AAUP CSU

On April 19, the STRS Board unanimously voted to approve a new reform plan that would allow the system to achieve very close to a 30-year funding period, a mandate of Gov. Kasich's for any reform plan that he would sign into law. All changes contained in the plan require legislative action by the Ohio General Assembly and the Governor to be implemented.

The Healthcare and Pension Advocates (HPA) coalition, of which OCAAUP is a member, came to consensus around this new plan, referred to as "Scenario 8," as it was one of many scenarios that STRS staff developed based upon new actual assumptions calculated by PricewaterhouseCoopers and adopted by the STRS Board in early March.

Because the General Assembly has waited years to act on reforming STRS, the system currently has $31 billion in unfunded liability. In order to preserve the defined benefit plan and achieve solvency, Scenario 8 contains several major changes that will impact current faculty and retirees:

*Increase in member contributions effective July 1, 2013

Member contributions would increase by 4%, phased in 1% per year beginning July 1, 2013, through July 1, 2016. Members currently contribute 10%; this would take total member contributions to 14% once fully phased in.

*Change in eligibility for retirement, effective Aug. 1, 2015

Service credit requirements for retirement with an unreduced benefit would increase to 35 years of service by Aug 1, 2023, and a minimum age 60 requirement would be added beginning Aug. 1, 2026. Members may still also retire at age 65 with a minimum of five years of service credit.

The service credit requirement for an actuarially reduced benefit would be phased in beginning Aug. 1, 2015, gradually increasing to 30 years of service by Aug. 1, 2023. Members may also still retire at a minimum age 60 with five years of service, but the benefit would be actuarially reduced beginning Aug. 1, 2015.

*Increase in final average salary (FAS) years effective Aug. 1, 2015

FAS calculation would be based on the five highest years of earnings instead of three.

*Changes to the cost-of-living adjustment (COLA), effective in fiscal year 2013

All retirees as of July 1, 2013, would not receive a COLA increase on their next anniversary; effective July 1, 2014, the COLA would be 2%. Members retiring Aug. 1, 2013, or later would also receive a 2% COLA, but it would not begin until 60 months after the date of retirement.

*Change in benefit formula, effective Aug. 1, 2015

The new formula would be 2.2% for all years of service. Members who are eligible to retire on July 1, 2015, would maintain retirement eligibility, and the benefit would be the greater of the benefit calculated under the new benefit formula or the benefit the member could have received had the member retired on July 1, 2015.

We understand that this plan is not particularly palatable, but it was the best option given a set of extremely difficult circumstances, including another mandate from Gov. Kasich that a reform plan could not include any additional employer contributions. We must keep in mind that the alternative is potentially losing the defined benefit option altogether.

Again, this plan is not yet in effect. It requires approval by the General Assembly and Governor. If you are a member near retirement and trying to decide when to retire, we recommend that you contact STRS to review your options.

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