Disenfranchising 500,000 teachers and retirees through an overnight coup
David Pepper July 1, 2025
Yes, there are a lot of horrible things happening in politics at the moment. The budget bill just passed the Senate—let’s hope it gets killed back in the House. Make whatever calls you can.
But of all those terrible things, there’s a reason why teachers, retirees and people who care about democracy and fair play (myself included) are so outraged by what just happened in the Ohio budget process.
It has huge impact on lives and economic well-being in Ohio, but it’s also a case study of what happens when everyday Americans get close to real power. The minute they do, those in power strip it away from them as fast as they can—running over laws and the accepted rules of the game in the process. And in this case, undoing past election results, and cancelling future elections.
If you watch this explainer on what happened here, you too will be outraged.
BUT…as I say at the end to the understandably angry (I’m angry too, as you’ll see) and despondent teachers, don’t ever give up. Use the same power you used to get so close the first time around, and go even bigger next time.
Please share this with fellow Ohioans so everyone understands what just happened.
I just tried to explain to all of Ohio what just happened with STRS. And that everyone should pay attention because it’s a case study of what happens when everyday Americans get close to real power.
The minute they do, those in power strip it away from them as fast as they can—running over laws and the accepted rules of the game in the process. And in this case, undoing past election results, and cancelling future elections.
BUT…as I say at the end to the understandably angry (I’m angry too, as you’ll see) and despondent teachers and retirees, don’t ever give up. Use the same power you used to get so close the first time around, and go even bigger next time. And I also explain why there is a credible legal challenge to the travesty.
Every Active and Retired educator in Ohio must watch Pepper's video at:
https://davidpepper.substack.com/p/whiteboard-the-politicians-pension
MEET DAVID PEPPER
(Taken from Mr. Pepper’s online biography.)
David Pepper is a lawyer, writer, political activist, former elected
official, and adjunct professor, and served as the Chairman of the
Ohio Democratic Party between 2015 and 2021.
In that role, he was engaged in numerous fights and extensive litigation over voter suppression and election laws in the Buckeye State. Stemming from that work, David appeared in “All In”—the documentary highlighting Stacey Abrams’ nation-wide fight for voting rights.
Pepper has written four novels that bridge real-world politics and fiction—including A Simple Choice (released in August 2022)). His first novel, The People’s House, earned praise for having “predicted the Russia scandal.” The Wall Street Journal named Pepper "one of the best political-thriller writers on the scene.”
Born and raised in Cincinnati, David is a fifth-generation Cincinnatian. David earned his B.A. magna cum laude from Yale University, where he was Phi Beta Kappa, and later earned his J.D. from Yale Law School…
He served as a Hamilton County Commissioner from 2007-2010, including as its president in 2009-2010. David was the Democratic candidate for Ohio Auditor in 2010 and Ohio Attorney General in 2014. He was elected chair of the Ohio Democratic Party in December 2014…
David also teaches election and voting rights law as an Adjunct Professor at the University of Cincinnati College of Law…
David spent three years doing international work in St. Petersburg, Russia. Based out of the Center for Strategic and International Studies—a Washington D.C. think tank—he served as a research intern for Zbigniew Brzezinski for part of 1993, followed by several years as the assistant director of a project providing technical assistance to the City of St. Petersburg as it underwent economic reform. In that role, David interacted with international figures such as Henry Kissinger, Paul Bremer, ambassadors, members of Congress, business leaders, and Vladimir Putin, who was then Vice Mayor of St. Petersburg.
David and his wife Alana have two sons, Jack, 8, and Charlie, 5.
It appears the only way to catch the attention of our legislators is through our vote.
Let’s ensure we vote for legislators who show
compassion towards teachers and don’t take
us for granted. Our votes count!
In a non-social security state such as Ohio, the average Employer Contribution Rate exceeds 30%; Ohio's rate is 14%, less than half of the national average. The Employer Contribution Rate in Ohio has been stagnant for over 40 years.
When computing benefits, unfunded liabilities, and other variables, actuaries first examine the known cash flow. A responsible Employer Contribution Rate is vital for the financial health of any public pension system.
