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 oversight commi

(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

(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 me

(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 in

(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

(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: -

(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