ORTA Legislative News
Call to Action!
ORTA has learned that Rep. Devin Nunes of California has introduced legislation in Congress that would require public sector defined benefit pension systems like STRS to calculate their liabilities using the rate of return on U.S. Treasury bonds.
The legislation, known as the Public Employee Pension Transparency Act, (PEPTA) would artificially inflate unfunded liabilities of pension systems such as STRS to much higher levels than what the plans actually face. Despite what is taking place in other states with regards to public pensions in crisis, STRS remains well funded. The requirement to use the ‘risk free’ rate of returns as suggested in this legislation is unnecessary. As ORTA members already know, previous pension reform efforts within the STRS system has already strengthened our system.
The real design of this type of legislation is to do away with defined benefit programs such as STRS and force conversion into ‘defined contribution’ pension systems. This would likely force active members and retirees of the public pension systems to be responsible for managing their own investments and for any losses they might incur as a result of individual plan performance.
Rep. Nunes has, on several occasions, attempted to force this kind of legislation before. ORTA is concerned that, every time he introduces legislation such as PEPTA his efforts may become a reality.
PEPTA is yet another attempt to cast public pension systems in the worst light possible. If successful in gaining support for PEPTA Rep. Nunes’ bill will have a devastating effect on otherwise healthy public pension plans such as STRS. Our system uses current actuarial data to determine the rate of return on investments. Being forced to use the rate of return on U.S. Treasury bonds would be neither accurate nor realistic.
ORTA is concerned that Rep. Nunes may attempt to have PEPTA included into the legislation under consideration by the Congressional Joint Select Committee on Pensions. This congressional committee is currently working on a fix for public pension systems that are in trouble across many states. These systems are in trouble, not because of inaccurate actuarial investment projections, but because those systems are UNDERFUNDED. STRS is not underfunded and should not be forced into a ‘fix’ that is not necessary.
What you need to do NOW!
ORTA is asking its members to contact Senators Sherrod Brown and Rob Portman and voice opposition to any elements of PEPTA that are introduced to the Joint Select Committee on Pensions. Both of Ohio’s senators serve on this committee and have the necessary influence to oppose this legislation. ORTA members are encouraged to write (or call) both Senators Brown and Portman at the addresses below:
What to say and what to write:
• Do not allow Rep. Nunes PEPTA language to be added as an amendment to any legislation proposed by the Joint Select Committee on Pensions
• Ohio’s public retirement systems are prudently managed and overseen by a board of trustees, the Ohio Retirement Study Council and ultimately, the Ohio General Assembly
• PEPTA is an unreasonable solution that is not necessary for Ohio’s well-funded public retirement systems. It would simply result in additional costs, administrative burdens and negative publicity for these systems
• STRS is not in financial distress but would be if forced to comply with the unreasonable standard mandated by PEPTA
• If financially evaluated in this manner, it is likely STRS retirees would face extreme financial hardships that are unnecessary
• STRS retirees contribute billions of dollars into Ohio’s economy. The economic impact of PEPTA would threaten the financial outlook for hundreds of thousands of Ohioans.
Senator Sherrod Brown:
713 Hart Senate Office Bldg.
Washington, DC 20510
Phone: (202) 224-2315
Senator Rob Portman:
448 Russell Senate Office Bldg.
Washington, DC 20510
Phone: (202) 224-3353