Ohio's Legislators have ignored the need for an employer increase for years. Our STRS investment staff can’t make up cash flow shortfalls by beating the market through investments. This is ridiculous. This thinking has teachers contributing more, working longer, and receiving less. Ohio’s legislators would never retire without inflation protection, but that is what is happening to us. In the past 5 years, inflation has eaten into purchasing power by over 20%.
It appears the only way to catch the attention of our legislators is through our vote. Let’s ensure we vote for legislators who show compassion towards teachers and don’t take us for granted. Our votes count.
Dean Dennis, Chair
ORTA Executive Council
After 5 years of litigation ended last month with the Court of Appeals ordering disclosure of here-to-for secret investment documents, STRS Ohio claims it must seek approval from its Wall Street money managers to release the information to the public.
On May 6th, the Court of Appeals of Ohio (Tenth Appellate District) handed us a decisive victory in our longstanding battle for access to public records from the highly-secretive State Teachers Retirement System of Ohio. Once the appeal period had run on that decision, this week we asked how and when STRS intended to produce the documents, as ordered by the court. Our hope was that after all these years of litigation it would not be necessary to bring an action to hold the Board in contempt.
By way of background, since early 2021, we have asked the $96 billion public pension to disclose to the public all contracts, including any private placement memoranda, offering documents and subscription agreements, between STRS and its investment managers. And for the last 4 years, the pension has fought hard to keep its shady investment dealings secret.
And here’s the alarming response to the letter our counsel sent to counsel for STRS Ohio this week:we received from STRS:
As your letter received on June 23, 2025, indicates, STRS elected not to appeal the Tenth District’s decision to the Ohio Supreme Court.
Consistent with the Tenth District’s Decision, STRS intends to provide the following items in its possession relative to the Investment Manager Request:
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Private Placement Memoranda provided to STRS by its Investment Managers;
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Subscription Agreements between STRS and its Investment Managers;
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Limited Partnership Agreements between STRS and its Investment Managers; and
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Side Letters between STRS and its Investment Managers.
As STRS has indicated to you and your client, over 100 investment managers are managing more than 400 private funds in which STRS was invested during the covered period. While STRS has begun the process of identifying responsive documents applicable to each such fund and investment manager, it is also contractually required to notify each investment manager of such request and offer them the opportunity to assert any applicable exemptions (emphasis added) under Ohio’s Sunshine Laws (e.g., trade secrets or IP).
Therefore, STRS intends to begin notifying its investment managers the week of June 30 that STRS has received a records request for their documents and to provide them with 14 days to redact or withhold records that are not subject to disclosure under applicable exceptions to Ohio’s Public Records Act (emphasis added).
STRS will then provide the respective records to you on a rolling basis as responses from each investment manager are received.
STRS further plans to submit an affidavit verifying there are no additional responsive Panda Investment records other than the ones initially sent by STRS and as supplemented during the Tenth District briefing.
Amye Bensenhaver is co-founder and co-director of the Kentucky Open Government Coalition and a 25 year veteran of the Kentucky Office of the Attorney General. As an assistant attorney general, Bensenhaver focused exclusively on administrative adjudication of open records and open meetings disputes. Here’s what she had to say about our victory and the STRS response:
Siedle’s victory in State ex rel. Edward Siedle v. State Teachers Retirement System of Ohio, represents a tremendous victory not just for pensioners attempting to penetrate the wall of silence erected by public pension systems to evade accountability and transparency both to their members and to nonmember taxpayers, but to all public records requester who experience agency imposition of based on the same overused pretextual barriers — vagueness, overbreadth, and burdensomeness. The Court systematically rejects each of these arguments, advanced by STRS, and provides an invaluable roadmap for requesters seeking to refute similar, if not identical, false agency claims to circumvent public records laws. We’ve seen these claims proliferate in Kentucky at an exponential rate, and highly recommend State ex rel. Edward Siedle v. State Teachers Retirement System of Ohio as the corrective to bureaucratic evasion based on claims of vagueness, overbreadth, and burdensomeness.
News that STRS will attempt to evade the Ohio court’s final opinion alters these observation not a whit. The court should see this strategy for exactly what it is: the ultimate blame shifting for public agency secrecy. This, too, we have seen in Kentucky. The pension system’s claim that it must seek approval from the investment manager for any disclosure is a direct affront to pensioners and the public. It will fail under judicial review (emphasis added).
