Thursday, November 12, 2009

Time Bomb: Beginning to Understand

I have already written a couple of articles about the ticking time bomb which is the State Teachers Retirement System (see Time Bomb and Still Ticking). More specifically, the problem is that the STRS Retirement Fund is fatally underfunded right now, given the losses they took in the stock market, and the rate in which benefits are being paid out.
After going through a period of asking for the heads of their own investment managers on a platter, some STRS retirees seem to be coming to understand the reality of their situation. This recent post on the blog of Kathy Bracy, a retired Ohio teacher, records a conversation between a retired STRS member and an STRS official.
Something has to be adjusted – either more money needs to be put in, or benefits need to be reduced. Up to now, Ms. Bracy and her readers have been calling for more money to be put in, specifically by teachers who are currently working, and by taxpayers via increased employer contributions.
The most profound statement in that dialog was the acknowledgement by the retired teacher that the everyday taxpayer has little appetite for propping up a retirement system which has been poorly managed when the taxpayer has seen his/her own prospects of having a financially secure retirement all but disappear. After all, the taxpayers have already contributed their employer share to STRS once through their school taxes. If STRS allowed themselves to get greedy and lose a bundle in the stock and real estate markets, that's on them, not the taxpayers.

1 comment:

  1. Any increase in our contribution, which has been scheduled at an additional 2.5% should be factored into the next 3 contract agreements if they are 3 years in length.
    Many have no longer have pensions
    due to the same issues, or they have been reduced. Pretty simple, we will see how our board and admin handles this during the next negotiation. 2.5% increase to start with.