Amid rising inflation, how can Ohio’s teachers’ pension fund restore COLA?

Ohio’s retired teachers haven’t seen the cost of living rise in their pension checks in five years — something State Sen. Teresa Fedor would like to fix.

But it won’t be cheap and Fedor has no intention of paying for it.

The Ohio State Teachers’ Retirement System said its actuary, Cheiron, estimates reinstating a 2% COLA would add $13.8 billion to the system’s unfunded liabilities, inflating them. at $34.6 billion. A full Cheiron analysis is expected this spring.

Democrat John Cranley recently chose Fedor as the lieutenant governor’s running mate. She is a longtime Toledo legislator and former teacher.

A week after joining the ticket, she introduced legislation to bring COLA back, calling it “the right thing to do.” Fedor’s bill has the support of his fellow Senate Democrats, but no Republican has signed on as a co-sponsor.

But Fedor has no details on how the pension system might foot the bill. She suggested that the STRS board consider reducing its capital expenditures and increasing the employer contribution rate, which is paid by school districts that are primarily taxpayer-funded.

“It’s up to them and they have to understand it,” Fedor said. She added: “We have to start there. Promises have been made in the past and they have been taken away.”

STRS spokesman Nick Treneff said a 2% annual increase in the cost of living would require doubling the employer contribution rate to around 28% of payroll.

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In April 2017, the STRS board voted to suspend COLA payments indefinitely in order to shore up pension finances. At the time, the council said the decision would be reviewed within five years. The STRS board is due to discuss the cost of living allowance at a special meeting on Thursday.

Fedor said she voted in favor of the Pension Reform Bill in 2012, which gave pension systems the power to change cost-of-living allowances without legislative approval. At the time, Ohio was in a recession and trusted the pension systems. Now, the STRS is the only one of five statewide public retirement systems that does not provide cost-of-living increases.

The STRS is the pension system for 500,000 teachers and retirees. It is funded by contributions from employers and employees as well as investment returns from its $95 billion portfolio.

Ohio public pensions are defined benefit systems. The pension benefit is based on age, years of service and final average salary and is guaranteed. Defined contribution plans, such as 401(k) funds, are more common in the private sector.

Public employees in Ohio do not contribute to the federal Social Security system.

Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, the Cincinnati Enquirer, the Akron Beacon Journal and 18 other affiliate news organizations in Ohio.

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Dolores W. Simon