The STRS investment staff's benchmark should be: Can we pay our members their COLA?
ORTA leadership was involved in numerous calls and two Zoom meetings last week. The focus was primarily on the Journal of New Finance article, "Retirement at Risk."
ORTA is seeking transparency. We are questioning how STRS justifies the large gap between their reported performance numbers (upon which investment staff salaries and bonuses are based) and the actuarial net numbers (how much we actually earned). The research article shares that OPERS doesn’t have the problem that STRS has.
All of this can get confusing without a financial background. But one thing is clear. The STRS salaries are out of line compared to peers, and we don’t have basic inflation protection. A dependable COLA.
Exploring STRS investment staff salaries and bonuses with the help of AI states, “Data compiled across Ohio public records, official compensation audits, and forensic reports show the average STRS investment staff employee earns roughly $85,000 to $115,000 more per year in total compensation than their direct counterpart at OPERS.”
An article by Chris Tobe reveals that 49 STRS investment staff employees made over $400,000. And 85 made over $200,000. Later, I’ll compare this to our members' lack of a reliable COLA.
So how are these high salaries tied to us not having a COLA? Here is how: These structured salaries encourage investment staff to focus on numerical benchmarks to take home more money. With 30% of our investment portfolio tied up in real estate, private equity, and private credit investments, actual performance isn’t transparent. Numerous financial experts, including our own state auditor, have questioned STRS investment practices and suggested they have cost members billions of dollars. The STRS investment staff's benchmark should be: can we pay our members their COLA? Too many fees and investment expenses go unaccounted for because of how we operate. We are incentivizing staff to direct our monies into a black hole.
Now, while STRS staff might get upset by this article, let’s put it in proper perspective. Over the last 10 years, our members have lost approximately 25% of their purchasing power. They didn’t earn $200,000 to $400,000 a year. Let’s look at an average teacher's retirement salary: $50,000. Last year they received a 1.6% COLA.
Let’s break this down. A 1.6% COLA on a base salary of $50,000 amounts to $800. However, federal and state taxes will take away over 13% of this, reducing the COLA to $694, or an additional $57 per month.
ORTA would like to help the public and legislators understand what it’s like to retire without any COLA protection. If you have a story to share about how you’ve been impacted by a lack of COLA, or if you know of a member who is going through a hardship because they are falling behind due to a lack of COLA, please contact the ORTA office at (614) 431-7002. Dr. Robin Rayfield or I will call you back.
Dean Dennis, Chair ORTA Executive Council
After a lawsuit filed by OEA, OFT, and OH AAUP, a Franklin County judge issued a preliminary injunction blocking an amendment to Ohio H.B. 96 that would have restructured the State Teachers Retirement System (STRS) of Ohio board by replacing four elected educator seats with government appointees. Judge Carl A. Aveni has repeatedly declined requests by the state to lift the block. The preliminary injunction to block the removal of teachers from the STRS Ohio Board is still in place.
ORTA needs your help. This is genuinely a truth-to-power issue. It takes money to stand up for what is right. ORTA wants to fight for your right to have a voice.
This is why we are asking members to make a sustaining contribution to the Pension Defense Fund for the next 24 months to fight current and future lawsuits. We are seeking 1,000 members to contribute $10 per month to the fund. This would enable us to pay attorney fees and rebuild our Pension Defense Fund.
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