Click here to read a letter regarding STRS investments with Silicon Valley Bank (SVB).
STRS Ohio pension fund faces pivotal moment with board election
If the reform faction gains a majority vote on the board, it could undermine confidence in STRS and play into a national movement that favors replacing defined benefit pension systems with 401(k) plans, DiMauro said.
In defined benefit systems money is collected from a large pool and invested over the long term. Pension checks at the end of a career are based on years of service and salary history. With 401(k) plans, the risk shifts to the individual to make smart investments.
“Electing the wrong people to the board significantly increases the risk to the system,” he said.Dispatch.com
Why the Ohio Education Association is Supporting Arthur Lard for STRS Board
We believe that ALL educators deserve the ability to retire with financial security.
Strong pensions provide educators with predictable, guaranteed benefits when they retire. In 2023, OEA members can elect an active seat representative to the State Teachers’ Retirement System (STRS) Board. That is why OEA continues to advocate for policies and support board members at STRS that have the members’ best interests in mind and ensure the system’s financial security.
For the active seat on the STRS ballot this year, OEA recommends Arthur Lard for re-election. As an OEA member, Arthur Lard knows that retirement security means having a retirement system that is stable and well-funded so that members can financially afford to retire comfortably. It also means trusting the system will be there for them for the rest of their lives, but that does not place the total burden on active educators to fund the system. Now that he is rounding out his first term on the Board, Arthur Lard wants to finish what he began as a member of the STRS board.
As a member of the Board, of which he is now only one of two OEA members on the STRS board, Arthur Lard has advocated for the best interests of OEA members and educators across the state. He has fought and supported policies that have kept STRS financially secure and has opposed initiatives that would put the pension at risk.
Like many teachers, Arthur Lard wanted to be sure that the people making decisions about his retirement money had our best interests at heart. So, he ran for the STRS board to give teachers a voice. As a member of the Board, Arthur fought for policies that would secure the financial security of the system and worked to return benefits to members. He removed the rule against letting teachers retire before they’re 60 and secured a 3 percent cost-of-living increase for retirees. Now our pension and healthcare are more substantial.
But Arthur’s opponent, and his supporters on the STRS Board, keep making empty promises for policies that would put our pension at risk. We must re-elect Arthur Lard to the STRS Board because of his dedication to keeping our pension financially secure long into the future.
Arthur Lard’s Success on the STRS Board & His Future Plans
Arthur fights for the financial security of STRS:
- Arthur believes that all educators deserve the ability to retire with financial security. He will make sure that our STRS pension remains strong and secure for all Ohio teachers, including retirees, active teachers, and those just entering the profession.
- Arthur believes pension security should be a top priority. He will fight against unproven investment schemes targeting our pension dollars.
As a teacher and OEA member, Arthur has the best interests of educators in mind:
- Arthur believes transparency is another top priority. He will fight to ensure members are aware
of investment decisions that affect their retirement. - Last year, the STRS Board approved a measure to eliminate the requirement that members be 60 years old or older to retire and approved a one-time 3 percent cost-of-living adjustment (COLA) for eligible retirees. Arthur abstained on this vote, not because he opposed the measure, but because he wanted the Board to do more to benefit ALL members by also reducing contributions for active teachers. Arthur supports continuing to return benefits to ALL STRS members when it is fiscally responsible to do so.
- Arthur has been on the STRS Board for 3 years and is a proven leader. In that time, the solvency of the health care plan has improved greatly, securing the future of current and future retirees. Arthur has also assisted in the lowered health care premiums and provided rebates to retirees.
Arthur is honest and will never overpromise just to get elected:
- Unlike his opponent, Arthur will never make empty promises, putting your pension at risk, to get
elected. Arthur is dedicated to keeping STRS solvent and strong into the future. - Arthur is one of the last two OEA members on the STRS board, which clearly means he is outside the majority. Arthur will continue to honestly serve and represent the best interests of educators and OEA members on the STRS board without making promises he knows he cannot keep getting elected.
- What does STRS stand for?
STRS stands for the State Teachers Retirement System. This is the public pension system for Ohio’s teachers and other certified educators. - Who pays into the fund?
