COLUMBUS, Ohio – The board that governs the state’s teachers’ pension fund will award investment staff with a $11.1 million bonus as retirees wait to see if the fund provides cost-of-living adjustments amid high inflation. I am considering.
The proposed bonus for 91 Ohio Teachers’ Retirement System (STRS) investment staff is even higher than the controversial bonus awarded last year when the fund lost money during a market downturn. Last year, the fund awarded $9.7 million in bonuses, up from what he originally budgeted for $8.5 million.
The Ohio Teachers Association, which has been critical of the fund’s operations, said this year’s bonuses are nearly a third higher than what the STRS budgeted last year. However, the pension fund says the bonus is based on achieving board-approved benchmarks.
“STRS leadership has always put their interests ahead of teachers,” said Robin Layfield, executive director of the Ohio Teachers Association. “After losing $5 billion last year, and after public outcry over artificial bonuses of more than $10 million, 30 of bonuses have been cut even though the STRS has done nothing to bail out current and retired teachers. Demanding a % increase is disgraceful.The current STRS board election is a referendum on a broken culture where STRS staff are paid first and teachers are paid last.”
Pension assets were approximately $88.1 billion at the end of March. It serves approximately 500,000 current public school teachers and provides benefits to former and retired teachers participating in the plan.
The Ohio Teacher Retirees Association and the STRS board have been at odds over the austerity measures implemented by pensions over the past decade.
The board also voted to give retired teachers a 3% cost-of-living adjustment last year when the fund lost about $4.7 billion and investment staff got bonuses.
STRS chief communications officer Dan Minnich said the bonus is based on: Board-approved investment benchmarks Performance-based incentive policy. Investment performance is important in both rising and falling markets to ensure the financial health of pension funds, he said.
STRS performance bonuses are available only to staff in the investment department, which is home to 91 of STRS’s 489 employees. No other employees, including senior management, received bonuses, Minnich said.
Minnich said the fund’s total net return from July 1 to March 31 was 4.2%.
“At the end of the day, if an investment manager outperforms a board-approved benchmark based on a board-approved PBI policy, i.e., if the investment manager outperforms the market, the investment manager receives an incentive for that outperformance.” He said.
There is also the possibility of further increases in living costs for teachers, which will take effect from 1st July.
“The board had a lively discussion with the actuaries last week to determine whether it would be prudent to enhance additional benefits in the upcoming financial year,” Minnich said. “This conversation will continue at next month’s Board meeting. Only those benefit improvements that the actuaries of the pension fund have determined will not materially impair the financial health of the pension fund should be made.”
The Ohio Retired Teachers Association, recently renamed from the Ohio Retired Teachers Association, also monitors elections for the STRS board.
Arthur Lard, whose term expires on August 31, will join the Board for the first time in 2019 and is seeking re-election. Lard is a business education teacher at Portsmouth City School. He is a member of the Ohio State Education Association, and the union supports and actively supports his re-election, said OEA President Scott DiMauro.
His challenger is Pat Davidson, a business and computer teacher at the Berea City School District. Davidson is a member of the Velia Teachers Federation, Supported by the Ohio Teachers Federation.
The Ohio Retired Teachers Association has also endorsed Davidson, believing he would challenge the STRS staff over Lard.
Election results will be announced on May 6.
Laura Hancock covers state government and politics at The Plain Dealer and cleveland.com.
