From Dr. Robin RayfieldApril 24, 2025
Greetings ORTA Members!
As spring begins the local chapters of ORTA begin their meetings. I have attended several meetings already and have several on my calendar for April and May. I always look forward to visiting with the membership at local chapters to share what we know about our pension. I have received many questions about when STRS retirees might see a restoration of promised benefits. I wish that I could provide a definitive answer, but I am unable to offer any assurance. I can offer that the board is working within the restrictions that Ohio law imposes on the STRS system to address the restoration of benefits. I also recognize that ‘talk’ does not provide any protection against inflation. Talk is, however, the beginning of any solution that may emerge. I know that many of you are frustrated with the pace of the reforms at STRS and that we want to see action sooner rather than later. It is also advisable to familiarize yourself with the problems at STRS. Below, I have attempted to highlight the problems as I see them.
1. STRS faces a $4 billion dollar shortfall in revenue each year. The income from employer contributions and individual contributions at STRS is about $3 billion. The expenses at STRS (mostly from the benefits STRS pays retirees) are $7 billion. That means that STRS must earn $4 billion in revenue from investments just to stay even. Although a daunting task, this is possible as the average return on investments at STRS over its history is 8%. Unfortunately, when a downturn in the market occurs STRS is not able to earn what it needs. Sometimes, STRS might even ‘lose’ money such as it did in the great recession of 2008. In the years that STRS does not make the necessary $4 billion it needs each year it must spend money from its assets, meaning that the pressure to earn income from investments is greater. This has forced STRS to take on more risky investments and creates more problems.
2. When ORTA and other organizations like STRS Members only Facebook, and STRS Watchdogs began to criticize STRS for what we deemed poor investment returns the Staff at STRS pushed back and pointed to the fact that STRS is in the top percentage of pension funds with regards to investment returns. This argument has led to contentious elections and divisions on the board. As the argument unfolded a deeper dive was necessary. You may recall that ORTA led a crowd funded campaign to conduct a forensic audit of STRS. Edward Siedle conducted an audit on behalf of ORTA of the STRS system. He found information that was troubling. Unfortunately, STRS did not cooperate with this audit and refused to provide information on costs and expenses of STRS’ investment program. The lack of transparency was the most concerning finding of his investigation.
3. Using the forensic audit as a starting point reform board members continued to push for transparency and information regarding what STRS pays people to invest our money has emerged. What we think we know at present is that our investment strategies at STRS have resulted in $12 billion less in revenue than it would have earned by investing in an inexpensive index-based passive investment strategy. Certainly, one might say that hindsight is 20/20 and you cannot go back in investing money, but it is also important to recognize that if STRS simply invested in the market and took what the market gave, we would be significantly better off than we are now.
4. What is complicating this issue to a greater degree is the fact that STRS investment staff have received bonuses for their performance every year, despite not beating a market benchmark. I think everyone could accept that when the market is down STRS has less to work with and promised benefits could be reduced. But, when these down years occur, it is important that down years should impact everyone, not just the retirees and active members of STRS. ORTA has called STRS management out for its ‘lack of shared sacrifice’ on multiple occasions. In a recent discussion with STRS management we were informed that STRS employees are not interested in ‘sharing any sacrifice and want to be paid.’ That is very troubling.
5. The question going forward is how do we fix STRS for Ohio’s educators? Certainly, STRS is capable of reforming itself with regards to transparency, and controlling the expenses associated with its investment program. This will certainly help with the annual shortfall of $4 billion. Earning a higher net rate of return could offset this shortfall. With an assumed rate of return at 7%, earning just ½% more (7.5%) would generate $500 million each year. Another piece to this puzzle is increasing the number of teachers paying into the STRS pension system. Currently, STRS has approximately one active teacher for each retiree. This 1/1 ratio designates STRS as a ‘mature system’. Adding more teachers to the pension system is important. Finally, convincing the Ohio legislators to increase the contribution rate for employers would help to close the gap between the income at STRS and the expenses at STRS. Ohio ranks as the second lowest employer contribution rate for non-social security states in the nation. Ohio has been at the current rate for over 40 years. Asking the state of Ohio to increase its employer contribution rate is appropriate and legislation to seek this increase is in progress. I am not optimistic that the current leadership in Columbus has any appetite for increasing this contribution rate given the recent news that the plan by the house leader is to decrease funding for Ohio’s public schools and increase the money sent to private schools.
I hope this overview of where STRS is at present helps everyone understand the complexity of the STRS problems.
STRS Board Member Elections
The election for three seats on the STRS Pension board is underway. The retiree seat currently held by Dr. Rudy Fichtenbaum is not being contested. Dr. Fichtenbaum is the only candidate for the seat he currently holds so retirees will not receive a ballot. Rudy will serve another four-year term beginning in September.
The active members will vote for two seats on the board. ORTA has endorsed Michael Harkness and Chad Smith for these two seats. Retirees are urged to let their active member friends to vote for Harkness and Smith. The results will be known in early May.
National Assessment of Educational Progress (NAEP)
I received an email from the NAEP seeking educators to assist with their testing program. You can find out more at www.worknaep.com. This part-time work is available to retired teachers.
Contact Allison King at 630-781-1728
Pension Defense Fund
ORTA’s Pension Defense Fund has worked with both Wade Steen and Dr. Rudy Fichtenbaum assisting both people from the attacks by Governor DeWine and Attorney General Yost. As you might imagine, the cost to defend a person from attack by the two most powerful people in the state is tremendous. If you are able to donate to this worthy cause, please visit the website at orta.org/defense-fund.
You can also mail a check to:
ORTA Pension Defense Fund
250 E. Wilson Bridge Rd. Suite 150
Worthington, Ohio 43085
STRS Meetings
The next meeting of the STRS board is scheduled for May 14-16. The date for public participation will be announced closer to the date of the meeting on the STRS website.
Final Thoughts
I will close with what I know about the passage of the Social Security Fairness Act by the US congress and signed by the president in January of this year. If a person qualified for social security (had a minimum of 40 quarters of contributions) you received payment from social security. Going forward the elimination of the Windfall Exclusion Provision (WEP), as part of this bill, means that qualified people would receive their full amount of social security each month. The other part of this national legislation eliminated the Government Pension Offset (GPO). The GPO impacted spouses that were eligible for spousal benefits of social security beneficiaries. ORTA recommends that STRS retirees reach out to a nearby social security office and see what you may qualify for. Appointments are made weeks in advance to retirees are urged to reach out soon.
Robin Rayfield, Executive Director
Ohio Retirement for Teachers Association
