Thursday, April 18, 2019

Bob Buerkle to STRS Board: It's time to own up to your actions

Bob Buerkle's Speech to STRS
April 18, 2019
Cost Of Living Adjustments Must Be Restored
In the Spring of 2009 Mr. Nehf addressed this Board and said that "without changes, the STRS would not be able to fund pension benefits sometime in the future." That seemed reasonable at the time since STRS investment experts had lost 48% of our money, from peak-to-trough, over the 18 month period between October 2007 and March 2009. Actuaries and STRS Staff scrambled their brains for months and months with "LEVERS,
DISCUSSIONS and PROJECTIONS." I don't disagree with the fact that an action plan had to be developed and some things needed to be changed. I do disagree with the path taken, when better alternatives, with successful track records, were available but not considered.
I was not alone in the approach that many reasonable people would have selected, since 29 other State Pension Plans did so and developed "NEW PLANS (TIERS) FOR NEW HIRES." Nearly all of these systems grandfathered their pension promises to retirees and active members. Even the nation's two worst funded pension systems, Kentucky and Illinois, protected their retirees and current teachers. Their future pension changes will only apply to new hires.
I would also like to point out that New York has utilized this "TIERED" approach 6 times since the very large 1974 financial crisis. New York protected all of their retirees and actives in each of their plans for life. I might add that today New York is considered one of the strongest pension plans in the country. You know from 45 years of past-practice, what the rules are from the day you are hired and what your benefits will be at retirement. This is what STRS Ohio Members also used to think about our Pension Plan, but no more!
New "Tiers" may change the age, service, formula and contribution requirements for new hires but the teachers hired under these "new tiers" know the pension plan that they are being offered will not change and that their retirement rules are permanent. This allows members to plan for their retirement throughout their careers, knowing exactly what they will receive after their teaching careers are over. It also provides them with the opportunity to compare the New York Pension offer to other states. Knowing what STRS Ohio has done to their retirees and actives, why should anybody trust this system in the future?
In retrospect, how could Mr. Nehf or anybody have known that STRS investments would earn 36.13% by June 30th, 2011? They could not. But they also did not take action to help us after these facts were known! STRS had 15 months of time before Governor Kasich signed the Pension Bill that went into effect in 2013, during which a less punitive path could have been explored. This did not happen. In fact STRS took actions which created an additional 15 Billion dollars of debt by reducing their future "earnings assumption rate" from 8% to 7.75%, even though they had just made 13.54% and 22.59% in the previous two fiscal years. STRS later made things worse again, reducing the EAR to 7.45% which caused another 12 Billion of debt. It's time to own up to your actions.


Dan MacDonald's speech to STRS Board
April 18, 2019

Holy Thursday, the last supper, and here we are. How appropriate? Easter is upon us but the only rising will be in the merit based raises budgeted for STRS staff. A 4.8 percent STRS compensation increase for 2019-2020. How many pieces of silver versus fiduciary loyalty to membership?

I am Dan MacDonald, a 38 year STRS retiree from the Cleveland Hts-University Hts City School District. I am here as Executive Director of Local 279-R, Northeast Ohio AFT retirees.

Let’s start with the salaries and bonuses, total compensation, of the top 2 Investment staff for 2018.

(Click image to enlarge)

All Investment staff positions are also eligible for merit-based raises. Board members, when do we, actives and retirees, find out the determining factors and criteria that go into which positions, and then, the factors influencing the amount of the raise given?

In contrast to the continual raises and bonuses, a reminder that the Investment Department gets a Performance-Based Incentive of salary even if the General Fund bellies-up, let’s look at what an active and now a 2018 retiree was denied by the Final Average Salary (FAS) committee.

A Cleveland Achievement Credit which amounted to $560 spread over two years can’t be used in FAS because it was for “services not rendered.” Cleveland Metro contracted with its union to pay the attendance bonus. According to ORC with STRS’s interpretation, you can’t raise your salary average for just being present. Services were rendered!

Additionally, a little over $6,000 in the teacher’s final year of service was denied because it was an excessive increase over the previous year salary. In the last year the teacher was forced to be responsible for assigned autistic students from their arrival to their departure and was paid such by the district for these extra hours.

STRS ruled that the excess wage was to be excluded as if it were a supplemental contract. Although the teacher received a letter that there could be an appearance before the FAS committee, the teacher was never informed of the time or date of the meeting until April 15th, 1 month after the meeting. Blame the US Postal Service and STRS. The committee met, the teacher was denied and received a letter stating “Since the laws and rules that create STRS Ohio provide no further appeal, the action of the Retirement Board is final.” FAS Customer Service? Membership wrong, STRS’s might makes it always right.

STRS ACQUIRES, ACTIVES/RETIREES get DISEMBOWELED. What other monies are being denied actives in their FAS? As always, there should be SHARED SACRIFICE AND A LEVEL PLAYING FIELD, retirees want their COLA restored.

Dean Dennis to STRS Board: This isn’t ethical. We need your help

Dean Dennis’ Speech to STRS Board
April 18, 2019
My name is Dean Dennis. I retired with 35 years. I am the STRS Chair for the CFT-Retirees Chapter and the spokesperson for Ohio STRS Member Only Forum.
The STRS membership is nearly equally comprised of retired and active teachers.
Here is a 16 oz container [holding up a water bottle]. It represents the STRS retirees. It’s 100% full, or funded, due to retired teachers having contributed to STRS for 30 years or more, along with their employers. For at least 30 years you have had these contributions for investments and used them to average earnings of over 8%.
For every 30 year funding period, you always earned over 8%, although you have always assumed you would earn less. So in short, you exceeded your investment goals.
Investment goals are set to meet monetary promises to retirees, a COLA being one such promise. A COLA has been promised since 1971; it was even built into the STRS pension formula. Of note: in 1971, STRS was 59% funded.
Here is another 16 oz container. This represents the active teachers. It’s only 40% full, or funded. This is because the average active teacher in Ohio has only made contributions for 12.5 years. Therefore, STRS will still be receiving an additional 20 years of their contributions. Active teachers cannot be 100% funded from their monies while in the process of making contributions. If this container were to become 100% funded, it should only happen from total investments over a very long period of time and from good stewardship. It should never happen by diverting deferred compensation monies earned by and promised to retirees.
Now here is a 32 oz container [larger water bottle]. This represents both the retirees and active teachers when combined. Combined, the container is about 70% full or funded. Being 70% funded and having a 30% liability is actually the norm for a public pension system. The 30% liability exists because the retirement system makes future pension promises to new hires. This creates a needed liability. In public education active teachers become retirees and are replaced by new hires; there is always a flow of new contributions coming in. it is a dynamic system.
In closing, at the March Board meeting you stated your objective was to become 100% funded. I asked, “How are you going to do this when 170,000 of active teachers, on average, owe STRS more than 20 years’ worth of contributions towards their pensions?”
We know the answer; in fact, we are experiencing it. Your 100% funding objective cannot be shared by those you serve by the way you’re going about it. It’s just wrong. It’s worse than any collective bargaining agreement being violated.
Your retired peers are being irreparably harmed while being robbed of their deferred compensation: their COLA. This isn’t ethical. We need your help.
Thank you.
Larry KehresMount Union Collge
Division III
web page counter
Vermont Teddy Bear Company