In conclusion, our counsel will bring an action to hold the Board in contempt for its efforts to evade the court’s final opinion. In Ohio, and across the nation, public pensions today agree that they will work together with Wall Street to keep the abuses and damages related to their private investment dealings from public scrutiny. Compliance with public records laws has long been abandoned and the public has no clue about the abuses funds and their managers are working so hard to keep secret.
Pension Warriors by Edward Siedle is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Circus Clowns Center Ring At Ohio Teachers, Minnesota State Pensions
The clown show continues at these massive state pension circuses... but no one's laughing.
Jun 18, 2025
It’s no longer a secret that the financial statements of the State Teachers Retirement System of Ohio, Minnesota State Board of Investments and other public pensions are grossly misleading. So, what happens next?
Thanks to Artificial Intelligence, today the public can get a quick answer to the question of whether the State Teachers Retirement System of Ohio, the Minnesota State Board of Investment, or possibly any other state pension is accurately reporting its financial results. The days when the clowns managing our nation’s state pension funds could massively misrepresent—i.e., underreport—billions in investment fees secretly paid to hedge funds, private equity and other alternative investments are over.
Now that the secret’s out of the bag, the question is whether state pension boards, their investment managers and auditors will continue to mislead the public, or change course, altering disclosure of the fees they pay Wall Street. Either course of action—continue lying or confess to lying for decades—has its risks. To date, state pensions challenged about their fee disclosures have chosen to incrementally increase disclosed fees, so as to not draw public attention to the magnitude and longevity of the underreporting, as they eventually—over several years—get closer to the complete truth. Recall the “frog in boiling water” parable: Gradually turn up the heat so that the frogs, i.e., the public doesn’t freak out.
For example, in Minnesota the state recently disclosed a 400% increase in fees paid to Wall Street, following a forensic investigation funded by participants. Total fees are still not anywhere near fully disclosed. Watch for another 200% increase in subsequent years.
Will state pensions continue to mislead the public, or change course, altering disclosure of the fees they pay Wall Street. Either course of action—continue to lie, or confess to lying for decades—has its risks. To date, state pensions challenged about their fee disclosures have chosen to incrementally increase disclosed fees, so as to not draw public attention to the magnitude and longevity of the underreporting, as they eventually—over several years—get closer to the complete truth. Recall the “frog in boiling water” parable: Gradually turn up the heat so that the frogs, i.e., the public doesn’t freak out.
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State Teachers Retirement System of Ohio
Ask ChatGPT whether the State Teachers Retirement System of Ohio discloses all the investment fees it pays to Wall Street so that stakeholders can evaluate its management, and here’s the answer you’ll get:
Short answer: No.
It publishes only asset-class-level totals and continues to litigate against releasing fund-by-fund contracts and carried-interest data, so outsiders still cannot reconstruct the true all-in cost of its portfolio.
What is not disclosed?
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Manager‑level detail; a separate line for carried interest and other performance fees;
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Supporting invoices and limited‑partnership account statements;
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Full partnership agreements and fee schedules.
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Evidence of gaps:
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STRS Ohio treats private‑equity incentive fees as confidential “trade secrets,” and the state auditor has said that is permissible under Ohio law.
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A 2021 forensic review commissioned by the Ohio Retired Teachers Association (“The High Cost of Secrecy”) said unreported fees could exceed US $100 million a year.
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Stakeholders have had to litigate for underlying documents; in May 2025, the Tenth District Court of Appeals ordered STRS Ohio to release additional investment records.
Bottom line for STRS: The system meets the minimum GASB accounting requirement (aggregate expense disclosure) but does not provide fund‑by‑fund figures or a transparent tally of carried interest. As a result, teachers, taxpayers and legislators cannot independently reconstruct the true all‑in cost of investment management.
While, as noted by ChatGPT, STRS Ohio was recently ordered by the Tenth District Court of Appeals to release the investment records we requested 5 years ago disclosing the true fees, the pension has until June 20th to appeal this decision.
While STRS Ohio was recently ordered by the Tenth District Court of Appeals to release the investment records we requested 5 years ago disclosing the true fees, the pension has until June 20th to appeal this decision.
