Kevin Kroskey's Ohio Faculty Advisor

January Board News

2012-02-07T15:57:00.002-05:00

(The text below is reprinted from the news release by STRS on 1/23/12.)

Callan Associates Updates Retirement Board on Asset-Liability Study

At the January meeting of the State Teachers Retirement Board, the board's investment consultant, Callan Associates, provided additional research that the board requested in December as part of its asset-liability study. The study will help the board determine the optimal portfolio allocation for the system's assets. Last month, Callan presented five potential asset mixes for the board to review, along with the projected short- to medium-term rates of return for those mixes. At that time, the Retirement Board asked Callan to provide information on two additional asset mixes. The board will discuss these results further at its February meeting.

The preliminary results of the asset-liability study showed that STRS Ohio's current investment policy target would be challenged to achieve an 8% return during the next five to 10 years; however, based on historical data, Callan believes STRS Ohio could expect to generate an 8% to 8.5% return over a 30-year horizon. The study also confirmed that without benefit changes that STRS Ohio is currently seeking through S.B. 3 and H.B. 69, the system will eventually be unable to pay benefits. Unless the proposed changes are fully implemented soon, Callan recommends reducing the risk in the investment portfolio to meet the liquidity needs to pay benefits.

2011 Member Survey Results Presented

Results of membership surveys conducted in December 2011 show that most STRS Ohio members — active and retired — continue to have positive overall impressions of the system and the Retirement Board, and most still consider their pension an excellent or good value.

These were just a few of the findings from the annual membership surveys presented at the board's January 2012 meeting by Dr. Marty Saperstein. His Columbus-based research firm, Saperstein Associates, conducted the survey for the ninth consecutive year. The phone surveys involved 602 randomly selected participants (300 active members and 302 retirees) with surveys averaging about 20 minutes in length.

This year's survey results also showed the following:

About two out of five active members plan to teach longer than they originally thought, and the most common reason cited for this is proposed pension benefit changes.
About 73% of retirees consider the amount they pay for health insurance through STRS Ohio an excellent or good value.
Most members are satisfied with system communications, including email updates. There is interest in web-based communication and services and a continued need for communication about proposed pension legislation.
Nine out of 10 retiree households have at least one source of income in addition to STRS Ohio. On average, STRS Ohio provides 63% of retirees' income.

Retirements Approved

The Retirement Board approved 197 active members and 174 inactive members for retirement.

Other STRS Ohio News

STRS Ohio Working with Pension Trustee Advisors on Pension Reform

In December, Pension Trustee Advisors (PTA), an independent actuarial firm hired by the Ohio Retirement Study Council (ORSC) to study pension reform, sent a lengthy request for background data to all five Ohio public retirement systems. PTA requested the information as part of its work to review the pension reform plans that the retirement systems proposed — currently in Senate Bill 3 and House Bill 69. By the mid-January deadline, STRS Ohio had responded with nearly all of the data requested. Any outstanding items are being addressed. The information provided included board reports and policies, copies of our current and past Comprehensive Annual Financial Reports, 30-year funding plans, health care plan information and additional studies and research.

Call Center Service Levels Increase for Calendar Year 2011

Service levels increased significantly in the Member Services Center (MSC) during 2011. The average wait time for a representative dropped to 29 seconds compared to 85 seconds in 2010, and the abandon rate dropped to 1.9% compared to 6.5% in 2010.

Helping to increase the service level was the drop in call volume from 322,000 in 2010 to 319,000 in 2011. Call activity increased regarding counseling services, service retirement and account withdrawal, while the call volume relating to health care dropped due to an off year for dental and vision open enrollment.

The MSC has eliminated the call menu for incoming calls. Members no longer need to select from a menu of three choices when calling STRS Ohio; instead, they will hear a live person answer their call. In the past, a menu system was used to help direct calls to the appropriate staff; however, member service representatives are now trained on all STRS Ohio benefits and can take any incoming call. This change will eliminate confusion for members, as well as reduce repeat calls when members hang up and try a different option during peak calling periods in hopes of getting a faster response.

Health Care Plans' Total Enrollment Unchanged by Annual Open Enrollment

Following a successful open-enrollment period in November, the STRS Ohio Health Care Program is beginning 2012 with about the same number of enrollees as December 2011. There were 807 new enrollees and 1,080 terminations for a net decrease of 273 (0.2% decrease in total enrollment). More than 12,000 plan changes were recorded between November 2011 and January 2012. More than two-thirds of these changes (8,174) were Medical Mutual Plus Plan Medicare B only members who STRS Ohio proactively moved (i.e., the enrollee did not need to do anything additional) to the Aetna Medicare Plan (PPO). Total enrollment in the STRS Ohio Health Care Program as of Jan. 1, 2012, stands at 122,540.

Tax Reporting Season Includes New Feature for Benefit Recipients

The year-end tax reporting process for 2011 is under way — generating 161,634 Form 1099R tax statements that show slightly more than $5.7 billion in distributions and $810 million in federal and Ohio taxes withheld. Tax statements began mailing to benefit recipients on Jan. 17. Tax statements for QEBA excess benefit recipients (35) and non-resident aliens (approximately 175) are also part of this mailing.

Beginning Feb. 1, a new feature on the STRS Ohio member website will allow benefit recipients online access to reprint their 1099R forms for 2011. Copies of 2010 and earlier tax statements will continue to be available by request from our Member Services Center.

December Board News

2011-12-14T13:53:00.000-05:00

(The text below is reprinted from the news release by STRS on 12/9/11.)

Callan Associates Presents Preliminary Results of Asset-Liability Study; Retirement Board Requests Actuarial Experience Review
At the December meeting of the State Teachers Retirement Board, the board's investment consultant, Callan Associates, shared its preliminary findings from the asset-liability study that began in August. Asset-liability studies take into account an investor's risk tolerance, investment goals and cash flow needs paired with capital market expectations to determine the optimal portfolio allocation into broad asset classes.

As reported in last month's Board News, Callan concluded that STRS Ohio's current investment policy target would be challenged to achieve an 8% return during the next five to 10 years; however, based on historical data, Callan said STRS Ohio could expect to generate an 8% to 8.5% return over a 30-year horizon. Callan created a liability model for the system and ran simulations of various asset allocation mixes to project expected return rates and how that growth meets the expected growth in the system's liabilities. The preliminary results of the study confirm that without the benefit changes that STRS Ohio is currently seeking through S.B. 3 and H.B. 69, the system will eventually be unable to pay benefits. Unless the proposed plan changes are fully implemented soon, Callan recommends reducing the risk in the investment portfolio to meet liquidity needs to pay benefits.

The asset-liability study and annual actuarial valuation (received last month) are two important tools for the Retirement Board to assess the financial health of the pension fund. During the December meeting, the board voted to request one additional study — an actuarial experience review. This study assesses all of the pension fund's actuarial assumptions to determine if any adjustments are necessary. Data presented by the board's actuarial consultant in November indicated that assumptions used for payroll growth and individual teacher salary growth are higher than what has been experienced during the past several years.

An experience review is typically conducted every five years — STRS Ohio's last review was in fiscal year 2008. Even though it has been only three years, the board voted to carry out a comprehensive experience review in early 2012 so that it could have up-to-date analysis as it continues discussion of STRS Ohio's financial condition. The board plans to resume that dialogue at its January meeting and also during the Board Retreat later that month.

2011 Annual Financial Statement Audit Completed
Clifton Gunderson reported the results of its audit of the STRS Ohio financial statements for the fiscal year ended June 30, 2011, at the December Retirement Board meeting. The report noted that the system's financial statements were fairly stated in accordance with generally accepted accounting principles; further, no material weaknesses in internal controls or instances of statutory noncompliance were found. As a result, STRS Ohio received a "clean" audit known as an unqualified opinion, which is the highest level of opinion that an organization can receive.

STRS Ohio's financial statements are included in the 2011 Comprehensive Annual Financial Report, which will be posted on the STRS Ohio website by Dec. 30, 2011. Copies of the report can also be requested by calling STRS Ohio's Member Services Center toll-free at 1-888-227-7877. In addition to the financial statements noted above, the report includes investment, actuarial and statistical information about STRS Ohio.

Board Approves Three Goals for 2012–2025 Health Care Strategic Plan
The Retirement Board continued its deliberation on strategic health care planning and approved three goals to improve the sustainability of STRS Ohio's Health Care Program. The vote followed presentations by the Member Benefits Health Care Department in November and December. Staff recognized that the current health care program is only expected to remain solvent until 2024, and there is little likelihood for additional funding.

The three goals adopted at the December meeting resolve to:

· Establish Medicare as the health care program’s cornerstone

· Achieve 30 years of solvency by 2016

· Extend forecasted solvency to 65 or more years by 2025

The board directed staff to begin drafting a strategic plan document and to explore potential actions to achieve the newly adopted goals. While laying the groundwork for the long term, the strategic plan will include specific initiatives for 2012–2015. Some of the ideas discussed are designed to better align the non-Medicare program with the marketplace. These ideas included consolidating the Plus and Basic plans into a single plan and phasing in higher annual deductibles and out-of-pocket limits in order to lower monthly premiums. Plan details will be presented and voted on at future board meetings.

Retirement Board Salutes Retiring ORSC Director
Board chair Jim McGreevy presented Aristotle Hutras with a resolution honoring Hutras' 22 years of service as Ohio Retirement Study Council director. Hutras is retiring at the end of December. The resolution recognized Hutras for providing "guidance, direction and counsel to STRS Ohio in both good and challenging times." Hutras, who noted that he graduated with an education degree "before the Statehouse bug bit me," thanked the board and staff for working closely with him over the past two decades.

Retirements Approved

The Retirement Board approved 100 active members and 64 inactive members for service retirement benefits.

Other STRS Ohio News

STRS Ohio Receives $43 Million from Early Retiree Reinsurance Program (ERRP)
On Dec. 8, STRS Ohio received ERRP payments of $20.4 million for calendar year 2010 and $22.6 million for calendar year 2011 requests. In addition, staff received approval on the claim files for the regional fully insured plans — Kaiser, AultCare and Paramount for 2010 and 2011; the amounts are $1.1 million and $1.6 million respectively. Staff expects the regional fully insured requests will be added to the pending list of outstanding reimbursement requests. To date, STRS Ohio has received a total of $72.7 million from the ERRP project and is awaiting payment for an additional $3.3 million for the regional fully insured plans AultCare and Paramount. Last month, the U.S. Department of Health and Human Services (HHS) announced that, as of Oct. 27, they have paid out $4.1 billion of the total $5 billion available for ERRP payments.

Update on contract negotiations between Express Scripts, Walgreens
Walgreens and Express Scripts have not come to terms to continue Walgreens' participation in Express Scripts' pharmacy network in 2012. Overall, departure from the Express Scripts' network will likely lead to reduced program costs for STRS Ohio and enrollees. On Nov. 22, Express Scripts began mailing letters to Medicare and non-Medicare enrollees who fill prescriptions at Walgreens. The letter provides information regarding local alternative network pharmacies and instructions should enrollees decide to transfer their prescriptions. On average, there are one or more network pharmacies within one-half mile of a Walgreens' pharmacy. Medicare enrollees who do not use Walgreens will receive an informational letter per Centers for Medicare & Medicaid Services guidelines. All letters include a reminder that mail service is available for maintenance medications and how to locate in-network retail pharmacies via Express Scripts' toll-free phone number or by visiting Express Scripts' website. Non-Medicare enrollees who do not have active prescriptions at Walgreens will not receive a letter.

Retirement Board Election Process is Under Way
In spring 2012, an election for one contributing member seat on the State Teachers Retirement Board will be held. The election process began this fall, when individuals interested in running for this seat could first request petitions from STRS Ohio. Those eligible for nomination are individuals presently contributing to STRS Ohio or those who have contributions on deposit with STRS Ohio. STRS Ohio retirees who are reemployed in an STRS Ohio-covered position are not eligible for nomination.

Individuals interested in running for this seat can request petitions from STRS Ohio by calling toll-free 1-888-227-7877. The deadline for returning petitions is Feb. 24, 2012. STRS Ohio members will receive their ballots and voting information in April; they will have through May 7, 2012, to cast their vote. The winner of the election will begin his or her four-year term on the board on Sept. 1, 2012.

November Board News

2011-12-05T14:08:00.022-05:00

(The text below is reprinted from the news release by STRS on 11/18/11.)

ORSC Chooses Pension Trustee Advisors to Review Pension Reform Plans

At its Nov. 16 meeting, the Ohio Retirement Study Council (ORSC) heard presentations from three firms vying for the opportunity to advise the Council on the pension reform plans currently in pending legislation (S.B. 3 and H.B. 69). Following the presentations and question-and-answer sessions with each firm, the ORSC unanimously selected Pension Trustee Advisors (PTA) to conduct the review.

The Council questioned whether the three senior principals proposed to lead the project would be sufficient to accomplish all of the work, but the firm addressed this concern to the satisfaction of Council members. The PTA partners said they have no ongoing long-term contracts and will be able to focus their work on the Ohio pension funds. They said they expect to be able to complete their work by July to meet the ORSC's timeline. PTA referred to prior work done with CalSTRS and the city of New York to show its experience with larger public pension funds.

Rep. Kirk Schuring (R-Canton), who chaired a subcommittee that scored the initial written proposals, underscored that the scope of the project should be manageable for the firm, noting that PTA will be "reviewing, not recreating" the work done by the pension systems.

The ORSC received six written proposals in response to an RFP issued last summer. After the subcommittee met and scored those proposals, all of the firms were invited to make a presentation to the full Council. Three firms responded to that request, PTA, Hay Group and The Segal Company.

PricewaterhouseCoopers Reviews Annual Pension Valuation
Representatives from the Retirement Board's actuarial consultant, PricewaterhouseCoopers (PwC), reviewed with the board the results of the 2011 annual actuarial valuation report. The preliminary report was presented to the Retirement Board at its October meeting by STRS Ohio staff. There were no changes to the report — the pension system's funded ratio stands at 58.8% as noted in the October issue of Board News. PwC noted that as retirement systems mature, it is common for the fund to experience negative cash flow — that is, for benefit payments to exceed contributions collected. However, PwC said that it is happening at a faster than projected rate at STRS Ohio due to an uptick in retirements (more benefits are being paid) and slower growth than expected in teacher payrolls (fewer contributions).

PwC also reviewed the Governmental Accounting Standards Board (GASB) exposure draft on pension accounting and financial reporting by employers. If adopted, the new rules will have a significant impact on how public pension funds and reporting employers show liabilities on their financial statements. If unchanged, the new rules are scheduled to take effect in 2013.

Callan Associates Updates Board on Asset Liability-Study
During the November board meeting, the Retirement Board's investment consultant, Callan Associates, updated the board on its ongoing asset-liability study that began in August. Callan is currently refining its liability model and resulting projections. The final results of the study are now expected in January.

As part of the study, Callan is providing both long- and short-term capital market projections. Callan concluded that STRS Ohio's current investment policy target will be challenged to achieve an 8% return for the next five and perhaps 10 years. However, Callan reported that based on this investment policy target and historical data, STRS Ohio could expect to generate an 8% to 8-1/2% return over the longer term 30-year horizon. Due to market volatility, the study said the path to a long-term 8% return will include extended periods of returns above the 8% and periods below the 8%.

Board Discusses Strategic Plan for Health Care
One of the Retirement Board's strategic goals is to work on options for the Health Care Stabilization Fund that support the STRS Ohio Health Care Program. The board and staff are developing a long-term strategic plan that includes specific initiatives for 2012–2015.

During the discussion at the November board meeting, staff recognized that the current health care program continually faces near-term insolvency with little prospect for additional funding. The board reviewed statistical analysis that showed:

The Health Care Stabilization Fund is only expected to remain solvent until 2024.
Sixty-nine percent of benefit recipients enrolled in the STRS Ohio Health Care Program are also receiving Medicare benefits, while 31% are non-Medicare.
Subsidies for non-Medicare retirees account for 62% of all subsidies.

With this in mind, staff proposed a vision for the future that would establish the Medicare program as the cornerstone for the STRS Ohio Health Care Program, to help the largest number of retirees for the longest period of time. This plan would increase out-of-pocket expenses to reduce premium increases and merges the Medical Mutual Plus and Basic plans into one plan by 2016. The most significant changes would affect the non-Medicare program. These changes would more closely align costs with the marketplace.

The discussion also addressed the need to continue to educate members about planning for growing health care costs in retirement and how to better manage their health and health care coverage. The board is expected to continue the strategic plan discussion at its December meeting.

Retirements Approved

The Retirement Board approved 311 active members and 112 inactive members for service retirement benefits.

Other STRS Ohio News
Satisfaction Survey Responses Ranked Outstanding for First Quarter

During the first quarter of the 2011–12 fiscal year, more than 2,100 members who met with a counselor completed a satisfaction survey, with 96% responding that the service met or exceeded their expectations. Of those members who met with a counselor, 51% provided a perfect 10 score for overall service. Staff continues to be rated the highest in the areas of professionalism, courtesy and knowledge, with 67% of members providing a perfect 10 rating.

In addition, about 1,000 members who attended a Member Education program completed satisfaction surveys for the quarter, with 98% stating that the program exceeded their expectations and 47% rating the program a perfect 10. More than 76% of respondents rated the Member Education staff a perfect 10 regarding professionalism, courtesy and knowledge.

Retirement Board Election Process Begins this Month
On Nov. 10, notices were sent to all STRS Ohio reporting employers and other interested parties about the upcoming Retirement Board election for one contributing member seat. In addition, information was in the October newsletter and is posted on the STRS Ohio website. Individuals interested in running for this seat can request petitions from STRS Ohio. The deadline for returning petitions is Feb. 24, 2012.

October Board News

2011-10-27T09:36:00.000-04:00

(The text below is reprinted from the news release by STRS on 10/21/11.)

Despite Strong Investment Returns, Annual Actuarial Valuation Underscores Need for Pension Plan Adjustments
At its October meeting, the State Teachers Retirement Board received the preliminary annual actuarial valuation report prepared by its actuarial consultant, PricewaterhouseCoopers (PwC). The report provides a "snapshot" of the actuarial position of the retirement fund as of July 1, 2011. Even though the system reaped its strongest investment return in nearly three decades during fiscal year 2011, the funding period for the pension fund remains "infinite," and the funded ratio declined slightly from 59.1% to 58.8%. The fund experienced a small actuarial gain of about $181 million during the fiscal year.

While the positive investment return for fiscal year 2011 generated a gain, STRS Ohio uses a common accounting and actuarial technique called "smoothing" to spread market volatility over four-year periods. This method helps pension funds recognize investment returns for a given year over a four-year window rather than a one-year "spike." The smoothing technique is more apparent when the returns are especially high (as they were in 2011), or unusually low (as they were in 2009). Some of the significant investment losses from fiscal year 2009 are still being absorbed into this year's valuation, which is part of the reason for the overall decline in funded ratio. The pension fund has a net $5.5 billion in unrecognized gains being deferred to future years.

Other significant factors in this year's valuation included:

· A net gain for the system in individual salary increases — these increases were smaller than expected.

· Net losses for the system in retiree mortality — retirees are living longer than expected and collecting benefits for a longer period of time.

· A net loss for the system in retirements/terminations/withdrawals — the system saw a greater number of retirements than expected.

The results of this year's actuarial valuation reiterate the need for pension reform and implementation of the changes the Retirement Board proposed to strengthen the financial condition of the retirement system.

CEM Benchmarking Gives STRS Ohio High Marks for Member Service
CEM Benchmarking, a leading global research and benchmarking company, reported the results of its annual pension administration benchmarking report for fiscal year 2010 at the October Retirement Board Meeting. CEM has used peer comparative analysis to measure the performance of public pension plans since 1998, and STRS Ohio has consistently scored in the top quartile of CEM's universe for service. This year's results again recognize STRS Ohio as above the peer median for total service, while noting that the system's total cost is also above the peer average (but below the average of all 78 participating private and public retirement systems from around the world). The report noted that STRS Ohio's costs per member decreased by 2.7% annually between 2007 and 2010, while the average cost of its peers increased by 2.0%.

One key takeaway from the report is that there is a global shift to online service and related savings. STRS Ohio has been aware of this shift and is currently developing an online Service Retirement Application to make the retirement process easier for members and more efficient for the retirement system. STRS Ohio will continue to enhance its website and to review other internal processes to identify opportunities to gain efficiency.

Retirements Approved
The Retirement Board approved 1,090 active members and 134 inactive members for service retirement benefits.

Other STRS Ohio News

ORSC Scores Proposals for Pension Plan Adviser; Firms to Present to Council Nov. 16
A subcommittee of the Ohio Retirement Study Council (ORSC) met Oct. 11 to score six proposals that were submitted in response to a request for proposals issued by the Council. The subcommittee, chaired by Rep. Kirk Schuring (R-Canton), also includes Rep. Dan Ramos (D-Lorain) and Seth Morgan, a gubernatorial appointee.

Categories included in the scoring were: management summary, vendor capabilities and references, staff qualifications, resources, methodology, timeline, additional information about services, glossary and cost information. The Hay Group received the highest score — a 46 out of a possible 50 points. The combined proposal from Pension Trustee Advisors/KMS Actuaries came in at 43 points. Two firms, The Segal Company and Milliman both scored 37 points. Rounding out the bottom with 30 and 26 points, respectively, were Bolton Partners and Deloitte.

The results of the scoring were accepted by the full Council at its Oct. 13 meeting. On Nov. 16, the six bidding firms are expected to make presentations to the Council. Awarding of the contract will likely happen after the November meeting.

