The recent article “Ohio teacher pensions: Control of the board, $95B at stake in election” is certainly correct in making the statement that the State Teachers Retirement System of Ohio board election — which is now taking place — is a pivotal moment for the State Teachers Retirement System.
However, the issues in this election centered around an “unproven investment strategy” are incorrect. If anything, the issues center around the current STRS investment strategies, which have failed to deliver the resources needed to keep the promises made to Ohio’s teachers.
Recently, investment expert Richard Ennis, who was hired by Ohio to help clean up the mess at the Bureau of Workers Compensation in the aftermath of “Coingate," wrote a Toledo Blade essay that explained how STRS had “underperformed a passively investable benchmark by 1.62 percentage points per year for … 13 years…” and “much of the underperformance could be attribute to unrecouped investment expenses incurred by STRS.”
Active teachers are working longer and paying more, but will receive less when they retire.
A large part of what they will not receive is their guaranteed cost-of-living adjustment, which the STRS Board eliminated. How will active teachers fare over time, since they will not receive Social Security in retirement and will also not have a COLA?
Those who are already retired did so with the promise that they would receive a COLA; however, after making that irrevocable decision, they have found over the last decade that the STRS Board reneged on its promise. Retirement for active teachers and for those already retired without a COLA is a formula for impoverishment.
In Ohio, a non-Social Security state, asking active teachers to work longer, pay more, receive less, and retire without a COLA is asking them to take a vow of poverty in their golden years.
This hurts all Ohioans. It will also surely drive the best and the brightest teachers, who are among the most educated individuals in Ohio, to look for work elsewhere or to choose a different profession. That is what is truly at stake in this election.
What also is at stake in this election is a lack of transparency and an investment staff that feels entitled to millions of dollars annually in bonuses while the pension loses billions of dollars each year.
What is at stake in this election is the senior leadership of STRS, which continuously releases a stream of propaganda, telling members, the public, and the Ohio Legislature that everything is okay and that STRS is one of the best pensions in the country.
They paint a picture that members are happy; indeed, they are not. What STRS doesn’t admit is the truth: They have no real plan to restore benefit cuts and to provide a COLA for retirees.
STRS Ohio loses around $320 million a month (approximately $10.7 million per day) because expenses are greater than contributions. This difference needs to be made up from investment income.
What STRS senior management and their Board member supporters don’t say publicly is that STRS cannot invest its way out of this crisis. In other words, active teachers will have to continue to work longer, pay more, receive less, and retire without a COLA. Teachers currently retired are left worrying if they can make it without any inflation protection.
The truth is, STRS Ohio needs more money to keep its promises and that money will not come from the proven failed investment strategy that STRS is using. At the end of the day, this election is about transparency and facing the truth. It is about electing Board members that will hold staff accountable. It is about electing Board members who are willing to face up to the problems the pension has and are willing to look for real solutions.
Dean Dennis is a retired Cincinnati Public Schools teacher and administrator. He is president-elect of the Ohio Retired Teachers Association.