Kevin Kroskey's Ohio Faculty Advisor

(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 ...

(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...

(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 vola...

(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...

(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 mor...

(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 oversi...

(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 acti...