such as Facebook. Here is why: 

The Ohio STRS fiscal year just ended on June 30, 2018. Over the past two years, STRS investments respectively earned a return of 14.29% for 2017, and a return of 9.5% for 2018. However, STRS only projected investment earnings return of 7.45%, for each of the past two years. 

The current STRS Board of Directors allowed STRS management to deliberately underestimate their historical investment earnings projections. The earnings are always above 8% for their required 30 year funding period. But, the STRS Board of Directors allowed STRS management to assume 7.45%. In turn, this allowed STRS to claim they needed to withhold retired teacher's promised cost-of-living-adjustment. The result, retired teachers were wrongly being robbed of $1,000's of dollars that they will never recover. 

Then shockingly, the STRS Board of Directors approved huge annual performance incentive bonuses, dozens, exceeding $100,000 to STRS employees. 

On August 16, with your help, we will attempt to end this nightmare for Ohio's retired teachers. The STRS Board of Directors will once again be confronted, but this time more people will be watching. Let's see if they can find it within themselves to vote to restore the COLA for retired teachers. Again, please share the petition, www.restoreourcola.com  

Dean Dennis to STRS Board: Reform your investing approach

https://www.change.org/p/13172311/u/22940358?utm_medium=email&utm_source=petition_update&utm_campaign

June 28, 2018

Note to STRS Board of Directors: Reform STRS's Investing Approach

Dean Dennis

Cincinnati, OH

JUN 28, 2018 — STRS has over a 100 people in their Investment Department. STRS pays the investment firm, Callan Associates, over $700,000 annually for investment advice. Callan recommended an Earnings Assumption Rate reduction of under 7% to the STRS Board, however the STRS Board adopted a 7.45% Earnings Assumption Rate. Even this was a reduction from the prior 7.75% Earnings Assumption Rate. The STRS Board did this despite always earning over 8% for every 30 year Earnings Period. Let's contrast this to Tampa's Fire and Police Pension Fund.

Tampa's Police and Fire Pension Fund utilizes a single manager. They have done so for 43 years. They have averaged over 12% annually, significantly more than Ohio STRS. Please listen to the interview with Tampa's Police and Fire Chief Investment Officer and contrast their success with ours.

Perhaps our members who have been encouraging Ohio STRS to not get involved with alternative investments, such as Hedge Funds, are right. Perhaps our members who have been encouraging STRS to invest main in Index Funds designed to reflect the market returns. Members do not want our investment department taking so many risks attempting to beat the market.

Six Recommendations to STRS Board from CFT President Julie Sellers, June 21, 2018

Julie Sellers' speech to the STRS Board, June 21, 2018

Good Morning Members of the Board,

My name is Julie Sellers and I am the President of the Cincinnati Federation of Teachers. I am here today to request that the Trustees fulfill their responsibilities of managing the pension funds for Ohio’s Teachers in a transparent manner. I also understand the legal necessity to preserve the fiscal integrity of the pension fund and make sure it is solvent for every retired AND active member. But make no mistake, I believe that the STRS Board needs to hold the employees of STRS responsible to make sound investments with our hard earned dollars. I do not believe that this has always been the case, employees for STRS have consistently received bonuses in the six figures while active members are working longer, contributing a greater percent of their earned income (14%) and getting less in return. That does not make sense. Until some of our cuts are restored, you STRS, must reign your spending.

Current teachers must now work until they are 60 years old and have 35 years in the system. This means that many teachers begin their careers when they are just 21 or 22 years old so actually they MUST work 38 or 39 years before they can retire. That adds up to a combined scored of 98 or 99 for most people. This used to be a score of 30. That is well above other states; most have a required score of 70-80. Teachers’ life expectancy will not be greater than it is today. Currently, members were mandated with the changes would not have received a COLA for 5 years so their clock was already ticking towards that 5 year marker. Now, with your recent 5 year COLA Freeze they will have an additional 5 year freeze on top of the years they were already frozen – maybe 6 or 7 years. The changes to the actives did not seem fair to me when the initial changes took place and they still do not seem fair. Teaching is a hard job and it can suck the life out of you. This is making a teaching career one that many are walking away from which is further destabilizing the fund.