Open Enrollment for the STRS Ohio Health Care Program Begins Nov. 1
The annual open-enrollment period for the STRS Ohio Health Care Program for calendar year 2012 will be Nov. 1–22. Benefit recipients currently enrolled in an STRS Ohio health care plan will soon receive a personalized information packet about their 2012 plan options, monthly premiums and details about features of the hospital/medical and prescription drug coverage. During open enrollment, current enrollees may change plans and enroll dependents. Benefit recipients who do not currently participate in the program may enroll without a waiting period.

STRS Ohio Receives Additional ERRP Payments
After a lengthy quality assurance review by the U.S. Department of Health and Human Services (HHS), STRS Ohio received $9.3 million on Sept. 21 for a 2011 payment from the Early Retiree Reimbursement Program (ERRP). This brings the system's total ERRP funds received to $29.7 million. In late September, STRS Ohio staff submitted four new payment requests: two for the 2010 self-insured plans and two for the fully insured plans for 2010 and 2011. The total of the four requested payments is $35.9 million. Staff expects these payments to be subjected to HHS quality assurance review; so, it is unclear if or when STRS Ohio will receive any reimbursement.

Health Care Services staff is currently working with consultants to plan the timing of fourth quarter ERRP submissions to HHS, as it is unknown at this time when the federal ERRP funds will run out.

September Board News

2011-10-17T12:11:00.000-04:00

(The text below is reprinted from the news release by STRS on 9/16/11.)

Pension Legislation Remains on Hold; Six Firms Respond to RFP

Six potential vendors have submitted proposals in response to the Request for Proposals (RFP) from the Ohio Retirement Study Council (ORSC). The six firms that submitted proposals are: Deloitte, The Segal Company, Bolton Partners Inc., Hay Group, Milliman, and Pension Trustee Advisors. The ORSC has not met since the proposals were submitted. Senator Keith Faber (R-Celina), chair of the ORSC, reiterated at the August meeting his intention to conduct regional hearings on the five pension system boards' pension reform proposals; however, no announcement regarding the hearings has been made. STRS Ohio will share information concerning these meetings as soon as it becomes available.

Retirement Board Updated on Asset-Liability Study

Callan Associates, the Retirement Board's investment consultant, is conducting an asset-liability study for the pension fund that is expected to conclude in December. Pension funds use asset-liability studies to establish investment policy by evaluating various criteria including pension plan design (benefit structure), actuarial data, and investment risk and return objectives.

During the September board meeting, Callan Associates' staff discussed asset allocation with the board, calling it a long-term strategic process that is the primary determinant of investment return and asset volatility. The board's consultant will create a series of asset mix alternatives with different levels of risk/reward for consideration. This "modeling" will include the June 30, 2011, valuation results. The study will also evaluate the impact of different interest rate and economic scenarios on STRS Ohio's liabilities.

The presentation also noted that the appropriate asset allocation policy should satisfy two basic criteria:

• The asset mix will be efficient — generating the maximum level of expected return for a given level of risk

• The asset mix will reflect the appropriate level of risk for STRS Ohio.

Investment Cost Effectiveness Analysis Shows $94 Million Saved Through Internal Management

A CEM Benchmarking report, "Investment Cost Effectiveness Analysis" was shared with the board at the September meeting. The analysis compares cost and return performance to a custom peer group of pension systems. One of the more significant findings is that STRS Ohio saved $94 million in 2010 by managing about 80% of its total assets with in-house staff. The analysis compared those internal management costs to the median management costs that the peer group pays for external management. The report also noted that STRS Ohio's five-year total return of 4.4% was ahead of its policy return of 4.2%. The five-year value added figure of 0.2% was above the peer median.

Retirements Approved

The Retirement Board approved 1,517 active members and 151 inactive members for service retirement benefits.

Finance Staff Educates Employers About GASB Exposure Draft

As noted in last month's Executive Director's Report, the Governmental Accounting Standards Board (GASB) has recently issued two exposure drafts about pension accounting and financial reporting that would make fundamental changes to standards for state and local governments, including public school districts, colleges and universities. The proposed change is most likely to directly impact STRS Ohio reporting employers, because employers participating in a cost-sharing, multiple employer pension plan (like STRS Ohio) are required to report a net pension liability in their financial statements for a proportionate share of the plan's entire unfunded liability. Finance staff sent a bulletin to employers to make them aware of the exposure drafts and how these rules, if they become standards, will impact them. The bulletin also gave employers information about how to submit written comments to GASB.

Benefit Counselors Are on the Road Again

Benefits counselors took to the road for fall field counseling the week of Aug. 15. The fall season includes 26 locations around the state. Scheduling for the available appointments began in July with nearly 1,300 members scheduling appointments at one of the first 11 locations. Internet scheduling is still popular, with half of the appointments being scheduled through the STRS Ohio Web site. Counselors will be available to meet with more than 4,600 members at the various locations around the state during the next three months. This is a 30% increase in capacity compared to fall 2010.

Express Scripts Inc. and Medco Health Solutions Sign Definitive Merger Agreement

Express Scripts Inc. (ESI) and Medco Health Solutions Inc. announced recently that they entered into a definitive merger agreement. The transaction is targeted to close in the first half of 2012. However, monopolistic concerns and scrutiny as to whether regulatory review will approve the merger have been raised.

Under the terms of the definitive merger agreement, ESI management is sustained and becomes the executive driving force. STRS Ohio, as a client of ESI, expects little if any adverse impact to enrollees. Looking ahead, ESI should have opportunity to leverage additional dispensing facilities, augment clinical pharmacy services and potentially enhance volume discount negotiations.

STRS Ohio Sets the Record Straight on Buckeye Institute Report

2011-09-15T07:55:00.002-04:00

(The text below is reprinted from the news release by STRS on 9/12/11.)

Earlier this month, the Buckeye Institute issued a misleading report entitled, "Taxpayers on the Hook: Taxpayer Contribution Rates for Ohio Government Pensions Outpace National Averages." The report claims STRS Ohio's 14% employer contribution rate is the ninth highest rate out of 34 states with similar teacher retirement programs. STRS Ohio employers do not contribute to Social Security by state law, making the STRS Ohio pension the only source of retirement income for Ohio's educators.

In reality, STRS Ohio's employer contribution rate is below the national average when you factor in the Social Security contribution rate of 6.2% that 22 of those states make on behalf of their public educators. The report only listed the amount those states contribute to the state retirement system and failed to include the additional amount that is contributed to the Social Security program.

A more fair and accurate comparison would have noted that when the Social Security contribution is factored in, STRS Ohio's 14% employer contribution rate ranks 20th out of the 34 states in the report. Among the 12 states that do not participate in Social Security, STRS Ohio's rate ranks right in the middle:

Illinois	24.91%
Louisiana	23.70%
Connecticut	19.20%
Maine	17.28%
Colorado	14.75%
Missouri	14.50%
Ohio	14.00%
Kentucky	13.11%
Alaska	12.56%
California	10.27%
Massachusetts	8.50%
Texas	6.64%

Of the remaining 22 states that contribute to both a public retirement system and Social Security on behalf of their public educators, 18 of those states contribute more than 14% in combined state retirement contributions and Social Security contributions.

The Buckeye Institute report suggests that 401(k)-style retirement plans are a better alternative for Ohio's public employees, but study after study shows that individuals enrolled in these plans are ill-prepared for retirement, as untrained, individual investors earn a significantly lower return than the professional money managers at public pension funds like STRS Ohio. It's clear that defined benefit plans offer a greater retirement benefit at a lower cost.

These continued and unwarranted attacks on Ohio's public pension funds and their defined benefit plans are sure to continue until the Ohio Legislature takes action on pension reform proposals that are currently on hold. Defined benefit pensions give members a retirement they can count on and stoke — rather than drain — Ohio's struggling economy. STRS Ohio paid more than $5.5 billion in benefits during fiscal year 2010, with much of that money staying right here in Ohio, being spent on goods and services throughout the state — and that's something all Ohioans should be thankful for.

CONTRIBUTION CHANGE REMAINS OUT OF FINAL BUDGET BILL; ORSC GOING AHEAD WITH STUDY

2011-07-05T11:24:00.000-04:00

(The text below is reprinted from the news release by STRS on 6/30/11.)
The legislative conference committee dealing with the state budget did not include a shift in employer/employee contributions for the five statewide pension systems in its final report issued on Monday, June 27. The Ohio Senate then passed the budget bill on June 28, followed by passage in the Ohio House of Representatives on June 29. The bill then went to the governor for his signature.

During the budget discussions, STRS Ohio voiced its concern about the change, advocating that any discussion of contributions should be held within the context of the pension reform legislation proposed by the five Ohio statewide public pension systems. STRS Ohio is grateful for the many STRS Ohio members and constituency groups who also shared this message with members of the Legislature.

Discussions about future pension reform now shift to the Ohio Retirement Study Council (ORSC), the legislative oversight committee for the five pension systems. It is going forward with its plans to issue a request for proposal (RFP) for an independent actuary and policy advisor. According to the RFP, this consultant will be asked to review the systems' proposed pension reform plans, as well as alternative pension plan design changes, retiree health care coverage, pooled purchasing, and individual account options to augment retirees' pensions and health care coverage. It is expected that the process of hiring a consultant, plus the completion of the requested work, will take the project well into the fall.

Committee hearings on House Bill 69 and Senate Bill 3, which were introduced earlier this year to carry pension legislation, will not be resumed until after the ORSC study is done. However, STRS Ohio members are encouraged to keep sharing their opinions with their legislators - particularly on the topic of preserving defined benefit pensions for future retirees versus moving public educators into defined contribution plans.

As STRS Ohio has noted in previous communications, the defined benefit pensions Ohio's public educators earn:

- Provide retired teachers a reasonable and reliable pension they won't outlive.

- Save taxpayers billions of additional dollars in potential public assistance expenditures now spent to help individuals whose savings accounts, such as 401(k) plans, do not provide enough to keep them out of poverty in retirement.

- Provide a stable source of revenue, including tax revenue, for Ohio's local economies.

- Are both efficient and economical, as a defined benefit pension can deliver the same retirement income at almost half the cost of a defined contribution savings account due to pooling of investment risk, continual diversification of assets and professional investment management.

- Help Ohio's schools, colleges and universities recruit and retain quality educators.

With legislators spending more time in their home districts during the summer, STRS Ohio members have an opportunity to talk face-to-face with their representatives and senators about the importance of preserving pensions. Phone calls, letters and e-mails are also effective. Although there is a lag in the pension discussion at the Statehouse, it is still important to stress the importance of changes being approved in a timely manner that preserve pensions for all STRS Ohio members.

Links to additional information relating to the proposed pension legislation are below.

Testimony by STRS Ohio Executive Director Michael J. Nehf can be found at: https://www.strsoh.org/legislation/Testimony.html.

Contact Information for the Members of the ORSC can be found at: https://www.strsoh.org/legislation/ORSC_contacts.html.

Contact Information for the Members of the House Subcommittee can be found at: https://www.strsoh.org/legislation/House_contacts.html.

Contact Information for the Members of the Senate Government Oversight and Reform Committee can be found at: https://www.strsoh.org/legislation/Senate_contacts.html.

CONTRIBUTION SHIFT PROPOSAL MAY REEMERGE IN CONFERENCE COMMITTEE DISCUSSIONS

2011-06-20T09:06:00.001-04:00

(The text below is reprinted from the news release by STRS on 6/15/11.)

Members who have been following communications from STRS Ohio during the past few months know that the system has continually expressed its concern about one component of Gov. John Kasich's proposed state budget that was first presented in March. This component called for a shift in employer/employee contributions from the five statewide pension systems. Employers would pay 2% less based on payroll and employees would pay 2% more. For STRS Ohio, this could mean an increase in member contributions to 12% from the current 10%, and a decrease in employer contributions to 12% from 14%. Requiring employers to pay less was recommended as a way to help offset the cutbacks in state funding to state and local governments.

STRS Ohio Executive Director Michael Nehf, as well as constituency groups and individual STRS Ohio members, voiced their concern with legislators about this budget bill language. In subsequent action, the contribution change was removed from Substitute House Bill 153 (the budget bill) by the House of Representatives before it was sent to the Senate. The Senate also chose to omit this language.

However, other differences between the House and Senate versions of the budget bill mean it now goes to a conference committee composed of three House members and three Senate members. They will hash out the differences and, later in June, each chamber will vote on the conference committee report. Following that, the bill will be sent to the governor.

Media reports suggest that the contribution shift to 12%/12% may come up again in the conference committee. STRS Ohio continues to voice its concern, noting the following:

- The State Teachers Retirement Board has spent the past two years forming a reasonable plan to help strengthen the financial condition of the pension fund. This plan maintains the current level of employer contributions at 14% and also calls for increasing the member rate to a total of 13%. This contribution structure, plus other changes, bring the pension fund to the statutorily required 30-year funding period.

- A shift in contribution rates to 12%/12% would mean the board's plan no longer meets the 30-year funding requirement. The Retirement Board and Legislature would be faced with making additional reductions in benefits for current and future teachers, as well as retirees. The board's proposed plan already requires current and future educators to work longer and contribute more for a lesser benefit in retirement, plus provides a smaller cost-of-living adjustment for all retirees.

- The 12%/12% proposal plus the additional 3% from members contained in the board's plan - a 50% increase for members - still leaves the pension fund short of reaching the 30-year funding requirement by one-half year due to the fact that member contributions are 100% refundable and may have accrued interest attached.

As noted above, both the House and Senate chose to omit the contribution language from the budget bill, recognizing that this shift would adversely affect system funding. STRS Ohio is grateful for this action, but is also mindful that the language could reappear during conference committee meetings. The executive director and other staff are sharing their concerns with the committee members and the governor. STRS Ohio continues to advocate that any discussion of contributions should be held within the context of the pension reform legislation proposed by the five Ohio statewide public pensions systems and contained in House Bill 69 and Senate Bill 3. STRS Ohio members who would like to share an opinion on this topic should contact the members of the conference committee as soon as possible. Their contact information can be found at the following link: https://www.strsoh.org/legislation/Conf_Comm_contacts.html

Pension Legislation Update

2011-05-19T16:49:00.000-04:00

(The text below is reprinted from the news release by STRS on 5/13/11.)

ORSC ANNOUNCES PLANS TO HIRE ACTUARY AND POLICY ADVISOR TO REVIEW PENSION LEGISLATION

During the May 12, 2011, meeting of the Ohio Retirement Study Council (ORSC), Sen. Keith Faber, who chairs the committee, announced that he is creating a subcommittee to develop a request for proposal for an independent actuary and policy advisor in regard to pension reform issues. This consulting expert will be asked to help the ORSC members analyze the plans the five public pension systems have developed to strengthen the solvency of their pension funds and other potential retirement-related changes. Faber noted he wants someone who can advise on reform trends in other states and the private sector.

Through media reports, Faber indicated the Senate is not likely to proceed with any pension legislation until this review is completed. It is expected that this process will take pension reform discussions into the fall. The members of the ORSC subcommittee, which will be chaired by Rep Kirk Schuring, are Sen. Scott Oelslager, Rep. Dan Ramos and Lora Miller, who was recently appointed by the governor to the ORSC.

As a result of this latest development, it is likely that committee hearings on House Bill 69 and Senate Bill 3, which were introduced to carry pension legislation, will not be resumed until after the ORSC study is done. However, STRS Ohio members are encouraged to keep sharing their opinions with their legislators — particularly on the topic of preserving defined benefit pensions for future retirees versus moving public educators into defined contribution plans. As recently as May 8, the Columbus Dispatch ran a guest column supporting the movement of public pensions to 401(k) plans. (The response sent by STRS Ohio Executive Director Michael Nehf can be found on the STRS Ohio Web site at: https://www.strsoh.org/default.htm#Response.)

As STRS Ohio has noted in many of its communications to members, the pensions Ohio’s public educators earn:

- Provide retired teachers a reasonable and reliable pension they won’t outlive.

- Save taxpayers billions of additional dollars in potential public assistance expenditures now spent to help individuals whose savings accounts, such as 401(k) plans, do not provide enough to keep them out of poverty in retirement.

-Provide a stable source of revenue, including tax revenue, for Ohio’s local economies.

- Are both efficient and economical, as a defined benefit pension can deliver the same retirement income at almost half the cost of a defined contribution savings accounts due to pooling of investment risk, continual diversification of assets and professional investment management.

- Help Ohio’s schools, colleges and universities recruit and retain quality educators.

With legislators spending more time in their home districts during the summer, STRS Ohio members have an opportunity to talk face-to-face with their representatives and senators about the importance of preserving pensions. Phone calls, letters and e-mails are also effective. Although there is a lag in the pension discussion at the Statehouse, it is still important to stress the importance of changes being approved in a timely manner that preserve pensions for all STRS Ohio members.

ADDITIONAL ITEM OF NOTE 
When Gov. John Kasich presented his proposed state budget in March, it included a shift in employer/employee contributions for the five statewide pension systems. Employers would pay 2% less based on payroll and employees would pay 2% more. Requiring employers to pay less was being recommended as a way to help offset the proposed cutbacks in state funding to state and local governments.

For STRS Ohio, this could mean an increase in member contributions to 12% from the current 10%, and a decrease in employer contributions to 12% from 14%. However, STRS Ohio is already proposing a 3% increase in member contributions and no change in the 14% employer contribution in its January 2011 plan as a way to help the pension fund meet the 30-year funding requirement.

A 12%-12% contribution arrangement, without additional contributions, puts the pension fund at a 45.6-year funding period, assuming the other changes the board has proposed are made. Implementing the board’s plan without any changes in contributions puts the fund at a similar funding period. To achieve a 30-year funding period, the board’s plan needs 3% additional member contributions plus the 14% from employers. The 12%-12% proposal plus an additional 3% from members — a 50% increase — results in a funding period of 30.5 years. In short, a reduction in employer contributions means employees would pay even more or benefit cuts would have to be more significant to achieve a 30-year funding period.

STRS Ohio Executive Director Michael Nehf and other system associates, as well as many STRS Ohio members, voiced their concerns with legislators about this budget bill language. In subsequent action, the contribution change was removed from Substitute House Bill 153 before it was sent to the Senate Finance Committee for hearings in that chamber.

However, Sen. Keith Faber, who is a member of the Finance Committee, has been quoted by the media as saying the Senate will be giving strong consideration to restoring the contribution shift in the budget bill. Executive Director Michael Nehf reiterated STRS Ohio’s position during the May 12 committee meeting, advocating that any discussion of contributions should be held within the context of the pension reform package proposed by the five Ohio statewide public pension systems. This would help allow any proposed changes to STRS Ohio’s plan to be discussed and their actuarial impact analyzed in conjunction with the other plan components. STRS Ohio members who have an opinion on this topic should contact the members of the Senate Finance Committee. Contact information can be found on the STRS Ohio Web site at: https://www.strsoh.org/legislation/Finance_contacts.html.

STRS May Board News Details - Retirement Board Actions and Discussions

2011-05-19T16:41:00.000-04:00

(The text below is reprinted from the news release by STRS on 5/19/11.)

This week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The May report follows.

CONTRIBUTING MEMBER TAIYIA L. HAYDEN WINS BOARD SEAT
Taiyia (Tai) L. Hayden was reelected to the State Teachers Retirement Board in the recent election. The term for this seat begins on Sept. 1, 2011, and ends on Aug. 31, 2015.

PENSION LEGISLATION ON HOLD PENDING INDEPENDENT REVIEW
During the May 12, 2011, meeting of the Ohio Retirement Study Council (ORSC), Sen. Keith Faber, who chairs the committee, announced that he is creating a subcommittee to develop a request for proposal for an independent actuary and policy advisor in regard to pension reform issues. This consulting expert will be asked to help the ORSC members analyze the plans the five public pension systems have developed to strengthen the solvency of their pension funds and other potential retirement-related changes. Faber noted he wants someone who can advise on reform trends in other states and the private sector. Through media reports, he indicated the Senate is not likely to proceed with any pension legislation until this review is completed. It is expected that this process will take pension reform discussions into the fall.

The members of the ORSC subcommittee, which will be chaired by Rep. Kirk Schuring, are Sen. Scott Oelslager, Rep. Dan Ramos and Lora Miller, who was recently appointed by the governor to the ORSC.

Faber has also been quoted as saying the Senate will be giving strong consideration to restoring the contribution shift (12% and 12% versus 10% and 14% from members and employers, respectively) in the budget bill, which is Substitute House Bill 153. STRS Ohio Executive Director Michael Nehf testified at the May 12 meeting of the Senate Finance Committee, which is holding hearings on the bill, reiterating that any discussion of contributions should be held within the context of the pension reform package proposed by the five Ohio statewide public pension systems. This would help allow any proposed changes to STRS Ohio's plan to be discussed and their actuarial impact analyzed in conjunction with the other plan components.

During the May ORSC meeting, STRS Ohio also presented its proposed operating and capital budgets for fiscal year 2012. There were no recommendations for changes from the council members.

One final note regarding the ORSC: The last vacancy on the nine-member panel has been filled by the governor, who named former state Rep. Seth Morgan to the council.

RETIREMENT BOARD CONTINUES DISCUSSION ABOUT 2012 HEALTH CARE PROGRAM
>From March through June each year, STRS Ohio staff discusses proposed premiums and any health care plan changes for the upcoming calendar year with the Retirement Board. In April, the board agreed to phase-in reductions over the next four years to the premium subsidy received by benefit recipients enrolled in the health care plans. The reduction in subsidy will increase premiums more than the usual increase for medical trend. During the May meeting, the board reviewed preliminary premiums for all plans for 2012; however, the board will not be asked to approve final premiums until the June board meeting. This allows staff to review the claims experience and trends for the first three months of 2011 before making final recommendations.

In calendar year 2012, STRS Ohio health care program participants who are eligible for Medicare Part B only will be able to enroll in the Aetna Medicare Plan (PPO) or the Medical Mutual Basic Plan (or one of the regional health care plans, if applicable). About 7,800 Medicare Part B only enrollees will benefit from the lower monthly premiums provided by the Aetna Medicare Plan (PPO). Previously, these individuals had to choose between the Medical Mutual Plus Plan, Medical Mutual Basic Plan or a regional plan.

