To be honest, this feels a lot like an \u201cold retired person complaining\u201d.\u00a0\u00a0But here it is.\u00a0\u00a0I was a public employee, a public school teacher before I retired.\u00a0\u00a0I worked for thirty-five and a half years (to be precise, I wasn\u2019t going to leave in the middle of the year).\u00a0\u00a0The \u201cretirement deal\u201d I got sounded pretty good.\u00a0\u00a0I could retire at a high percentage of my best three years, and I would get additional cost of living adjustments (COLA\u2019s) after I retired.\u00a0\u00a0That was the deal through my most years of my employment \u2013 no surprise \u201ctake it or leave it\u201d offers at the end.\u00a0\u00a0And it was what I depended upon as I planned my future.<\/p>\n\n\n\n
State Teacher Retirement (STRS) is different than most other forms of retirement. As a teacher, they didn\u2019t even take Social Security or Medicare out of our paychecks. We were separate, and the \u201cdeal\u201d was that our retirement system would provide a pension and health insurance, better than Medicare and Social Security. We wouldn\u2019t \u201cneed\u201d those services.<\/p>\n\n\n\n
It was a \u201cstraight\u201d pension program.\u00a0\u00a0We paid ten percent of our annual salary into the system, our employer added another eight percent.\u00a0\u00a0So STRS got thirty-five and a half years of eighteen percent of my salary to invest.\u00a0\u00a0There wasn’t any choice to make back \u201cin the day\u201d; it was sign up and start teaching.\u00a0\u00a0Thirty or more years down the road, STRS would \u201ctake care\u201d of you, with your own money.\u00a0\u00a0The deal was to work for moderate wages and get a solid pension afterwards.\u00a0\u00a0But the deal is changing, long after the promises were made.<\/p>\n\n\n\n
They started to change the rules in the last years right before I planned on retiring. All of a sudden, the Ohio State Legislature was worried that the public pension systems \u2013 STRS, SERS (school employees), OPERS (public employees), SHPS (Highway Patrol) and OP&F (police and fire) might not have enough money to cover their obligations. There were a lot of factors, but one was us \u201cbaby boomers\u201d. There were a lot of us, and we were retiring and living longer, and that was putting pressure on the system. For forty years, the \u201cbaby boomers\u201d carried the systems, with more of us working and fewer retired people. Now, that ratio started to reverse.<\/p>\n\n\n\n
But you\u2019d think if the systems got thirty or more years of eighteen percent of our income, that would be enough. And add to that sum, all of the money they could make by investing that money \u201cfor us\u201d, and it should cover everything. If the phrase, \u201cit takes money to make money\u201d makes sense, then they had plenty.<\/p>\n\n\n\n
If they just stuck the money in the stock market, using the Dow Jones Industrials, they\u2019d averaged\u00a0\u00a0ten percent per year.\u00a0\u00a0 Standard and Poor’s Index, would have been eleven percent over the past forty years.\u00a0\u00a0But the vagaries of the stock markets were too dangerous, they thought, so they diversified the funds.\u00a0\u00a0That made sense, originally.<\/p>\n\n\n\n
But, particularly after the Wall Street crash of 2008, the pressure was on the \u201cfunds\u201d to make more profit.\u00a0\u00a0And, no one, the state leaders thought,\u00a0\u00a0could make profit than private investment folks (just like the ones that crashed Wall Street in the first place).\u00a0\u00a0It didn’t hurt that Ohio’s Governor, John Kasich, had made his “fortune” at Lehman Brothers. So STRS began to pay millions of dollars to have private investment firms control some of their \u201cnest egg\u201d.\u00a0\u00a0And how big is the \u201cegg\u201d:\u00a0\u00a0over ninety billion dollars.<\/p>\n\n\n\n
And in the meantime, you had all of those \u201cpublic\u201d employees at STRS (they actually retire in OPERS) controlling the investments from STRS Headquarters in downtown Columbus: 275 East Broad Street.\u00a0\u00a0It\u2019s a beautiful building, reminiscent of a high class Hyatt Hotel.\u00a0\u00a0And of course, there\u2019s the heated sidewalks, the brick floored covered garage, the in-house child care and the expensive art and sculptures.\u00a0\u00a0They definitely had money to spend, and they spent it.\u00a0\u00a0And that\u2019s all good, as long as they covered all of their retirees costs.<\/p>\n\n\n\n
There were some early signs. For two decades STRS issued retirees a \u201cThirteenth Check\u201d each year. But in 2000 that stopped. And retirees looked at increasing costs of health insurance, particularly for dependents. <\/p>\n\n\n\n
And in 2015 STRS suspended Cost of Living Adjustments. At first it was for five years, but now six years later they are still suspended, with little hope of returning. Meanwhile, the investment staff lost half a billion dollars investing in Panda Energy in Texas, and more in high end real estate with little hope of recouping the costs. But the staff still managed to \u201cachieve\u201d $7.8 million in annual performance bonuses for themselves.<\/p>\n\n\n\n
So with all this, what\u2019s the point. <\/p>\n\n\n\n
STRS, and the other pension funds in Ohio, shouldn\u2019t be \u201cWall Street\u201d style investment houses.\u00a0\u00a0They aren\u2019t there to make their \u201cassociates\u201d a profit, or provide them with all of the \u201cWall Street\u201d type perks.\u00a0\u00a0They should be protecting the future for their members; the now retired, and the future retirees.\u00a0\u00a0But there\u2019s a lot of living \u201chigh on the hog\u201d going on, with little concern for the impact of cuts to their members.<\/p>\n\n\n\n
And there\u2019s the more basic question. If the staff is achieving millions of dollars of performance goals, why is the fund still continuing to charge increased costs to the \u201cmembers\u201d? Shouldn\u2019t the \u201cperformance\u201d be based on achieving one basic goal \u2013 taking care of their members? That\u2019s not what going on.<\/p>\n\n\n\n
Meanwhile, if you are a retired teacher, all of the promises are in question. You don\u2019t \u201cneed\u201d Medicare, but with increasing STRS insurance costs, you probably do. You don\u2019t \u201cneed\u201d Cost of Living Adjustments, but the real \u201ccost of living\u201d continues to increase. Do we really want seventy-five year old substitute teachers? Or your old first grade teacher greeting you at Wal Mart? That\u2019s not the \u201cdeal\u201d we made.<\/p>\n\n\n\n
But at least if we have to sleep on the sidewalks at 275 East Broad, they\u2019re heated.<\/p>\n","protected":false},"excerpt":{"rendered":"