Public employees who are members of STRS include K-12 teachers, faculty members at public colleges and universities, certified educators such as school psychologists, counselors, etc. as well as school district administrators such as principals and superintendents. - What is the benefit of a pension versus a 401K?
The primary benefit of a defined benefit (DB) pension versus a 401K is that a defined benefit pension will pay a lifetime benefit that you cannot outlive. With a 401K you may outlive the retirement savings you have accumulated in your account.STRS also offers a defined contribution (DC) plan which is similar to a 401k, that it is portable so that those who switch careers or move out of state can take their money with them and roll it over into further retirement savings. Additionally, STRS offers a combined plan that is a hybrid of the DB and DC. - What are the benefits that STRS provides?
STRS provides pension benefits to retirees. The calculation of retirement salary benefits is 2.2% of the Final Average Salary (FAS) per year of service. FAS is calculated as the average of the five highest years of salary. A teacher with 35 years of service at retirement would have a base pension benefit of 77% of their FAS. After five years of retirement, a retiree is eligible for a cost-of-living allowance (COLA) when granted by the Board.
STRS also provides retiree health care coverage. Eligible members have subsidized health care premiums based on their years of service. - What is the funding status of the pension?
In the most recent actuarial valuation (fiscal year 2022), the funding ratio of the STRS pension plan is 80.9%. STRS has assets on hand to pay just over 80% of the benefits that have been earned by active and retired teachers. It is important to note that these earned benefits are not due all at once but will be paid over the coming decades as active teachers are not currently drawing benefits. If all economic assumptions are met, STRS is on track to be 100% funded in 11.5 years. STRS offers retiree health care coverage for retirees. The health care plan is fully funded so we know it will be there for active teachers when they retire. In 2022, retirees enrolled in the health care program receive a $600 rebate on premiums. - Why is STRS not currently fully funded?
The unfunded liability grows as retirees live longer, drawing their pension for longer periods of time. Decreased state education funding forces districts to hire fewer staff or stagnate wages which contributes to the liability. Educators choose to leave the profession due to working conditions; these and other factors reduce the amount of money going into the pension fund which impacts the liability. - How much do I personally contribute?
Employees contribute 14% of their salary to STRS towards their retirement benefits. - How much does my school district contribute?
Employers contribute 14% of payroll to STRS towards the retirement benefits of STRS members. - What’s a COLA?
A cost-of-living adjustment (COLA) is an increase in the base benefit amount for retirees. This is designed to allow the benefit to grow over time. You will be eligible for a COLA after five years after retirement. To improve the funded percentage of the pension, plan the STRS Board froze COLA benefits in 2017. With improved funding, the Board approved a 3% COLA for fiscal year 2023. - When can I start drawing benefits?
Eligibility for retirement with full benefits is when a member has 35 years of service at any age or is age 65 with at least 5 years of service. Last spring, the STRS Board repealed a requirement that would set eligibility for full benefits at 35 years of service and at least age 60. - Who makes the decisions of how to invest pension dollars?
The STRS Board sets an investment policy, and investment strategy including the asset allocation—what percentage of assets will be invested in US stocks, international equities, fixed income, real estate, etc. Professional investment staff and investment managers make individual investment decisions in accordance with these policies. - How is membership of the STRS Board determined?
The STRS Board is comprised of eleven members that are defined by state law. There are four appointees: representatives of the Governor, Treasurer, the General Assembly, and Superintendent of Public Instruction. There are seven elected members: five members elected by active employees contributing to STRS and two elected by STRS retirees. - How will I receive my ballot?
STRS contracts with an independent firm to conduct retirement board elections. For active seats on the board all contributing members and those who have accounts on deposit with STRS are sent a ballot via mail. - When do elections occur?
Board elections are held each year. When there is a contested election, ballots are sent to members in early April via mail. Filled out may be returned via mail, however you can vote by phone or online as well. Full instructions on how to vote are included with your ballot. The deadline for voting in the 2023 STRS Board election is May 1, 2023. - Who is eligible to vote?
For contributing seats on the STRS Board, all members who pay into the fund and members who have paid into the fund but have since left the education professions are eligible to vote. For retiree seats, member retirees are eligible to vote. In 2023, there is one contributing seat that is contested. - How do I vote?