The Aetna Medicare Plan (PPO) offers a number of enhanced benefits for its enrollees, including: a $1,500 maximum in out-of-pocket costs that includes the $500 deductible and all medical copayments and coinsurance; low office copayments of $15; ability to see virtually any physician/provider who accepts Medicare; and gym memberships at participating fitness centers. Additional information will be provided later this year through the STRS Ohio Web site, newsletters and health care open-enrollment materials.

RETIREMENT WEBCASTS PROVE SUCCESSFUL
More than 60 individuals have participated in the Retirement Countdown 2011 webcasts that began on May 11. The Member Education staff is offering these weekly to help members who have already met with a benefits counselor and have current retirement estimates, but need help completing the necessary paperwork for retirement this summer. These webcasts will be offered every Wednesday through June 29 from 4:30-5:30 p.m. Registration can be taken up to 4 p.m. on the day of the session. Registration information is posted on the STRS Ohio Web site under the "Counseling & Seminars" tab at: https://www.strsoh.org/resources/2.html.

STRS OHIO RECEIVES CERTIFICATE OF ACHIEVEMENT
STRS Ohio's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2010, has received the Certificate of Achievement for Excellence in Financial Reporting. This is the 21st consecutive year that STRS Ohio has received this award, which is given by the Government Finance Officers Association (GFOA).

EXTERNAL AUDITOR SELECTED
Clifton Gunderson has been selected to audit STRS Ohio financial statements for fiscal years 2011-2015. Clifton Gunderson was selected from four firms interested in performing the external audit work; the firm's pension experience played a key role in its selection. The first-year, fixed-fee bid of $101,500 is 12% less than the 2010 fee.

RETIREMENTS APPROVED
The Retirement Board approved 137 active members and 101 inactive members for service retirement benefits.

STRS May Board News Details

2011-05-09T12:35:00.000-04:00

(The text below is reprinted from the news release by STRS on 4/29/11.)

CONTRIBUTION CHANGE REMOVED FROM BUDGET BILL
The proposed state budget no longer includes language that would set the contributions for public employers and their employees to 12% from each. On April 28, Substitute House Bill 153 (commonly referred to as the "budget bill") was presented at the House Finance and Appropriations Committee meeting with the proposed contribution change removed. This now enables any discussion of contributions to be held within the context of the pension reform package proposed by the five Ohio statewide public pension systems.

STRS Ohio's proposed pension reform plan calls for a 3% increase in member contributions, to 13% from 10%, and no change in the current 14% employer contributions as a way to help the pension fund meet the 30-year funding requirement. STRS Ohio was on record as opposing the 12-and-12 scenario, noting that the resulting decrease in revenue would require additional cuts in benefits for STRS Ohio's active members and retirees and/or even more in contributions from members. Many STRS Ohio members also voiced their concerns with legislators about the budget bill language.

This most recent step in the House committee helps allow any proposed changes to STRS Ohio's plan to be discussed and their actuarial impact analyzed in conjunction with the other plan components. We will continue to monitor Sub. H.B. 153 as it moves through the legislative process.

OTHER ITEMS OF NOTE

ACTIONS AROUND THE COUNTRY ARE STRENGTHENING PUBLIC PENSION PLANS
Earlier this week, some STRS Ohio members may have read articles about a study released by the Pew Center on the States, titled "The Widening Gap: The Great Recession's Impact on State Pension and Retiree Health Care Costs." Unfortunately, much of the report relies on 2009 data, plus does not take into account the actions many states have taken to preserve or restore the affordability and sustainability of their pension plans. In Ohio, all five pension systems have been proposing changes since 2009 that are designed to "close the gap" on funding levels. The introduction of House Bill 69 and Senate Bill 3 on Feb. 1, 2011, at the Statehouse finally brought this important discussion to the Legislature.

Information about changes public pension plans throughout the country have made or are proposing can be found on STRS Ohio's Web site under "Legislative News" on the home page (https://www.strsoh.org/quicklinks/legislative.html). Also, Web site visitors can access a joint response to the Pew study from the National Association of State Retirement Administrators and the National Council on Teacher Retirement on the home page. (STRS Ohio is a member of both of these organizations.) Just click on "Additional Information Resources" that can be found under the "Special Pension Plan Reform Coverage" section (https://www.strsoh.org/legislation/resources/main.html).

WEEKLY WEBCASTS DESIGNED TO HELP MEMBERS RETIRING THIS SUMMER
A one-hour live webcast titled "Retirement Countdown 2011" will premiere on May 11. This program is targeted to members who have already met with a benefits counselor and have current retirement estimates, but need help completing their service retirement application and health care program enrollment. Viewers will be able to submit questions to the webinar speakers in "real time." The one-hour webinars will start on Wednesday, May 11, and are offered each Wednesday thereafter through June 29, from 4:30 to 5:30 p.m. To register for one of the sessions, go to the STRS Ohio Web site home page where instructions can be found at: https://www.strsoh.org/whatsnew/news48.html. Registrations can be taken up to 4 p.m. on the day of the session.

STRS April Board News Details

2011-04-26T11:36:00.000-04:00

(The text below is reprinted from the news release by STRS on 4/15/11.)

STATUS OF PENSION LEGISLATION - STILL AWAITING SUBSTITUTE BILLS; REEMPLOYED RETIREES ADDRESSED IN NEW SEPARATE BILL
On Feb. 1, House Bill 69, sponsored by Rep. Lynn Wachtmann, and Senate Bill 3, sponsored by Sen. Keith Faber, were introduced as the vehicles to carry the changes being proposed by the five statewide public pension plans (including STRS Ohio) to strengthen the solvency of their respective pension funds. H.B. 69 was assigned to the Health and Aging Subcommittee on Retirement and Pensions, which is chaired by Rep. Kirk Schuring. The committee held a number of hearings; however, the last four scheduled meetings were cancelled in late March and early April. Schuring, Rep. Lynn Wachtmann and Sen. Keith Faber are working on language for a substitute pension reform bill. STRS Ohio will let members know when this revised bill is presented.

Other recent events at the Statehouse include the following:

- On April 7, Sen. Bill Seitz was replaced as the chair of the Senate's Government Oversight and Reform Committee, which had been hearing testimony on S.B. 3. Sen. Keith Faber is now leading the committee.
- On April 13, Rep. Richard Hollington introduced House Bill 202. This bill includes provisions dealing with reemployed public employees. Basically, it would require anyone who is receiving retirement benefits from one of the Ohio systems, including STRS Ohio, to forfeit $1 of their retirement benefit for each $2 earned above an annual threshold amount of $14,160. This threshold amount, or "excess earnings base" as it is referred to in the bill, would be adjusted each year by the actual average increase, if any, in the consumer price index (CPI).

Here's an example of how a reemployed retiree's pension could be reduced: Assume a retiree is receiving a yearly pension of $38,000. This individual returns to work in a public position covered by one of the Ohio retirement systems and receives an annual salary of $35,000. This salary exceeds the threshold amount of $14,160 by $20,840. The retiree's pension would be reduced by $10,420 (one-half of the excess amount). The bill's language does not detail how this new rule would be implemented, monitored or enforced.

- On April 13, Executive Director Michael Nehf submitted testimony to the House Finance and appropriations Committee on House Bill 153, which is the state budget bill. His written remarks focused on the language in the bill that would limit the contributions for employers and employees to 12% from each. Nehf noted this change would result in the Retirement Board's proposed plan no longer meeting the 30-year funding requirement. The board's plan maintains the current level of employer contributions at 14% and increases member contributions by 3%, from the current level of 10% to a total of 13%. The resulting decrease in revenue from the contribution scenario contained in the budget bill would require additional cuts in benefits for STRS Ohio's active members and retirees and/or even more in contributions from members. As a result, Nehf requested removal of the 12-and-12 contribution language from H.B. 153. Complete text of the testimony can be found on the STRS Ohio Web site at: https://www.strsoh.org/pdfs/Nehftestimony4132011.pdf.

PROPOSED OPERATING BUDGET FOR FISCAL YEAR 2011 REFLECTS SLIGHT DECREASE
At its April meeting, the Retirement Board received its first look at the proposed system budgets for fiscal year 2012 (July 1, 2011-June 30, 2012). The proposed operating budget totals $89,732,800, a slight decrease from the current year's budgeted amount of $89,773,600. The current head count of 592 full- and part-time associates is not being increased in the coming year. The budget does include a 3% merit increase for eligible STRS Ohio associates, which, if approved, would end the three-year salary freeze that has been in effect for most associates since July 1, 2008. The budget also provides funds for several new initiatives, including an information technology controls audit and an asset/liability study of the investment funds. The proposed capital budget for fiscal year 2012 totals $2,277,100. The board will be asked to approve the budgets at its June meeting.

Throughout the fiscal year, the Retirement Board reviews each month's expenditures and year-to-date expenditure totals as part of its regular meetings. This information is also posted on STRS Ohio's Web site for members to view at: https://www.strsoh.org/pdfs/Expenses.pdf.

BOARD APPROVES SEVERAL HEALTH CARE PROGRAM CHANGES
The board took several actions during its April meeting affecting the calendar year 2012 STRS Ohio Health Care Program. The first action was to approve changing the premium subsidy received by benefit recipients by reducing the "years of service" multiplier to 2.1% from the current 2.5%. To help members adjust to the change, it will be phased in at a rate of 0.1% per year, beginning in 2012 and continuing through 2015. For 2012, the multiplier will be 2.4%. As an example: a benefit recipient with 30 or more years of service currently pays 25% of the premium cost; STRS Ohio pays 75% (30 years x 2.5% = 75%). Under a 2.4% multiplier, STRS Ohio will pay 72% of the premium cost in 2012 (30 years x 2.4% = 72%) and the benefit recipient's portion will be 28%. By 2015, a benefit recipient with 30 or more years of service will pay 37% of the premium cost.

The second action by the board affects future premiums for the AultCare, Kaiser and Paramount health care plans. This change will standardize the basis for the subsidy calculation across all plans. Beginning in 2012, the subsides applied to these premiums will be further reduced based on the respective plan's full cost. This will result in a lower premium subsidy for the approximately 6,600 benefit recipients enrolled in these plans. Monthly premiums for 2012 for all health care plans will be available this summer.

These two changes should preserve an additional $22 million in the health care fund in 2012 and more than $85 million annually once fully implemented. However, it was noted that further significant changes to the health care program will be needed in the future to prevent the health care fund from becoming insolvent. Currently, the projected life of the health care program extends to 2024. This fall, the board will continue its work on a strategic plan for health care that will examine the potential for major changes in coverage features, program eligibility and/or premium subsidies, while evaluating the impact of changes that may occur at the federal and state levels regarding health care.

During this segment of the meeting, the board also approved continuation of the 2011 premium reimbursement amounts for Medicare Part B in 2012. The maximum reimbursement amount from STRS Ohio remains at $52.83 per month for the 30-year retiree; the minimum amount of reimbursement is $29.90 per month. Also, the Health Care Assistance Program will continue in 2012 with the same coverage level, eligibility requirements and $0 monthly premium.

RETIREMENTS APPROVED
The Retirement Board approved 165 active members and 108 inactive members for service retirement benefits.

RETIREMENT COUNTDOWN 2011 WEBCASTS BEGIN MAY 11
The Member Education staff will begin offering weekly webcasts to help members who are retiring this summer. The live webcast - Retirement Countdown 2011 - will be offered every Wednesday from 4:30-5:30 p.m. from May 11 through June 29. Scheduling begins on April 18, with 100 logins available for each meeting. This webcast is targeted for members who have already met with a benefits counselor and have current retirement estimates, but need help completing the necessary paperwork or have questions about the various choices a member must make at retirement. Viewers will be able to submit questions at the end of the presentation, which will then be answered "on-air" during the webcast or in an e-mail following the broadcast's conclusion.

INTEREST IN SERVICE RETIREMENT EXHIBITED IN CALL VOLUMES AND APPLICATIONS
Call volume in STRS Ohio's Member Services Center increased by 10% or 3,000 calls in March 2011 compared to March 2010. The volume is about 400 more calls per day than in 2009. There has been a considerable increase in calls regarding service retirement. The center mailed out 786 service retirement packets this March compared to 283 in March 2010.

Concurrently, the volume of service retirement applications is also increasing. Each year, March brings a significant increase in submitted applications. This past March was no different, but the numbers were higher compared to the previous year. In March 2011, 1,529 service retirement applications were received, which is an increase of 260 over March 2010. Of the applications received, 1,370 were for summer retirement dates (June -611, July - 723, August - 36). STRS Ohio received about 370 more applications from January through March compared to the same period in 2010.

STRS March Board News Details

2011-03-28T16:21:00.001-04:00

(The text below is reprinted from the news release by STRS on 3/18/11.)

PENSION PLANS DISCUSSED IN HOUSE AND SENATE COMMITTEES AND NOW INCLUDED IN PROPOSED STATE BUDGET
Legislation based on plans forwarded to the General Assembly from the five statewide public pension plans has been the focus of hearings in a subcommittee in the Ohio House of Representatives. House Bill 69, sponsored by Rep. Lynn Wachtmann, was assigned to the Health and Aging Subcommittee on Retirement and Pensions after its first hearing. Wachtmann, who is chair of the House Health and Aging Committee, sent the legislation to the subcommittee that is pursuing an aggressive hearing schedule under the direction of Chair Kirk Schuring.

To date, all five systems have presented testimony on the board-approved changes to their respective plans. In the case of STRS Ohio, the language in the current bill actually refers to the plan adopted by the Retirement Board in fall 2009. However, language is expected to be amended with the more recently adopted board recommendations from January 2011. Since the bill's introduction on Feb. 1, nine hearings have been held and an additional five are scheduled.

The pace in the Senate on pension legislation has been slower. Sen. Keith Faber delivered sponsor testimony on Senate Bill 3 on Feb. 24 to the Senate Government Oversight and Reform Committee. The following week, the directors of the five systems provided overviews of their systems for the committee, but did not delve into detail on their respective board plans for long-term sustainability, leaving that for a subsequent committee hearing.

In his testimony, STRS Ohio Executive Director Michael Nehf indicated the system's typical new retiree is age 59 with 30 or more years of service. He said the large majority of members contribute to or receive pensions from STRS Ohio's Defined Benefit Plan. He also said the system isn't in "immediate crisis," but noted that without changes, STRS Ohio would eventually be unable to pay pensions. He explained to the committee that a shift to a defined contribution plan isn't a viable solution, in part, because diverting contributions from new teachers to a different plan would actually cost existing members and employers more to make up for the lost contributions. Regardless of the plan design for the future, the existing unfunded liabilities must be funded. In a follow-up comment, Sen. Bill Seitz, who chairs the committee, said that moving to a defined contribution plan for STRS Ohio or the other systems would be like "trying to put the toothpaste back in the tube."

The committee currently does not have plans to hear S.B. 3 again until later in March as the Legislative Service Commission is in the process of drafting a substitute version of the bill.

Further complicating the current pension reform discussion is a proposal contained in Gov. John Kasich's state budget that would shift employer/employee contributions for the five pension systems. Employers would pay two percent less based on payroll and employees would pay two percent more. Requiring employers to pay less is being recommended as a way to help offset the proposed cutbacks in state funding to state and local governments.

For STRS Ohio, this could mean an increase in member contributions to 12% from the current 10%, and a decrease in employer contributions to 12% from 14%. However, no details have been received as yet regarding this change, including how it would relate to the already proposed 3% increase in member contributions that STRS Ohio included in its January pension reform plan.

It is anticipated that this proposed contribution change and its potential impact on the five systems' respective plans, plus the feasibility of moving public employees into defined contribution plans, will be discussed in the committees and by the Ohio Retirement Study Council (ORSC). This month, Sen.
Keith Faber was elected chair of the ORSC, which is the legislative oversight committee for the five pension systems. Wachtmann was elected vice chair.

STRS Ohio members are encouraged to visit the STRS Ohio Web site frequently for updates on pension legislation (https://www.strsoh.org). Hearing schedules and contact information for legislators can also be found there.

BOARD CONTINUES DISCUSSION ABOUT POSSIBLE 2012 HEALTH CARE PROGRAM CHANGES
At its February meeting, the State Teachers Retirement Board further reviewed proposed changes to the STRS Ohio Health Care Program for 2012. The first change would be an adjustment to the premium subsidy methodology by reducing the "years of service" multiplier to 2.1% from the current 2.5%, phased in over 2012 through 2015. For 2012, the multiplier would be 2.4%. As an example: a benefit recipient with 30 or more years of service currently pays 25% of the premium cost; STRS Ohio pays 75% (30 years x 2.5% = 75%). If the multiplier goes to 2.4%, STRS Ohio would pay 72% of the premium cost (30 years x 2.4% = 72%) and the benefit recipient's portion would be 28%. It is anticipated that this change could preserve an additional $20 million in the health care fund in 2012.

The second change the board is considering affects future premiums for the AultCare, Kaiser and Paramount health care plans. Currently, the benefit recipients enrolled in these plans are actually receiving a higher subsidy than the 75% maximum because the plans' costs are cheaper. Under the proposal presented to the board, the subsidies applied to these premiums would be capped at 75% and would be based on the respective plan's full cost. This will result in a lower premium subsidy for the approximately 6,600 benefit recipients enrolled in these plans.

The board will be asked to take a vote on these proposed changes at its April 2011 meeting.

ELECTION BALLOTS MAIL ON APRIL 1
The 2011 Retirement Board election packet will mail on April 1. It will include information about the two candidates - Taiyia (Tai) L. Hayden and Martin A. Miller - who are running for the one contributing member seat on the board, as well as instructions for casting votes using the Internet, phone or mail. Those eligible to vote in this election include all STRS Ohio contributing members, individuals who have contributions on deposit at STRS Ohio and disability benefit recipients. The deadline for voting is May 2.
Results of the election will be announced following certification of the election results by the board of tellers on May 7.

PENSION PROPOSAL ONLINE CALCULATOR AVAILABLE FOR MEMBERS
A new calculator is now on the STRS Ohio Web site to enable members to estimate service retirement benefits based on the Retirement Board's January 2011 pension plan proposal. This calculator is not tied to the member's personal account; however, the member can enter a retirement date, birthdate, years of service at retirement and final average salary and get an estimate that reflects the phase-in period and a close estimate of the actuarial early retirement reductions. The STRS Ohio home page now includes an information box at the top of the page for pension legislation tools that includes the benefit calculator, frequently asked questions and the January proposal. The new calculator can be accessed at:

https://www.strsoh.org/v3prdcalc/app?service=external/Client:NonSecureCalcPSCOptions

RETIREMENTS APPROVED
The Retirement Board approved 160 active members and 106 inactive members for service retirement benefits.

STRS February Board News Details

2011-03-01T11:15:00.000-05:00

(The text below is reprinted from the news release by STRS on 02/18/11.)

PENSION LEGISLATION INTRODUCED, STRS OHIO STAFF PROVIDE TESTIMONY 
Legislation to bring the five statewide retirement systems back to secure long-term financial stability was introduced in the Ohio House of Representatives on Feb. 1, 2011. Rep. Lynn Wachtmann introduced House Bill 69, which has been assigned to the House Health and Aging Committee that is chaired by Wachtmann. A Health and Aging Subcommittee on Retirement and Pensions, chaired by Rep. Kurt Schuring, has begun hearings on the bill.

On Feb. 16, 2011, Michael Nehf, executive director of STRS Ohio, and Terri Bierdeman, director of Governmental Relations for STRS Ohio, presented testimony in support of House Bill 69 during a subcommittee meeting. During his comments, Nehf reviewed the components contained in the plan approved by the Retirement Board at its Jan. 27, 2011, meeting, noting that most of the January’s plan components are not currently in House Bill 69, but should be included as amendments. The January 2011 plan maintains the current 14% employer contribution and brings the pension fund to a 30-year funding period by saving about $10.9 billion in accrued liabilities.

In his remarks, Nehf said “When the board began to proactively discuss future changes to strengthen the solvency of the pension fund in early 2009, it openly recognized and acknowledged that few would be happy with the needed changes. Current and future teachers will be contributing more and working longer for a lesser benefit in retirement; current retirees’ pensions will continue to grow, but at a slower rate due to a reduced cost-of-living adjustment. However, STRS Ohio members will continue to have the financial security provided by a reasonable and reliable pension.”

Schuring has issued a hearing schedule for H.B. 69 that includes opportunities for proponent/opponent/interested party testimony during both day and evening sessions. The members of the subcommittee are: Reps. Bruce Goodwin, Bob Hagan, Richard Hollington, Todd McKenney, Dan Ramos and Wachtmann. The hearing schedule is posted on the STRS Ohio Web site (https://www.strsoh.org/pdfs/hearing_schedule.pdf), along with STRS Ohio’s testimony (https://www.strsoh.org/pdfs/Nehftestimony2162011.pdf) and accompanying materials (https://www.strsoh.org/pdfs/STRSOH_Pension_Hearings_211.pdf) presented at the Feb. 16 hearing. It is Schuring’s plan to have the pension legislation with amendments to the full House floor for a vote in April.

A second placeholder bill addressing pension reform, Senate Bill 3, was also introduced on Feb. 1 by Sen. Keith Faber. At this time, the only language that it contains calls for changes to the Ohio Revised Code “… to modernize, update, and improve the actuarial soundness of the Public Employees Retirement System, Ohio Police & Fire Pension Fund, State Teachers Retirement System, School Employees Retirement System, and State Highway Patrol Retirement System.”

STRS Ohio will continue to use all its communication channels to keep STRS Ohio members and other system stakeholders informed of the progress of any pension legislation.

