Having additional resources would bolster the resiliency of the pension fund and allow the State Teachers Retirement Board to consider benefit changes sooner than would otherwise be possible. We look forward to partnering with our members on this important endeavor.
— Lynn Hoover, acting executive directorEmployer Rate Increase Initiative
4% increase proposed,
phased in over eight years
Among states where teachers are not covered by Social Security, Ohio’s employer contribution rate is the second-lowest, while Ohio’s teachers contribute at a rate that is the third-highest. We are working with the state legislature and encouraging members and other stakeholders to join us in these conversations.
Resources
FAQ
- Why is the bill needed?
- How are demographic changes impacting STRS Ohio?
- What will STRS Ohio do with additional funds from employers?
- How does STRS Ohio’s employer contribution rate compare with the rate in other states?
- If passed, how will this 4% increase be implemented?
- When is the last time STRS Ohio’s employer contribution rate was increased?
- Will this impact what educators contribute?
- How will employers fund the increase?
- Will the increase impact negotiations of teacher contracts?
- More
Membership
In fiscal 2023, there were more than 536,000 members and benefit recipients.
Historical active and beneficiary membership totals (1994–2023)
A change from two active members for every one benefit recipient to one active teacher for every benefit recipient.
Recent STRS Ohio benefit changes
March 2022
- 3% permanent cost-of-living adjustment (COLA) for eligible benefit recipients (beginning in fiscal year 2023)
- Age 60 retirement eligibility requirement eliminated
May 2023
- 1% permanent COLA for eligible benefit recipients (beginning in fiscal year 2024)
- Unreduced retirement eligibility at 34 years extended
March 2024
- Unreduced retirement eligibility at 34 years made permanent
- Reduced retirement eligibility lowered to 29 years
Sustainable Benefit Plan: Allows for an annual process for the State Teachers Retirement Board and its actuaries to incrementally change benefits if there is no material impairment to the fiscal integrity of the system
Legislative background
Pensions & Investments recently reported that over a ten-year period, STRS Ohio chalked up an annualized net return of 8.6%, the eighth highest return among 79 public pension funds it tracks (for the 10 years ended June 30, 2023).
2013 pension reform legislation
It was projected in 2011 that without pension reform the pension fund would run out of money by 2040. The Ohio legislature approved changes needed to keep STRS Ohio’s funding period — that is, the projected time needed to reach a 100% funded status — within the State of Ohio’s 30-year target.
Key changes include:
- Increase in member contributions and retirement eligibility requirements
- Change in benefit formula and final average salary calculation
- Reduction of cost-of-living adjustment and eligibility change to five years after retirement effective date
- Changes to disability and survivor benefit eligibility
Reforms proposed by STRS Ohio were supported by stakeholder groups. Support was received from the Healthcare & Pension Advocates for STRS; a diverse coalition comprised of professional employer, employee and retiree organizations supporting STRS Ohio’s stakeholders.
Contribution rates — set by law
Over the past ten years, Ohio teachers have contributed at the third-highest rate among comparable systems in states where teachers are not covered by Social Security (averaging 12.8% compared to a median of 9.25%). At the same time, the employer rate in Ohio has been the second-lowest, averaging 13.4% compared to a median of 19.6%).
Employer contribution rate: 14%
- Last increased in 1984 — 40 years ago
Member contribution rate: 14%
- Has increased nine times in the past 40 years, from 8.7% to 14%, including the phased-in 4% increase following 2013 pension reform legislation
Position of the fund
Funded ratio: STRS Ohio assets as a percentage of what it owes to current and future retirees
75%
80%
- Higher percentages indicate a better financial position
- As low as 55.1% in 2009
- Without 2013 pension reform: 49.1% in 2023 (hypothetical)
Funding period: Time STRS Ohio would need to fully fund benefits for current and future retirees
30.5 years
11.2 years
- Lower number of years indicate a better financial position
- Funding period has been catastrophic multiple times since 1994. Pension reform worked, and the system has recovered significantly, though not yet to the point where meaningful inflation protection or changes to current retirement eligibility requirements are possible.
Increasing Ohio’s employer contribution rate will put benefit changes that can be sustained over the long-term back on the table for Ohio teachers.
Organizations supporting an STRS Ohio employer contribution rate increase
- Ohio Conference of American Association of University Professors (AAUP)
- Ohio Council of Higher Education Retirees (OCHER)
- Ohio Education Association (OEA)
- Ohio Federation of Teachers (OFT)
- Ohio Retirement for Teachers Association (ORTA)
Contacts
- Lynn A. Hoover
- Acting Executive Director
- Marla Bump
- Director, Governmental Relations
- [email protected]
- 614-227-4012
- Anne Erkman
- Assistant Director, Governmental Relations
- [email protected]
- 614-227-2983
- Stacey Wideman
- Chief Legal Officer