Greetings ORTA Faithful!
Many members of our organization have received good news regarding the passage of the Social Security Fairness Act. This legislation marked the end of decades of unfair treatment for all public pension benefit recipients. ORTA engaged in this fight several years ago and, along with many other organizations and individuals, pushed this legislation across the finish line. What this means for public pension recipients is that the money that they contributed into social security over the course of their lifetime would not be penalized due to the person’s service as a teacher, policemen, or other public employee. I have received several questions about how an STRS retiree can check the status of their social security. I am not an expert; however, I was able to sign up at www.ssa.gov and I am now receiving the full amount of my benefit.
I attended the most recent STRS board meeting and was impressed with the board’s ability to function. Much of the friction between the board members and the STRS staff seemed to be reduced. One of the most important duties of the STRS board is asset allocation. This is the determination of where our funds will be invested. For example, how much money will be invested in equities, how much in fixed income, how much in real estate and so on. Over the years, consultants hired by STRS have steered the investment choices with their advice. The discussions are spirited and, I assume, provide the board with the necessary information to make wise decisions about our investments.
What is important to understand is that our pension depends on investment returns to pay our benefits. If you recall STRS collects about $3 billion in contributions from individuals and employers but pays about $7 billion each year. That means that the first $4 billion earned through investments is already spent. That is the reason that the STRS board is so careful when deciding matters such as COLA or length of service.
Because the income from contributions at STRS fall far short of the expenses paid to retirees, ORTA has been vociferous in its position that an increase in the employer contribution rate is essential to stabilize the STRS pension system. Currently, STRS has the highest employee contribution rate in the country for all pension systems that are non-social security states. On the other hand, the employer rate paid into STRS is the lowest in the country. Our active educators pay far more for their pension than other educators around the country while our employers pay the least. In fact, the employer rate is less than ½ of the rate paid by other employers around the country.
STRS is currently searching for a permanent Executive Director. This search is the most important decision that the board will make. ORTA’s hope is that they will find a person that is committed to the membership and less committed to the staff at STRS.
