(The text
below is reprinted from the news release by STRS on 8/17/12.)
STRS Ohio Total Fund Returns 2.3% For Fiscal Year 2012
Final fiscal year calculations show the State Teachers Retirement System of Ohio's Total Fund earned +2.3% for the year ending June 30, 2012. This result follows last fiscal year's 22.6% return that was the highest in nearly three decades. Investment staff indicated in its Investment Plan for fiscal year 2012 that returns were likely to come in below the system's actuarial assumed rate. The Total Fund's return over the past three years is 12.5%.
STRS Ohio Presents
Pension Reform Proposal to House Subcommittee
At the August meeting of the State Teachers Retirement Board, executive
director Michael Nehf provided an update on the status of pension legislation
that is pending before the Ohio House of Representatives. Nehf told the board
that the House Health and Aging Subcommittee on Retirement and Pensions held
several hearings on pension bills during the summer. On Aug. 8, Nehf presented
STRS Ohio's pension reform proposal to the subcommittee and responded to
questions from its members
Nehf told the subcommittee that STRS Ohio's changes are necessary to
preserve the pension fund and acknowledged that the board-approved plan has the
support of the Healthcare and Pension Advocates for STRS — a coalition that is
comprised of groups of active members, retirees and employers. The STRS Ohio
plan increases age and service requirements for retirement; calculates pensions
on a lower, fixed formula; increases the period for determining final average
salary; increases member contributions to the system; reduces the
cost-of-living adjustment (COLA); defers the COLA for future retirees; and
calls for no COLA to be added in fiscal year 2014.
Now that all five statewide pension systems have made presentations to
the subcommittee, this body is hearing testimony from proponents, opponents and
interested parties. House leadership has indicated that it plans to hold
additional hearings in August and early September and expects to take action on
the bills in September.
Operating Expenses Come in Below Budget
Final figures for fiscal year 2012 (July 1, 2011–June 30, 2012) show
that STRS Ohio's total operating expenditures were approximately $3.4 million
less than budgeted for the year. Less than expected expenditures for salaries,
custodial banking fees and data processing equipment accounted for much of the
savings.STRS Ohio Total Fund Returns 2.3% For Fiscal Year 2012
Final fiscal year calculations show the State Teachers Retirement System of Ohio's Total Fund earned +2.3% for the year ending June 30, 2012. This result follows last fiscal year's 22.6% return that was the highest in nearly three decades. Investment staff indicated in its Investment Plan for fiscal year 2012 that returns were likely to come in below the system's actuarial assumed rate. The Total Fund's return over the past three years is 12.5%.
STRS Ohio's Total Fund return beat its performance benchmark by 0.29%,
meaning the system's active management of the funds — rather than relying on
index funds — added approximately $95 million in value after all investment
costs during the fiscal year. STRS Ohio's Total Fund return has exceeded its
benchmark in nine of the past 10 years. At fiscal year end, STRS Ohio's assets
stood at $63.8 billion, an overall decrease of $2.4 billion when benefit
payments of nearly $5.8 billion and contributions are accounted for.
STRS Ohio's Strong Service Scores Improve in CEM Benchmarking
Study
CEM Benchmarking, a leading global research company, reported the
results of its annual pension administration report for fiscal year 2011 at the
August Retirement Board meeting. CEM measures the performance of public pension
plans and uses comparative analysis among peer groups to rank the service level
of the plans. STRS Ohio again scored in the top quartile of CEM's universe for
service and improved its overall score from the 2010 study.
The report noted that STRS Ohio's total cost per member for the services
evaluated is above the peer average; however, STRS Ohio's costs are trending
lower, while peers' costs are trending higher.
Centers For Medicare and Medicaid Services (CMS)
Notifications Impact STRS Ohio's Health Care Program For 2013
Following the Retirement Board's adoption of the 2013 health care
program changes in April, STRS Ohio was notified of regulations and
interpretive decisions by CMS that will impact the 2013 Aetna Medicare Plan
(PPO) and Express Scripts' prescription drug plan.
CMS now requires all PPO Medicare Advantage plans to charge individuals
residing in a network service area the annual deductible for all out-of-network
services (except for preventive, emergency, urgent care and emergency transport
services) before both copayments and claims payments by
the plan. To comply with the new regulation, the board approved the following
changes to the 2013 Aetna Medicare Plan (PPO):
·
To apply the $500 annual deductible to out-of-network
services, except those noted above, to enrollees who reside in a network
service area in all states; and
·
To charge a $40 copayment after the annual $500 deductible is
met for all out-of-network physician office visits to enrollees who reside in a
network service area in all states
About 5,000 Aetna enrollees reside outside a network service area and
will continue to receive services under the in-network coverage levels.
Also, Express Scripts Inc. learned in July that Medicare Part D programs
could not offer Tier 3 and Tier 4 drugs at 100% coinsurance. To comply with
this CMS interpretation, the board approved the following change to the 2013
Express Scripts Plan:
·
To discontinue coverage of the 2012 Tier 3 and Tier 4 drugs,
with enrollees paying 100% of the retail cost.
Retirements Approved
The Retirement Board approved 2,681 active members and 239 inactive
members for service retirement benefits.