(FROM the STRS Ohio eUPDATE)
STRS Ohio executive director Michael Nehf expressed his appreciation to the key legislative leaders who helped bring the board-approved plan to fruition. "I want to thank Senate President Tom Niehaus (R-New Richmond) and Minority Leader Eric Kearney (D-Cincinnati) for co-sponsoring the pension reform bills," said Nehf. "I am also grateful for the leadership that Representatives Kirk Schuring (R-Canton) and Lynn Wachtmann (R-Napoleon) showed in shepherding these much needed bills through the House."
On Sept. 12,
the Ohio Legislature passed pension reform bills to improve the financial
condition of all five Ohio pension systems, including the State Teachers
Retirement System of Ohio (STRS Ohio). The STRS Ohio bill, Substitute Senate
Bill 342, was based on the reform plan approved unanimously by the State
Teachers Retirement Board on April 19, 2012. The bill now goes to Governor
Kasich for his signature. Once signed, the bill will go into effect Jan. 7,
2013, but most of STRS Ohio's plan changes will take effect July 1, 2013, or
later.
STRS Ohio executive director Michael Nehf expressed his appreciation to the key legislative leaders who helped bring the board-approved plan to fruition. "I want to thank Senate President Tom Niehaus (R-New Richmond) and Minority Leader Eric Kearney (D-Cincinnati) for co-sponsoring the pension reform bills," said Nehf. "I am also grateful for the leadership that Representatives Kirk Schuring (R-Canton) and Lynn Wachtmann (R-Napoleon) showed in shepherding these much needed bills through the House."
Provisions in
Sub. Senate Bill 342 are projected to save $11.6 billion in accrued liabilities
and will allow STRS Ohio to maintain a 1% employer contribution to its health
care fund. The bill increases age and service requirements for retirement;
calculates pensions on a lower, fixed formula; increases the period for
determining final average salary; increases member contributions to the system;
reduces the cost-of-living adjustment (COLA); defers the COLA for future
retirees; and calls for no COLA to be added in fiscal year 2014. Under these
provisions, STRS Ohio is projected to meet the 30-year funding requirement by
2016, if all actuarial assumptions are met.
The bill also
provides the Retirement Board the authority to make future adjustments to the
member contribution rate, retirement age and service requirements, and the COLA
as the need or opportunity arises, and depending on the funding progress. In
addition, eligibility for survivor and disability benefits increased to five
and 10 years, respectively, for all new hires.
The bill's
passage is the culmination of three years of efforts by STRS Ohio and its
stakeholders to address the system's funding challenges. Various plans were
reviewed with legislators and stakeholders before agreement was reached earlier
this year. The bill was supported by Healthcare and Pension Advocates for STRS
(HPA) — a coalition that is comprised of groups representing more than 470,000
members and retirees, as well as employers.
Executive
director Nehf recognized the significant role that HPA played throughout the
development and legislative process. "Legislative leaders expressed early
on that they were looking for broad constituent support for any benefit
changes," said Nehf. "We knew the needed changes would be difficult,
but the Healthcare and Pension Advocates understood the changes were necessary
to preserve the pension fund. HPA's support was key in getting this bill
passed.”
STRS Ohio has outlined the key components of the bill on our website including
some background on the need for these changes and the effective dates of
various provisions of the bill. Information will also be shared with both
active and retired members in STRS Ohio's October newsletters.