Neville said he believes the teachers’ retirement system should be marketed as a way to attract future teachers into the profession.
Neville recently sat down with the Dayton Daily News to talk about the system, the town halls and more.
On the State Teachers’ Retirement System
NEVILLE: “STRS was created in 1920, as the pension fund for public educators in Ohio. So back then, pensions were provided at the local level. Half those schools pensions were insolvent. The other half were headed that way... So we have a defined benefit pension, like a traditional pension that pays you a monthly wage that you can’t outlive, but also healthcare and disability.”
On STRS solvency
NEVILLE: “We have between $85 billion and $90 billion depending on the stock market in funds paid up for future retirees. So we have, let’s call it $90 billion just for round numbers. If we have $90 billion, we also have liabilities projected out for everyone who is currently retired and aren’t currently in the classroom. We don’t have enough to cover everything we’ll pay out eventually. It’s a little bit like a mortgage. You don’t need all your mortgage money today, but you know what you’re going to pay over the life of your loan. We have somewhere around 80% of the money right now that we’ll need to pay up over the years and years to come.”
On the STRS proposal to ask districts to increase the percentage paid into the STRS system from 14% to 18%
Employers and employees now each contribute 14% of payroll into STRS. This contribution rate hasn’t changed since 1983. The employer contribution is paid by school districts. State legislation would have to be passed for this to happen.
NEVILLE: “In between 2009 to 2012, following the Great Recession, the board and their actuaries really struggled with the fiscal solvency of the plan. And so active teachers are working longer than they would have prior to that and paying in more. Retired teachers had a COLA (cost of living adjustment) that was typically 3%, reduced to 2%, and then from 2017 to 2022 the COLA was reduced to 0%…
“But of course, active teachers and retired teachers would like to see more enhancement of those benefits. The reality is, we can’t afford those. Our actuaries tell us we can’t afford those enhancements.”
On how the pension system can attract teachers
NEVILLE: “We have a lot fewer college students going into education right now than we did historically. It was north of 10% (of students pursuing an education degree). Now, the last number I saw was south of 5% of students majoring in education. And I think if we can begin educating not just teachers close to retirement, not even just new teachers in the classroom, but the students who are in universities right now about what a robust pension we have, the safeguards and the benefits available to teachers in Ohio through STRS, I think you could really attract more folks to the profession.”
On how many retired teachers are frustrated with the changes to pensions
NEVILLE: “Any individual, whatever they’re feeling is completely valid and no one’s ever heard me argue with any individual what he or she is feeling. What I know is that after the Great Recession, from 2009 to 2012, we were at 55% funded and projected to be out of money by 2040. Those changes were necessary to preserve the fund. And that’s what we’ve accomplished.”
On why STRS wants to do the town halls
“We’re trying to get out to between 80 and 100 active teachers or retirees at a time depending on the size of the library auditorium, where we’re conducting them. It is in part an opportunity for me to get out to those members information about the system and our funding and the audits and benefits that we pay and the enhancements and the benefits that have happened recently and what I think will happen in the future, both with legislation and with board action. I also want to hear from teachers and retirees what they’re thinking and that can be in question and answer that’s in front of a group. Even afterwards we’ve stayed around as long as an hour or more afterwards having conversations with individual teachers. So it’s an opportunity to both educate and be educated by our membership.”
STRS, the fifth largest public teacher pension system in the U.S., serves 528,000 teachers and retirees.