Teachers in Ohio were always promised a simple Cost-of-Living-Adjustment (COLA) upon retirement. It is only through a COLA that retired teachers can keep up with inflation. Many of Ohio's teachers teach in rural areas and retire with very modest pensions. They rely heavily on their promised and earned COLA. The State Teacher Retirement System (STRS) has broken their promise to Ohio's retirees.
STRS can restore our COLA if they are realistic about what they actually earn and adopt an earnings assumption perhaps .50% less as a safety margin. Currently, STRS has adopted earning 1.15% less than what they are actually earning. This is primarily what has killed our COLA. They are ignoring both historical market earnings and historical STRS earnings.
My name is Dean Dennis, STRS Chair for the CFT-Retirees Chapter, Spokesperson for the Ohio STRS Member Only Forum. I retired with 35 years from the Cincinnati Public Schools.
Today I want to make some points:
First and foremost, the adopted STRS investment return assumption, or earning assumption, of 7.45% is significantly too low. While it might serve STRS employee's with their investment goals; it does not serve STRS members regarding their pension. This too low of an earnings assumption is the primary reason our retired members are going without a COLA and our active teachers will not have a COLA for 5 years upon retirement.
STRS trustees know STRS is earning 8.6% over the 30 year funding period, this is far above 7.45%. Trustees know that STRS has always earned above 8% for every 30 year funding period. Yet, you are assuming 115 basis points less than you are earning. This isn't okay.
Subtract 7.45 from 8.60 and the difference is 115. Since we have a 115 basis point difference, we can easily add 25 basis points to the earnings assumption and add back $5 1/2 billion to the 30 year period. We can easily add back 50 basis points and add back $11billion. This would still allow for a 65 basis point cushion.
Trustees will only gain credibility with members, when members see them take into account what they actually earn, and then adopt an earning assumption more in line with reality.
Adopt an earning assumption 40, 50, or 60 basis points lower as a safety margin. Credibility is lost when trustees adopt an earning assumption 115 basis points below actual earnings. This only punishes those you are supposed to be serving. Are we really to believe you can't provide a COLA?
Review the handouts, I passed out to you. The stock market's 30 year rolling periods average is nearly 10%. The stock market even earned 9.99% during the 30 year period which included: Black Monday, Desert Storm, the Savings and Loan crisis, wars in Iraq and Afghanistan and three recessions.
Trustees should easily be comfortable in adjust the earnings assumption upwards from 7.45%
Revisit the recent adopted mortality tables. This "new actuarial best practice," adversely penalizes retirees. Today's 75 year old should not be assigned the same mortality rate as a 21 year old entering the system. This accounting falsely skews actual liabilities. It also harms retirees from receiving their rightful COLA.
I know that being only granted 3 minutes, I will run out of time, so I can't go into any depth on avoiding alternative investments, changing the payroll growth assumption rate, seeking legislation to change our 30 year funding period to 35 years, seeking legislation to increase in the employer contribution or increasing the time to present to the Board from 3 minutes to 5 minutes.
So, I'll switch gears and close with one last thought, having 5 elected STRS board members for active teachers, yet only 2 elected STRS board members for retired teachers deserves attention. This is a disproportionate ratio which does not reflect the number of active teachers compared to retired teachers.
Since there are 7 elected board members, the ratio should be a 4 /3 split and both retired teachers and active teachers should be allowed to vote for all elected STRS Board members. I hope you give this some thought as well.
Ohio's teachers now contribute more of their salaries than any teachers in the United States but they will not get a COLA for 5 years after they retire after working 35 years. They also will have to be at least age 60. Ohio's current retired teachers were promised a COLA their whole careers but will not receive a COLA for 6 years; unless changes are made. All of this is because Ohio STRS adopted earnings assumptions unbelievably lower than what they actually earn. The STRS staff is doing exceptionally well when it comes to salaries, and bonuses. Ohio's retired teachers are not!
Recently, the Ohio STRS Member Only Forum joined forces with the Ohio Retired Teachers Association and sent a letter to every member of Ohio's General Assembly explaining the state of affairs for Ohio's active and retired teachers.
Teachers are also encouraging the public to contact Ohio's gubernatorial candidates: Richard Cordray firstname.lastname@example.org and Mike DeWine email@example.com and ask "will you support Ohio's teachers in receiving a COLA?" Ask them to post the answer on their website.
Lastly, Please Share This Petition on Social Media, Numbers Matter. Dean Dennis October 2, 2018
By now, all members of Ohio's General Assembly should have received a letter from our Forum and ORTA stating clearly why we are without a COLA and the hardships placed upon Ohio's educators.
At this time there are two things we can do to move our efforts forward:
1) Email Richard Cordray at firstname.lastname@example.org and Mike DeWine at email@example.com and simply ask will they show public support for us in the way of public statements or postings on their websites for restoring our COLA and helping Ohio's teachers? We will be watching.
2) There are thousands of us on this forum. If each one of us takes it upon ourselves to get a dozen signatures for our petition, we can reach 20,000 signatures before the mid term elections. It is important to spread the petition on social media and keep it growing.