But, on the other hand, as I look around this room, I see many retirees. Is it fair or realistic that they will not receive a COLA increase for 5 years? During the recession and with Ohio’s draconian cuts to education, almost everyone in this room went for 5-6-7 years without a raise. This was difficult for every family paying into this system. Not only did we have pay freezes but you were increasing the employee contributions by 1% per year, so employees were taking home less each and every year! Now as these folks are in retirement, you are again mandating for them to take another freeze.

I attended a board meeting about a year ago when you were trying to justify the 5 year COLA freeze and you gave data that most retirees have multiple income streams. I have talked to many teachers since that meeting and most have not been able to save for retirement like they had hoped due to the years of employee contribution increases and freezes on our salaries. Many younger employees are in a lifetime of student loan debt, and are still trying to purchase their first home. I do not think that you should make the assumption that the COLA freezes will not impact the lives of our current or future retirees.

I also believe that you are not using accurate investment returns and actuarial projections. You should not be waiting for five years to revisit the COLA issue. I would like to remind you, that the STRS funds are not your money. These funds belong to the current retirees and active members and we need for you to look out for the financial well-being of us all.

Recommendations:

This must be a delicate balance between actives and retirees.

1. The mandatory age of 60 AND 35 years of service must be decoupled to address the many diverse options that teachers have; address second careers, young beginning careers or older beginning careers.
2. The 13th check should not be an option. When this was paid it cost billions of dollars that would have made our current system today more solvent.
3. It is not realistic to NOT give a COLA for 5 years or more. Check the assumptions annually.
4. ANY school that receives vouchers of public funds should be mandated to pay into the pension system for their certificated personnel.
5. Any Charter School who has not paid for their employees funds into the system should be shut down and any property or resources should be used to repay STRS because this disrupts the system.
6. Stop investing in Hedge Funds. Their fees are too high and you have to pay if the investment makes money or not. This is not a good return on our investment.

Julie Sellers

Robin Rayfield to STRS Board June 21, 2018: Hold employees' raises/incentive pay till the COLA is restored or a pathway established

Robin Rayfield

STRS Comments June 21, 2018

Thank you for the opportunity to speak at the STRS Board of Trustee's meeting. As the Executive Director of the Ohio Retired Teachers Association I represent thousands of STRS beneficiaries.

First let me say 'Thank you' to Director Nehf, Nick Treneff, and Paul Snyder for meeting with Bee Lehner (ORTA President) and myself at ORTA's office on May 30th. I appreciate your willingness to develop a dashboard to reflect a pathway to COLA. I look forward to our next meeting.

My work at ORTA has helped me understand that 'pensions are complex and have many moving parts that are subject to change without notification'. Complex problems often require complex solutions that also have many moving parts.

Currently, ORTA members have demonstrated patience and understanding as the hard-working employees and trustees at STRS work to fortify our pension system and insure that the pensions we all work so hard for will continue for generations to come.

Now, as STRS considers its budget for the next year, I would like to point out that only two of the groups of stakeholders in the STRS pension system have been forced to suffer during this time of strengthening the pension system. Only STRS recipients have felt the pain of the loss of COLA. Only active contributors have felt the increase of member contributions or the requirements to work longer to receive their pensions. Neither the legislators, nor the employees at STRS have felt the economic impact of the loss of COLA or increased work requirements and increased contribution levels.

As I meet with and speak with STRS recipients at local ORTA Chapters around the state I hear the same questions: 'What is the status of our COLA?' or 'How can the employees at STRS receive salary increases while we do not receive our promised COLA?'

As you consider the budget for the next year, I suggest, as a show of good faith, that the employees at STRS share in the sacrifice STRS members are suffering through. In other words, I suggest that STRS employees receive no increases in salary or incentive pay until COLA is restored or at least until the pathway to COLA is established.

I close with this simple thought. As a superintendent of schools I could not accept a pay raise, nor could my administrative team or supervisors receive pay increases, unless the employees of the organization received an increase. I recognize that a school district budget is not a great analogy to a pension system such as STRS, but the principal of shared sacrifice is an appropriate analogy.

Thank you for your past work and I look forward to our work together to solve the current problems that our pension system faces.

A timely quote from an STRS retiree

" It is an outrage if the board hands out any more bonus checks to people (which I bet are planned in the newly adopted budget …..and it is equally an outrage that STRS total assets is still below the $81 billion we had in in 2008 when the stock market problems hit. It also is disgusting that when we hit $81 billion, the DOW was sitting at 12,000 points, which has jumped to over 24,000 points in the past 10 years.  The investment staff is simply NOT doing the job."

