Skip to main content

STRS Ohio Sets the Record Straight on Buckeye Institute Report

Image
(The text below is reprinted from the news release by STRS on 9/12/11.)

Earlier this month, the Buckeye Institute issued a misleading report entitled, "Taxpayers on the Hook: Taxpayer Contribution Rates for Ohio Government Pensions Outpace National Averages." The report claims STRS Ohio's 14% employer contribution rate is the ninth highest rate out of 34 states with similar teacher retirement programs. STRS Ohio employers do not contribute to Social Security by state law, making the STRS Ohio pension the only source of retirement income for Ohio's educators.


In reality, STRS Ohio's employer contribution rate is below the national average when you factor in the Social Security contribution rate of 6.2% that 22 of those states make on behalf of their public educators. The report only listed the amount those states contribute to the state retirement system and failed to include the additional amount that is contributed to the Social Security program.

A more fair and accurate comparison would have noted that when the Social Security contribution is factored in, STRS Ohio's 14% employer contribution rate ranks 20th out of the 34 states in the report. Among the 12 states that do not participate in Social Security, STRS Ohio's rate ranks right in the middle:
Illinois 24.91%
Louisiana 23.70%
Connecticut 19.20%
Maine 17.28%
Colorado 14.75%
Missouri 14.50%
Ohio 14.00%
Kentucky 13.11%
Alaska 12.56%
California 10.27%
Massachusetts 8.50%
Texas 6.64%
Of the remaining 22 states that contribute to both a public retirement system and Social Security on behalf of their public educators, 18 of those states contribute more than 14% in combined state retirement contributions and Social Security contributions.

The Buckeye Institute report suggests that 401(k)-style retirement plans are a better alternative for Ohio's public employees, but study after study shows that individuals enrolled in these plans are ill-prepared for retirement, as untrained, individual investors earn a significantly lower return than the professional money managers at public pension funds like STRS Ohio. It's clear that defined benefit plans offer a greater retirement benefit at a lower cost.

These continued and unwarranted attacks on Ohio's public pension funds and their defined benefit plans are sure to continue until the Ohio Legislature takes action on pension reform proposals that are currently on hold. Defined benefit pensions give members a retirement they can count on and stoke — rather than drain — Ohio's struggling economy. STRS Ohio paid more than $5.5 billion in benefits during fiscal year 2010, with much of that money staying right here in Ohio, being spent on goods and services throughout the state — and that's something all Ohioans should be thankful for.
Labels:
By

Popular posts from this blog

March Board News

By
(The text below is reprinted from the news release by STRS)   Solvency Period for Health Care Fund Drops to 15 Years; Board Exploring Options to Preserve Plan   At the March meeting of the State Teachers Retirement Board, Paul Snyder, deputy executive director — Finance and chief financial officer, presented results of Segal Consulting’s annual actuarial valuation of the Health Care Fund. The report shows the funded ratio for the Health Care Fund dropped to 63% from 74% last year. This means STRS Ohio has 63 cents on hand for every dollar needed to continue the current plan indefinitely. The valuation projects the Health Care Fund to remain solvent until 2031, a decrease of four years from last year’s valuation — and a decrease of 33 years from the 2014 valuation. The projected 15-year solvency period is an estimate ­— in actuarial terms, there is a 50% confidence level that the Health Care Fund has at least 15 years of solvency. Depending on the strength of financial markets,
Read more

April Board News

By
(The text below is reprinted from the news release by STRS on 4/20/12.) Retirement Board Amends Plan to Strengthen the Financial Condition of the Pension Fund; Pension Design and Contribution Changes Approved The State Teachers Retirement Board voted to amend its plan to further strengthen the financial condition of the pension fund at its April meeting and hopes to see legislative action on its pension reform plan in the coming months. The board’s plan is projected to save about $13.3 billion in accrued liabilities, maintains a 1% employer contribution to STRS Ohio’s health care fund and does not include any increase in employer contributions. The board vote followed several months of discussion and study — including conducting an asset-liability study and a three-year actuarial experience review. All changes contained in the plan require legislative action by the Ohio General Assembly and the governor to be implemented. Components of the plan include: ·          Increase in
Read more

May Board News

By
(The text below is reprinted from the news release by STRS on 5/18/12.) Ohio Senate Passes Pension Reform Legislation; STRS Ohio Hopeful That House of Representatives Will Take Action Executive Director Michael Nehf reported at the May Retirement Board meeting that the Ohio Senate passed STRS Ohio’s long-awaited pension reform bill (Sub. Senate Bill 342) on May 16 by a 31–2 vote, paving the way for the House to hopefully take similar action yet this year. Retirement Board Chair Jim McGreevy expressed appreciation to the Senate and to the bill’s co-sponsors, Senate President Tom Niehaus (R-New Richmond) and Senate Minority Leader Eric Kearney (D-Cincinnati) for taking action on pension reform. McGreevy also complimented STRS Ohio stakeholders for their work in support of the bill. On May 8, the co-sponsors introduced four pension reform bills that were assigned to the Senate Insurance, Commerce and Labor Committee. In testimony that afternoon, Nehf told Committee members that the
Read more