We deserve better than this!
Why can OPERS continue to pay a 3.0% / 2.3% COLA (depending on date of retirement)? Why can OPERS actives retire with full benefits after 32 years of service? Why can OPERS do this, while STRS can't? These questions have plagued me for a while.
Is if because STRS pays out more each year than they bring in? No. Although that is a problem that will likely precipitate the need for increased employer contributions in the future, that is not the answer. Why? Because OPERS is in a very similar negative cash flow situation.
Is it because OPERS is not as well funded as STRS? No. That is not the answer either. Both STRS and OPERS have been over 75% funded since 2017.
The answer lies in investment perfomance, as the graph shows. There are a couple of important things to note about this graph. 1) It does not start at $0 but rather at $40 billion, and 2) STRS and OPERS have different fiscal years. STRS's fiscal year ends on June 30th while OPERS's fiscal year ends on December 31st. Thus, the fiscal year end numbers are 6 months apart, making yearly comparisons invalid. However, what is valid and important here is the trend over time.
After the great recession of 2008, OPERS had a quicker recovery and continued to grow their Net Plan Assets at a greater rate than STRS. The result is an OPERS fund that has been $20-30B greater than STRS since 2017. This is why STRS retirees have gone without a COLA and actives are working longer and paying more.
Unfortunately, we can't turn back the hands of time. But going forward, we don't have to sit back and blindly accept STRS's strategies for our money. We deserve better than this.
Michelle Flanigan, a former financial analyst for American Greetings, teaches government and economics, including AP government and politics, at Brunswick High School, where she has taught for 26 years. She is an active member of the Ohio STRS Member Only Forum (MOF) on Facebook, where she posts about the investment practices of STRS Ohio.
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