Dean Dennis: Active and Retired Teachers Attend Ohio STRS Meeting To Protest COLA Cut

https://chn.ge/2K74iWk 

Active and Retired Teachers Attend Ohio STRS Meeting To Protest COLA Cut

By Dean Dennis

Cincinnati, OH

JUN 24, 2018 — On June 21st at 7:30 am, a busload of retired and active teachers dressed in black and equipped with protest posters boarded and left for the STRS building in Columbus. They joined the car loads that came to Columbus to send a clear message to STRS administrators and Board members about our COLA loss.

The meeting was well attended by organizational leaders. In attendance were ORTA (Executive Director Dr. Robin Rayfield), OFT (President Melissa Cropper and Darold Johnson), CFT (President Julie Sellers and members) and many of Ohio's retirement chapters.

The message sent was clear, 1) active teachers should not have to wait 5 years for a COLA after having to work more years than prior retirees, especially coupled with having their contribution increased to 14%. 2) STRS should not breach the COLA promises made to current retirees, especially AFTER they have retired. 3) STRS needs to stop risky investment practices and stop trying to beat the market which has always outperformed STRS over the long term. 4) STRS needs to cease bonuses and salary increases to their employees until the COLA can be restored.

When the public participation segment of the STRS meeting started, the hundred plus members, dressed in black, stood showing protest signs and banners as our members spoke. ORTA Director Dr. Robin Rayfield went first with a powerful well articulated speech letting STRS know that everywhere he goes, his members ask him when is the COLA going to be restored? He followed up with a theme that every speaker echoed. How can STRS deny our members their promised COLA, yet provide STRS staff such large six figure bonuses and six figure base salaries while our members suffer?

Next, speaker CFT President Julie Sellers spoke and eloquently represented the active teachers. She reminded STRS how hard the teaching profession is and how many of our members will now be in their mid sixties before than can gain their full pension. Next, speaker was Dean Dennis who read excerpts from a letter from Representative Bill Seitz, House of Representative Majority Floor Speaker. The letter was a letter of support for "the harsh decision made by STRS to reduce to zero for at least 5 years the COLA adjustment for all existing and new retirees." He stated that in his wildest dreams that he never thought that STRS would reduce to ZERO the COLA. His letter concluded by stating "the General Assembly may have the appetite to resolve this inequity by taking back, in whole or in part, its prior authority over COLAs."

Next, Bob Buerkle gave an excellent speech titled, "Where is the Justice at STRS?" The speech pointed out numerous inequities regarding how STRS treats their employees better than our teacher members. It essence, he told STRS, "you can take our money, but you can't deliver." Bob Buerkle was followed by Mike Mulchay and Roger Peebles who gave examples of STRS misspending practices. They both chastised STRS for passing out excessive bonuses while not being able to provide a COLA.

The last speech was given by Tom Frank, a young Cincinnati teacher. Mr. Frank, speaking for his generation, pointed out that he would be turning his money over to STRS for over 35 years in order to reach age 60 for his full pension. In addition, if he lived out his life expectancy he could have over a 60 year relationship with STRS. He made it clear he didn't want STRS enriching themselves with his money, chided them for getting into hedge funds and he wanted to be able to trust them. It was both a passionate and excellent speech.

After the public speaking concluded, nearly a hundred attendees gathered on the sidewalks in front of the STRS building for a final protest test rally. The rally was covered by Columbus News 10.

A thank you to everyone who attended the STRS meeting and protest. It was very impressive. It was evident to everyone who attended that the STRS administration and the STRS Board Members were not expecting the turnout or expecting the passion. We certainly made a strong impression and our protest was conducted responsibly. Let's keep adding Members to our Forum and Signatures to our Petition. We're gaining momentum!

Columbus Dispatch: Pension workers’ raises upset retirees

Columbus Dispatch, June 24, 2018
Pension workers’ raises upset retirees

Retired Ohio educators and others are livid with the leadership and board of the School Employees Retirement System of Ohio amid an ongoing fight.

The board last week approved a pool of money (equivalent to 3 percent of overall payroll) for merit raises, including a 3.1 percent raise for Executive Director Richard Stensrud to boost his pay to $257,750 a year. A total of 170 of the system’s 181 employees will receive raises of 0.7 to 3.7 percent.

