Friday, July 24, 2020

Robin, Bob and Dean: Letter to all Ohio Legislators enlisting their help to get our COLA reinstated

Posted on Facebook July 23, 2020
July, 2020
Greetings Ohio Legislators!
The Ohio Retired Teachers Association (ORTA) has been advocating for Ohio’s STRS retirees since its creation in 1947.
Despite our best efforts, Ohio’s STRS retirees have experienced a loss of these promised benefits beginning in 2013 with a one-year freeze of our 3% COLA, followed by a three-year, 1% reduction of our COLA to 2% and then followed by 5 fiscal years of total COLA elimination since 2017; unless Ohio's Legislators intervene. This has created a significant financial burden on retired educators.
Since Ohio's Legislators handed over control of STRS COLA decisions to the STRS Board of Trustees, our retirees have witnessed pension cuts that were guaranteed by Ohio Revised Code. While STRS retirees have lost the value of 7 promised cost of  living adjustments, other Ohio public employee retirement systems have been more faithful to the promise that was made to their retirees, even though the financial strength of STRS equals or exceeds all of the other Pension Plans.
Please review the information compiled by two ORTA members below:
Comparing Ohio’s Five Retirement Plans
by Bob Buerkle and Dean Dennis
The most recent Ohio Retirement Study Council (ORSC) Annual Report issued March 4, 2020 is interesting. The report shows the 30-year funding plans for all five systems required by the Legislature. If a plan exceeds 30 years, they must develop a plan to lower their funding level to 30 years or below in the future. An indicator of the strength of a system is how many years the unfunded liability is from
becoming fully funded. So, the lower the number of years (the closer to zero), the stronger the pension plan.
The ORSC Chart indicates the following:
STRS is best at 16.6 years, averaging about 10 years ahead of the other four plans.
PERS is at 27 years
OP&F is at 29 years
SERS is at 25 years
HPRS is at 23 years
Also, in the latest ORSC Annual Report are the 10-year averages for the investment returns for all five plans. The report also lists the Earnings Rate Assumption of each of the five plans. This is important because it helps determine if each plan is exceeding what they expect to earn or is falling short. This is measured in Basis Points (bps). A Basis Point (bps) is one hundredth of 1%. So, if a pension plan expected to earn 8% (Earnings Rate Assumption) but earned 9%, they would have earned 100 Basis Points (bps) more.
STRS is best earning 10.31% (averaging nearly a full percent ahead of the other four plans)
PERS earned 9.69%
OP&F earned 10.24%
SERS earned 9.42%
HPRS earned 8.77%
It is important to note that all 5 of Ohio's pension plans earned more than their expected Earnings Rate Assumptions. Over the 10-year period STRS again performed the best earning 286 bps over their Earnings Rate Assumption. In fact, STRS performs the best in every financial performance category rating except in "Funded Ratio" where they are at 76%, second to PERS at 77%.
Now that we have established the strength of Ohio's 5 pension plans, let’s compare the COLA policies:
STRS - no one has received a COLA since 2017, nothing is in sight. Retirees were not grandfathered.
OPERS - pays a 3% COLA to all pre-2013 retirees and the lower of CPI or 3% to post 2013 retirees.
OP&F - pays a 3% COLA to pre-2013 retirees and future retirees who had 15 or more years of service in 2013
SERS - plans to restart their COLA at the lesser of CPI or 2.5%, in 2021, after a 3-year suspension
HPRS- reviews actuarial reports each year to determine their COLA. In recent years it has been around 1.5%.
ORTA asks that all elected representatives and senators place this issue as a high priority in the next legislative session. Over the next couple of months ORTA will offer suggestions as to how this issue might be addressed. With the STRS Board ignoring our plight, the only place STRS retirees can turn is to you, our elected officials. A pension that doesn't have a growth component such as a COLA is not a pension; it essentially amounts to an annual stipend. Teachers were promised a pension with a COLA for their decades of service, not a stipend. Prior to the November Election ORTA plans to issue a survey to all Ohio Legislators. The survey will ask for a simple “YES” or “NO” response as to whether or not you will vote to support providing Ohio’s retired educators with what they were promised (a pension that grows annually throughout retirement). We will share your support on our website and other websites we support that will reach over 50,000 STRS Members along with their families and friends.
Please respond to this email that you received our correspondence.
Robin Rayfield, ORTA Executive Director
Bob Buerkle
Dean Dennis
Larry KehresMount Union Collge
Division III
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