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STRS Ohio October Board News

Actuarial Valuation Shows COLA Change, Investment Returns Lead to Funding Gains
During the October meeting of the State Teachers Retirement Board, actuarial consultant Segal Consulting presented key findings from its July 1, 2017, annual pension valuation report. This report provides a detailed look at the financial health of the pension fund. The most common ways to express the system’s financial condition are through the funded ratio and the funding period. This year’s valuation report shows the funded ratio — the value of assets compared to actuarial accrued liabilities (benefits earned by members of the system) — improved to 75.1% from 69.6% last year. The funding period — the amount of time needed to pay off the system’s unfunded liability under current assumptions and benefit levels — also improved, decreasing to 18.4 years from 26.6 last year. Segal shared that without the board’s action to reduce cost-of-living increases granted on or after July 1, 2017, to 0%, STRS Ohio’s fun…
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STRS Ohio September Board News

Board Reviews Health Care Subsidy Options for 2019 and Beyond

During the September meeting of the State Teachers Retirement Board, the board continued its discussion on the solvency of the Health Care Fund and how to provide a meaningful subsidy for plan enrollees. The Health Care Fund has a balance in excess of $3 billion and is currently estimated to remain solvent through 2034. Solvency is largely driven by the subsidy provided to each enrollee — both the initial subsidy level and the growth of the subsidy. The STRS Ohio Health Care Program is currently funded through premiums charged to plan enrollees, government reimbursements and investment earnings on the fund. STRS Ohio no longer allocates a portion of employer contributions to the Health Care Fund, as all of the employer contributions are needed to fund pensions.
Finding solutions for health care funding is challenging for several reasons. The board has already implemented many cost-saving options available through plan desig…

STRS Ohio August Board News

STRS Ohio’s Investment Return of 14.29% in Fiscal 2017 Is a Positive Step For The Fund
At the August meeting of the State Teachers Retirement Board, Investment Department staff reported that STRS Ohio’s total fund return for the year ending June 30, 2017, was +14.29%. This follows returns of +0.92% in fiscal year 2016 and +5.45% in fiscal 2015. The fiscal 2017 return beat the total fund benchmark by 0.63%. The system’s active management of the funds, rather than relying on index funds, added approximately $400 million in value after all investment costs during the fiscal year. Total fund assets were $75.1 billion as of June 30, 2017.
STRS Ohio’s fiscal 2017 total fund return ranked in the top 20% of Callan Associates’ public fund sponsor database. Callan serves as an investment consultant to the Retirement Board. The strong performance was led by a +22.2% return on international investments (vs. a benchmark return of 21.6%) and a +19.6% return on domestic equities (vs. a benchmark ret…

STRS Ohio June Board News

Retirement Board Approves Health Care Premiums For 2018; Approximately 80% of Enrollees Will See No Premium Increase

At the June meeting of the State Teachers Retirement Board, the board approved 2018 premiums for all plans offered through the STRS Ohio Health Care Program. A complete list of these premiums is posted on the system’s website, or can be obtained by calling STRS Ohio’s Member Services Center toll-free at 888‑227‑7877. Additional information about the 2018 Health Care Program will be provided in upcoming newsletters and on the STRS Ohio website. In late October, all plan enrollees will receive personalized health care plan information in preparation for the fall open-enrollment period that extends from Nov. 1‑21, 2017.

When determining premiums, the Retirement Board and STRS Ohio staff consider the claims experience of plan enrollees, annual health care cost trend rates and administrative expenses for the program. Factors that proved favorable for 2018 rate setting includ…

STRS Ohio May Board News

Correthers Wins Contributing Member Board Seat; Stein, Walters Unopposed for Retired Member Seats

Contributing teacher member Carol Correthers was reelected to the State Teachers Retirement Board in the 2017 election that concluded on May 1. Retired teacher member and current board chair Robert Stein, as well as retired teacher Rita J. Walters, were unopposed for the two retired teacher seats on the board. Walters will be serving her first term on the board. The terms for these three seats begin Sept. 1, 2017, and end on Aug. 31, 2021. Board members receive no compensation for service on the board other than reimbursement for actual, necessary expenses.

Board Reviews Preliminary 2018 Health Care Premiums; Will Continue to Explore Options to Improve Solvency of the Health Care Fund

During the May meeting of the State Teachers Retirement Board, STRS Ohio staff presented a preliminary look at health care program premiums for 2018. Staff works with health care consultants and actuaries to de…

STRS Ohio April Board News

Board Votes to Reduce Future Cost-of-Living Increases to 0% to Preserve Fiscal Integrity of the System; Will Revisit Within Five Years At the April meeting of the State Teachers Retirement Board, the board made the difficult but necessary decision to reduce cost-of-living increases granted on or after July 1, 2017, to 0% to preserve the fiscal integrity of the retirement system. Current benefit recipients’ base benefit and past cost-of-living increases will not be affected by this change. The board also agreed to evaluate — not later than the next five-year actuarial experience review — whether an upward adjustment of the cost-of-living increase is payable without materially impairing the fiscal integrity of the retirement system. The cost-of-living adjustment has a large financial impact on the pension fund because it affects both active and retired members of the system. The vote follows last month’s action to approve changes to the actuarial assumptions that are used to calculate p…

STRS Ohio March Board News

Solvency Period for Health Care Fund Drops to 15 Years; Board Exploring Options to Preserve Plan

At the March meeting of the State Teachers Retirement Board, Paul Snyder, deputy executive director — Finance and chief financial officer, presented results of Segal Consulting’s annual actuarial valuation of the Health Care Fund. The report shows the funded ratio for the Health Care Fund dropped to 63% from 74% last year. This means STRS Ohio has 63 cents on hand for every dollar needed to continue the current plan indefinitely. The valuation projects the Health Care Fund to remain solvent until 2031, a decrease of four years from last year’s valuation — and a decrease of 33 years from the 2014 valuation. The projected 15-year solvency period is an estimate ­— in actuarial terms, there is a 50% confidence level that the Health Care Fund has at least 15 years of solvency. Depending on the strength of financial markets, the amount of health care claims and whether additional funding is avai…