The cause of the discontent: The board voted last fall to impose a three-year freeze on cost-of-living increases for 80,000 retirees, who receive an average monthly pension check of $1,233, Ludlow reports.

Lois Carson, a 30-year secretary with Columbus City Schools nearing retirement, gave the board an earful: “We trusted you with our pension. You froze it. You have money to give yourself a 3 percent raise based on merit. Based on what you did investing our money. So you’re increasing your pay. Not on your money ... on my money.”

The Ohio Association of Public School Employees is suing to restore cost-of-living allowances, accusing SERS of “fraud and misrepresentation.” The system denies the charges and is fighting the suit.

SERS spokesman Tim Barbour said the raises given to employees help avoid turnover and were less than the average 5 percent annual raise received by still-working members of the retirement system.

drowland@dispatch.com 

@darreldrowland

Here is a link to the lawsuit of OAPSE against the School Employees Retirement System for freezing their COLA at zero....

From John Curry, June 24, 2018

http://files.constantcontact.com/1dfb501c401/3979cbf4-50af-412c-9bcf-075eb19b973d.pdf 

Channel 10 (Columbus) coverage of June 21, 2018 protest at STRS

https://www.10tv.com/article/ohio-teachers-want-cost-living-allowance-restored 

What must be done about "the low hanging fruit": Your COLA

From the Ohio STRS Member Only Forum (Facebook). Author or date not given.

 Why STRS Can Afford To Restore Retirees COLA

and

Why Ohio Legislators Should Intervene

One of the biggest fears of retirees is that Ohio STRS is having financial difficulties and restoring the COLA benefit will jeopardize the pension. This is not the case. Below is a list of reasons why the Ohio's Legislature must restore the COLA to all retires who retired under Ohio's statutes that stated a COLA shall be paid.

1) We were told that in a Defined Benefit Plan the employer assumes all the risk. A Defined Benefit Plan is like a contact where contribution monies from the teacher and teacher's employer is given to STRS. STRS then exclusively invests the monies for the defined benefit pension plan to provide your pension benefits. Teachers who retired prior to July 2013 met all of their Defined Benefit obligations and STRS Ohio met all their 30 year investment goals (earnings assumptions) over every 30 year funding period. A 3% COLA was built into their actuarial table as a pension benefit along with the base pension payout. It goes without saying this COLA should be paid, as promised, as it was a consistently stated benefit. STRS also offers a Defined Contribution Plan; but in this plan the risk is assumed by the employee's investment selection. All teachers financially harmed by the COLA loss, were a part of the Defined Benefit Plan. Reneging on paying out the earned COLA erodes the underpinnings of Ohio's Defined Benefit Plan. Teachers are learning a lesson that they cannot trust STRS after decades of having to hand over their hard earned monies.

2) STRS Ohio created their own problem but teachers are being asked to take the fall. We understand STRS needs to have enough money to pay your pension and promised benefits. They do this by taking your contribution and your employer's contribution. They then invest the monies over your employment period prior to retiring. If they meet their earnings goal, they'll have enough money. So in order to pay out your pension and benefits they project a rate of return on their investments that they will need over the time period you work. This rate of return is referred to as their earnings assumption rate. The period of time you work prior to retiring is often referred as the funding period. Since the average person used to have to work 30 years to get full retirement benefits, the funding period is a 30 year period. So, STRS has a funded period which is blended with an earning assumption rate estimate (so basically it is what percent do they expect to earn on investments from the collected employee and employer contributions). It becomes easy to see the higher percentage rate STRS earns, the better off the funding is for your pension. Additionally the higher earnings assumption STRS projects, provides STRS with more latitude in increasing pension benefits. However, when STRS lowers earnings assumptions, problems can be created. And this is what STRS did, they lowered their earnings assumption down to 7.45% from 7.75%.

When STRS lowers their earnings assumption even slightly, it creates significant projected liabilities over the 30 year funding period. This is because STRS has billions of dollars (currently 77 billion) to invest. It's important to understand that the earnings assumption is simply a projection. In reality, STRS has always earned over 8% in returns over every 30 year funding period. STRS always earns a higher rate of return than their projected earnings assumption rate over the 30 year funding period. So when STRS lowers their earning assumption rate, they must project billions of dollars of less money in their coffers 30 years out. As a result, STRS must figure out how to make up the artificial deficit on paper.

