The long-term goal of 2012 legislation to keep the State Teachers Retirement System fund solvent is expected to have a short-term effect of encouraging experienced educators to retire sooner than they might have under the previous rules.
Teachers who retire on or before July 1, 2013, will receive no cost-of-living adjustment to their pension after the first year. But in subsequent years, they will see a 2 percent increase.
"If you retire after this year, that ... adjustment is not going to kick in until five years after you retire," Belpre City Schools Superintendent Tony Dunn said. "That's huge."
According to the State Teachers Retirement System website, www.strsoh.org, these and other changes were implemented by Ohio General Assembly legislation last year. The recession and demographic factors like members living longer have cut into the pension fund, putting it on a course to one day be unable to meet its obligations.
Dunn expects six teachers - three at the elementary school and three at the high school - to retire at the end of this year, compared to only two or three last year. That's not an insignificant number in a district with about 70 teachers, he said.
At least some of this year's likely retirees were prompted to do so by the prospect of missing out on those increases, Dunn said.
What are the changes?
Changes to the State Teachers Retirement System include:
Members who are already retired or retire prior to July 1, 2013, will not receive a cost-of-living increase during the 2013-14 fiscal year.
Those who retire on July 1, 2013, would not receive the adjustment on July 1, 2014.
After missing one year, their cost-of-living adjustments would resume at 2 percent per year.
Members retiring after July 1, 2013, would not receive any cost-of-living adjustment until the fifth anniversary of their retirement.
After July 1, 2015, members who retire with 35 years of service will no longer receive 88 percent of the average of their highest three years' salary as a pension. The new formula will be 77 percent of the average of the highest five years' salary.
For more information, visit www.strsoh.org/legislation/legislation.html.
Source: State Teachers Retirement System.
Lydia Hunter, president of the Warren Local Education Association, which represents that district's teachers, said there are teachers retiring from Warren this year that potentially would have stayed another year or two. If she could get her full benefits, she'd go with them.
"If I had 30 years in this year, I would retire because that extra four years of the cost-of-living adjustment is significant," she said.
Hunter, a seventh- and eighth-grade science teacher at Warren Elementary School, has taught for 29 years.
The changes have also removed the incentive for her to work for 35 years, Hunter said, because by the time she would reach that threshold, the enhanced benefit formula that sets the annual pension amount at 88 percent of the average of the teacher's three highest-paid years will have been phased out. The maximum would be 77 percent, which is what she can get after 30 years.
Warren Local Superintendent Tom Gibbs hasn't received official notices, but he currently expects at least four teachers to retire from Warren. Even if a couple more make the decision, that wouldn't be out of line with recent numbers, since the district has a number of experienced educators.
"We've been seeing anywhere from five to 10 people retire each year for the last five or six years," Gibbs said.
In many cases, those positions have not been filled as the district has worked to reduce spending. The upside is that money is saved; the drawback is increasing class sizes, Gibbs said.
But that might not continue much longer.
"We're near state minimums (in staffing levels) now," Gibbs said. "So the likelihood that we could just not replace all the people that retire from now on is very slim."
Gibbs said he has not been given an indication yet of how many teachers might be considering retirement in the Fort Frye Local district, where he also serves as superintendent.
Frontier Local Schools could have fewer teachers retiring this year than last, even with the rule change providing an additional incentive. Treasurer Frank Antill said they're currently expecting three or four, while the district saw seven retire last year.
Antill included about $100,000 in the five-year forecast for this year for severance pay, which would cover three teachers.
"Anything over that we have to make an adjustment," he said.
Severance rates differ by contract with each district's education association. However, officials in multiple districts noted potential costs are included in the forecast, and additional expenses could be at least partially offset by hiring younger teachers or, in districts where contracts allow it, rehiring the retirees at a lower rate of pay.
That savings is an advantage of hiring a new teacher, but Marietta City Schools Superintendent Harry Fleming noted there is also a loss of experience.
"There's always an upside and a downside," he said.
Fleming said he's anticipating some additional retirements this year because of the rule changes but did not know how many. The district had several experienced teachers retire last year but did not struggle filling their jobs. That's not always the case, as some certifications are harder to find than others, Fleming said.
Wolf Creek Local Superintendent Bob Caldwell said he expects at least one, if not two, teachers to retire this year because of the STRS changes.
"Pertaining to impact on instruction, it would be negative because these two are veteran 'highly qualified' teachers," he said in an email to The Marietta Times.
Caldwell said he's looking at the matter from a professional and personal standpoint since his sister, a teacher in another Ohio district, is retiring this year.
"(That was) not her choice as STRS made it a disadvantage financially for her if she stayed," he said.