In 2007 we commissioned the well-respected economists Robert Costrell and Michael Podgursky to analyze Ohio's State Teachers Retirement System. Key findings from their report, Golden Peaks and Perilous Cliffs: Rethinking Ohio's Teacher Pension System, included that:
-The system is too pricey to sustain in its current manifestation.
-The system encourages early retirement and ???double-dipping;???
-The system is out of step with the state's current teacher needs, labor markets, and career patterns; and
-The system lacks transparency.
Public retirement systems really are troubled and in need of serious reforms. Now that we agree on the problem, what should we do about it?
Representatives of both the STRS and the teachers unions attended every presentation and briefing we held about the report, publicly questioning not only the veracity of the report's findings but also the integrity of the authors themselves. And, of course, they questioned the motives of the Fordham Institute for releasing such a report. At one gathering an elderly couple stood up and asked, ???Is it true that you want to take away our pensions???? By the end of the day both Costrell and Podgursky looked beaten down and were more than happy to board their flights home.
The Dayton Daily News captured all of this thusly:
Think tanks and public pension systems aren't typically parties to street fights. But there was a rumble last month when the Thomas B. Fordham Institute released a study on the State Teachers Retirement System in Ohio. The teachers' retirement fund fired a pre-emptive shot the day before the report's publication. The pension system complained that Fordham had refused to share an advance copy of the report ??? adding, by the way, that the pension system is fiscally sound, well-managed and forward looking.
The Fordham Institute released the report the next day under the banner headline: ???Ohio teacher pension system in urgent need of overhaul.??? It called the system ???a ticking time bomb??? that's ???out of step with Ohio's current teacher needs, labor markets and career patterns,??? and that carries ???$20 billion in unfunded liabilities ??? more than $4,000 per Ohio household.???
Pension administrators shot back with their own poison press release, stating that ???the report appears to be a very incomplete analysis of the system,??? and that it contains ???glaring mistakes and misstatements.???
Fast forward three years and some heavyweights have joined Fordham's corner.
The Akron Beacon Journal ??? in a piece reprinted in the state's other major newspapers as part of a joint analysis and examination ??? wrote of Ohio's five public pension systems:
Although they are supported by billions in taxpayers' dollars, Ohio's public pension funds are stingy when it comes to disclosing details about individual retirees. The trouble is, the pension funds are likely to need additional funding to remain solvent. Without a greater degree of transparency, lawmakers will find it difficult to assure the public that the money is being spent wisely.
Today Ohio Senate President Bill Harris weighed in, saying that Ohio's current public-employee pension systems are ???not sustainable??? and will require legislative action.
In 2007, Costrell and Podgursky used the power of economics and rational analysis to point out the serious problems confronting STRS (the oldest and second largest of Ohio's five pension systems). They have subsequently done deeper analysis in other states and have been at the forefront of badly needed pension reform efforts nationally.
Ohio's political debate and its newspapers have caught up to the pessimistic scientists. The state's public retirement systems really are troubled and in need of serious reforms.
Now that we agree on the problem, what should we do about it?
???Terry Ryan
