Is the Ohio Retirement Study Council Properly Informed?

The Ohio Legislature has disadvantaged our pension plan when it comes to providing benefits and a proper normal cost compared to other national public pension plans.

On April 30th, Laura Bischoff of the Columbus Dispatch published an article titled, Should Ohio change its teacher pension board? Lawmakers should consider it.

On the same day, News 5 Cleveland reporter, Morgan Trau, published an article titled, Members and teachers’ pension fund board could lose their voting power.

Let’s visit what is driving these sensational headlines. On the surface, you’d think the STRS board is doing something terrible. 

• It doesn’t help that News 5 Cleveland misrepresents the actions of the STRS board. They wrongly reported that the meager 1.5% cost-of-living allowance passed by the STRS for retired teachers for the 2026 fiscal year cost $2 billion when it actually cost $660 million. Legislators and the press, please note that Ohio’s retired teachers have lost over 20% of their purchasing power since 2020. 

• It didn’t help when the Governor illegally unseated his appointee, right after an election. This appeared to many as a deliberate attempt not to accept the membership’s wish to have a board fighting for transparency issues.

• It didn’t help when an “anonymous letter” from the STRS staff arrived at the governor's office and ended up on the Ohio Attorney General’s desk. This also happened right after the election to the STRS board of a reform minded candidate.

In recent developments, the Ohio Attorney General disclosed in an affidavit that the STRS Legal Department drafted the anonymous memorandum, making accusations against two board members. To date, no wrongdoing has been found. 

As one can determine, the sensational headlines aren’t driven by our board members but by others resisting change.

This leads back to the question of whether the members of the Ohio Retirement Study Council (ORSC) are being adequately informed.

The ORSC oversees the five pension boards for the members of the Legislature and has consistently championed the returns of the STRS pension plan.

The STRS board approves investments and allocations. The board oversees a pension dramatically underfunded by the Ohio Legislature. The national consultants who were contracted to advise our pension plan all agree that the Ohio Legislature has disadvantaged our pension plan when it comes to providing benefits and a proper normal cost compared to other national public pension plans.

So, how have our board members addressed this dilemma?

STRS Ohio is handicapped with an Employer Contribution Rate among the lowest in the nation and Ohio Revised Code (ORC) language that states that something as basic as a cost-of-living adjustment cannot be granted unless, in the actuary's determination, it doesn’t materially impair  the fiscal integrity of the pension.

The Employer Contribution Rate is a legislative issue. The legislative (ORC) language regarding “fiscal integrity” was dumped by the Legislature onto our board members and their actuary to figure out and quantify. Here’s what our board members did.

The press didn’t follow this because it would not make for a sensational headline. But our members of the Legislature need to know this in light of the recent press headlines. 

The STRS board extensively consulted with our actuarial firm, Cheiron, and crafted a conservative Sustainable Benefit Plan, a way to restore benefits that were once promised to members but were taken away to balance STRS's books.

The first factor needed was to adopt a rate of return in line with what staff could achieve. This laid the foundation for a three-step process.

1. The first was to maintain a trajectory to become 100% funded. Currently, we are ten years away, which is very good.

2. The second was to use a tread water measurement to ensure that benefits paid allowed the board to move towards the 100% funding goal.

3. The last was a safety net measurement. This variable simulated a severe market downturn to determine how much benefit could be granted, and still allow the pension to recover within 5 years to be on track for its 100% funding goal. No Sustainable Benefit is permitted if the “safety net” measurement can’t be passed. 

The STRS board also put into policy that a de minimis benefit of 1% of assets could be granted if the pension plan didn’t fall outside of 20 years in becoming 100% funded.

All of the above is simplified. Many more variables are involved, such as our asset allocations' volatility factor.

Hopefully, our legislators and ORSC members will see this article. I’m guessing that none of the other four pension boards have adopted a plan so carefully thought out and understood by board members.

The ORSC should use this plan as a model.

This is what transparency and reform look like.

By Dean Dennis, Chair

ORTA Executive Council 

May 6, 2025