2. Minnesota State Board of Investment
Ask ChatGPT whether the Minnesota State Board of Investment discloses all the investment fees it pays to Wall Street so that stakeholders can evaluate its management, and here’s the answer you’ll get:
Short answer: Not quite.
The Minnesota State Board of Investment (SBI) publishes a detailed schedule of what it calls “Investment Manager Fees” every year, but the disclosure still leaves out some sizeable cost items—particularly performance-based profit-sharing (carried-interest) and many underlying partnership expenses—so stakeholders cannot see the total cost of running the pension.
What’s not disclosed?
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Carried-interest / performance fees.
SBI states that private-market returns are reported “net of investment management fees and any profit-sharing arrangements, and SBI continues that practice in the entirety of this report.” In plain English, the report subtracts performance fees before showing returns but does not tell you what those fees were. -
Manager-level break-outs for private assets.
State law requires SBI to “report … the cost and the investment performance of each investment manager” by January 15 each year. The public-markets tables satisfy that requirement, but the private-markets section does not—the totals are given only by broad asset class, so beneficiaries cannot compare one buy-out or real-estate manager against another. -
Fund-level operating expenses, transaction fees and other pass-through costs that private partnerships charge inside the fund are also netted out of performance and never itemized.
In conclusion, SBI’s fee reporting stops well short of full-cost transparency. Without separate disclosure of carried-interest and other partnership-level expenses, neither beneficiaries nor legislators can calculate the all-in cost of running Minnesota’s $146 billion portfolio or judge whether any given private-market mandate is delivering value for money.
SBI’s fee reporting stops well short of full-cost transparency. Without separate disclosure of carried-interest and other partnership-level expenses, neither beneficiaries nor legislators can calculate the all-in cost of running Minnesota’s $146 billion portfolio or judge whether any given private-market mandate is delivering value for money.
If you need to evaluate management efficiency you will therefore have to:
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Rely on net-of-fees performance figures;
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Request additional documents (limited-partner reports or ILPA templates) from SBI staff; or
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Advocate for statutory or board-policy changes that would require manager-level and performance-fee disclosure for private assets.
So, what happens next? AI certainly can be a game-changer in exposing public pension and investment adviser fraud. But:
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Does it even matter that for at least two decades our nation’s state pensions have been lying about their financial results?
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Will public pension boards, investment managers or auditors be held accountable?
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Will stakeholders, including taxpayers and participants, be left holding the bag?
Maybe those are the next questions to ask AI.
Pension Warriors by Edward Siedle is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
The Toledo Blade Recommends Legislators Investigate Ohio and Minnesota State Pension Fees, Not Just ESG
On Saturday, The (Toledo) Blade Editorial Board recommended Ohio Legislators investigate a far greater problem than ESG for state pensions: exorbitant fees secretly paid to Wall Street.
Dec 30, 2024
“As we found out when STRS leaders were called upon to help the Minnesota pension fund rebut critics, dubious financial records with impossible to believe fund management expenses are a problem way beyond Ohio. Congressman Jordan could inquire as to Minnesota’s $83 million reported fee for management of $134.7 billion in the context of IRS oversight failure.
THE BLADE EDITORIAL BOARD
The anti-ESG legislation is part of a multistate Republican effort. Ohio Congressman Jim Jordan is using the House Judiciary Committee to investigate more than 60 Wall Street firms for collusion to promote this agenda.
Ohio Republican lawmakers and the DeWine administration aren’t totally ignoring the investment practices of the state’s five public pension funds. But they’ve addressed a culture war issue instead of pension solvency. The combined holdings of the Ohio public pensions total nearly a quarter trillion dollars. This month, on a straight party line vote, the legislature passed and Governor DeWine signed a change in law to bar state pensions, the Ohio Bureau of Workers Compensation, and university endowments from ESG investing.
That is shorthand for the political correctness of building a portfolio based on environmental, social, and governance issues.
Predictably, ESG is measured through a liberal lens, with environmental goals to minimize fossil fuel production and consumption, social goals to promote labor unions, and governance standards that emphasize diversity.
ESG has become controversial because the Wall Street investment managers for giant institutional clients like the Ohio funds routinely impose these requirements on corporate America through the power of dollars supplied by states that oppose the governance goals. Ohio’s new anti-ESG law simply requires all state investment funds “make investment decisions with the sole purpose of maximizing the return on its investments.”
