Bob Buerkle: An open letter to all STRS members

From Bob Buerkle, May 13, 2012

Subject: Re: Ohio's retirement systems by the numbers.......guess which system has the lowest funding ratio?

To STRS Retirees and current members,

When I see a chart like this it kind of makes me sick. It is disheartening to see us at infinity but to me that is not the worst part. It is what I know about some of the systems that eats me up inside.

For instance: SERS does not have to reserve very much money for the health care of their members. Why is that? Because they can assess employers for a Health Care surcharge for their retirees of up to about 2% of their total annual payroll. That makes their total employer contributions up to 16% versus our 14%. If STRS were allowed to do the same this would generate another $220,000,000 per year that could be used for Health care. Currently STRS Retirees pay almost exactly half all of the Health care costs themselves. Add $220,000,000 more from employers and the STRS HC Contingency fund would only have to use $30 to $40 Million dollars each year from its $3 Billion dollar reserve. That would be a Health Care Fund that would last for infinity!

STRS has transferred Billions into the HC fund over the past 30 years. Did you know that the current $3 Billion that was removed from the general pension fund for Health Care can never be counted as assets to reduce our unfunded liability? These funds came from us and were supposed to be for our pensions as this is a requirement by law. Funding health care is important but it is not required by law and there is no legal mandate or funding mechanism to provide for it. Unfortunately, we can't even count the $3 Billion as our pension assets because of Government Accountability Standards Bureau Rules (GASB). If we could, we would be out of infinity right now! So who was smarter, the Director and Board of SERS who decided against building up a huge HC reserve when GASB Rules were changed, or the STRS Director and Board who did build up their reserves?

Now let's talk about OPERS which is larger than all 4 other Ohio Pension systems combined. They have never made as much on their investments over the decades as STRS has made. They have had employer holidays in the past but STRS never has, meaning more money has flowed into STRS on a percentage basis than to OPERS over time.

To date OPERS has never had an anti spiking rule like STRS has. You could be a small town elected official like a trustee and make $5000 a year for 19 years, then get a State Job paying $75,000 for 3 years because of the good old buddy system, and qualify for a 30 year (66%) pension of $50,000 a year. In this case you would have paid around $30,000 into the pension plan in your whole 22 year career. Now that's a deal. And if you became director to OPERS for just your last year at $250,000 that would boost your annual pension to $133,300.

OPERS could save all of the systems but they won't. They are so large and their demographics are so much more favorable than all four of the other systems that they could make us all whole again with very little pain. Many states only have one public retirement system for all public employees. It makes for a fairer and level playing field. If Ohio Legislators had the same "skin in the game" that STRS members have they wouldn't be so anxious to take a scalpel to us.

Finally, our STRS employees should only have our plan in which they can be members. Letting them be members of OPERS is like having the fox watch the chicken house. If they were members of our plan would they work harder? Would they be more prudent with the way they spend our money? Would they make sure they lose less of our money in a market downturn because it is now also their money? Would we have an unfunded liability sitting at infinity right now? No way!

Bob Buerkle

Retired CPS Teacher [Cincinnati]

Former CFT Retirement Chair and OFT Retirement Committee Member for over 20 years. Current member of CFT, OFT, AFT, CORE, and Hamilton Co. ORTA

(From John Curry 5/12/12; see complete post here: http://kathiebracy.blogspot.com/2012/05/you-dont-suppose-8835-years-when-all.html.)

Source: Ohio Retirement Study Council.................................