One of the critical functions that the Ohio Conference performs for you, our members, is participating in coalitions that advance collective interests.
With regard to public college and university faculty in the State Teachers Retirement System (STRS), we belong to a coalition called Healthcare and Pension Advocates of STRS, or what we refer to simply as "HPA."
HPA is a coalition of active educator groups like ours, retired educator organizations, as well as associations that represent the K-12 and higher education employers. HPA originally began to save the retiree healthcare program, but as pension issues sprouted, began to take on a wider set of issues.
AAUP president Rudy Fichtenbaum, a member from Wright State University, and OCAAUP executive director Sara Kilpatrick represent faculty as part of HPA. This allows us to voice concerns to the STRS staff about the direction of the retirement system. We balance the interests of those in the Defined Benefit (DB) system with those who have chosen the Alternative Retirement Plan (ARP).
In 2012, a set of reforms were made to STRS in order to shore up funding of the DB system to meet legislative demands. These reforms included raising the mitigating rate for those in the ARP, as well as increasing contributions from DB members by 4%.
Most recently, the STRS Board and staff have undergone the legislatively-mandated five-year actuarial study. The study has revealed that market returns over the last five years have not been as high as were anticipated. The consultants hired by the system have recommended a new discount rate (the expected rate of return) of not higher than 7.25% (the current rate is 7.75%). The STRS staff are recommending a more conservative 7%.
Lowering the discount rate means that the system's liabilities will increase drastically. This then creates pressure on the system to make additional reforms in order to lower the liability. The STRS staff is recommending to the Board that they should eliminate the cost of living adjustment (COLA) for retirees.
Rudy Fichtenbaum taught econometrics for 35 years. He keenly understands economic forecasting and believes that STRS is making unnecessary decisions that will hurt retirees. Please take a few moments to read the letter
that he sent to our colleagues in HPA.
Like the STRS Board and staff, we want to ensure the preservation of the Defined Benefit plan, but we firmly believe that we cannot keep cutting, cutting, cutting away at active educators and retirees alike if the DB is going to have any real value to members. And please know that we will continue fighting for all public college and university faculty to be treated fairly by STRS.