HEALTH CARE FUND STATUS IMPROVES, BUT LONG-TERM CHANGES STILL NEEDED 
The move to a Medicare Part D Prescription Drug Plan via Express Scripts and a positive return on fund assets helped to lengthen the solvency period for the Health Care Stabilization Fund as of Jan. 1, 2011. The results of the annual actuarial valuation of the fund conducted by PricewaterhouseCoopers (PwC) show that the projected life of the STRS Ohio Health Care Program now extends to 2024 — an increase of three years from the previous valuation.

Costs for the health care program are paid out of the Health Care Stabilization Fund. Currently, monies for the fund come primarily from premiums charged to STRS Ohio retirees and their family members who are enrolled in the program, 1% of payroll from employer contributions, Medicare Part D subsidies and investment earnings on these funds. The balance in the fund as of Jan. 1, 2011, was $3.1 billion.

While the solvency of the health care program improved, both PwC staff and STRS Ohio staff noted that the health care fund is projected to become insolvent without significant changes to the program in the future. As discussed at previous board meetings, changes in coverage features, program eligibility and/or premium subsidies will be needed.

Looking to the future, staff noted that the uncertainty regarding federal health care reform, as well as STRS Ohio’s own pension legislation, makes long-term planning difficult at this time. Staff recommends there be a “bridge” to future strategic decisions through a single 2012 program change that would minimize disruption to program enrollees while helping to preserve the balance in the health care fund. This change could be an adjustment to the premium subsidy methodology by reducing the “years of service” multiplier to 2.1% from 2.5%, phased in over 2012 through 2015. The board will continue discussing this option at its March meeting, as well as other program options it asked staff to research.

RETIREMENTS APPROVED 
The Retirement Board approved 194 active members and 161 inactive members for retirement.

MEDICAL MUTUAL LAUNCHES EDUCATIONAL CAMPAIGN FOR DIABETIC ENROLLEES 
One of the most prevalent diseases among enrollees in the STRS Ohio Health Care Program is diabetes. To help these enrollees better manage their condition, Medical Mutual is starting an educational outreach campaign. Each quarter, diabetic enrollees in a Medical Mutual health plan will receive a mailing that contains information, nutrition tips, product coupons and recipes that encourage healthy eating and lifestyle habits. The first mailing will be sent in mid-February to about 3,330 enrollees.

STRS January Board News Details

2011-02-01T15:50:00.000-05:00

(The text below is reprinted from the news release by STRS on 1/27/11.)

RETIREMENT BOARD ADOPTS PLAN CONTAINING PENSION DESIGN AND CONTRIBUTION CHANGES The State Teachers Retirement Board took an important step to strengthen the financial condition of the pension fund by approving a plan at its Jan. 27, 2011, meeting that will help ensure STRS Ohio can continue to pay pensions to future generations of teachers. The board's plan is projected to save about $10.9 billion in accrued liabilities and does not include any increase in employer contributions. All of the changes contained in the plan require legislative action by the Ohio General Assembly and the governor to be implemented.

The plan's components increase member contributions; increase age and service requirements for retirement; calculate pensions on a lower, fixed formula; increase the period for determining final average salary; and reduce the annual cost-of-living adjustment (COLA) for current and future retirees and defer the COLA for future retirees. With these changes, teachers would receive 77% of their final average salary with 35 years of service. This plan complies with the Ohio statutory requirement to bring the pension fund to a 30-year funding period. Further, the current 1% employer contribution to STRS Ohio's health care fund continues.

The plan includes the following components:

CHANGE IN ELIGIBILITY FOR RETIREMENT BEGINNING AUG. 1, 2015
- Increases age and service requirements for retirement.

Age and service requirements for retirement would increase to a minimum age 60 with 35 years of service. (Members may currently retire at any age with 30 years.) This change would be phased in based on the following timeline:

- Age 56 with 31 years beginning Aug. 1. 2015, and retiring by July 1, 2017
- Age 57 with 32 years beginning Aug. 1, 2017, and retiring by July 1, 2019
- Age 58 with 33 years beginning Aug. 1, 2019, and retiring by July 1, 2021
- Age 59 with 34 years beginning Aug. 1, 2021, and retiring by July 1, 2023
- Age 60 with 35 years retiring Aug. 1, 2023, and later

Members may still also retire at age 65 with a minimum of five years of service.

Currently, STRS Ohio members may retire early with a reduced benefit at age 55 with 25 years of service. The service requirement for a now actuarially reduced benefit would be increased to 30 years of service. This change would also be phased in based on the following timeline:

- Age 55 with 26 years beginning Aug. 1, 2015, and retiring by July 1, 2017
- Age 55 with 27 years beginning Aug. 1, 2017, and retiring by July 1, 2019
- Age 55 with 28 years beginning Aug. 1, 2019, and retiring by July 1, 2021
- Age 55 with 29 years beginning Aug. 1, 2021, and retiring by July 1, 2023
- Age 55 with 30 years retiring Aug. 1, 2023, and later

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.

This information may also be viewed as a chart at: https://www.strsoh.org/boardnews/bn_current3.html#Chart

CHANGE IN BENEFIT FORMULA BEGINNING AUG. 1, 2015
- New formula would be 2.2% for all years of service.

Teachers retiring with 35 years of service at age 60 or older would receive 77% of their final average salary as a pension.

The current 35-year enhanced benefit formula would be eliminated. Those who have 30 years of service; who are age 55 with 25 years of service; or who are age 60 with five years of service as of July 1, 2015, would receive the greater of:

(a) The benefit as of July 1, 2015, under the current formula; or
(b) The benefit upon retirement under the new formula.

In short, members who are eligible for service retirement would receive no less of a base pension benefit than they could have received on July 1, 2015.

INCREASE IN FINAL AVERAGE SALARY (FAS) YEARS BEGINNING AUG. 1, 2015
- FAS calculation would be based on the five highest years of earnings.

Pension benefits are determined by a member's age, years of service and FAS; the current FAS period is three years.

REDUCTION IN COST-OF-LIVING ADJUSTMENT (COLA) BEGINNING JULY 1, 2012
- Beginning July 1, 2012, current retirees would receive an annual 2% COLA; members retiring Aug. 1, 2012, and later would also receive a 2% COLA, but it will not begin until 60 months after the date of retirement.

Currently, the COLA is 3%; both current and proposed COLAs are a fixed-dollar amount each year, not compounded.

INCREASE IN MEMBER CONTRIBUTIONS BEGINNING JULY 1, 2012
- Increase member contributions by 3%, phased in 1% per year beginning July 1, 2012, through July 1, 2014.

Currently, STRS Ohio members pay 10% of their salary to STRS Ohio in lieu of paying into Social Security. In the pension legislation, the Retirement Board will seek language that gives the board discretion to seek up to 4% total in increased member contributions. To achieve the 30-year funding period, the board's plan calls for only a 3% contribution increase phased in over three years. Authority for up to a 4% increase would give the board flexibility to address future funding experience.

Since the board first took the prudent and proactive step in spring 2009 to address its funding challenge, it has sought feedback from its membership, employers and legislators, noting that no actions would be taken lightly as all actions impact Ohio's public educators. Adoption of the steps contained in this plan by the Ohio Legislature would help ensure STRS Ohio pensions continue to:

- Provide a reasonable and reliable income for retired teachers that they won't outlive.
- Provide a stable source of revenue for local economies and provide tax revenues to support needed government services.
- Save taxpayers billions of dollars in potential public assistance by helping to ensure these pensioners will not have to turn to public assistance, Medicaid or social services in their retirement; and
- Help Ohio's schools, colleges and universities recruit and retain quality educators.

STRS January Special Meeting Board News Details

2011-01-24T11:38:00.002-05:00

(The text below is reprinted from the news release by STRS on 1/21/11.)

RETIREMENT BOARD WILL CONTINUE DISCUSSION ON PENSION PLAN CHANGES AT ANNUAL RETREAT
During its special meeting on Jan. 21, 2011, the State Teachers Retirement Board continued its discussion about potential changes to its pension plan design to strengthen the financial condition of the pension fund. Feedback from the Statehouse had indicated that any final pension legislation for STRS Ohio should not include an increase in employer contributions. Further, the plan must also result in a funding period for the pension fund that does not exceed 30 years. The plan adopted by the board in October 2010 brought the funding period down to 35.1 years with the inclusion of an additional 2.5% in employer contributions - and to only 46.1 years without the additional employer contributions.

The board reopened its discussion about possible pension plan changes at its regularly scheduled meeting on Jan. 13; then continued that discussion today. After reviewing several scenarios' impact on the funding period, the board asked for additional options to review during the board's annual retreat at STRS Ohio scheduled for Jan. 26 and 27. The meeting on Wednesday, Jan. 26, will begin at 1 p.m.

The components contained in these scenarios include member contributions, age and service requirements for retirement eligibility, benefit formula, final average salary (FAS) period, and the cost-of-living adjustment (COLA), as well as the impact of moving the 1% employer contribution currently going toward the STRS Ohio Health Care Program to the pension fund. Changes affecting only new hires, including moving them into a defined contribution plan, would not be enough to move the pension fund from its infinite funding period. Consequently, the board's goal is to come up with a combination of changes affecting both active and retired teachers that results in a funding period of 30 years or less.

The 30-year funding period is a "measuring stick" used by the Ohio Legislature to assess the solvency of Ohio's public pension funds. The funding period refers to the number of years required to "pay off" a pension fund's unfunded liabilities. In layman's terms, this would be similar to a home mortgage. A lender doesn't expect the homebuyer to have all of the money up front for a 30-year mortgage, but it does expect the buyer to have a plan to pay it off over the course of the mortgage. Similarly, STRS Ohio's plan must result in its ability to "pay off" its unfunded accrued liabilities over no more than 30 years.

STRS January Board News Details

2011-01-18T10:58:00.005-05:00

The state's fiscal issues are being faced and the pensions for state employees will continue to be put under a microscope. I wouldn't be so foolish to think this is going to be a one-time phenomenon but will continually be an issue in the coming years. Take a hard look at your lump sum options and consider these within the context of your financial planning.

Kevin Kroskey, CFP, MBA

(The text below is reprinted from the news release by STRS on 1/14/11.)

RETIREMENT BOARD REOPENS DISCUSSION ON PENSION PLAN CHANGES In September 2009, the State Teachers Retirement Board approved a set of changes to its pension plan design to strengthen the financial condition of the pension fund. Economic and demographic factors, coupled with the effects of the "Great Recession," had caused a significant reduction in available funds to pay off accrued pension liabilities over time. As a result, the funding period (i.e., the number of years required to pay off the pension fund's unfunded actuarial accrued liabilities) was "infinite." Without action by the board, STRS Ohio would eventually be unable to pay benefits.

Consequently, the board adopted a multifaceted plan affecting both active and retired teachers in 2009; then approved some modifications to the plan in October 2010. For the proposed changes to go into effect, however, legislation is required.

Feedback from the Statehouse has indicated that any final pension legislation for STRS Ohio will not include the request for an increase of 2.5% in employer contributions contained in the current board plan. Further, the plan must also result in a funding period for the pension fund that does not exceed 30 years; the current proposed plan brings the funding period down to 35.1 years - and to only 46.1 years without the additional employer contributions.

The board has been given an opportunity to develop a revised plan, though the timeline is relatively short. Consequently, the board began that discussion at its Jan. 13 board meeting, and has agreed to hold a special meeting on Friday, Jan. 21, beginning at 11 a.m., to continue the discussion.

The board has asked staff to look at several new scenarios that do not include an increase in employer contributions to see if they result in a 30-year funding period. The components contained in these scenarios include member contributions; age and service requirements for retirement eligibility; benefit formula; final average salary (FAS) period; and the cost-of-living adjustment (COLA).

At the next meeting, the board will have an opportunity to see if any of the scenario combinations bring the funding period to 30 years, as well as if additional scenarios should be considered.

The board has already scheduled its annual retreat at STRS Ohio for Jan. 26 and 27 and could continue the discussion at that meeting, with the goal of approving a new plan at that time.

2010 MEMBER SURVEY RESULTS PRESENTED
On a national level, public employees and public pensions are under attack.

Closer to home, STRS Ohio's own members have faced uncertainty and lack of specific details regarding their retirement due to no legislative action as yet on pension plan changes, as well as the financial issues facing the STRS Ohio Health Care Program. Nevertheless, the membership surveys conducted in late 2010 show that most STRS Ohio members - active and retired - continue to have positive overall impressions of the system; most also still consider their pension an excellent or good value.

These were just a few of the findings from the annual membership surveys presented by Dr. Marty Saperstein of the Columbus-based research firm, Saperstein Associates, during the board's January 2011 meeting. The phone surveys were conducted in late November and December 2010, and involved 601 randomly selected participants (300 retirees and 301 active members). This survey marks the eighth year the surveys have been conducted.

The survey results also showed the following:
- Positive impressions about STRS Ohio extend to member services, the work of the Retirement Board and system communications. Understandably, though, there is a growing need for pension- and health care-related information.
- Compared with last year, fewer actives feel the pension system is financially sound.
- A majority of enrolled retirees continue to value their health care coverage. However, a substantial minority - perhaps as many as three out of 10 enrolled retirees - continue to consider their health care coverage a fair or poor value.
- While only a small percentage of retirees are participating in the health improvement programs offered by the STRS Ohio health care plans, those who are participating are satisfied with the programs.
- There is more interest in using Web-based services among actives (e.g., online service retirement applications).
- About half of the active members expect to teach longer than they originally thought. Of those, two out of five cite proposed pension plan changes as a reason.
- Nine out of 10 retiree households have at least one source of income in addition to STRS Ohio.

RETIREMENTS APPROVED
The Retirement Board approved 176 active members and 179 inactive members for retirement.

OTHER STRS OHIO NEWS

STRS OHIO RECEIVES STATE AUDITOR'S AWARD STRS Ohio has received the "Making Your Tax Dollars Count" award from the Auditor of State's Office for the third consecutive year. STRS Ohio is receiving this award for the quality of its financial reporting and absence of audit issues for fiscal year 2009. Less than 5% of Ohio public entities receive this prestigious award.

FIRST REIMBURSEMENT RECEIVED FROM EARLY RETIREE REINSURANCE PROGRAM STRS Ohio has received its first Early Retiree Reinsurance Program (ERRP) reimbursement for its self-insured plans from Health and Human Services

(HHS) in the amount of $13.3 million. STRS Ohio's next submission will be in March 2011, as HHS allows only one reimbursement request per quarter per application. As required by the health care reform legislation, STRS Ohio will also begin notifying its early retirees of STRS Ohio's participation in this program. The reimbursed ERRP funds received from HHS will be placed into the Health Care Stabilization Fund, mirroring how retiree drug subsidy program monies are deposited.

STRS November Board News Details

2010-12-04T05:55:00.015-05:00

(The text below is reprinted from the news release by STRS on 11/19/10.)

HEALTH CARE PROGRAM DISCUSSION CONTINUES
At its November 2010 meeting, the State Teachers Retirement Board continued reviewing the STRS Ohio Health Care Program as part of its initial steps toward developing a strategic plan for retiree health care. As noted in previous STRS Ohio communications, funding for the health care program will be depleted by 2021.

At this month's meeting, Brent Greenwood, vice president of Actuarial Consulting for Ingenix Consulting, noted that the recent national election has created a "foggy future" for health care reform. While he noted that complete repeal of the federal health care law is unlikely, there could be specific repeals of certain sections and mandates, as well as a slowdown in implementation and appropriations. Further, the change in administration in Ohio could influence the state's strategy for health care exchanges, which are currently scheduled to begin in 2014. As in previous meetings, STRS Ohio staff reiterated that changes to the STRS Ohio Health Care Program are unavoidable because of its funding status, but also concurred that the uncertainty about health care reform makes it even more challenging to develop a long-term strategic plan.

Staff believes the best approach would be to look first at changes for calendar year 2012 and possibly 2013 that would focus on how premium subsidies are determined and the number and type of health care plans offered to benefit recipients. The goal of any changes would be to help preserve the balance in the health care fund, as well as position the health care program for a future that could include the addition of competitively priced health care exchanges in the marketplace and changes in Medicare Advantage programs. The board would also continue its work on the long-term strategic plan throughout 2011. This would allow time for some of the uncertainties about health care reform and its eventual impact on STRS Ohio's non-Medicare and Medicare enrollees to be resolved.

BENEFITS STUDY RESULTS PRESENTED
At its September 2010 meeting, the Retirement Board asked STRS Ohio staff to study improving benefits for low-income retirees with at least 30 years of service. In the study results presented at the November 2010 meeting, staff noted that STRS Ohio has no data available (except for participants in the Health Care Assistance Program, also known as HCAP) to identify low-income retirees; available data only identifies low pension benefit recipients. To give an example of how pension levels do not necessarily equate to income levels, staff provided some data about HCAP participation.

HCAP is available to service retirees with 25 or more years of service, disability benefit recipients and several other subgroups of STRS Ohio membership. To participate in HCAP, the benefit recipients must have total family gross earnings of $23,800 or less, and total liquid assets of $23,800 or less. However, while about 6,500 benefit recipients would qualify for HCAP if their pension benefit was the only criteria, the actual enrollment in the program is 230, of which only 25 individuals are service retirees with 25 or more years of service. Staff further noted that a Defined Benefit pension is based on a member's age, years of service and final average salary - and not on need or perceived need. This ensures that pension benefits are based on objective criteria applied uniformly across the system versus subjective criteria that could be open to interpretation and/or dispute. Consequently, staff recommended that no further action be taken.

RETIREMENTS APPROVED
The Retirement Board approved 560 active members and 128 inactive members for service retirement benefits.

OTHER STRS OHIO NEWS

PENSION PLAN CHANGES WILL BE PART OF LARGER STATE BUDGET DISCUSSION
There is every reason to believe a bill to revise STRS Ohio's current pension plan design will be introduced in the next Ohio General Assembly. To what extent it reflects the Retirement Board's recommendations won't be known for a while. Given the overarching agenda to balance a very
challenging state budget this spring, everything - including pension changes - will be caught up and influenced by that discussion. Staff from the five statewide public pension systems are meeting regularly to strategize the plan for the 129th General Assembly, as well as how to engage members in the
process. Representatives of the Healthcare and Pension Advocates (HPA) have also been meeting with system staff to determine the game plan for this next year. STRS Ohio Governmental Relations staff has already reached out to the winners of this election with congratulations and background information on
the Retirement Board's proposal.

EARLY RETIREE REINSURANCE PROGRAM (ERRP) APPLICATIONS APPROVED
STRS Ohio's applications to the Early Retirement Reinsurance Program (ERRP) have been approved by the federal government through the Department of Health & Human Services (HHS). The program applies to enrollees who are age 55 and older and not eligible for Medicare. The Health Care Services staff is currently working with Ingenix to aggregate the medical and drug claims from health care vendors - Medical Mutual, Express Scripts, Kaiser, Paramount and AultCare. The claims data is being merged with STRS Ohio's enrollee eligibility files to determine which enrollees have total claim costs between $15,000 and $90,000. STRS Ohio will be able to recover 80% of the cost within this corridor from HHS.

STRS OHIO RECEIVES PUBLIC PENSION AWARD
The Public Pension Coordinating Council (PPCC) recently presented STRS Ohio with the 2010 Public Pension Standards Award for Administration in recognition of meeting professional standards as set forth in the Public Pension Standards. PPCC is a coalition made up of the National Association of State Retirement Administrators, the National Council on Teacher Retirement and the National Conference on Public Employee Retirement Systems.

RETIREMENT BOARD ELECTION PROCESS BEGINS THIS MONTH
On Nov. 12, notices were sent to all STRS Ohio reporting employers and other interested parties about the upcoming Retirement Board election for one contributing member seat. In addition, information was in the October newsletters and is posted on the STRS Ohio Web site. Individuals interested in running for this seat can request petitions from STRS Ohio. The deadline for returning petitions is Feb. 25, 2011.

STRS October Board News Details With Comments

2010-10-20T06:30:00.001-04:00

Below is the reprinted news release by STRS from 10/18/2010. This is an important news release that lists revisions to the proposed changes to pension reform.

In my opinion it appears the changes to get the state pension systems in fiscal order are falling short of what is required. While participants are going to have to contribute an additional 2.5% to the pension plan, phased in over time, so too are the school districts. At a time when property taxes in Ohio are already what they are and schools face the funding challenges they do, it hardly seems like a sound fiscal idea to legislate additional funding, regardless of the time over which the changes may be phased in. After all, who knows what the next several years may hold in our era of high unemployment and (current) slow growth.

With the current meager 60% funded ratio of STRS and the reform falling short of what is required, it is a safe assumption that additional changes are going to be needed in the not too distant future. Teachers pay attention to this warning. Oh, and don't forget about the 800 pound healthcare gorilla either.

Additionally, it will certainly be interesting to see the latent effects of this forthcoming legislation on the Ohio taxpayers, as the schools will no doubt ask for more money from taxpayers, particularly once their funding obligations start to increase in 2016 through 2020. Sad to say that this is another example of not making tough choices and kicking the can down the road...

Kevin Kroskey, CFP(r), MBA and STRS participant (but a realist)

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https://www.strsoh.org/boardnews/bn_current.html

BOARD ADOPTS REVISIONS TO LONG-TERM PENSION REFORM PLAN At its October 2010 meeting, the State Teachers Retirement Board approved changes to the pension reform plan originally adopted by the board on Sept. 1, 2009. Since then, the Healthcare and Pension Advocates for STRS (HPA), who represent a coalition of member, employer and retiree groups, have suggested some modifications to the plan. After discussing these changes for several months, the board approved modifications in three areas at this month's meeting. With these changes, both the Retirement Board and the major constituency groups are now united in their support of the proposed reform package and can work collectively for its passage in the Ohio General Assembly.

