Wednesday, September 14, 2011

State Teacher Retirement System Misleading Taxpayers and Teachers...

I am a contributor to the STRS system as a substitute teacher in SW Ohio. These allegations I find very troubling, but not surprising, given that there was a great deal of controversy with STRS and misleading just a few years ago. From the Buckeye Institute:
In response to our report, Taxpayers on the Hook: Taxpayer Contribution Rates for Ohio Government Pensions Outpace National Averages, the State Teachers Retirement System (STRS) attacked the Buckeye Institute while conveniently leaving some undeniable facts at the door. By using their own data, reading their own admissions, and even following their own assertions, it is evident that Ohio taxpayers are far from off of the hook when it comes to potentially bailing out the pensions.

Key points:

STRS is plum broke. It possesses only 59 cents for every dollar in liabilities, leaving a $38.7 billion hole;

In its own statements, STRS has pursued an even higher taxpayer contribution rate than the current 14 percent (16.5 percent);

Using STRS' own recommendation of a 16.5 percent taxpayer contribution rate, Ohio would have the 10th highest taxpayer contribution out of 34 states with a teacher's pension system, including those that also pay into Social Security;

Social Security will result in a rate of return of near zero or negative for many "contributors," especially young and new workers;

State employees in Ohio are actually making out by not paying into Social Security;

Most private sector Ohioans can expect a 6.2 percent employer contribution to Social Security and a 4.0 percent 401(k) employer contribution, totaling 10.2 percent. This level is considerably lower than both STRS' current 14 percent and its desired 16.5 percent contribution rate.

Read the whole thing. Apparently, neither teachers or taxpayers are well served by the current system, and much like Social Security, the STRS is not going to be able to live up to its promises to teachers.