Dean Dennis, Founder of the STRS Ohio Watchdogs and President of the Ohio Retirement for Teachers Association (ORTA), adressed the STRS Ohio Retirement Board on October 19, 2023.
Members are constantly reminded that STRS is a top quartile, top tier pension system. And although in February of 2021 Wade Steen couldn't get any support to include the word "transparency" into Board Policy, STRS proudly posted in the April 21, 2023 Board News that STRS Ohio was recognized for transparency for the third consecutive year by Ohio Auditor of State Keith Faber.
Then there is CEM Investment Benchmarking - CEM annually tells us STRS Ohio’s performance ranks in the top 25% of our peer group and our investment costs are low compared to our peers. So how do these accolades help our members?
If you are an active teacher, the years to retire for a full pension has increased. Your employee contribution has increased 40%. You currently pay 14% for a negative contribution benefit valued at 11%. When you retire you'll need to wait 5 years for inflation protection and then, probably longer.
If you are a current Retiree, approximately 45,000 of your peers have died since 2013 without seeing the inflation protection they were once promised. But let's look at a living STRS retiree that depends on inflation protection. We'll compare the retired teacher with a retired Social Security recipient. We'll start with a $40,000 pension for both. We'll also start with the year 2017, because that's when the COLA was suspended and we want to see the importance of inflation protection. From 2017 to 2023, the STRS retired teacher went from $40,000 to $41,600 which is a only 4% increase. The Social Security recipient went from $40,000 to $51,281 for a 28% increase. Yes, retired members have lost 24% of their purchasing power in less than 7 years.
Now since STRS management likes fun facts. Let's take that same retired teacher. That teacher received a 1% for this year which resulted in $400 or $33 a month (before taxes). Let's compare that to a STRS investment department manager and pretend they recently retired. They get to be in OPERS. Since, every year they have nice 6 figure salaries and ALWAYS get a nice bonus, a pension of $462,000 is not unrealistic. Their annual COLA would work out to be around $13,800 or $1,155 a month. It must be nice to be in OPERS.
For years, members have been asking for a plan to restore benefits. Sadly, our lobbyists have contributed to the problem by allowing the Employer Contribution Rate (ECR) to remain at 14% for 40 years putting us well behind the average of other non-social security states, who average over 22% ECR. I believe going forward any de minimis monies should go towards solving the plight of active teachers since that might have an impact, whereas a 1% COLA is somewhat insulting. Please work on increasing the Employer Contribution and change the 100% funding goal and simply comply with the 30 year legislative mandate so members can have some inflation protection.
Dean Dennis is a retired teacher from Cincinnati Public Schools, Founder of the STRS Ohio Watchdogs, President of ORTA, and a member of the Ohio STRS Member Only Forum.