Members can vote by mail, phone or online using the instructions sent with their ballot materials which arrive in early April. The deadline for voting in the 2023 STRS election in on May 1, 2023. - What if I lose my ballot or accidentally throw it away?
If members lose their ballot, they can contact the vendor for a replacement. A phone number will be provided (this will be known closer to the election). - Where do I find the candidates?
Background information and answers to questions are provided by the candidates and included with the voting materials. - How does OEA select who to endorse for the STRS board?
OEA has a screening committee of active and retired STRS members who interview candidates for the Board. The screening is held in early December, and all declared candidates are invited to screen. The screening committee uses the interview and relevant background information to make a recommendation to the OEA Board of Directors who votes on whether to endorse a candidate. - Who is OEA recommending in 2023?
This year’s election is for a contributing member seat. OEA has endorsed incumbent candidate Arthur Lard for this year’s STRS election. You can find OEA’s STRS endorsement site at https://www.ohea.org/get-involved/oea-strs-board-endorsements/ - How does OEA advocate for educators’ pensions?
OEA advocates for members by seeking to ensure the long-term solvency of the pension plan so that the plan is available for members long into their retirement as the financial condition of STRS improves, OEA seeks improvements to be shared among active and retired members.
Recently, OEA members urged the STRS Board to adopt a 3% COLA for fiscal year 2023 and eliminate the age 60 requirement from retirement eligibility. In March of 2022, the STRS Board approved both of these recommendations. OEA also partners with other groups in the Healthcare and Pension Advocates for STRS (HPA) that meets regularly with STRS staff to receive information and make recommendations about issues such as access to affordable retiree health care.
At the state level, the Ohio Retirement Study Council (ORSC) provides legislative oversight of the pension systems. The ORSC advises and informs the General Assembly on all matters relating to Ohio’s benefits, funding, investments, and administration of the five pension systems. OEA advocates for policies to ensure the long-term solvency of STRS and the security of member assets at the ORSC and in the State Legislature. OEA also advocates full-fund public pensions in Ohio by the State. We know that a well-funded pension and secure, reliable benefits are critical to ensuring members’ retirement security and attracting and retaining qualified educators in Ohio. At the federal level, OEA continues to push for repeal of the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) that unfairly punish public servants by reducing earned Social Security and spousal benefits of many of Ohio’s retired public-school employees. - Why did STRS pay millions of dollars in bonuses last year to its employees?
STRS holds tens of billions of dollars in trust and uses a professional staff to help invest that money. STRS pays out over $7 billion in benefits each year but only collects around $3 billion in contributions. The difference has to be made up by investment earnings. Among other public pension plans, STRS has some of highest investment returns in the country. We need to assure we have a solvent pension system so that our benefits are there for us when we retire. - How is that the case when STRS has done worse than the S&P 500 in the last 20 years and lost out on billions of dollars?
Rather than put all our eggs in one basket the STRS Board has selected a portfolio aimed at balancing risk and return. Investing only in stocks will look good over some periods of time and look bad over other periods of time. The Auditor’s report shows this with multiple charts. Opponents of STRS, for whatever reason, are cherry picking data to drive their agenda. - Why hasn’t Arthur Lard restored the 30 years of service to retirement benefit?
STRS is 80% funded for the current level of benefits. While Arthur’s opponents make empty promises, his priority is making sure our pension is reliable and will last for a lifetime when we retire. Last year the Board voted to do away with the age 60 requirement which will help many teachers retire earlier and a 3% COLA for retirees. Arthur supports this because it was good for members and did not put the solvency of the fund at risk. - Why does STRS no longer automatically pay a COLA every year?
Making sure the pension benefits of our members are solvent is the top priority. An automatic 2% COLA adds about $18 billion in unfunded liabilities. Arthur is committed to providing a COLA to retirees as long as it doesn’t put the long-term solvency at risk. Further, active teachers should benefit from adjustments made to the pension plan. Last year the Board voted to pay a 3% COLA and eliminate the age 60 requirement. - Why can Social Security provide an 8.5% COLA and STRS can only provide 3%?
STRS and Social Security aren’t comparable institutions. STRS provides almost 77% of your salary while the average annual social security benefit is $18,605.