The modifications are as follows:

- Retirement Eligibility
The transition period for qualifying for a retirement benefit at 35 years of service from 30 years of service will be phased in based on the following timeline:

30 years of service until 8/1/2015;
31 years of service 8/1/2015 through 7/31/2017;
32 years of service 8/1/2017 through 7/31/2019;
33 years of service 8/1/2019 through 7/31/2021;
34 years of service 8/1/2021 through 7/31/2023;
35 years of service from 8/1/2023 and after.

As in the board's original plan, members will still be able to retire at age 60 with 30 years of service or at age 65 with five years of service, beginning Aug. 1, 2015. Under the revised plan, a member may also retire with 30 years of service under age 60 or at age 60 with five years; however, the pension benefit will be actuarially reduced beginning Aug. 1, 2015.

- COLA (Cost-of-Living Adjustment)
Under the revised plan, STRS Ohio members who are retired as of July 1, 2011, will receive an annual 2% COLA (down from a current 3% simple-interest COLA). Members retiring after 7/1/2011, will also receive a 2% COLA (not the 1.5% originally planned), but it will not begin for 36 months after the date of retirement.

- FAS (Final Average Salary)
Rather than request a change to a five-year FAS calculation from the current three-year calculation, the Retirement Board will now seek statutory authority to set a three-, four- or five-year FAS. This will give the board some discretion in making this change on the proposed implementation date of Aug. 1, 2015, based on the actuarial condition of the pension fund at that time.

The proposed changes to contributions and the benefit formula contained in the board's original plan remain the same. Member and employer contributions would be increased by a total of 5% by July 1, 2020. The member increase would be phased in at 0.5% per year, beginning July 1, 2011, until 2.5% is reached on July 1, 2015. The employer increase would be delayed for five years, when it would be phased in at 0.5% per year, beginning July 1, 2016, until 2.5% is reached on July 1, 2020.

Under the board's plan, the benefit formula would be 2.2% per year for the first 30 years of service; 2.5% per year thereafter, beginning Aug. 1, 2015. With this formula change, the 35-year enhanced benefit is eliminated.

The entire package of changes is projected to save about $8.4 billion in accrued liabilities and would bring the pension fund to a 35.1-year funding period; a slight increase from the 33.4-year funding period that would have resulted from the board's original plan.

The changes contained in the Retirement Board's plan require legislative action. The introduction of any pension legislation is not expected until after the November election.

ANNUAL ACTUARIAL VALUATION REPORT REITERATES NEED FOR PENSION FUNDING CHANGES At its October meeting, the Retirement Board received the annual actuarial valuation report of STRS Ohio's pension fund from its actuarial consultant, PricewaterhouseCoopers (PwC). This report provides a "snapshot" of the actuarial position of the retirement fund as of July 1, 2010. As expected, the funding period for the pension fund remains "infinite"; the funded ratio declined slightly from 60.0% to 59.1%. The funding period is the number of years required to pay off the pension fund's unfunded actuarial accrued liabilities; the funded ratio is the percentage of assets STRS Ohio has on hand to pay all benefits accrued by STRS Ohio members to date. An infinite funding period means the system will eventually be unable to pay benefits, unless changes are made.

In developing the actuarial valuation, STRS Ohio's actuarial gains and losses for fiscal year 2010 (July 1, 2009-June 30, 2010) were compiled. PwC looked at the system's actual versus expected actuarial experience in several areas, including investment returns, payroll growth, salary increases, retiree mortality, and the number of retirements and other separations from the system, such as account withdrawals -- all of which can either reduce or increase the system's liabilities from one year to the next.

STRS Ohio experienced a net actuarial loss for the fiscal year of $279 million. Investment losses in prior fiscal years were the major reason. The positive investment return for fiscal year 2010 above the assumed rate of 8% generated a gain. However, STRS Ohio uses an approved accounting and actuarial technique called "smoothing" to spread market volatility over four-year periods to make investment returns more of a "trend" rather than a "spike." Consequently, the significant losses in the market value of investments experienced in fiscal year 2009 are still reflected in this year's valuation, resulting in a 6.58% rate of return for actuarial purposes.

The results of this actuarial valuation continue to confirm the need for the reasonable, measured changes contained in the long-term pension reform plan the Retirement Board has proposed to help strengthen the financial condition of the retirement system.

BOARD CONTINUES HEALTH CARE STRATEGIC PLANNING DISCUSSION At its October meeting, the Retirement Board continued reviewing the STRS Ohio Health Care Program as part of its initial steps toward developing a strategic plan for retiree health care for adoption next spring. As noted in previous STRS Ohio communications, funding for the health care program will be depleted by 2021.

During October's meeting, the board heard a presentation from Brent Greenwood, vice president of Actuarial Consulting for Ingenix Consulting. He reviewed how STRS Ohio's health care program compares to the current marketplace and how the retiree marketplace will change in the future in light of national health care reform.

Across the country, fewer organizations -- both public and private -- are offering retiree health care. For those entities that do still provide coverage, retirees are paying an increasing portion of the total cost through their premiums, deductibles, copayments and coinsurance to keep pace with unrelenting increases in the health care trend rate.

Overall, STRS Ohio's Health Care Program offers career educators comparable or better value in terms of coverage and member premiums at this time because of the premium subsidies to career educators, no underwriting and no age rating. However, federal health care legislation will change the marketplace by 2014, creating new pressures on STRS Ohio's program. The health care legislation calls for enhanced access to coverage through the eventual elimination of all preexisting condition exclusions, limited underwriting and the introduction in 2014 of state-sponsored health care exchanges. As a result, more plan options with lower premiums than STRS Ohio can offer for those under age 65 will likely become available in the marketplace. For those age 65 and older, reduced subsidies for Medicare Advantage plans could lead to higher premiums, while the 10 Medicare defined supplemental plans offered through many insurance carriers may become more attractive.

In previous meetings, it has been noted there are four levers that affect the financial status of the health care program: (1) funding, (2) plan design, (3) eligibility and (4) premium subsidy. Greenwood reiterated this, noting that retiree health care plan costs can generally be reduced in one of two ways: (1) reduction in the cost of coverage per retiree (subsidy/plan design); or (2) reduction in the number of covered retirees (eligibility).
In November, the board will begin deliberations centered on the four levers to develop a long-term strategic plan for its health care program.

RETIREMENTS APPROVED
The Retirement Board approved 1,000 active members and 83 inactive members for service retirement benefits.

STRS September Board News Details

2010-09-21T05:33:00.005-04:00

(The text below is reprinted from the news release by STRS on 9/17/10.)

HILL AND PRICE TAKE SEATS AT BOARD TABLE

Mark Hill and Dale Price began their four-year terms on the State Teachers Retirement Board this September, following their election to the board last spring.

BOARD BEGINS HEALTH CARE STRATEGIC PLANNING DISCUSSION

As noted in previous STRS Ohio communications, funding for the STRS Ohio Health Care Program will be depleted by 2021. At the September 2010 meeting, the Retirement Board and staff began a review of the history and current status of the health care program as the first step in developing a strategic plan for retiree health care for adoption next spring.

When the STRS Ohio Health Care Program began in 1974, health care costs were insignificant compared to today. Just as an example, the limit for lifetime health care benefits for an enrollee was just $20,000. In 2010, the lifetime coverage is $2.5 million and it will be unlimited in 2011. During the last 20 years, STRS Ohio's health care cost trend rate has averaged about 11%.

Despite managed care and the significant changes STRS Ohio made to the program in 2004 that significantly increased enrollees' portion of the health care costs, the trend continues to rise, matching what is happening
nationally. Staff noted that the balance in the fund that supports the health care program must grow year-after-year just to help offset the yearly health care cost increases.

In the coming months, the board and staff will begin examining the four levers that affect the financial status of the health care program: (1) funding, (2) plan design, (3) eligibility and (4) premium subsidy. However, in light of pension funding issues, it is unlikely employer contributions beyond the current 1% allocation to the health care fund can be increased.

At the October meeting, the board will receive a presentation outlining how STRS Ohio's Health Care Program compares to the current marketplace and how the future retiree marketplace will change in light of national health care reform.

BOARD STILL AWAITING PENSION LEGISLATION

A final comprehensive bill containing the respective board proposals from each of Ohio's statewide pension systems to help address their long-term sustainability has not yet been forwarded to the systems for review.

During its September meeting, the board continued its review of the alternative proposal for pension benefit changes presented earlier this year by the Healthcare & Pension Advocates for STRS (HPA). The board also asked staff to study the possibility of providing further assistance to low-income retirees with at least 30 years of service credit; a report will be provided to the board at its November 2010 meeting. Any changes the board makes in the future to the proposed plan it approved on Sept. 1, 2009, will likely be included as amendments to introduced pension reform legislation. Staff recommends that if STRS Ohio members encounter legislators during this campaign season, encouraging support of the anticipated legislation could prove helpful when a bill is finally presented to the Legislature.

RETIREMENTS APPROVED

The Retirement Board approved 1,546 active members and 251 inactive members for service retirement benefits.

NEWSPAPER STORIES GENERATE SYSTEM RESPONSE

Several Ohio newspapers recently ran a story about conference-related travel by Ohio's five public pension funds, using data provided by each of the systems. Unfortunately, in the case of STRS Ohio, some important facts were not included. A significant portion of the travel expenses reported by STRS Ohio for the 12-month period was a direct reflection of the responsibilities STRS Ohio investment staff have for the internal management of international investments, real estate and the overall total investment fund, which currently stands at $58 billion. STRS Ohio manages about 80% of its total investments in-house, which is the highest level of internal management among the five Ohio systems. Further, STRS Ohio manages about 88% of its real estate investments in-house and about 59% of its international investments in-house. This internal management saves STRS Ohio approximately $90 to $100 million per year.

STRS Ohio has a stringent travel policy for board and staff that recognizes their collective responsibility to control operating expenditures. However, the board and staff also have a responsibility to maintain a level of
knowledge and to conduct the due diligence that enables them to perform as successful fiduciaries of the system. In this time of global economic issues and global investments (including real estate funds), not all of that knowledge can be obtained in Columbus, Ohio.

Some Ohio newspapers have also recently voiced concern about the five Ohio systems declining their request for information from member records. This request was declined as current Ohio law prohibits STRS Ohio from releasing personal history information about individual members, such as their monthly benefit amounts. Further, redacting the names and addresses of STRS Ohio members would not be sufficient to protect their identities if members' personal data maintained by STRS Ohio was made public. STRS Ohio provides a significant amount of member information in aggregate, as well as information regarding its finances and operations, through various reports and third-party reviews. All of this information is readily available to the media.

CEM STUDY CONFIRMS COST SAVINGS OF INTERNAL INVESTMENT MANAGEMENT

For a number of years, STRS Ohio has participated in custom peer group benchmarking studies conduced by CEM Benchmarking Inc. One of these studies compares costs among participating plans' investment programs. The most recent CEM study shows that the savings to STRS Ohio due to the lower cost of its internal management compared to external management fees was $99 million in calendar year 2009.

STRS August Board News Details

2010-08-13T13:29:00.000-04:00

(The text below is reprinted from the news release by STRS on 8/13/2010.)

Ramser Recognized for Board Service
During its August 2010 meeting, the State Teachers Retirement Board passed a resolution recognizing the dedicated and tireless service provided by Conni Ramser during her tenure as a board member. Ramser was selected to fill a contributing member seat on the board in August 2004, and was subsequently elected to a four-year term in May 2006.

Staff Reports 13.54% Investment Return for Fiscal Year 2010
The STRS Ohio total investment fund returned 13.54% for the 12 months ending June 30, 2010, outperforming the composite benchmark return of 13.28% by 0.26%. After all direct internal investment costs and external manager costs are subtracted from this gross active management return, the net value added was 0.15%, or about $50 million. This represents the additional value brought to the STRS Ohio investment fund through active management by STRS Ohio associates and external managers, above and beyond the passive benchmark. At the end of the fiscal year, the market value of investment assets totaled $56.9 billion.

During the August Retirement Board meeting, Callan Associates, the board’s investment consultant, noted that all STRS Ohio investment fund asset classes posted a positive return for fiscal year 2010 except for real estate. However, despite falling below its benchmark return, the STRS Ohio real estate portfolio ranked in the 12th percentile versus its peers for one-year returns. (Note: 1st percentile = best; 100th percentile = worst.)

STRS OHIO INVESTMENT RESULTS (FISCAL YEAR 2010)

LIQUIDITY RESERVES STRS
Ohio Return: 0.30%
Benchmark Return: 0.12%
Relative Return: 0.18%

FIXED INCOME STRS
Ohio Return: 13.28%
Benchmark Return: 10.60%
Relative Return: 2.68%

DOMESTIC EQUITIES STRS
Ohio Return: 14.94%
Benchmark Return: 15.72%
Relative Return: -0.78%

INTERNATIONAL STRS
Ohio Return: 13.09%
Benchmark Return: 11.45%
Relative Return: 1.64%

REAL ESTATE STRS
Ohio Return: -0.67%
Benchmark Return: 6.50%
Relative Return: -7.17%

ALTERNATIVE INVESTMENTS STRS
Ohio Return: 20.04%
Benchmark Return: 20.04%*
Relative Return: 0.00%

TOTAL FUND STRS
Ohio Return: 13.54%
Benchmark Return: 13.28%
Relative Return: 0.26%

Less Costs to Arrive at Net of Fees: -0.11%
Total Fund, Net of Fees: 0.15%
*No benchmark exists for this asset category; actual returns are used.

Operating Expenditures Come in Below Budget
Final figures for fiscal year 2010 (July 1, 2009–June 30, 2010) show that total operating expenditures for STRS Ohio were $8.5 million less than budgeted and $9.4 million less than fiscal year 2009 expenditures. Less-than-expected expenditures for associate salaries and related fringe benefits, custodial banking fees and outside services contributed to the majority of the savings. Operating expenditures for fiscal year 2010 totaled about $79.4 million.

Retirements Approved
The Retirement Board approved 1,559 active members and 182 inactive members for service retirement benefits.

Other STRS Ohio News

Member Services Completes Busiest Year Since Fiscal 2004
Demand for services this past fiscal year surpassed all previous years since fiscal 2004 in STRS Ohio’s Member Services area. The Member Education staff presented 312 programs to more than 20,000 members, which was a record high for member participation. This exceeded the previous high year of 287 meetings for about 10,000 members. For the first time since fiscal 2004, benefits counselors met with more than 18,000 members, while the Member Services Center exceeded 300,000 calls. The heavy call volume has increased since Jan. 1, 2010, and is currently running at a 15% increase over last year.

Work Continues on Long-Term Care Program Changes
The transition to Prudential as STRS Ohio’s long-term care (LTC) vendor is proceeding. In June, 12,033 Aetna LTC enrollees received a customized transfer offer from Prudential that provided recipients with a one-time opportunity to transfer to Prudential from Aetna without evidence of insurability. To date, Prudential has received acceptance forms from 5,126 (42%) enrollees. Prudential’s coverage for these individuals begins Oct. 1, 2010. The policies of individuals who remain with Aetna LTC become individual LTC policies under a trust that continues to be regulated under the enrollees’ State Department of Insurance. Staff continues to work with Prudential on the open-enrollment period for full-time active teachers, which is targeted for Feb. 14–March 4, 2011. All active teachers who work at least 20 hours a week can enroll with Prudential without medical underwriting during this one-time open enrollment. Staff is also finalizing the process to notify new retirees of their option to enroll in Prudential LTC, effective Oct. 1. 2010.

STRS Ohio Web Site Now Features Pension Plan Reform Information
The home page of the STRS Ohio Web site now features a section titled “Special Pension Plan Reform Coverage.” In addition to sharing the details of the proposed plan approved by the Retirement Board in September 2009, it includes information about the value of defined benefit plans, an ongoing recap of the board’s long-term planning work, a link to the National Institute on Retirement Security and other pertinent information. STRS Ohio also continues to respond to various newspaper articles focusing on Ohio’s public pension plans. Copies of these “Letters to the Editor” can also be found in this section of the Web site. Additional information will be added to the site on an ongoing basis.

Legislative News Includes Overview of Federal Financial Sector Reform Bill
In July, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act — a measure that many consider the most sweeping reform of the financial sector since the Great Depression. The August 2010 issue of STRS Ohio’s Legislative News includes an overview of the issues within the reform package that have the most direct impact for STRS Ohio. This newsletter also includes a report from the National Association of State Retirement Administrators (NASRA) on reforms to public pension plans in progress around the country.

Ohio Attorney General Suing British Petroleum Over Losses to State's Pension Plans

2010-07-22T08:01:00.004-04:00

It was announced on July 21st Richard Cordray, Attorney General for the State of Ohio, is jockeying to be the lead attorney in a law suit filed against British Petroleum (BP), seeking class-action status. The law suit was filed on behalf of the state's five pension systems, which incurred substantial losses due to the decline in BP stock after the gulf disaster.

"Institutional investors, and the Ohio Funds in particular, have been greatly harmed by BP's alleged misconduct. By forming a partnership between New York and Ohio, we aim to compensate investors for what we believe was securities fraud and effect real change in the way BP and other companies do business," Cordray said.

Let me first and very clearly state that I am not in any way, shape, or form arguing in defense of BP in writing this. What I am arguing for is common sense and personal responsibility. I'm no expert in deep-see drilling, but it would certainly appear to me that it might be a bit risky drilling down several thousand feet in the middle of an ocean or gulf. I may also think remember past catastrophes like the Exxon Valdez--while not a drilling issue--a dirty disaster nonetheless and one that Exxon and Exxon investors paid dearly for.

If investors didn't know that an oil company had material risks involved in deep sea drilling, they're not too smart. Filing a law suit to recover losses because you're not too smart just doesn't sit well with me. I am a participant in the State Teacher's Retirement System of Ohio and an investor in the stock market, so I too was harmed. I guess the difference is--in my biased opinion--I'm not looking for a handout because of it.

The handouts or amounts for damages should be paid to those who are directly affected by the disaster in the gulf. Writing this from Ohio where virtually no natural disaster occurs, I can only image the impact on the local residents, business owners, rig workers, etc. along the gulf. These people's livelihoods will be harmed for a long time to come and some may be so irreparably. These are the people that need money from BP and not those that made a bad investment in hindsight.

Maybe Cordray is trying to make a name for himself....maybe he's trying to get money for Ohio's woefully underfunded pensions...maybe he is on sound legal basis for doing all this. Regardless, I don't think from a common-sense perspective what he is doing is right, and I'm ashamed to be an Ohioan on this day.

While some or many may not agree with my perspective, it is what it is. I don't believe people can go through life pointing fingers at others when things go wrong. You have to look in the mirror and accept responsibility for your decisions. I can only dream how much better we'd be off if more people had this perspective.

Click here for more information on the story.

Kevin Kroskey, CFP, MBA

STRS June Board News Details

2010-06-14T13:40:00.000-04:00

(The text below is reprinted from the news release by STRS on 6/11/2010.)

JUNE BOARD NEWS

RETIREMENT BOARD CHAIR, VICE CHAIR NAMED; MEUSER RECOGNIZED FOR SERVICE During its June meeting, the State Teachers Retirement Board elected James McGreevy as its vice chair for the coming year. According to Board Policies, Tim Myers, who is currently serving as vice chair, automatically moves into the position of chair. Normally, both Myers and McGreevy would be moving into these leadership positions on Sept. 1, 2010. However, Mark Meuser, the current board chair, has announced his retirement from his position with the Gahanna-Jefferson City Schools and thus is resigning from the Retirement Board. As a result, Myers and McGreevy will assume their new responsibilities on July 1.

During the board meeting, a resolution recognizing Meuser's service was presented. In it the board expressed its deep appreciation for the valuable and tireless service he rendered to the membership and associates of STRS Ohio upon being elected to the board in 2006.

RETIREMENT BOARD ACCEPTS THE ANNUAL INVESTMENT PLAN
The Retirement Board voted to accept the Investment Plan for fiscal year 2011 (July 1, 2010-June 30, 2011). The plan details staff's investment strategy for each asset class comprising the system's investment fund.

STRS Ohio staff expects the U.S. economy to remain on a positive growth path during fiscal year 2011 that will spread to sectors beyond business inventories. Rather than the typical "V-shaped" expansion that usually follows a deep recessionary plunge, staff is forecasting a moderate "U-shaped" expansion. Outside the United States, a modest recovery and expansion is expected for many developed countries, while stronger growth is forecasted for emerging countries. Though inflation will remain largely contained, staff noted that monetary and fiscal policymakers around the world will need to slowly remove the extraordinary stimulus they introduced to ward off another Great Depression. The economic threats from a potential sovereign debt contagion that began in Greece will restrict growth potential and could threaten economic expansions in the United States and elsewhere. Staff noted that policymakers will need to walk the tightrope of tending to longer-term fiscal sustainability while not jeopardizing the cyclical recoveries by removing stimulus too soon.

On July 1, 2010, the Fiscal 2011 Investment Plan will be posted on the STRS Ohio Web site (www.strsoh.org) or available by calling STRS Ohio's Member Services Center toll-free at 1-888-227-7877.

FISCAL YEAR 2010 BUDGETS ADOPTED
The Retirement Board adopted the proposed budgets for fiscal year 2011 (July 1, 2010-June 30, 2011). The operating budget totals $89,773,600, which represents a 2.1% increase over this year's operating budget. No merit or cost-of-living salary increases for STRS Ohio associates are included in the budget. The capital budget for fiscal year 2011 totals $2,101,000. Additionally, the system expects to spend $580,000 in contract payments for the STaRS system that has replaced STRS Ohio's former obsolete pension management computer system.

RETIREMENT BOARD APPROVES HEALTH CARE PREMIUMS AND PROGRAM CHANGES FOR 2011
The Retirement Board approved three eligibility changes for the STRS Ohio Health Care Program resulting primarily from the health care reform bill recently passed in Washington, D.C.

