Comparing Ohio Pension Plans

What's there to worry about besides necessities like food, shelter, gasoline, insurance, medications and taxes?

Bob Buerkle addressed the STRS Ohio Board during Public Participation on May 15, 2025.

Throughout the 1970's, 1980's and 1990's, and even earlier, the pension formulas for SERS, OPERS and STRS were the same for a 30-year career. The formula per-year was increased from 1.9% to 2.0% in 1976, 2.1% in 1989 and 2.2% in 1999. If you are a 30-year teacher under age 65 and retiring this year, you will only receive 54.8% of your final average salary, not the 66% it was previously. SERS and OPERS have more generous plans.

At nearly every monthly board meeting for the last 30 years, STRS Management and your hired consultants have told us that STRS is doing great, it's a top tier pension plan, when you know it is not, that STRS can weather the storms, when you can't, that the Baby Boomers have been planned for since the early 1970's, not so much, all the while you continually tell us "How Great Thou Art."

In 1996 STRS became the first MATURE Ohio pension plan, meaning that for the first time in 76 years, the member and employer contributions were no longer large enough to pay for the benefits to retirees. No problem, said the actuary, this is the normal sequence of a pension plan and this is when the investment reserves begin to pay for the benefits not covered by total contributions. "What, me worry?" STRS Actuary Alfred E. Newman told us not to worry, it's all been planned for and factored into the calculations. Not so much. If this is true why are teachers the only Ohio pension retirees who are not receiving COLA's every year?

Many of us think there is an answer to this question and it's called management, actually "mismanagement." For example, after the 2002-2003 recession, which was longer and steeper than average, NO actions were taken and no proposals were brought forth. Consequently, by 2005 the STRS unfunded liability shot up to "INFINITY." All the while STRS continued to contribute to things that were not required by Ohio Revised Code.

For example, as we all know and have been told, the health care fund is not required by Ohio Revised Code.

HC is an important benefit, but in a crisis, it can survive for decades without any contributions. From 2003 it took another eleven years before HC contributions were finally stopped in 2014. Now, after another eleven years and without any employer contributions, the HC Fund investment reserves have grown from $4 billion to over $5 billion and is now over 160% funded.

The very first action that management could have taken would have been to eliminate the funding for STRS retirees Medicare Part A payments, which amount to over $60 million dollars annually. Income that could be used to help the ninety percent of our STRS members who have already earned and prepaid for Medicare Part A, have instead been used to pay for the 10-12% of our members who do not qualify for it. The sixty years of these payments is staggering, in the tens of billions of dollars and way more than would be needed to bring STRS up to 100% funded status. If never paid out in the first place, STRS could have continuously paid the 3% COLA, not alone the reduced yet still elusive 2% COLA. And if the COLA had never been lost, those retirees who did not qualify for Medicare Part A, would have had more than enough money to pay for their own Medicare Part A and also still have more pension income than they have today.

Finally, did STRS Management and our lobbyists beat down the doors of our legislators to seek increased employer increases? NO. Then when the "Great Recession" hit, even up until the fall of 2008, Executive Director Mike Nehf said STRS Retirees had nothing to worry about because our pension plan used a 4-year smoothing process to weather market downturns. By March, 2009 Nehf completely reversed his opinion, then stating that without pension reform the plan would never be able to invest its way to recovery.

What's there to worry about besides necessities like food, shelter, gasoline, insurance, medications and taxes?