The soap opera at the State Teachers Retirement System STRS. The entity that manages Ohio’s teacher pensions, has made non-stop headlines of late. The turmoil includes complaints from retirees about meager cost-of-living adjustments (COLAs) in an age of sky-high inflation, STRS staff bonuses paid in a year when the system lost billions, an investment wipeout tied to the Silicon Valley Bank collapse, and the suspension of the STRS executive director.
The latest is an allegation from
Attorney General Dave Yost that two STRS board UAE Phone Number List members pushed a questionable investment deal behind the scenes. Looming in the background is a system that has amassed some $20 billion in unfunded pension liabilities and is lobbying the legislature to increase employer contribution rates—a move that would take another bite out of school budgets—to fill some of that gap. Ohio teachers deserve better. Their hard-earn money shouldn’t get funnel into a trouble pension system. Taxpayers, who could be aske to foot the bill if contribution rates rise, deserve better, too. And so do students, who may suffer if pension payments divert more dollars from the classroom. What to do? Remembering the adage “if you’re in a hole, stop digging” would be a good place to start.
In that vein let us first pause and consider why
STRS seems to face such endless drama—and CW Leads then consider what Ohio could do to improve the situation. A key problem facing STRS—and other public pensions, too—is that high-stakes decisions about other people’s money and retirements are made centrally through a political process. In a traditional pension (“defined benefit”) system, retirement contributions go into a big old pot. the “pension fund,” which is used to pay out benefits. Policymakers and bureaucrats are charge with making decisions about how those dollars are invest and how retirement benefits are determine. Even without myriad scandals that can ensue, politics puts tremendous stress on this model. In the case of STRS, teachers, often via union representatives, push for more generous benefits and bigger investment returns. State officials must then wrestle with these demands (and sometimes resist them) based on fiscal or risk-taking implications.
