Kevin Kroskey's Ohio Faculty Advisor

(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 amende...

(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...

(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...

(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 th...

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 ...

(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 t...

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 ...