Since they have very little choice other than to ask the legislators to raise the employers contribution tax rate, they look to you. Retirees became the low fruit and that is why your COLA is unethically being held. This is why current teachers now have to be 60 years old and have at least 35 years of service in order to avoid an actuarially reduced pension.

All this happened because STRS lowered the earnings assumption from 8%, then down to 7.75% and now down to 7.45%. STRS created the 27 billion dollars paper deficit over the 30 year funding period but teachers are taking the hit. The COLA was the low hanging fruit. If STRS restores the COLA to 7.75% it wipes out most of the paper deficit and makes it hard for STRS to argue they can't restore our COLA. 

Again, why STRS's actions are unethical: STRS's actions do not match their financial reality. STRS has always earned over 8% on investment returns over a 30 year funding period. Here's a question, why do the investment advisers for the Ohio Police and Fire retirement system project their earnings assumption to be 8.25% while STRS investment advisers project our returns to be 7.45%? Are Ohio's teachers lesser in importance?

3) STRS Ohio has a goal to be 100% funded. This sounds noble, but their goal comes at our expense. Currently STRS is around 75% funded. This means in simplistic terms that without any earnings from investments they can pay out pensions and benefits for approximately 20 years. To put this into perspective Kentucky is 37% funded and in the news, but Kentucky's legislature is allowing current retirees and all current teachers vested with 15 years to go though their state retirement system without any reduction of benefits. Again, all of Kentucky's retirees are not being impacted in any manner.

4) STRS Ohio is taking advantage of you. Our Legislature needs to review their actions and intervene. Recently, STRS requested drastic changes to our pension system, some legal but arguably unethical. Some were arguably illegal. Here is what is illegal: Prior to 1/07/13, ORC Statute 3307.67 states the COLA shall be 3%. This wasn't honored. Ohio's Constitution, Article II Section 28 which addresses Retroactive Laws, states Ohio's General Assembly shall have no power to pass retroactive laws. This means they didn't have power to change your promised COLA benefit after you retired, but they did. Then they gave their legislative power away and allowed STRS to have control over your COLA. Also violated was ORC 3307.14. This provision states in clear terms that if STRS Ohio cannot meet its financial obligations, the burden falls on the employer not the employee. ORC 3307.14 would have to increase the employers contribution to cover our COLA loss if the STRS books clearly demonstrated there was a financial crisis. While perhaps unpopular,  increasing the employer contribution would be fair in light of it has been fixed at 14% for 34 years while the employee contribution has increased 100%. Thus the legislators only real  decision should be, should they raise the employers tax, or have STRS increase  the earnings assumption rate back to 7.75% to undo the paper loss. STRS could have approached the General Assembly with this option but likely don't want to draw negative attention to themselves. Here's what they did that was legal but questionable. STRS sought actions drastically impacting the pension system. As a result retirement requirements now require a teacher to be age 60 with 35 service years for full retirement. Additionally current teachers retiring are not provided any COLA for the first 5 years of retirement. They saved a fortune by doing the aforementioned. All legal, but is this what we want for Ohio's teachers. 

5) STRS has paved the road to being 100% funded off the backs of Ohio teachers. Some simple math and common sense reveals STRS did not have to seek the authority to rob retired teachers of their COLA from the legislature.

First, STRS has 77 billion dollars in investments. STRS pays out around 7 billion annually in pensions and benefits, but STRS takes in close to 3.5 billion dollars annually from the employee and employer contributions. If STRS just earns a 5% return on the 77 billion dollars they invest, they'll covers expenses. However, knowing they actually average earning over 8% on their investments over all 30 funding periods, there is a disconnect as to why they project 7.45%. Note, the S&P has averaged 9.8% over all 64 rolling 30 year periods.

Second, let's take a moving forward look at their finances. In the past, a teacher worked and paid into STRS for 30 years in order to obtain their pension and benefits. This teacher likely retired at age 55 and lived to age 80. So STRS collected contributions for 30 years and paid out retirement benefits for 25 years.

Currently, a teacher has to work 35 years to obtain their pension and benefits. This teacher must be at least 60 years of age and have paid into STRS for at least 35 years. So STRS will collect contributions for 35 years, but only pay out pension benefits for 20 years. Additionally, STRS will not pay out any annual COLA benefits during this teacher's first 5 years of retirement. Seems unfair. STRS has drastically reduced their long term liabilities by around 25%. STRS takes in monies 5 years longer yet pays out 5 years less. They will get to their 100% fully funded goal at the expense of Ohio's teachers.

