Sunday, March 24, 2019

Bob Buerkle's 11 page presentation to STRS Board, March 21, 2019

Bob Buerkle delivered 11 pages of material to the STRS Board on Thursday, March 21st, 2019. The first few pages showed the Inflation rate from 2000 through 2018 had averaged 2.12%. However, even though this is a lower than average inflation rate period the loss in purchasing power on a $50,000 pension is over $5000 from 2000-2018. Other pages showed 106 years of inflation data. When you look at the inflation rates for all 106 years since the Federal Reserve was established you see that the very long term inflation average is just over 3%. This is the most likely reason that the legislature originally approved a 3% CPI based COLA in 1979 and then made it an automatic 3% simple COLA in 2002. 
Bob explained that even if STRS had retained the 3% simple COLA for retirees, which STRS changed to 2% in 2014-16 after a freeze in 2013, we would eventually have fallen behind in actual purchasing power because in the real world inflation is compounded every year. (See Social Security COLA handout below, with comments, showing how a compounded COLA keeps up with inflation.) 
If you do the projections you find out that a 2% compounded COLA is worth more than a 3% simple COLA after 35 years. This is verified by the STRS's own data. If you look at the handout that shows all living STRS Retirees you will see that the 799 who were still alive in 2013 had retired with a monthly pension of $967.19 thirty years earlier in 1983. However, even with 30 years of 3% COLAs, which more than doubled their original pension to $1996.81, they have fallen behind by 11.6% in purchasing power. CAN YOU NOW SEE THE DEVASTATION DOWN THE ROAD FOR OUR RETIREES? 
Additionally, Bob provided a 7 page document to the Board that was authored by the former Ohio Attorney General Anthony J. Celebrezze Jr., from June 17th, 1987. In this document, Celebrezze verifies that the COLA is necessary to overcome the ravages of inflation over time and that the purpose of the COLA, as codified by retirement codes for all of the 5 pension systems, is to help retirees retain as much of their original purchasing power as possible. He continues by stating that he believes his interpretation "correctly reflects the intent of the General Assembly."

Inflation Documents
(Click each one twice  to open)

[See Celebreeze papers posted below]
Celebreeze Document 
(the rest of Bob Buerkle's post above)

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