Dependent children, as well as incapacitated children, will now be eligible for health care coverage until the end of the month in which they turn age 26, if they do not have access to other employer-sponsored health care coverage.
Upon reaching age 26, the monthly premium charged for a person incapacitated since childhood will be the same rate as the spouse premium.
The waiting period for late enrollees in the health care program will be reduced to 90 days from six months.

These changes go into effect on Jan. 1, 2011.

The board also approved the 2011 premiums for all the plans offered through the STRS Ohio Health Care Program. A complete list of these premiums will be posted on the STRS Ohio Web site (www.strsoh.org) on June 25, 2010, or can be obtained by calling STRS Ohio's Member Services Center toll-free at
1-888-227-7877 after that date. Additional information about the 2011 STRS Ohio Health Care Program will be provided in upcoming newsletters and on the STRS Ohio Web site. In late October, all current enrollees will also receive personalized health care plan information in preparation for the fall open-enrollment period, which extends from Nov. 1-23, 2010.

RETIREMENTS APPROVED
The Retirement Board approved 239 active members and 71 inactive members for service retirement benefits.

OTHER STRS OHIO NEWS

LEGISLATIVE NEWS INCLUDES UPDATE ABOUT PENSION PLAN ACTIONS AROUND THE COUNTRY
The June 2010 issue of STRS Ohio's Legislative News includes a report from the National Association of State Retirement Administrators listing reforms to public pension plans in progress around the country. The newsletter can be accessed via the STRS Ohio Web site at www.strsoh.org.

STRS Ohio staff is still awaiting the draft legislation containing the Retirement Board's proposed changes for the pension fund, as well as language reflecting changes proposed by the other Ohio retirement systems.
STRS Ohio staff continues to meet with legislators, stressing the importance of the legislation to the system's long-term viability.

E-MAIL NEWS SERVICE TOPS 100,000 SUBSCRIBERS
During May, the number of subscribers to STRS Ohio's e-mail news service surpassed the 100,000-mark. This service is used to keep both STRS Ohio members and non-members apprised of actions taken at each Retirement Board meeting, as well as other important news and events.

RECENT HEALTH CARE PROGRAM CHANGES RESULT IN SIGNIFICANT SAVINGS
Since mid-July 2009, several changes to the STRS Ohio Health Care Program have gone into effect. These changes are resulting in positive outcomes for program participants, as well as significant savings for them and the Health Care Stabilization Fund.

Here are a few examples:

The medical care management program offered under the Aetna Medicare Plan(PPO) includes a Health Risk Assessment (HRA). During first quarter 2010, 70.5% of the enrollees in the program completed the HRA; these assessments and other case management triggers resulted in about 4% of the enrollees now receiving case management assistance.
The use of generic prescription drugs has increased as a result of the "Call for Generics" program that began in mid-summer 2009. From July 2009 through April 2010, the estimated savings from the program is $1.8 million for the health care fund, with member savings resulting from lower copayments totaling about $1 million.
Other changes to the Express Scripts prescription drug program (e.g., $150 deductible for Tier 2 and Tier 3 medications) has resulted in a more than $10.5 million reduction in program costs.

STRS May Board News Details

2010-05-24T11:40:00.001-04:00

(The text below is reprinted from the news release by STRS on 5/21/2010.)

CONTRIBUTING MEMBERS MARK HILL AND DALE PRICE WIN BOARD SEATS
Mark Hill and Dale Price were elected to the State Teachers Retirement Board in the recent election. These two individuals will take their seats on the board on Sept. 1, 2010, and serve a four-year term through Aug. 31, 2014.

RETIRING BOARD MEMBER STEVEN M. PUCKETT RECOGNIZED FOR BOARD SERVICE
During its May 2010 meeting, the State Teachers Retirement Board passed a resolution recognizing the valuable and significant service provided by Dr. Steven M. Puckett during his tenure as a board member. He joined the board in January 2003 as the representative of the State Superintendent of Public Instruction. He is retiring from the State Department of Education on June 1.

BOARD REVIEWS ENROLLMENT, COST TRENDS AND IMPACT OF FEDERAL HEALTH CARE LEGISLATION ON 2011 HEALTH CARE PROGRAM PREMIUMS
The factors that affect health care costs nationwide continue to also affect the STRS Ohio Health Care Program. At the May Retirement Board meeting, STRS Ohio staff reviewed these factors and their impact on the annual premiums for each of the plans offered under the STRS Ohio Health Care Program. At the June board meeting, staff will present proposed premiums for all of its health care plans for calendar year 2011 for the board's approval. This allows staff to review the claims experience and trends for the first three months of 2010 before making final premium recommendations.

During the May presentation, staff noted that escalating health care premiums, along with accompanying higher out-of-pocket expenses, remain a national issue. National medical and drug trends continue to outpace the Consumer Price Index (CPI). The continued introduction of new medical technologies and specialty prescription medications play a significant role in these trend rates. STRS Ohio plan enrollees' use of services and claims experience also affect their premiums. The claims experience is particularly high among the non-Medicare Plus and Basic Plan enrollees, as more healthy individuals are not enrolling in the STRS Ohio program due to the availability of less costly plans in the marketplace. In determining premiums, staff must also consider changes resulting from the recent federal health care legislation. For example, this legislation capped Medicare Advantage plan subsidy levels for 2011 at the 2010 levels; yet, medical costs continue to rise. This will mean higher premiums for STRS Ohio's Aetna Medicare Plan (PPO). Nevertheless, it appears that the Aetna Medicare Plan (PPO) will still be less expensive than the Medical Mutual Plus Plan in 2011 for Medicare Parts A & B enrollees and will continue to also provide a savings to the STRS Ohio Health Care Program. The coverage levels and popular features provided by the Aetna Medicare Plan (PPO) will not change for next year.

This fall during the annual health care plan open-enrollment period, STRS Ohio benefit recipients will also have the opportunity to enroll in the dental and vision plans for the period extending from Jan. 1, 2011, through Dec. 31, 2012. There will be no changes in coverage or premiums for the dental plan offered through Delta Dental and the vision plan offered through VSP for this next two-year period.

DRAFT PENSION LEGISLATION LANGUAGE EXPECTED SOON STRS
Ohio has been told that the Ohio Retirement Study Council (ORSC) anticipates receiving draft pension bill language from the Legislative Service Commission soon. The five Ohio public pension systems can then review their pertinent sections and make any necessary corrections. In the coming months, STRS Ohio also expects to receive a separate package containing language for the additional supplemental changes approved by the Retirement Board in December 2009. These changes primarily focus on disability and survivor benefits and the cost to purchase service credit.

Following the close of fiscal year 2010 on June 30, the board will receive updated financial information this fall about the pension fund to consider as it evaluates any further changes to the draft bill, including the proposal presented earlier this year to the board by the Healthcare & Pension Advocates for STRS (HPA).

RETIREMENTS APPROVED
The Retirement Board approved 129 active members and 75 inactive members for service retirement benefits.

STRS OHIO RECEIVES CERTIFICATE OF ACHIEVEMENT RECOGNITION
The Government Finance Officers Association has awarded its Certificate of Achievement for Excellence in Financial Reporting to STRS Ohio for the 2009 Comprehensive Annual Financial Report. This is the 20th consecutive year STRS Ohio has received this national award, which recognizes annual reports that achieve the highest standards in government accounting and financial reporting.

STRS April Board News Details

2010-04-19T21:41:00.000-04:00

(The text below is reprinted from the news release by STRS on 4/16/2010.)

PENSION LEGISLATION NOT LIKELY UNTIL FALL The bill that will contain proposed changes for all five Ohio pension systems, including STRS Ohio, still has not been introduced. Consequently, the Ohio Retirement Study Council (ORSC), which is the legislative oversight body for the five systems, has not provided an analysis. Because of the politics surrounding the November elections, it is becoming more and more unlikely a bill will be introduced before November.

At the April 2010 State Teachers Retirement Board meeting, additional discussion was held regarding the alternative proposal for pension benefit changes presented earlier this year by the Healthcare & Pension Advocates for STRS (HPA). The HPA proposal calls for a longer phase-in of additional service required for full retirement benefits and provides for a different cost-of-living adjustment (COLA) than the plan approved by the Retirement Board last September. The HPA reported that it continues to support a 2% COLA for current retirees, beginning on July 1, 2011. It also continues to support a 2% COLA for new retirees after that date, with a deferral for 36 months from the date of retirement, but with no minimum age requirement. The longer phase-in, coupled with this COLA scenario, would result in a funding period of 35.1 years for the pension fund versus the board-approved plan that brings the funding period to 33.4 years. During the discussion, staff reminded the board that additional plan design changes may be necessary if economic and demographic assumptions are not met, and any plan components are removed or weakened and/or implementation dates change during the legislative process.
There was consensus that the board will consider taking action on the HPA proposal at its May meeting.

PROPOSED OPERATING BUDGET FOR FISCAL YEAR 2011 REFLECTS 2.1% INCREASE At its April meeting, the Retirement Board received its first look at the proposed system budgets for fiscal year 2011 (July 1, 2010-June 30, 2011).

The proposed operating budget totals $89,773,600, which represents a 2.1% increase over this year's operating budget. No merit or cost-of-living salary increases are included in the budget, effectively freezing salaries for most associates at July 2008 levels. The budget also supports 592 full- and part-time employees, which is in alignment with the current head-count freeze that calls for 605 or fewer associates. Payment of expected Performance-Based Incentives (PBIs) to eligible Investment Department associates for fiscal year 2010 performance, plus expected payment of the first half of the deferred PBI payments for fiscal year 2009 performance, are included in the budget. (The deferred payments will only be paid if the market value of STRS Ohio's investment assets remain at $60 billion or higher as of June 30, 2010; as of March 31, 2010, the value stood at $60.9 billion.) Aside from potential incentive payments to eligible investment associates and accompanying fringe benefits, all other major spending categories in the proposed operating budget are lower when compared to last year's budget.

The proposed capital budget for fiscal year 2011 totals $2,101,000. Additionally, the system expects to spend $580,000 in contract payments for the STRS system that has replaced STRS Ohio's former obsolete pension management computer system. The Retirement Board will be asked to approve the budgets at its June meeting.

BOARD APPROVES HEALTH CARE PROGRAM CHANGES FOR 2010 AND 2011 During April's meeting, the board approved a new program for STRS Ohio Health Care Program enrollees who receive their prescription drugs through Express Scripts. (These are individuals who are covered under the Aetna, Medical Mutual and Paramount health care plans.) The program, known as Select Home Delivery, encourages individuals who are filling prescriptions for maintenance medications at retail pharmacies to move to home delivery. This move will lower the individual's copayments plus reduce expenditures from STRS Ohio's Health Care Stabilization Fund, which supports the health care program.

Express Scripts will use a series of letters and phone calls to explain the advantages of home delivery and encourage the enrollee to make the transition. For those that wish to move their prescription to home delivery, they can direct Express Scripts to contact their physician to obtain a new prescription for home delivery through Express Scripts' "concierge service." Also, the first copayment for a generic maintenance medication moved to home delivery will be free up to a total of $50 per enrollee. There will be no change in copayments and enrollees will not experience any penalties if they choose to continue filling their maintenance prescriptions at retail. If just 50% of the eligible prescriptions move to home delivery, enrollees will save $3.1 million in copayments and the health care fund would retain an additional $4.7 million. The Select Home Delivery Program will begin this summer.

Looking ahead, the board also approved the following for the STRS Ohio Health Care Program in calendar year 2011:

- Implement a Medicare Part D prescription drug plan (PDP) through Express Scripts. Currently, STRS Ohio participates in a Medicare Part D subsidy program. This change should increase the subsidy amount to STRS Ohio by $6.3 million. In addition, many Express Scripts enrollees will benefit from less restrictive requirements for step therapy and prior authorization, 90-day supply at retail and some formulary adjustments. Eligible enrollees will receive additional information this fall.

- Change the family in-network annual deductible for the AultCare plans (available in select Canton, Ohio, ZIP codes) to $1,600 from $1,200, beginning Jan. 1, 2011. These plans will then match the single-to-family annual deductible ratio of all other STRS Ohio health care plans.

- Continue the Health Care Assistance Program with the same coverage level, eligibility requirements and $0 monthly premium.

- Continue the 2010 premium reimbursement amounts for Medicare Part B. The maximum amount of reimbursement from STRS Ohio remains at $52.83 per month for the 30-year retiree; the minimum amount of reimbursement is $29.90 per month.

Finally, the board approved Prudential as the carrier for the Long-Term Care (LTC) Program. Since November 1988, STRS Ohio has offered a long-term care plan through Aetna. However, Aetna is exiting this market as of Dec. 31, 2010. The almost 12,000 individuals currently enrolled in the program will have the option to stay with Aetna via a trust or transfer to the Prudential long-term care plan. Detailed information, including premiums and coverage options, will be mailed to all affected STRS Ohio members in June 2010; additional information and assistance with making a choice will be provided through Prudential's Web site and a customer service center. Open enrollment for new long-term care program enrollees - both active and retired STRS Ohio members - will be held in February 2011.

In the coming months, members will receive more detailed information about the STRS Ohio Health Care Program changes approved at this April meeting through newsletters, the Web site, e-mail news service and direct mail, including the health care program open-enrollment materials sent to members in the fall.

IMPACT OF NATIONAL HEALTH CARE LEGISLATION ON STRS OHIO STILL TO BE DETERMINED With a piece of legislation as massive as the health care reform bill that recently passed in Washington, STRS Ohio and many others will be analyzing its content for some time. All attention will now be on the regulatory process and how the administrative authorities interpret and implement the numerous reforms. Although the bill's full effect will not be felt for several years, some clarifying regulations are expected to be developed during the next 180 days. Some areas where staff believes there is a strong likelihood that adjustments to the STRS Ohio Health Care Program will be necessary includes elimination of lifetime limits for coverage; increasing dependent children's eligibility for coverage to age 26; and eliminating any out-of-pocket costs for preventive services in the Medical Mutual Plus Plan.

STRS Ohio may also be able to apply for participation in the early retiree (age 55-64) reinsurance program for the years 2010 through 2013. However, until regulations are finalized, nothing is for certain. STRS Ohio will continue to use its newsletters, e-mail news service and Web site to keep health care program enrollees informed of any changes affecting them.

RETIREMENTS APPROVED
The Retirement Board approved 123 active members and 83 inactive members for service retirement benefits.

NO CHANGE TO SERVICE CREDIT RULE FOR PARTIAL YEARS OF TEACHING In January 2010, the Retirement Board was asked to consider a change that would require STRS Ohio members to work 180 days to receive a full year of credit. Currently, members who are employed on a full-time contract can receive a full year of service credit by (a) working 120 full-time contract days, or (b) completing two full-time quarters. However, upon further research, staff has determined that 120 days for a full year of service was chosen in 1971 to be consistent with other sections of Ohio law affecting teachers. As a result, staff has determined that the existing service credit rule should stay in effect.

STRS March Board News Details

2010-03-22T11:41:00.006-04:00

(The text below is reprinted from the news release by STRS on 3/22/2010.)

PENSION COMMUNITY CONTINUES IN HOLDING PATTERN
Though recommendations relative to maintaining long-term solvency were submitted to the Ohio Retirement Study Council (ORSC) from the state's five public plans in September 2009, legislation has yet to be introduced. ORSC staff, however, anticipates having a bill before the council members in April, at which time staff will review the bill and provide its recommendation. A vote by ORSC members regarding their recommendation for passage and/or changes to the bill would then likely take place in May. While formal introduction of a bill and committee hearings in the Ohio House of Representatives could occur this spring, it is more likely that serious discussion on the bill will occur after the November election.

IMPACT OF HPA'S PROPOSED PENSION PLAN CHANGES REPORTED AT MARCH MEETING
At the February 2010 board meeting, the Healthcare & Pension Advocates for STRS (HPA) presented an alternative proposal for pension benefit changes to the State Teachers Retirement Board for its consideration. At the March board meeting, staff reported on the impact the two major components of HPA's plan would have on the solvency of the pension fund and on STRS Ohio members.

The primary differences between the plan approved by the Retirement Board on Sept. 1, 2009, and the HPA plan is that the HPA plan calls for a longer phase-in of additional service required for full retirement benefits and provides for a different cost-of-living adjustment (COLA). In the HPA plan, current retirees would receive a 2% COLA, beginning on July 1, 2011. New retirees after that date would also receive a 2% COLA, but it would be deferred for 36 months from the date of retirement or until age 60, whichever comes later. The STRS Ohio staff analysis showed the cost of the longer phase-in for retirement eligibility is paid by a less valuable COLA for all new retirees because of the deferral period. The HPA plan does result in total additional savings of $60 million to the pension fund, and would reduce the funding period for the pension fund to 32.9 years versus 33.4 years under the board's adopted plan. During the discussion, staff reminded the board that additional plan design changes may be necessary if economic and demographic assumptions are not met (e.g., investment return rates or mortality rates), and any plan components are removed or weakened and/or implementation dates change during the legislative process.

At its April meeting, the board will receive an update regarding the ORSC meeting being held earlier in the month and further discuss the HPA plan.

HEALTH CARE PROGRAM CHANGES RECEIVE INITIAL REVIEW
At its March 2010 meeting, the Retirement Board took its first look at possible changes for the 2011 STRS Ohio Health Care Program. At this time, no changes are anticipated for the Medical Mutual Basic or Plus plans, the Aetna Medicare Plan (PPO) or the health care plans offered by Kaiser and Paramount. For the AultCare PPO plan, there may be a change to the family deductible and out-of-pocket maximums. Staff is also looking into expanding the Aetna Medicare Plan (PPO) to Medicare Part B-only enrollees in 2011 if premiums are less than what can be offered through the Plus Plan.

The board will be asked to finalize calendar year 2011 plan changes at its April meeting, as well as approve plan premiums for 2011 at its June 2010 meeting.

The board was also presented with a timeline for a long-term health care strategic planning process that would begin this fall. As noted in the February Board News (https://www.strsoh.org/boardnews/Feb10.html), without significant changes in premiums, program eligibility or plan design, the STRS Ohio Health Care Program cannot survive in the long term. During the next 18 months, board and staff will focus on designing long-term strategic solutions while taking into consideration any changes that come out of national health care reform that could reshape STRS Ohio's options.

PENSION CHECKS MOVE TO DIRECT DEPOSIT IN OCTOBER
Every month, STRS Ohio pays benefits to more than 125,000 individuals by using safe, secure and reliable direct deposit for their payments. Unfortunately, benefit recipients who still receive paper checks can be impacted by delayed mail delivery or lost or stolen checks. When a paper check is lost, it can take 10 to 15 days to replace it.

To ensure the timely delivery of pension payments to benefit recipients, the Retirement Board approved a requirement for monthly benefit payments to be paid by direct deposit, effective Oct. 1, 2010. Timely deposits are made on the first banking day of the month - even when benefit recipients are out of town or unable to go to the bank. Benefit recipients who reside outside of the United States are exempt from this change.

Individuals who still receive paper checks will be sent a direct deposit form to complete and return in the coming months. Benefit payments can be deposited to a checking or savings account. Check memos will continue to be mailed when the net benefit amount changes (e.g., when withholding tax is changed or the annual cost-of-living adjustment is paid). Benefit recipients can also continue to use the Personal Account Information section of the STRS Ohio Web site to view monthly pension payment information, including all deductions.

ELECTION BALLOTS MAIL ON APRIL 2
The 2010 Retirement Board election packet will mail on April 2. It will include information about the three candidates - Mark Hill, Dale Price and James A. Stoll - who are running for the two contributing member seats on the board, as well as voting instructions. The top two vote-getters will win the seats.

Those eligible to vote in this election include all STRS Ohio contributing members, individuals who have contributions on deposit at STRS Ohio and disability benefit recipients. VR Election Services is conducting the election.

The deadline for voting is May 3. Results of the election will be announced following certification of the election results by the board of tellers on May 8.

RETIREMENTS APPROVED
The Retirement Board approved 123 active members and 107 inactive members for service retirement benefits.

STRS February Board News Details

2010-03-10T05:19:00.000-05:00

(The text below is reprinted from the news release by STRS on 2/22/2010.)

PENSION LEGISLATION SPONSORSHIP WILL BE BIPARTISAN

The five Ohio retirement systems, including STRS Ohio, are still waiting for the Legislative Service Commission to finish its work in drafting the legislation designed to keep the systems financially strong and sustainable for all current and future public employees. During the February meeting of the State Teachers Retirement Board, Executive Director Michael Nehf reported that STRS Ohio has learned that the bill sponsorship will be bipartisan. House Assistant Minority Leader Louis Blessing (R-Cincinnati) has agreed to co-sponsor the legislation with Ohio Retirement Study Council Chair Rep. Todd Book (D-Portsmouth). It is anticipated that once a bill is introduced, hearings may occur this spring; however, voting on a bill is not expected until after the November election.

On Capitol Hill in Washington, D.C., the focus of legislators and the president appears to be on jobs; financial market regulation and reform; and the growing federal deficit and debt reduction measures. Health care is also on the list; however, congressional staff members are giving passage of health care reform a 50/50 chance this year. Additional information about discussions at the federal level can be found in this February's issue of STRS Ohio's Legislative News, which is posted on the STRS Ohio Web site.
(https://www.strsoh.org/quicklinks/legislative.html)

HPA PRESENTS MODIFIED PACKAGE OF PENSION BENEFIT CHANGES

At the February board meeting, the Healthcare & Pension Advocates for STRS (HPA) presented an alternative proposal for pension benefit changes to the Retirement Board for its consideration. The HPA proposal does not call for any changes to the proposed member and employer contribution increases nor to the benefit formula change contained in the plan adopted by the board on Sept. 1, 2009.