6) Nero fiddled while Rome burned. The average retired teacher's pension in Ohio is less than $50,000 for decades of service. The average promised simple COLA benefit is less than $1,500. Compare that to the salaries of the STRS staff (which pays into PERS). A typical annual salary bonus in the investment department, bonus not salary, can be around $150,000. Here's a thought, STRS bonuses could cover many thousands COLA's. We pay for STRS raises and bonuses while they take away our COLA. Something wrong?

7) Action please! In summary, The State of Ohio has relinquished control of their teacher's COLA to STRS. This action has resulted in retirees promised COLA being lost for what might effectively be a 8 year period for the majority of retirees. By relinquishing control to STRS, the legislature has violated many of their own statutes. This caused great financial hardship to retirees, financial hardship that was arguably unnecessary. That said, when will the legislature address STRS's mismanagement, take back control of the COLA and restore the promised and COLA benefit? Until the legislators, or STRS, can restore retirees COLA and make retirees whole, it is only proper that the Ohio's legislature should take actions to: 

A) Freeze all STRS salaries

B) Freeze all STRS bonuses
C) Freeze all STRS hiring
D) Legislatively move all STRS employees from PERS into STRS
E) Review selling STRS assets and real estate
or
F) *Restore the COLA by increasing the Employer's Contribution Rate (ORC 3307.14) or by increasing the Earnings Assumption Rate to reflect accurate historical returns 

Representative Bill Seitz to STRS: Never in my wildest dreams did I expect the STRS Board to reduce to zero the retired teachers’ COLA

Below is the text of a letter from State Representative Bill Seitz. No date was given, but it sounds like it was very, very recent.

Columbus Office

Vern Riffe Center

77 S. High Street

14th Floor

Columbus, Ohio 43215-6111

(614) 466-8258

(800) 282-0253

(614) 719-0000 (Fax)

Rep30@ohiohouse.gov 

Dear STRS Board of Directors,

I write in support of a growing coalition of STRS retirees to request relief from the harsh decision made by STRS to reduce to zero for at least 5 years the COLA adjustment for all existing and new retirees.

When the Ohio General Assembly enacted pension reform legislation in 2012, we passed what each of the five retirement systems recommended by way of shoring up the fiscal stability of each fund. We admittedly gave the STRS Board, at its request, the complete power to set and adjust COLAs; we did not grant this power to the OPERS system, which did not ask for it. Never in my wildest dreams did I expect the STRS Board to reduce to zero the retired teachers’ COLA – especially after many teachers and administrators retired before the bill’s effective date in order to take advantage of the higher COLA which was offered to those who retired before the effective date. Even Social Security allows an annual modest COLA – and most teachers are precluded from participating in Social Security, or have their eligible benefits reduced or offset by their state pension.

I recognize that there are some retirees who have prospered by reason of prior STRS COLA payments that were in excess of the inflation rate. I also recognize that STRS must act to ensure continued solvency, though recent years’ investment performance and the requirement of 35 years of service should go a long way to achieving that goal.

But what is unreasonable is a zero COLA. I have offered numerous ideas to STRS about how to tackle this problem. None have been favorably responded to. What I find particularly unfair is that OPERS is still paying a fairly decent COLA, and its recent legislative proposal to make only modest reductions in that COLA (to 2.5 % or inflation, whichever is less) failed to receive any favorable legislative action. This signals to me that if STRS is not prepared to offer SOMETHING by way of a COLA, even on a targeted basis to those recent retirees who never really benefited from the COLA’s of the past, or those most in “need”, or those willing to waive health care in return for COLA, then the General Assembly may have the appetite to resolve this inequity by taking back, in whole or in part, its prior authority over COLAs.

Thank you for considering my views and the pleas of the many retirees.

Sincerely,

William J. Seitz 

Dean Dennis: Words for the STRS Board June 21, 2018, and a strong admonition from Representative Bill Seitz

Dean Dennis' STRS Address June 21, 2018

My name is Dean Dennis, STRS Chair for the CFT-Retirees Chapter; Spokesperson for Ohio STRS Member Only Forum. (nearly 4,000 members). 

I want to share excerpts of an email letter I received.

"Dear STRS Board of Directors,

"I write in support of a growing coalition of STRS retirees, to request relief from the harsh decision made by STRS to reduce to zero, for at least 5 years, the COLA adjustment for all existing and new retirees.

