STRS wants pension reform to include more contributions. But who will pay the bill?
- STRS Ohio Watchdogs
- Mar 27
- 3 min read
Updated: Apr 2
Pension reform is coming, and Ohio’s State Teachers Retirement System wants a 4 percentage point increase in contributions to meet lawmaker demands for a healthier, more stable system.
There’s only one problem: Who should foot the bill—teachers or schools?
Collectively, teachers and their districts pay 28% into the pension system. STRS wants to bump that to 32%.
Teachers unions say they’ve already paid their share, pointing to increases after the Great Recession that raised employee contributions to 14% of teachers’ salaries.
“There is no room for any increase in employee contributions‚” Ohio EducationAssociation President Scott DiMauro said.
But with lawmakers eyeing school funding cuts as part of the budget, public school advocates say districts can’t afford it either. Districts also contribute 14%.
“Given the current budget proposal, which includes reductions to public school funding, school districts are already facing financial challenges, ” Ohio School Boards Association spokesperson Jennifer Hogue said. “These cuts could make it more difficult for districts to maintain the high-quality services students depend on.”
Why lawmakers want pension reform
State Sen. Mark Romanchuk, a Republican from Mansfield, introduced Senate Bill 69 in February.
The placeholder bill, for now, is just a few short sentences that say Romanchuk will draft legislation that makes “necessary changes to the law to ensure the health and sustainability of the state’s [five] public retirement systems.”
To do that, Ohio’s pension systems could be asked to reduce their funding requirements from 30 to 20 years, STRS Interim Executive Director Aaron Hood said during the board’s March meeting.
A funding requirement is the number of years a plan has to close the gap between what it owes retirees and the money it actually has.
And while STRS can meet that benchmark today, Hood said dropping down to 20 years is
a “super serious proposal.”
Why STRS wants more money coming in
STRS oversees the investment of more than $90 billion for Ohio’s 500,000 teachers and retirees.
An 11-member board that includes appointees and elected members oversees the pension system. And up until 2023, the board had spent years cutting back on benefits, including Cost-Of-Living Allowances (COLA).
Frustrated retirees fought back—voting in new board members who promised change.
In 2023, STRS gave retirees a 1% COLA bump but skipped an increase in 2024. In December, the board gave out $300 million in one-time bonus checks to retirees. It also lowered the years of service teachers need before retiring if they want full benefits.
But STRS is a “mature” or one-to-one system, meaning they have one working employee for every retiree. The ratio was four active teachers to one retiree when state Rep. Sean Brennan, a Parma Democrat, began his teaching career.
“We teachers are very blessed to live longer than any other pensioners in all five systems,“ Brennan said. ”We have a lot of folks who have been retired longer than they worked.”
Mature systems like STRS have a greater risk of paying out more than they are taking in and depend on investment returns to remain solvent.
Another big recession could, in Hood’s opinion, put the system above 20 years.“We’re not here to beg for a new Nintendo 64... ‚” Board Member Michael Harkness said during STRS’ March meeting. “We’re here because we’re trying to do the best for the health and the protection of the fund overall.”
That’s one of the reasons why Brennan, who sits on the Ohio Retirement Study Council, is
open to idea of increasing contributions. “I’m not committing to anything, but I am open to exploring all possibilities,” Brennan said. But he wasn’t sure where the money should come from either.
He supports fully-funding the state’s school funding formula--something Gov. Mike DeWine’s budget doesn’t do.
“That’s why we don’t support the governor’s budget, ” Ohio Federation of Teachers President Melissa Cropper said. She, like DiMauro, doesn’t support increasing teacher contributions to STRS either. But they don’t want stabilizing the system to harm students either.
“This legislature needs to stop trying to do these things on the cheap,” Cropper said. "You create a quality education system by taking care of the people who do the work.
What about the otuher pension funds?
Ohio’s Police & Firefighter Fund asked lawmakers to increase what local governments pay into their retirement system in the last General Assembly.
House Bill 296 passed the House but didn’t get a vote in the Senate.
Opponents said the increase created an unfunded mandate that would have forced cities to slash spending on other programs or raise taxes.
That is essentially the same issues schools and teachers have with STRS’ proposed contribution increase. “I know of some states where the state has provided a revenue stream, ” DiMauro said. “But I’m not naive enough to think that politically is a viable option right now.”