The Blade Editorial Board finds it regrettable that Republican lawmakers and the governor don’t use the same all-that-matters-is-return-on-investment criteria when it comes to managing, or even monitoring, the exorbitant fees paid to Wall Street fund managers.
As documented by reform board members at the State Teachers Retirement System of Ohio and reported exclusively on The Blade Editorial page, fees paid to alternative fund managers by STRS over the last two years are nearly $1 billion more than reported on their Annual Comprehensive Financial Report. Pension expert Richard Ennis wrote in The Blade of his study showing higher than reported investment management fees caused STRS to trail the return they could have earned from a low-cost index fund by an average of 1.62 percent for 13 years. The $12.5 billion opportunity cost to STRS is a much bigger Ohio problem than ESG.
The anti-ESG legislation is part of a multistate Republican effort. Ohio Congressman Jim Jordan is using the House Judiciary Committee to investigate more than 60 Wall Street firms for collusion to promote this agenda. If the GOP was really interested in serving the retirement needs of pension beneficiaries as they are in blocking a liberal political agenda powered by the economic clout of massive state pension funds, they would also be investigating huge fees paid to Wall Street shielded from scrutiny by false financial records.
As we found out when STRS leaders were called upon to help the Minnesota pension fund rebut critics, dubious financial records with impossible to believe fund management expenses are a problem way beyond Ohio. Congressman Jordan could inquire as to Minnesota’s $83 million reported fee for management of $134.7 billion in the context of IRS oversight failure (emphasis added).
All state pension plans are tax exempt as qualified plans, but fictitious reporting to the IRS on financial records is enough to threaten tax free status. Congress should take a look at the collusion between state pensions and Wall Street funds to hide true expenses. The Ohio General Assembly should require total transparency on all fees and expenses paid by all state funds covered by the new anti-ESG law.
Pension Warriors by Edward Siedle is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Despite heavy opposition from cities and business groups, Ohio lawmakers advanced a plan to increase money for the police and fire retirement fund
Despite heavy pushback from cities and business groups, the Ohio House voted 66-25 on Wednesday in favor of a bill to require local governments to pay more into the public pension system that covers police and firefighters.
The rate hike would cost local governments an additional $80 million a year.
The Ohio Police & Fire Pension Fund says it needs more money from employers or it'll be forced to cut benefits for police officers and firefighters.
Under House Bill 296, the employer contribution rate for police officers would climb to 24% of payroll, up from the current 19.5%. The employer contribution rate for firefighters in the pension fund is currently 24%.
Employees currently pay 12.25% toward their police and fire pension. The bill calls for increasing the employee contribution rate to 12.5%.
The Ohio Municipal League and Ohio Mayors Alliance pleaded with lawmakers to hit pause on the bill and consider alternatives to shoring up the pension fund finances. Increasing the pension contributions will cut into cities' ability to hire new officers and offer pay raises, they said.
Mayors urged lawmakers to consider finding a chunk of state money to help Ohio Police & Fire Pension Fund, take a deeper look at the pension's assumptions and data and discuss reducing the cost-of-living adjustments given to retired first responders.
"We need to make sure that this very complex issue is handled with care and precision to make sure that it is sustainable and that we are being good stewards of Ohio's taxpayer dollars," said Findlay Mayor Christina Muryn. "This is not something that can just be easily fixed and we don't think that just throwing a pile of money from the communities at this is going to be the solution."
Lawmakers weren't interested in earmarking state money for the pension fund. State Rep. Bill Seitz, R-Cincinnati, warned that that would set a bad precedent and open the door for other pension funds to also ask for financial support from the state.
The Ohio Police & Fire Pension Fund has been lobbying for an increase in employer contribution rates for years. A similar bill introduced last legislative session to shore up the police and fire pension fund failed to pass.
The last increase in the employer contribution rate came nearly 40 years ago.
The fund reduced its assumed annual rate of return − how much it expects to make each year from investments − from 8% to 7.5%. That move caused its unfunded liabilities to increase on paper.
The bill now moves to the Ohio Senate for consideration. Any bills that don't receive approval from both chambers by Dec. 31 would have to be reintroduced next year.
Ohio has five public pension systems that serve 2.28 million current and former government employees and retirees. Public employees in Ohio do not participate in Social Security so the state pension systems are their main retirement funds.