"When the Ohio General Assembly enacted pension reform legislation in 2012, we passed what each of the five retirement systems recommended by way of shoring up the fiscal stability of each fund. We admittedly gave the STRS Board, at its request, the complete power to set and adjust COLAs; Never in my wildest dreams, did I expect the STRS Board to reduce to zero, the retired teachers’ COLA – especially after many teachers and administrators, retired before the bill’s effective date in order to take advantage of the higher COLA ...."

The letter concludes by stating,

" If STRS is not prepared to offer SOMETHING by way of a COLA ....... then the General Assembly may have the appetite to resolve this inequity by taking back, in whole, or in part, its prior authority over COLAs."

Signed:

Representative Bill Seitz,
Ohio House of Representatives Majority Floor Leader

Next, STRS has always earned over 8% for every 30 year funding period. However, you vote to adopt a low, 7.45%, earnings assumption rate. This drastically increased the unfunded liability. Because of this, we lose our COLA, but for some reason STRS employees don't lose their six-figure annual bonuses.

Next, the Board voted to make teachers work 5 years longer for full pension benefits. You'll gain 5 additional years of higher payroll salaries than you'd receive from a new, lower-paid teacher. Nevertheless,

You vote to reduce your payroll growth assumption. This further increases the unfunded liability. It was 3.5%, knowing your payroll growth is going to be higher, you vote to reduce your payroll growth assumption to 3%. You then make over 4%. Surprise, surprise. What is going on? Same thing with the earnings assumptions; you project 7.45% over 30 years, knowing you average 8.4%, surprise, surprise again. By the way, where's our COLA?

Lastly, without a COLA, the average teacher's pension could put them near the poverty level before they die. For example, In 1987 the average teacher retired with a monthly pension of $2,400. Today, $2,600, is the threshold for food stamps for a family of two. Ohio's teachers deserve better than to have to worry if they'll end up on government assistance.

When it comes to protecting our dignity, we are cut out of the same cloth as our neighboring teachers in Kentucky and West Virginia. Our members have been patiently waiting on you to do what is right, but our patience is wearing thin. I hope when you listen to us, you hear us too.

Thank you,

Mike Mulcahy to STRS Board June 21, 2018: STRS is forcing employers to rob taxpayers

Mike Mulcahy’s speech to STRS Board June 21, 2018

STRS is forcing Employers to Rob Taxpayers

1. Previous Retirement Rules (66% of FAS @ 30 years/any age) – Teacher earns $400,000 in the last years before retiring. Qualifies for a $52,800 pension.

2. New Retirement Rules (77% of FAS @ 35 years/if also age 60, teacher who began teaching at age 25) earns $400,000 in last 5 years and $400,000 additional lifetime career earnings over teacher #1, because they must work 5 years longer. Qualifies for a $61,600 pension.

3. New Retirement Rules (85.8% of FAS @ 39 years/if also age 60, teacher who began teaching at age 21) earns $400,000 in last 5 years and a total of $720,000 (9 extra years times $80,000) in lifetime career earnings over teacher #1.Qualifies for a $68,640 pension.

Result:

a) The Ohio Taxpayer additional burden for 5,000 teachers at the top of the salary scale working extra years to reach retirement as compared to a new teacher is $40,000 times 5,000 = $200,000,000 per year.

b) STRS saves Billions in pension funding as all future retirees are guaranteed to receive 5 to 9 fewer years of pension income.

Now let’s look at the teachers with each of the 3 scenarios mentioned.

Teacher #1 lives to be 85 and receives 25 years of pension of $52,800, totaling $1,584,000 with no COLA. Also has 5 more years in retirement than teacher #2 and 9 more years than teacher #3.

Teacher #2 lives to be age 85 and receives 25 years of pension of $61,600, totaling $1,540,000 with no COLA. This means $44,000 less pension income compared to teacher 1 and, had to work 5 more years, which of course means 5 less years in retirement. This teacher also will pay an additional $56,000 to STRS in pension contributions so they have lost $44,000 + $56,000 + $100,000 and 5 years of retirement!

Teacher #3 lives to be age 85 and receives 25 years of pension of $68,640 totaling $1,716,000 with no COLA. Works 9 more years for $132,000 more income. Teacher #3 also paid an additional $78,400 to STRS in pension contributions so they are ahead by only $53,000, but they also lost 9 years of retirement.