However, the HPA proposal does call for a phased approach to increasing the number of years of service required for full retirement benefits. In the HPA proposal, the change to 35 years from 30 of required service would be phased in, in two-year increments beginning in 2015 (i.e., 30 years until Aug. 1, 2015; 31 years from August 2015 through July 31, 2017; 32 years from August 2017 through July 31, 2019; 33 years from August 2019 through July 31, 2021; 34 years from August 2021 through July 31, 2023; and 35 years from August 2023 and beyond). Members could also retire early with 30 years of service, but with an actuarial reduction of their benefits.

HPA is also recommending that there be no tiering of the cost-of-living adjustment (COLA). In the HPA proposal, current retirees would receive a 2% COLA, beginning on July 1, 2011. New retirees after that date would also receive a 2% COLA, but it would be deferred for 36 months or until age 60, whichever comes later.

Finally, the HPA proposal would prefer legislation that grants authority to the Retirement Board to adjust the final average salary at three, four or five years, based on the funding status of the system.

In presenting its proposal, the HPA also expressed its commitment to the STRS Ohio Health Care Program by recommending that a contribution to the Health Care Stabilization Fund be set at no less than 1% of employer payroll.

At the March board meeting, STRS Ohio staff will present a report to the board showing the impact of the HPA's proposed changes on the solvency of the pension fund. It was noted that any or all of HPA's changes could be included in the pension legislation through amendments to the bill.

PROJECTED LIFE OF THE HEALTH CARE FUND INCREASES SLIGHTLY, BUT LONG-TERM CHANGES STILL NEEDED

A positive return on fund assets, as well as the addition of a Medicare Advantage program and other plan changes, helped to slightly lengthen the solvency period for the Health Care Stabilization Fund as of Jan. 1, 2010.

The results of the annual actuarial valuation of the fund show that the projected life of the STRS Ohio Health Care Program now extends through 2021. This reflects an increase of three years from the 2009 valuation.

Costs for the STRS Ohio Health Care Program are paid out of the Health Care Stabilization Fund. Currently, monies for the fund come from premiums charged to STRS Ohio retirees and their dependents who are enrolled in the program, 1% of payroll from employer contributions, Medicare Part D subsidies and investment earnings on these funds. Though the balance in the fund stood at almost $3 billion on Jan. 1, 2010, next year the fund principal will be tapped to cover the shortfall in paying health care costs.
Reliance on the principal rapidly depletes the health care fund, leaving only the 1% employer contribution, enrollee premiums and Medicare Part D subsidy to sustain the fund. Without significant changes in premiums, program eligibility or plan design, the program cannot survive in the long term. In the coming months, STRS Ohio staff will present options for the health care program for the board's consideration.

RETIREMENTS APPROVED

The Retirement Board approved 175 active members and 125 inactive members for service retirement.

STRS OHIO RECEIVES STATE AUDITOR'S AWARD STRS

Ohio has received the "Making Your Tax Dollars Work" award from the Auditor of State's Office for the second consecutive year. STRS Ohio received the award for the quality of its financial reporting and the absence of audit issues. Less than 5% of the 5,500 entities that the Auditor of State's Office audits each year receive this award.

STRS January Board News Details

2010-01-19T05:00:00.001-05:00

(The text below is reprinted from the news release by STRS on 1/15/2010.)

NEW MEMBER JOINS RETIREMENT BOARD
Joining the State Teachers Retirement Board at its January meeting was Dr. Daniel J. Martin, who was recently appointed to the board by Treasurer of State Kevin L. Boyce. Martin is currently the president of Mount Vernon Nazarene University. Before assuming this position in 2007, he served as the vice president for University Advancement at Point Loma Nazarene University in San Diego, as well as in various positions with MidAmerica Nazarene University in Olathe, Kan. He holds two doctorate degrees in higher education from the University of Pennsylvania and The University of Kansas, as well as a law degree and a master's in business administration from The University of Kansas. His four-year term on the board will run through Jan. 7, 2014.

BOARD CONSIDERS CHANGE TO SERVICE CREDIT RULE FOR PARTIAL YEARS OF TEACHING
Currently, STRS Ohio members who are employed on a full-time contract can receive a full year of service credit by (a) working 120 full-time contract days, or (b) completing two full-time quarters (applies to higher education faculty). As a result, about 6% of retirees each year elect to retire midyear. The Retirement Board is considering the elimination of the reference to 120 days in the service credit rule, as well as the option for a full year of credit to be granted for two full-time quarters, effective July 1, 2015. This proposed change requires members to work 180 days to receive a full year of credit. Tutors or substitutes, who are not under a full-time contract on the teacher salary schedule, do not qualify for the 120-day rule. The board will be asked to take action on the proposed rule change at its March 2010 meeting.

2009 MEMBER SURVEY RESULTS PRESENTED
The membership surveys conducted in late 2009 show that most STRS Ohio members - active and retired - continue to have positive overall impressions of STRS Ohio. These positive impressions extend to member services, pension benefits, the Retirement Board and communications. However, as expected, there has been some slippage since last year among very favorable impressions, especially among actives, due primarily to economic issues and the proposed pension plan changes.

These results were contained in a presentation made to the Retirement Board by Dr. Marty Saperstein of the Columbus-based research firm, Saperstein Associates, during the board's January meeting. The annual telephone surveys were conducted by Saperstein Associates in late November and December, and involved 606 randomly selected participants (304 active members and 302 benefit recipients).

The survey results also showed the following:

- The collective work of the Retirement Board and staff has resulted in the majority of STRS Ohio members being not only aware, but also knowledgeable about the proposed pension benefit changes. This was especially evident among those closest to retirement (pre and post). The survey responses also show a growing need for pension benefit information among actives.

- Health care coverage remains a source of concern among active and retired members. Members want the board to continue to consider this as a top priority, along with maintaining pension benefits and improving investment returns.

- Half of the active members still expect to teach longer than they originally planned, but this year one of the primary reasons (in addition to the down economy) is the proposed pension plan changes.

- About one out of 20 retirees is struggling to make ends meet.

Additional details about the surveys will be included in the next edition of the STRS Ohio newsletters.
RETIREMENTS APPROVED
The Retirement Board approved 35 active members and 26 inactive members for service retirement benefits.

RETIREMENT SYSTEMS STRESS VALUE OF DEFINED BENEFIT PLANS
In the past few weeks, Ohio's major newspapers have written about Ohio's public pension plans and their future sustainability. Adding to the discussion have been several editorials, as well as "letters to the editor" - both pro and con - regarding the value and funding of the Defined Benefit Plans available to Ohio's public employees. Before these articles ran, STRS Ohio reiterated its commitment to the Defined Benefit Plan with its members through its Web site and e-mail news service. In addition, the executive directors of the five Ohio systems shared the following message with key legislators.

DEFINED BENEFIT PLANS ARE GOOD FOR THEIR MEMBERS AND GOOD FOR OHIO
For many decades, the public employees of Ohio have been provided with dependable retirement income during economic ups and downs. Public employers have had the ability to recruit and retain workers and budget for a predictable contribution rate. The vast majority of these Ohioans' retirement security has been provided through the investment returns earned by Ohio's five public pension plans. The balance is provided by contributions from the members and their employers. At the conclusion of their public service careers, members receive a pension benefit that is paid in lieu of Social Security. Going forward, the public pension plans can continue to provide this valued financial security by making reasonable, measured changes.

The Defined Benefit Plans offered by OPERS, STRS Ohio, SERS, Highway Patrol Retirement System and Ohio Police & Fire have benefited Ohio's public employees, this state and all taxpayers.

- Defined Benefit Plans provide financial protection for both plan members and taxpayers. Members are provided a lifetime benefit they won't outlive - a problem now faced by so many whose savings or 401(k) plans have been depleted in this recession and now face the possibility of slipping into poverty in their "golden years," having to turn to taxpayer-funded public assistance, Medicaid or social services. The state is already struggling to budget the higher level of resources to cover the new people seeking assistance.

- Defined Benefit Plans are both efficient and economical. A 2008 National Institute on Retirement Security (NIRS) report found that a defined benefit pension can deliver the same retirement income at 46% lower costs than an individual defined contribution account due to pooling of investment risk, continual diversification of assets and professional investment management.

- Defined Benefit Plans provide a stable source of revenue for Ohio's local economies. According to NIRS, in 2006 nearly 360,000 residents of Ohio received a total of $8.41 billion in pension benefits from state and local pension plans, with $8.29 billion paid from plans within the state and the remainder originating from plans in other states.

- Defined Benefit Plans support Ohio workers. NIRS has also reported that retiree expenditures stemming from the pension plan payments in 2006 supported more than 79,000 Ohio jobs that paid $4.3 billion in wages and salaries.

- Defined Benefit Plans support the services provided by local, state and federal governments through the taxes paid on these pensions. In 2006, taxes paid by retirees and beneficiaries in Ohio directly out of pension payments, as well as taxes attributable to direct, indirect and induced expenditures, accounted for $702.5 million in state of Ohio and local tax revenue, according to NIRS.

- Defined Benefit Plans play a critical role in reducing the risk of poverty and hardship among older individuals. Defined benefit pension income saved taxpayers $7.3 billion in public assistance expenditures nationally in 2006 alone because retirees had a regular monthly pension payment that helped sustain them above the poverty level.
The public pension plans in Ohio have a history of remaining sustainable with reasonable, measured changes. Each system has taken the prudent and responsible step to present proposals that recognize the need to look at options, including adjusting benefits that acknowledge the fact that people are living longer. The legislative process is important to provide plan stability for the systems' members, local economies and all Ohioans.
The starting point for discussions must be the preservation of the Defined Benefit Plan offered by each system. These plans are major economic drivers for the state; are administratively efficient and economical; and provide a stable retirement income for public workers in Ohio, thereby reducing the burden on taxpayers and Social Security.

For further information about NIRS reports, visit http://www.nirsonline.org/.

BOARD RETREAT DATES ANNOUNCED
The Retirement Board will hold its annual retreat at STRS Ohio from Jan. 27-29. The meeting is open to the public.

STRS October Board News Details Retirement Board Actions and Discussions

2009-10-18T19:24:00.002-04:00

(The text below is reprinted from the news release by STRS on 10/16/2009.)

This week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month.

OCTOBER BOARD NEWS

ANNUAL ACTUARIAL VALUATION REPORT CONFIRMS NEED FOR PENSION FUNDING CHANGES

At its October 2009 meeting, the State Teachers Retirement Board received its first look at the annual actuarial valuation report of STRS Ohio's pension fund from its actuarial consultant, PricewaterhouseCoopers (PwC). This report provides a "snapshot" of the actuarial position of the retirement fund as of July 1, 2009. As expected, the PwC report confirmed the data shared much earlier in the year with the Retirement Board and STRS Ohio members during the board's long-range planning discussions. Since July 1, 2008, the funding period for the pension fund has increased to "infinity" from 41.2 years and the funded ratio decreased to 60% from 79.1%.

In developing this actuarial valuation, STRS Ohio's actuarial gains and losses for fiscal year 2009 (July 1, 2008-June 30, 2009) were compiled. PwC looked at the system's experience in several areas, including investment returns, payroll growth, salary increases, retiree mortality, and the number of retirements and other "separations" from the system, such as account withdrawals -- all of which can either reduce or increase the system's liabilities from one year to the next.

STRS Ohio experienced a net actuarial loss for the fiscal year of more than $17 billion -- due almost entirely to the significant decline in the value of STRS Ohio's investment assets as a result of the global recession. Consequently, the system's unfunded accrued liabilities more than doubled to $36.6 billion from $18.2 billion.

The fact that the pension unfunded liabilities are at "infinity" -- meaning the system can never pay off its liabilities unless changes are made -- prompted the Retirement Board to begin developing a long-range plan to strengthen the financial condition of the retirement system last March. The plan adopted by the board on Sept. 1 calls for an increase in contributions; an increase in final average salary years; a change in eligibility for retirement; a change in the benefit formula; and a reduction in the annual cost-of-living adjustment. STRS Ohio staff projects the proposed changes would save almost $9 billion in accrued liabilities and would bring the pension fund to a 33.4-year funding period from its current status of infinity, assuming the proposed timeline for the changes can be implemented.

OHIO RETIREMENT STUDY COUNCIL REVIEWS COMPARISON CHART OF SYSTEMS' PLANS; LEGISLATION EXPECTED IN THE COMING MONTHS

On Sept. 9, Executive Director Michael Nehf presented STRS Ohio's plan to the Ohio Retirement Study Council (ORSC); Ohio's four other public pension systems -- Ohio Public Employees Retirement System, School Employees Retirement System, Ohio Police & Fire Pension Fund and Highway Patrol Retirement System -- also presented their plans for strengthening their funds. The ORSC is the legislative oversight body for the five systems.

At the ORSC's October meeting, the council members reviewed a comparison chart detailing each system's proposals by category (e.g., retirement eligibility, final average salary and contributions). Most of the changes that each system is proposing require legislation. Rep. Todd Book, who chairs the ORSC, noted that he expects legislation to be drafted over the next several months and introduced by the end of 2009 or the beginning of 2010.

RETIREMENT BOARD ANNOUNCES NEW INVESTMENT CONSULTANTS

The Retirement Board has chosen Callan Associates Inc. to serve as its investment consultant for general investment matters and all asset classes other than alternatives (i.e., private equity investments, hedge funds, etc). For the alternatives component of STRS Ohio's investment fund, the board has chosen Cliffwater LLC as its investment consultant. The board will be entering into contracts with each firm extending through June 30, 2012. Callan and Cliffwater are replacing Russell Investment Group, which notified the board in summer 2008 that it would not be renewing its contract with STRS Ohio due to changes in Russell's new business model.

During the search for new investment consultants, the board and staff spent considerable time contacting and interviewing current Callan clients. The board was impressed with the expertise of the Callan staff and its track record of satisfaction among those clients. Callan has extensive experience in working with public pension funds. Because of the board's long-term plan to increase its exposure to alternatives, the board also wanted a consultant with specific expertise in that area. As with Callan, the board and staff contacted and interviewed many Cliffwater clients, who indicated Cliffwater was instrumental in adding value to their portfolios.

ADDITIONAL ITEMS REPORTED BY EXECUTIVE DIRECTOR MICHAEL J. NEHF: HEALTH CARE MEETINGS WILL TRIPLE 2008 ATTENDANCE

The Member Education staff will again present meetings around the state this fall to help members with their health care plan decisions. The first year for these meetings was 2007, when 1,008 retirees attended one of 25 sessions. In 2008, the attendance doubled. Through the end of this September, more than 6,000 enrollees have reserved a seat at one of 51 sessions being offered. Due to the introduction of the Aetna Medicare Plan (PPO) and the changes to the Express Scripts prescription drug coverage, staff expected increased interest in the meetings this year. Sessions were increased to 51 with nearly 10,000 seats available. Representatives from the Health Care Services Department and Express Scripts, as well as other health care vendors, will also attend to help answer enrollee questions. Open-enrollment packets will begin mailing Oct. 23; this year, open enrollment will run from Nov. 1-24.

I.O.U.S.A. Free Movie Showing During Financial Planning Week

2009-09-27T20:02:00.004-04:00

In support of Financial Planning Week which runs from October 5-11, 2009, the Financial Planning Association of Northeastern Ohio is pleased to announce a public showing of the movie I.O.U.S.A. (http://www.iousathemovie.com/) at the Cedar Lee Theater in Cleveland Heights, OH. One of the missions of the FPA is to raise awareness about the the importance of personal financial planning and offer guidance in making financial decisions. As a Board Member of the association I support and encourage this pro bono event in our community.

Tuesday, October 6, 2009 at 7pm
Free Admission (with a suggested donation of $3 to go towards Cleveland Saves)
Cedar Lee Theater
2163 Lee Road
Cleveland Hts., Ohio 44118

Seating is limited, so please register at http://tinyurl.com/ydq99lh. (You must register to attend.)

Although the movie is free, there is a suggested donation which will go towards Cleveland Saves, a local non-profit that encourages individuals and families to save money so that they can build wealth.

I.O.U.S.A. boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. Burdened with an ever-expanding government and military, increased international competition, overextended entitlement programs, and debts to foreign countries that are becoming impossible to honor, America must mend its spendthrift ways or face an economic disaster of epic proportions.

Throughout history, the American government has found it nearly impossible to spend only what has been raised through taxes. Wielding candid interviews with both average American taxpayers and government officials, Sundance veteran Patrick Creadon (Wordplay) helps demystify the nation's financial practices and policies. The film follows former U.S. Comptroller General David Walker as he crisscrosses the country explaining America's unsustainable fiscal policies to its citizens.

With surgical precision, Creadon interweaves archival footage and economic data to paint a vivid and alarming profile of America's current economic situation. The ultimate power of I.O.U.S.A. is that the film moves beyond doomsday rhetoric to proffer potential financial scenarios and propose solutions about how we can recreate a fiscally sound nation for future generations.

Creadon uses candid interviews and his featured subjects include Warren Buffett, Alan Greenspan, Paul O'Neill, Robert Rubin, and Paul Volcker, along with the Peter G. Peterson Foundation's own David Walker and Bob Bixby of the Concord Coalition, a Foundation grantee.

Pointedly topical and consummately nonpartisan, I.O.U.S.A. drives home the message that the only time for America's financial future is now.

The Financial Planning Association® (FPA) is the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning. FPA demonstrates and supports a professional commitment to education and a client-centered financial planning process. Based in Denver, Colo., FPA has close to 100 chapters throughout the country representing more than 29,500 members involved in all facets of providing financial planning services. Working in alliance with academic leaders, legislative and regulatory bodies, financial services firms and consumer interest organizations, FPA is the community that fosters the value of financial planning and advances the financial planning profession. For more information about FPA, visit www.FPAnet.org or call 800.322.4237.

Cleveland Saves is a broad-based coalition of nonprofit, financial, corporate and government groups which encourages individuals and families to save money so that they can build wealth. Through the delivery of information, advice, and encouragement, Cleveland Saves assists individuals who wish to pay down debt, build an emergency fund, afford a home, education, investments, or retirement in order to improve their standard of living and most important, gain peace of mind.

September Board News Details Retirement Board Actions and Discussions

2009-09-22T06:34:00.004-04:00

(The text below is a copy of the release from STRS made 09/21/2009)

Last week, the State Teachers Retirement Board held its monthly meeting. Following the regularly scheduled meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report each month. The September report follows.

SEPTEMBER BOARD NEWS

OHIO'S FIVE PENSION SYSTEMS PRESENT THEIR PLANS TO THE ORSC On Sept. 9, all five Ohio public pension systems - STRS Ohio, Ohio Public Employees Retirement System, School Employees Retirement System, Ohio Police & Fire Pension Fund and the Highway Patrol Retirement System - presented their plans for achieving or maintaining a 30-year funding period to the Ohio Retirement Study Council (ORSC). This council serves as the legislative oversight body for the five systems.

At the beginning of the ORSC meeting, Rep. Todd Book (D-Portsmouth), who is chair of the council, noted that it was clear that none of the systems would be able to "invest" their way out of future funding challenges. The systems' plans call for changes in contributions and/or pension plan design to strengthen their funds. This month's Legislative News, developed by STRS Ohio's Governmental Relations Department, includes a chart detailing the major components of each system's plan. (The newsletter can be accessed via STRS Ohio's Web site (http://www.strsoh.org/quicklinks/legislative.html); a paper copy can be obtained by calling 614-227-2913.)

Because of the differences in each system's funding situation, demographics and current plan design, there was wide divergence among the five proposed plans. Several council members expressed their distaste for proposed increases in employer contributions, citing the burden this puts on taxpayers. This sentiment was echoed in a major daily newspaper editorial that morning. This same editorial called for the public sector to move to defined contribution plans and away from defined benefit plans.

In the coming weeks, ORSC staff will be working with the systems to assess the five reports. It is anticipated that eventually legislation will be drafted and introduced; then the normal legislative process will begin. Almost all the changes proposed by the systems require legislative action by the Ohio General Assembly and the governor before they can be implemented. ORSC is scheduled to meet on Oct. 14, where additional details of the next steps are expected to be presented.

RETIREMENT BOARD DEFERS PAYMENT OF PBI PAYMENTS

Earlier this year, in January 2009, the Retirement Board voted to suspend the Performance-Based Incentive (PBI) Program for eligible Investment Department associates as of Feb. 1, 2009. With that suspension, it was noted that any earned PBIs for that fiscal year would be limited to 7/12 of the performance results for July 1, 2008-Jan. 31, 2009. PBI payments are calculated on the performance of various portfolios and asset classes against their respective benchmarks for multiple-year periods, total fund performance and absolute return. While the value of STRS Ohio's investment fund has dropped significantly during the recession, the net value added from active management over the total fund benchmark return for the time period of July 1, 2004, through June 30, 2009, was more than $1 billion. This means that investment assets were higher at June 30, 2009, by $1 billion than if STRS Ohio had invested only in index funds. This number takes into account all direct investment costs , including earned PBIs, during that period. The benchmark annualized rate of return over the five-year period was 2.30%; the return on STRS Ohio's total investment fund was 2.69%.

At its September meeting, the board voted to not pay the earned $3.39 million in PBIs for fiscal year 2009 in fiscal 2010, but instead, defer their payment as well as spread the payment over future fiscal years. One-half of the payment, or about $1.7 million, will be paid only when: (1) STRS Ohio investment assets total $60 billion or higher at the fiscal year-end; and (2) the total investment fund has a positive return. This latter provision is in keeping with an earlier board action that stated no PBIs would be paid in the future (beginning July 1, 2009) when the total investment fund has a negative return - regardless of the performance of individual investment associates against their respective benchmarks. The first payment of $1.7 million cannot be made before July 1, 2010.

The remaining $1.7 million in PBIs can only be paid when: (1) STRS Ohio investment assets total $65 billion or more at the fiscal year-end; and (2) the total fund has a positive return. This second payment cannot be made until at least July 1, 2011.

