GREENE COUNTY RETIRED TEACHERS’ ASSOCIATION
Volume XVII Issue 2
11:30 a.m. Wednesday May 24, 2017
Memorial United Presbyterian Church
343 W. Ankeny Mill Road, Xenia, Ohio
Program: Bob Stein, Chair of the STRS Board and one other Board member on STRS Fiscal Accountability
At the regular STRS Board Meeting on April 20, action was taken to Preserve fiscal integrity and work toward long term financial solvency in our pension system. The asset liability study was completed in March and resulted in the Board adopting a new asset mix. The Board also asked the STRS staff to look at the cost-of-living adjustment (COLA) models used in other states.
While every state is unique, some commonalities were found: • Ad hoc COLA’s are becoming more common than automatic COLA’s. Our 2% was an automatic and not tied to other factors such as inflation and the Consumer Price Index (CPI). • Compounded COLA’s are rare. Ours was a simple COLA, meaning that it was a % based on the original amount and not the current amount you are receiving. • It is common for COLA’s to be tied to inflation and the CPI. STRS has actually done better with a fixed COLA than having it tied to inflation which is probably a contributing factor in the unfunded liabilities. • Delaying the onset of a COLA is becoming common. Teachers retiring now under STRS were not eligible for a COLA until after 5 years of retirement. • Some states pay a COLA only on a portion of the benefit. In other words, you might only get a COLA on your first $30,000.00. Ohio has always paid a COLA on the full amount of your original amount regardless of that amount. • A 2012 Towers Watson survey found that only 10% of private sector retirement plans provide a COLA.
There are three economic assumptions that have significant financial impact on STRS: • Our actuarial rate of return was too high. It was at one time 8% and was reduced to 7.7%, and has been reduced to 7.45%. These may seem a small reduction, but is a lot of money when spread over $73 Billion. • The Board adopted new mortality assumptions that reflect that we as a group are living longer. Living longer means drawing more money than originally planned from the system. If your retirement was an individual plan, you could simply at some point run out of money. Because
we are a group defined benefit plan, you will continue to draw regardless of how many years you live. • The payroll growth assumption had to be reduced. There are fewer people than projected paying into the system and their pay is not growing at the rate projected so the amount going in is a smaller pool than had been projected. So, a motion was made and seconded:
In order to preserve the fiscal integrity of the retirement system, cost-of-living increases granted on or after July 1, 2017, pursuant to Ohio Revised Code Section 3307.67, will be reduced to 0%from the current 2%.
Be it further moved that no later than the next quinquennial (occurring every 5 years) actuarial experience review conducted pursuant to ORC Section 3307.51, the Board will evaluate whether an upward adjustment to the cost-of-living increase is payable without materially impairing the fiscal integrity of the retirement system.
The motion passed with only one no vote from Jim McGreevy, who voiced his concern that the burden of fixing this issue falls only on the retired teachers and is not a shared responsibility.
Teachers still in the workforce are paying 14% into the system and their boards are paying an additional 14%. A person retiring in 1990 after 30 years had an average member contribution rate of 8.04%. The average contribution rate in 2010 after 30 years of service was 9.3%.
The COLA is what helps our benefit check keep pace with inflation. There was no statutory COLA for STRS recipients until 1971. The member rate was 7.8% and the board paid an additional 12.9%. The COLA was 1.5% on the 3rd anniversary of retirement. From 1971 to 1996, a COLA was only paid if the CPI increased by at least the amount of the COLA or the accumulative increase since 1971 equaled the COLA level. For a few years there was a COLA Bank which was confusing to manage, but in 2002 the COLA became 3% by Ohio law.
While the motion that passed says that the COLA will be reviewed “no later than” the next 5 year review (2021), there was some hope that it would be reviewed annually. We would have felt better if the motion had said annually. With all the changes that have been made including the suspension of the COLA, it is projected that in 2021 our funded ration will be at 68% and our funding period will be at 24 years – less than the 30 years required by law.
Let us be thankful for what we have, where we live and the times we live in. There are many in this world who would gladly change places with us. At the same time, let us be mindful that there are many who suffer from “pension envy” and are still working to do away with defined benefits and COLA’s. Our voices need to be heard and we are stronger as a group than individually.
Bob Stein, Chair of the STRS Board and one of the two STRS Board members who represent the retired teachers will be our speaker at the Greene County Retired Teachers meeting on May 24. This is a good time to come and hear directly from Bob about what is happening. You will have the opportunity to ask questions and express your ideas. Our power base comes from our numbers. Please be there to support our organization and ORTA.
Bill Wright, President and Linda Chaney Beaver, Vice President
“Lunch on Wheels”
If you could use assistance in obtaining your luncheon plate and drink at our quarterly luncheons, please take note of the new checkbox on our reservation form. “Lunch on Wheels” will bring your food plate and a drink of your choice to your seat if you check the box on our reservation form.
Medicare Card Change Coming
STRS provides Medicare through Aetna but for those who also have Medicare cards, Medicare is preparing to stop using Social Security numbers for identification next year and will send new cards to patients with Medicare ID numbers. According to AARP, the move is required by a law enacted two years ago to discourage identity theft.
The Centers for Medicare & Medicaid Services (CMS) recently updated its web page to help health care providers prepare for the change. The agency plans to begin mailing the new cards with Medicare beneficiary identifiers (MBI’s) in April 2018. During a transition period through 2019, providers can use the MBI’s or health insurance claim numbers (which are based on Social Security numbers) on transactions such as billing and claims.
3 Scholarships to be Awarded this year
Yellow Springs High School, Xenia High School, and Cedarville High School will receive our three scholarships this year.
Karen Schmitt requests we donate old eyeglasses and/or cases. Please bring to luncheon and she will see that the Lions’ Club receives them for distribution to those who can use them.
Membership – Jim Beaver
The GCRTA brochure was posted in every Greene County School in April. It includes our mission statement, information regarding our meeting dates, our activities as well as how to join our organization. In May, our district representatives will be contacting their school districts to provide me with the names of newly retired educators in Greene County. I will mail an invitation to these retirees in hopes they will join us at our August meeting.
If you know of any retired teachers or administrators who taught in Greene County or live in the county who need an invitation, call me at 937-305-1935 or email me at email@example.com
GCRTA Luncheon Reservation (for luncheon Wednesday, May 24, 2017)
Please reserve ___________ lunch(es) @ $12 each ________ Prospective Member
_________ I would like to try the new “Lunch on Wheels” concept and have my lunch plate served at my seat and my drink then provided by the server.
Luncheon cost: ___________ Please bring unused stamps to the meeting if
Scholarship Donation: ___________ you can donate!!!!!!!!!!!!
Please make checks payable to GCRTA.
In order to get an accurate count of the number of lunches needed, all luncheon reservations are due by Thursday, May 18 to:
Fay Sesslar, 80 N. Limestone St, Jamestown, OH 45335
Those without a reservation will need to pay $14.INDEX