It’s been four years since half a million retired teachers in Ohio have gotten cost of living increases from their pension fund. And with inflation on the rise, teachers have howled about how the lack of those increases has been eating into their benefits.
But after many months and of protests and frustration by those retirees, who rely on the pension system because they don't pay into Social Security, that could be changing.
State Teachers Retirement System (STRS) Director William Neville told the legislature’s Retirement Study Council that "strong investment returns" in the last fiscal year have brought STRS to 80.1% funded, up from 77.4%. STRS manages about $94.5 billion in assets.
Neville said STRS had said it would consider the suspension of the cost of living adjustment (COLA) as part of a five-year actuarial review. He said that would include looking at issues such as mortality and asset liability.
“The lever that looks to me like what the board is focused on is a 2% COLA for retirees and a reduction or elimination of what would be a 35 years and age 60 requirement for actives going into effect in 2026," Neville said.
Neville said that would likely be a one-time COLA reinstatement: “July 1, 2022 would the time that COLA, is the most - I think the most likely time that COLA would be.”
Retired teachers have been frustrated that other pension funds have kept or restored COLAs. At the same meeting of the Retirement Study Council, the State Employees Retirement System (SERS) announced a 2.5% COLA for its retirees.
But STRS has maintained the COLA suspension was needed to protect the fund’s liability. It had reduced the COLA from 3% to 2% in 2013 before suspending it completely in 2017.
An analysis by STRS' actuary Cheiron said an on-going 2% COLA would add about $13.8 billion in liabilities.
Last year auditor Keith Faber announced a special audit of STRS based on a report by Ted Siedle, who was hired by retired teachers questioning STRS’ stated fund performance and management fees.
Siedle, a former U.S. Securities and Exchange Commission asset management lawyer, wrote a report that blasted STRS for lack of transparency and legislative oversight and mismanagement of billions he says could restore the COLA. He told the Statehouse News Bureau in an interview in October: “One of the key problems that STRS has that they've lost the trust of their participants. Schoolteachers don't trust them anymore."
In its response to the Benchmark Financial Services' report, STRS shot back that the report had "numerous misstatements and allegations not supported by evidence" and said it’s handed over 22,000 pages of documents to Siedle. STRS has also said the pension fund has beat established benchmarks and outperformed the market over the past decade.
Faber's office says the audit is still ongoing and there's no timetable for when it might be released.
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