As of Aug. 31, 2009, STRS Ohio's total investment fund has a preliminary market value of $56.8 billion.

In related action, the board approved a compensation study for investment associates. Currently, total compensation - base pay plus maximum PBI - for most STRS Ohio Investment Department associates is targeted at the bottom 25th percentile of total compensation levels in the private market. STRS Ohio benefits from the lower cost of internal management by STRS Ohio associates compared to paying fees to external money managers. The savings from internal management totaled more than $100 million in calendar year 2007 alone. The compensation study will include public and private sector data and will include a recommendation for the mix and amount of base pay versus variable pay for all professional Investment Department positions. The study will be completed in November.

RETIREMENTS APPROVED

The Retirement Board approved 502 active members and 141 inactive members for service retirement benefits.

ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR MICHAEL J. NEHF

IMPLEMENTATION OF 2010 HEALTH CARE PROGRAM UNDER WAY STRS Ohio staff members continue to work collaboratively among all departments to prepare for the 2010 health care program. Open-enrollment packets are scheduled to begin mailing on Oct. 23. Targeted postcards are being mailed this month to enrollees, advising them of the "Health Care Program Highlights Meetings" being held in their area. These meetings are scheduled to begin Oct. 19 and will run through Nov. 13. The meetings will be tailored to the differing needs of enrollees; Medicare and non-Medicare enrollees will attend different meetings. Additional information about the meetings, as well as registration information, can be found on the STRS Ohio Web site (http://www.strsoh.org/resources/2k.html), or by calling toll-free 1-888-227-7877. Advance registration is required.

BENEFIT COUNSELORS RETURN TO THE ROAD STRS Ohio benefit counselors are on the road for fall counseling. The fall season includes 28 locations around the state. Scheduling for the available appointments began in July with nearly 1,000 members setting appointments at one of the first seven locations. Internet scheduling is still popular, with half of the appointments scheduled through the STRS Ohio Web site. Counselors will meet with more than 4,000 members at various locations in Ohio during the next three months.

Comments on Proposed Changes to State Teacher's Retirement System

2009-09-03T10:45:00.013-04:00

As seen from the full post of the STRS announcement, STRS finally came out with their proposed changes to the pension plan. These changes will be presented to the Ohio Retirement Study Council next week in conjunction with the other state pension systems for public employees. These other state pension systems face similar issues as STRS and change within these other pension systems is likely not far behind. It's important to note that state law must actually be changed before these proposed changes can actually be put into force, so there is still considerable length to this process of change.

Change in some form is eminent. Private, non-government pension systems have been vanishing over the last decades because in part because as our life expectancy has continually increased over time, the pensions have had to be paid longer than expected. Pensions put an open-ended liability on the shoulders of the private companies and these pensions and healthcare benefits provided to both employees and retirees hindered companies' ability to compete, as plainly evidenced by the U.S. auto companies. The current recession certainly poured accelerant on the fire of change, but the fire was already burning.

STRS and other governmental organizations are nearly always slower to change than private companies. The sea change experienced in private company pensions and healthcare is now finally making its way to Ohio's pension and healthcare plans. This change will put more responsibility on the shoulders of those who participate in the pension plans. While most people don't like change, procrastination is what will hurt pensioners most over the long term, as they need to accept and plan for the added financial responsibility.

In my opinion the biggest change is the reduction in the cost of living adjustment (COLA). This reduction will be a 33% or 50% reduction, depending on when a pensioner retires with the smaller reduction affecting current retirees. I believe this is the biggest change because it will affect both current retirees and future retirees. All of the other proposed changes affect future retirees. Because of this, I see the COLA issue to be the most hotly contested of them all by pensioner advocates.

The biggest risk an individual faces in retirement is the need to preserve their purchasing power in the face of inflation over their retirement years. STRS and other Ohio pension systems had a 3% COLA, but this 3% was a simple interest adjustment, meaning the adjustment wasn't compounded over time. What this means is that the COLA is solely based on the first year pension amount. So if the pension is $50,000, there would be a $1500 cost of living adjustment each year, yielding $51,500 in year two, $53,000 in year three, and so forth. Yet, if the COLA were compounded the third year adjustment would be 3% on $51,500 for a third year pension of $53,045. While this difference may seem trivial, the compounding affects become steep and very real over time.

For example, suppose a retiree receives a pension of $50,000 per year when she retires at age 60. After 20 years to maintain that $50,000 purchasing power in the face of 3% inflation, the pension needs to equate to $87,675. However, if the pension adjusts at a 3% simple rate, after 20 years the pension would yield $78,500. With the proposed changes to the COLA for those retiring after July 1, 2011, the 3% would be halved to 1.5%. With the 1.5% simple rate, after 20 years the pension would yield $64,250--a whopping 27% reduction from the compounded amount.

It will be interesting to see what proposed changes make it through the legislative process. But again, change in some form is eminent. If you are a participant in one of Ohio's pension systems, you will have more responsibility for your own financial well being. This added responsibility can be dealt with but don't procrastinate in doing so. Utilize your 403b and 457 retirement plans. Evaluate whether or not utilizing the Partial Lump Sum Option (PLOP) will be of benefit to you. Seek the help of a qualified Certified Financial Planner, if you need help with your retirement planning and encourage other pensioners to do the same.

To Your Prosperity ~ Kevin Kroskey

STRS Board News: Retirement Board Actions and Discussions from 9/1/09

2009-09-02T08:37:00.007-04:00

(The text below is a copy of the release from STRS made 09/01/2009)

Today, the State Teachers Retirement Board held a special meeting. Following board meetings, a report titled "Board News" is posted on the STRS Ohio Web site, as well as mailed to a number of members and education organization representatives who have requested it. As a member of STRS Ohio with an e-mail address on file, you will also receive this report whenever it is issued.

RETIREMENT BOARD ADOPTS PLAN FOR PENSION DESIGN AND CONTRIBUTION CHANGES

Following many months of discussion and after receiving significant input from STRS Ohio members, the State Teachers Retirement Board unanimously approved a multifaceted plan today to strengthen the financial condition of the retirement system. In approving the plan, board members cited the difficulty in making the decision, noting that these changes impact all STRS Ohio members. The plan includes an increase in contributions; an increase in final average salary years; a change in eligibility for retirement; a change in the benefit formula; and a reduction in the annual cost-of-living adjustment.

STRS Ohio, along with Ohio's four other public pension systems, will present their plans to the Ohio Retirement Study Council (ORSC) on Sept. 9 for either maintaining or returning to a 30-year funding period. The ORSC is expected to weigh in on the plans and then work with the systems to draft a bill. Once legislation is introduced, the normal legislative process begins. The proposed changes require legislative action by the Ohio General Assembly and the governor, as all the requested changes require changes in existing statute.

Before the market downturn, STRS Ohio had a funding period of 41.2 years, exceeding state statute's 30-year maximum funding period. Factors, such as members living longer, caused a reduction in available funds to pay off accrued liabilities over time. The unprecedented decline in the global markets and the accompanying recession, along with the projected gradual economic recovery, significantly accelerated the need for STRS Ohio to make changes. Without these changes, STRS Ohio would eventually be unable to pay future benefits. This plan enables the Retirement Board and staff to meet their fiduciary responsibility to help ensure the long-term solvency of STRS Ohio for future generations of teachers.

STRS Ohio staff projects that these changes would save $8.99 billion in future liabilities and would bring the pension fund to a 33.4-year funding period from its current status of infinity. Further, the current 1% employer contribution to the health care fund continues.

INCREASE IN CONTRIBUTIONS

- Increase member contributions by 0.5% per year beginning July 1, 2011, to a total of 2.5% on July 1, 2015.

- Increase employer contributions by 0.5% per year beginning July 1, 2016, to a total of 2.5% on July 1, 2020.

Currently, STRS Ohio members pay 10% of their salary to STRS Ohio and employers pay 14% of total teacher payroll in lieu of paying into Social Security. This plan component increases member and employer contributions by a total of 5% by July 1, 2020. The member increase would be phased in at 0.5% per year, beginning July 1, 2011, until 2.5% is reached on July 1, 2015. The employer increase would be delayed for five years, when it would be phased in at 0.5% per year, beginning July 1, 2016, until 2.5% is reached on July 1, 2020. Ultimately, STRS Ohio members would contribute 12.5% and employers would contribute 16.5%. This phased approach allows time for the economy to improve and also helps employers with budgeting.

INCREASE IN FINAL AVERAGE SALARY (FAS) YEARS

- FAS calculation to be based on five highest years of earnings beginning Aug. 1, 2015.

Pension benefits are determined by a member's age, years of service and FAS. Under the recommended plan, the FAS would be based on the five highest years of earnings versus the current three years, beginning Aug. 1, 2015.

CHANGE IN ELIGIBILITY FOR RETIREMENT

- Increase years of service required for retirement, beginning Aug. 1, 2015.

The recommended change increases the number of years required to be eligible for retirement. Beginning Aug. 1, 2015, members can retire at any age with 35 years of service; at age 60 with 30 years of service; or at age 65 with five years of service. (Members may retire earlier with an actuarially reduced benefit at age 55 with 30 years or at age 60 with five years.) Members who meet age and service eligibility for service retirement as of July 1, 2015, under the existing rule retain their eligibility.

CHANGE IN BENEFIT FORMULA

- New formula would be 2.2% per year for the first 30 years of service; 2.5% per year thereafter, beginning Aug. 1, 2015.

The 35-year enhanced benefit is no longer needed to encourage teachers to work longer and is eliminated. Those who have 30 years of service; who are age 55 with 25 years of service; or who are age 60 with five years of service as of July 1, 2015, receive the greater of:

(a) The benefit as of July 1, 2015, under the current formula; or

(b) The benefit upon retirement under the new formula.

In short, members who are eligible for service retirement will receive no less of a base pension benefit than they could have received on July 1, 2015. Under the new formula, at the end of a 35-year career, teachers would receive 78.5% of their final average salary; teachers who retire at age 60 with 38 years would receive 86% of final average salary.

REDUCTION IN COST-OF-LIVING ADJUSTMENT (COLA)

- Beginning July 1, 2011, current retirees would receive an annual 2% COLA; members retiring on July 1, 2011, or later would receive a 1.5% COLA each year.

Currently, the COLA is 3%. Without a change in the COLA, a viable Defined Benefit Plan cannot be sustained.

Overall, this plan accomplishes the following:

- Preserves the Defined Benefit Plan for Ohio's public educators. STRS Ohio members do not have to worry about outliving their benefits. These pension benefits can continue to support local economies (more than $3.6 billion in benefits are paid to Ohio residents alone); the taxes paid on these benefits can also continue to support local, state and federal governments. A viable Defined Benefit Plan also reduces the likelihood that STRS Ohio members will have to turn to public assistance, Medicaid or social services in retirement, thus relieving taxpayers of future obligations.

- Continues to offer a retirement plan that will help Ohio's public schools, colleges and universities recruit and retain quality educators.

- Allows for current and future active members, retirees and employers to collectively contribute to a solution.

- Provides a transition period for those teachers who are close to retirement, while recognizing that those further out from retirement have more time to plan for their future financial security.

- Allows members to continue to control their retirement decisions and not be "forced" out. This mitigates a potential "stampede" of members who want to retire before changes go into effect, thus preserving retirement patterns for STRS Ohio and protecting employers from veteran teachers leaving all at once.

- Preserves all past cost-of-living adjustments (COLAs) and ad hoc increases for current retirees.

- Allows retirees' pensions to continue to grow in the future, but at a slower rate.
The board will continue to annually review the actuarial valuations of the pension fund and the health care fund to monitor both funds' progress over time.
The board will also continue working with constituent groups as discussions continue with the Legislature. In addition, STRS Ohio will be scheduling meetings around the state to provide additional information to active and retired educators. Progress reports on the legislation will also be provided. Future STRS Ohio newsletters will provide more information.

July Update From STRS Ohio

2009-07-15T12:08:00.006-04:00

As the market downturn has hurt pension plans nation-wide, STRS is conducting various contingency planning scenarios to ensure the pension plan is more adequately funded for current and future retirees. Some of the changes, if implemented, could impact current retirees, potentially reducing or eliminating the COLA--cost of living adjustment--for example. This could pose a difficult scenario for current retirees, as a promised and likely planned-for benefits could be reduced.

In a future post, I will discuss the pros and cons of using the PLOP--Partial Lump Sum Option--available through STRS and other state pension systems. The PLOP transfers investment risk to the participant but can reduce the risk of negative changes to the pension systems such as a reduced COLA.

Notes from STRS' July Update are shown below.

To Your Prosperity,

Kevin Kroskey

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(From STRS Ohio's July Update)

LONG-TERM CONTINGENCY PLANNING WORK CONTINUES In preparation for the August Retirement Board meeting, STRS Ohio staff is continuing to work on various scenarios designed to restore the pension fund to a 30-year funding period in a reasonable amount of time, while also allowing additional employer contributions to go to the Health Care Stabilization Fund and extend the life of the STRS Ohio Health Care Program. As noted in previous communications, STRS Ohio, along with pension plans around the country, has been severely impacted by the historic downturn in the markets and the accompanying recession. But before the economic downturn, STRS Ohio was already being impacted by other economic and demographic factors. For example, the life expectancy of STRS Ohio members has increased over time, but age and service requirements have not changed since 1976, resulting in pension benefits being paid for longer periods of time. Additionally, there has been steady growth in the benefit formula (including the enhanced 35-year benefit) over the years. Finally, improvements to already granted retiree benefits, such as ad hoc increases to various groups of retirees in 1984, 1988, 1990, 1997 and 1999, as well as supplemental lump-sum payments (often called 13th checks) from 1980 through 2000, have increased the system's liabilities over time.

Looking long term, the reduced level of investment assets, coupled with future expected investment earnings and current contributions levels, will result in a funding shortfall. Unless changes are made, STRS Ohio will eventually be unable to pay members' projected benefits. The Ohio Retirement Study Council (ORSC), which is the legislative oversight body for Ohio's five public pension systems, directed each system in May to present board-approved plans for achieving or maintaining a 30-year funding period at the ORSC's Sept. 9, 2009, meeting. STRS Ohio will continue to use its newsletters, Web site and e-mail news service to share the results of the board's and the ORSC's discussions in the coming weeks. In addition, once future changes are more defined, STRS Ohio will be holding meetings around the state to provide additional information to active and retired educators.

A review of the member comments received at STRS Ohio reveal a few misperceptions about the work being conducted by the Retirement Board and staff. We would like to address these below.

PERCEPTION: The Retirement Board is looking at reducing my pension benefit.

FACT: The Retirement Board is not looking at changing current pension payments.

PERCEPTION: The only option for change being considered by the board is the cost-of-living adjustment (COLA).

FACT: Although reducing the COLA is the most effective means for preserving the pension fund because it impacts both current and future retirees, the board has been looking at an extensive list of potential options since beginning its discussions in March. Other changes under consideration that would impact current and future teachers include:

- Increasing contributions from the current 10% from active teachers and/or 14% from employers;
- Instituting a minimum retirement age (none currently exists);
- Increasing the number of years used to calculate final average salary to five from three; and
- Changing the formula for calculating pensions.

In its discussions, the board has also been taking into account the impact of delaying implementation of some changes, as well as the possibility of phasing-in plan design and/or contribution increases. However, the longer it takes for changes to be implemented, the more severe they will need to be to have the same monetary impact.

PERCEPTION: The COLA is calculated on a member's final average salary at retirement. For example, if a member's final average salary is $50,000 a year, then each year in retirement, the member would receive 3% of the $50,000 or $1,500 per year. The COLA is never compounded.

FACT: The COLA is not calculated on the final average salary, but rather the member's final retirement benefit, which is based on the member's age at retirement, total years of service credit, final average salary and chosen plan of payment. It is true that the annual 3% COLA is calculated on the original benefit and is not compounded over the previous year.

PERCEPTION: A change to the COLA will affect past COLAs.

FACT: Any change to the COLA would not impact past COLAs that have already been added to a benefit.

PERCEPTION: Changing the COLA only affects current retirees.

FACT: As noted previously, changing the COLA would affect all STRS Ohio members - future, current and retired educators. But it actually has a greater financial impact on future retirees than current retirees because current retirees have already been receiving an annual COLA throughout retirement. Those increases would not be taken away. A change in the COLA would only affect future COLA payments. For members who have yet to retire, they will be financially impacted by a change in the COLA throughout their entire retirement.

PERCEPTION: Eliminating the $1,000 lump-sum death benefit is being considered by the board.

FACT: The board has not yet discussed the $1,000 lump-sum death benefit and whether to make any changes. Eliminating the $1,000 lump-sum death benefit was included on a list of possible changes that the staff of the ORSC asked all five Ohio public pension plans to consider. The ORSC list includes increases in member and employer contributions; increasing age and service requirements; changing the benefit formula, as well as eliminating the 35-year incentive that applies to STRS Ohio; changing final average salary to five years from three; eliminating the lump-sum death benefit; looking at either eliminating, delaying or reducing the cost-of-living adjustment; and increasing the number of days to earn one year of service credit to 180 from 120.

PERCEPTION: There is no need to make drastic changes; the stock market will eventually improve.

FACT: One of the first things the board looked at when it began its long-term contingency planning was the investment return assumption. This was part of an Asset Allocation Study the board recently conducted to evaluate its current allocations to different asset classes and the accompanying expected risk and return. In the past, STRS Ohio has assumed an 8% return on its investments over rolling 20-year periods. A higher investment return would result in a reduction in unfunded liabilities. The board worked with its investment consultant and examined future investment return projections. The Asset Allocation Study confirmed its 8% long-term assumption is appropriate going forward, but it cannot be increased. In short, STRS Ohio cannot "invest" its way out of the funding challenge it faces.

PERCEPTION: If STRS Ohio would just "tighten its belt," no changes would be necessary.

FACT: Reducing STRS Ohio's operating expenditures is always important - regardless of the status of the pension fund. Potential reductions - both large and small - are pursued year-round by STRS Ohio associates, as evidenced by final year-end financial reports that show expenditures continue to be reduced.

Ohio Deferred Compensation Informational Program

2009-05-12T14:38:00.003-04:00

Below is an email that Ohio Deferred Comp sent out to participants of the 457 retirement savings plan about an upcoming informational session held in Medina on 5/19/09.

To Your Prosperity,

Kevin Kroskey

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The Ohio Deferred Compensation Program will be offering two evening retirement readiness workshops on Tuesday, May 19th at 5:30 p.m. and 7:30 p.m. Program Account Executives will cover topics such as asset allocation, risk tolerance, catch-up deferrals and withdrawal options.

Individual questions will also be addressed after the workshop. Due to the large number of anticipated attendees, we will be unable to perform detailed individual account reviews at the workshop. Program participants are welcome to bring a spouse or a co-worker to learn more about the Program. Space is limited. Please call 1-877-644-6457 or reply to this email with your full name, daytime phone number, seminar time you wish to attend and number of attendees to register for either workshop. Location: Holiday Inn Akron - West 4073 Medina Road Akron, OH 44333 Click here for a map of the location.

Account Executives are Registered Representatives of Nationwide Investment Services Corporation, member FINRA. Neither the Ohio Plan nor the Account Executives offer tax, legal or investment advice.
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DISCLAIMER

2009-04-30T20:47:00.003-04:00

This blog and website are for informational, educational and discussion purposes only. Even though topics may be discussed on this blog that involve legal, tax, or investment issues, nothing on this blog shall be deemed to constitute the practice of law, legal advice, tax advice or investment advice. No reader should act in reliance on anything discussed in this blog without prior consultation with a licensed professional who is qualified to evaluate the reader’s individual facts and circumstances and offer an informed professional opinion with respect thereto.

If any reader takes action or makes decisions based solely on the information on this blog without prior consultation with a qualified, licensed professional, the reader does so at his or her own risk and agrees that Kevin Kroskey and True Wealth Design shall have no liability resulting from such unilateral action or decisions by the reader.

The information posted on this blog is believed to be accurate and truthful. Nevertheless no express or implied warranty or guarantee is provided to the accuracy of postings and the information that others post here. On occasion post links to information on other websites. Merely because a link to a third party site appears in this blog does not mean that the site has been reviewed or approved for content. The reader must treat information from third party links at the reader’s own risk, and no liability is accpeted with respect to such third party information.

The Beginnings of Ohio Faculty Advisor

2009-04-30T19:56:00.001-04:00

My name is Kevin Kroskey, and this is my first foray into blogging. I am a Registered Investment Advisor with a fee-only financial planning firm, which I own, called True Wealth Design. I also am a part-time instructor at Tri-C Corporate College near Cleveland where I teach Retirement Planning to financial professionals who are seeking their Certified Financial Planner(r) certification. Through my role and compensation as instructor I too am a participant in State Teacher's Retirement System (STRS). In my practice I work with several faculty members who are also participants in STRS as well as their families.

Through my related experiences as both a participant and practitioner I am confident that I can provide quality information to other faculty members on both the opportunties as well as the challenges they face in navigating their unique financial planning needs. And in my experience this is sorely needed. Thus the creation of this blog.

Some of the topics I intend to write about include:

Current issues facing STRS and it's participants
Optimizing benefits through STRS and other retirement plans available to faculty members
Choosing STRS pension options
The little known Ohio Deferred Compensation Plan (457 Plan)
Exhorbitant investment costs typically associated with 403(b) programs

Now since the content of this blog is solely educational in nature and not specific to any reader's situation, the standard disclaimers apply. In fact I will make a separate "DISCLAIMER" post just to be clear.

I truly look forward to having some fun in sharing my knowledge and creating a niche community for faculty members that have some commonality. Collectively I hope we can better teach the teachers about their financial planning! Your comments and questions are always welcome.

To Your Prosperity ~ Kevin Kroskey