In 2012, lawmakers approved a pension reform package that required employees to work longer for lesser retirement benefits.
Laura A. Bischoff Columbus Dispatch
The Greatest Teacher
Retirement Crisis in History
- John MacGregor, Ted Siedle
(Also, Dean Dennis, Pres. ORTA and two retirement reformer teachers from Minn.)
“JM – Full Disclosure Podcast”
https://www.youtube.com/watch?v=U0XSJwm WU0U&ab_Channel =TheRichDadChannel
Magistrate Orders Ohio Teacher Pension To Release Investment Documents--Finally
For over 3 years, the Ohio Pension has fought hard to keep its dealings with Wall Street hidden from public scrutiny.
Jul 27
Sunshine is long overdue at highly secretive $90 billion State Teachers Retirement System of Ohio.
In 2021, I was retained by the Ohio Retired Teachers Assocation to conduct a forensic investigation of the State Teachers Retirement System of Ohio—the pension system ORTA’s members rely upon for their retirement security. In connection with my investigation, on February 19, 2021, I filed a request pursuant to Ohio law for an opportunity to inspect or obtain copies of public records related to the pension’s investment managers, investment consultants, performance compliance auditor, investment cost monitor, financial auditor, and custodians, as well as board and staff.
Over 3 years ago, my journey to inspect the pension’s records began.
The overwhelming majority of the most critical disclosure information I requested was summarily denied. That is, STRS simply permitted the investment firms involved to unilaterally determine whether the information I sought on behalf of stakeholders had to be disclosed under Ohio law. Not surprising, most firms granted the opportunity to oppose public scrutiny of their financial dealings with STRS, chose to do so. Most disturbing, not a single prospectus or offering document required to be provided to all investors under our nation’s securities laws was provided to me in response to my public records request. As a result of the extensive denials of important public records requests, it was impossible for STRS stakeholders to evaluate the investment strategies, performance, fees, risks, and conflicts of interest related to the pension’s investment portfolio.
Accordingly, on May 21, 2021, I filed a complaint for writ mandamus with the Supreme Court of Ohio seeking certain STRS public records I had been denied.
As I noted in my investigative findings:
This lack of cooperation by STRS is all-the-more surprising given that STRS is well-aware that this forensic review of the pension was commissioned, as well as paid for, by tens of thousands of participants, with the stated objective of improving management and oversight of the pension. Pension fiduciaries solely concerned with the best interests of participants and beneficiaries should welcome, not oppose, a free independent review by nationally recognized experts in pensions. Further, given the profound fiduciary breaches and disclosure concerns stakeholders (and even STRS’s own commissioned experts) have long raised, it is clear STRS could benefit from an independent review by experts—this time not of its own choosing.
And now for the good news...
Just yesterday the magistrate assigned the case found:
Siedle has established a clear legal right to the production of public records sought in the first investment managers request and the first Panda Investments request. STRS was under a clear legal duty to comply with these public records requests. Accordingly, it is the decision and recommendation of the magistrate that this court issue a writ of mandamus ordering STRS to comply with Siedle's first investment managers request in the February 19, 2021 letter.
Now that the magistrate has confirmed that I (and the public) has a “clear legal right” to the pension investment contracts, I trust that STRS Ohio will comply with its “clear legal duty” to provide them. The time has come for its members and taxpayers to see what the pension has been hiding for so many years.
I look forward to learning the secrets STRS Ohio has fought so hard for so long to keep from the public.
Further, these documents will confirm whether the alternative investments STRS Ohio has made are plagued with the same industry abuses that were identified in my High Cost of Secrecy report, as well as whether the pension may be able to recover any funds pilfered— funds that could be used to pay benefits promised.
Finally, public scrutiny of these heretofore “Top Secret” documents will reveal whether the “Special Audit of STRS conducted by Ohio Auditor Keith Faber in 2021 was thorough. Faber did not review these contracts for his report, and his staff candidly admitted to me that—even if they had the documents—they lacked the expertise to do so. (When I offered to review any such contracts for his staff, they never responded.) Therefore his so-called “audit” failed to address any concerns regarding fraud related to these investments.
Pension Warriors by Edward Siedle is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
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.
