Kevin Kroskey's Ohio Faculty Advisor

(The text below is reprinted from the news release by STRS on 10/17/2014.)  Annual Actuarial Valuation Shows Steady Improvement in STRS Ohio Funding At its October meeting, the State Teachers Retirement Board received a report of the annual pension valuation results from its actuarial consultant, Segal Consulting. The report provides a “snapshot” of the actuarial position of the retirement fund as of July 1, 2014. Segal’s report this year shows the funding period for the pension fund — the amount of time needed to pay off any unfunded liability — decreased to 29.5 years from 40.2 years, and the funded ratio improved to 69.3% from 66.3%. Better than expected investment returns were the primary driver for the funding improvement. Other significant notes from this year’s actuarial valuation report include: The unfunded actuarial accrued liability decreased to $29.5 billion from $31.8 billion — this represents the difference between STRS Ohio’s actuarial value of assets and the actuari

(The text below is reprinted from the news release by STRS on 9/19/2014.)    Board Reviews Enterprise Risk Management At the September meeting of the State Teachers Retirement Board, STRS Ohio’s chief financial officer Paul Snyder reviewed how the pension system identifies and addresses enterprise-wide risks. Snyder shared that enterprise risk management (ERM) provides a framework and a systematic approach for effectively evaluating and managing operational uncertainty and allows STRS Ohio to respond by reducing risks appropriately.    Snyder explained that the executive director, in coordination with STRS Ohio’s senior leadership team, addresses overall system risks and provides updates to the board. Snyder also reviewed with the board that STRS Ohio’s ERM framework is focused on the following core risk areas:  Investment returns Regulatory/statutory compliance Actuarial results Member satisfaction Constituent/public relations Legislative change

(The text below is reprinted from the news release by STRS on 08/15/2014.) STRS Ohio Reports +16.8% Total Fund Return for Fiscal Year 2014 During the August meeting of the State Teachers Retirement Board, Investment Department staff reported that STRS Ohio’s total fund return for the year ending June 30, 2014, was +16.8%, and the market value of assets at fiscal year end was $74.8 billion. The strong return exceeded the fund’s assumed actuarial return of 7.75% and followed a +13.7% return in fiscal year 2013. The Retirement Board’s investment consultant, Callan Associates, noted that STRS Ohio’s fiscal year 2014 returns ranked above the median of the Callan Public Fund Sponsor database, but an overweight to liquidity reserves detracted from returns. Following two years of solid market returns, STRS Ohio’s 2015 Investment Plan calls for only moderate growth in the capital markets in fiscal year 2015.        STRS Ohio’s assumed actuarial rate of return     +7.75%       Total fun

(The text below is reprinted from the news release by STRS on 06/20/2014.) Retirement Board Chair, Vice Chair Named During its June meeting, the State Teachers Retirement Board elected contributing teacher member Carol Correthers (Lorain City Schools, Lorain County) as its vice chair for the coming year. According to Board Policies, retired teacher member Robert Stein, who is currently serving as vice chair, automatically moves into the position of chair. Stein and Correthers will assume their new responsibilities on Sept. 1, 2014. Board members receive no compensation for serving on the board other than reimbursement for necessary expenses.   Fiscal Year 2015 Budgets Adopted The Retirement Board adopted the proposed budgets for fiscal year 2015 (July 1, 2014–June 30, 2015). The operating budget totals $91,482,200, an increase of 1.1% over the current year’s budget. STRS Ohio’s operating budgets have remained relatively flat for the past five fiscal years. The capital budget f

(The text below is reprinted from the news release by STRS on 5/16/2014.)   Board Approves STRS Ohio Health Care Program Changes for 2015 At the May meeting of the State Teachers Retirement Board, the board approved a number of STRS Ohio Health Care Program changes that will take effect in the 2015 plan year. During the April 2014 board meeting, staff proposed health care program changes for plan years 2015 and 2016. The approved changes for 2015 follow the health care strategic framework adopted by the board in 2011 and are designed to improve the board’s ability to sustain the health care program by focusing on: Reducing non-Medicare program costs; Staying below the Affordable Care Act’s excise tax threshold in 2018; Guiding enrollees to lower cost plans, in-network providers and cost-effective services; and Offering subsidies only to members enrolled in an STRS Ohio health care plan. The only actions taken on proposed changes for the 2016 plan year were related to the

(The text below is reprinted from the news release by STRS on 4/25/2014.) Board Reviews Proposed Changes to STRS Ohio Health Care Program for 2015 and 2016 During the April meeting of the State Teachers Retirement Board, STRS Ohio staff presented the Retirement Board a two-year health care plan for years 2015 and 2016. The recommendations continue building upon the multi-year strategic plan that began with the board’s December 2011 approval of a strategic health care program framework.   A key component of that framework is to extend the projected solvency of the Health Care Fund to 65 or more years by 2025. Staff recommended the changes outlined below with the board’s strategic framework in mind. The board will be asked to vote on these items at its May meeting.   Proposed Changes to STRS Ohio’s Health Care Program for 2015 Reducing the subsidy multiplier by 0.1% to 2.2% per year of service — continues the phased-in reduction that the board began in 2012. A retiree wit

( The text below is reprinted from the news release by STRS on   3/21/2014.)   Retirement Board Takes Action to Improve Pension Funding At the March meeting of the State Teachers Retirement Board, the board took action to reduce the amortization period for the pension fund, voting unanimously to discontinue the current allocation to the Health Care Fund of 1% of the 14% employer contribution beginning   July 1, 2014 . This decision follows discussion that began at the Board Retreat in January and continued at subsequent board meetings. The Segal Company, STRS Ohio’s actuarial consultant, projects this change, coupled with smoothed gains from strong investment returns, will result in an amortization period of about 32 years. That puts STRS Ohio on track to reach a 30-year amortization period by 2016 — the time frame that was projected when pension reform legislation was passed in 2012. Ohio retirement systems are required by law to amortize unfunded liabilities over a

( The text below is reprinted from the news release by STRS.)   Retirement Board Will Continue to Share Potential Funding Improvements With Stakeholders At its February meeting, the State Teachers Retirement Board reviewed several options to reduce the amortization period for the pension fund and agreed that STRS Ohio will continue to involve stakeholders in the process of considering plan revisions. STRS Ohio is required by law to amortize its unfunded liabilities over a period of not more than 30 years. Since STRS Ohio’s current funding period is 40.2 years, the system is required to submit a board-approved plan to the Legislature to reduce the funding period to 30 years. The plan was submitted on Feb. 21.   The plan reviewed the significant impact that pension reform legislation had on the pension fund. STRS Ohio’s July 1, 2013 pension valuation shows pension reform reduced STRS Ohio’s unfunded liabilities by $15.7 billion and improved the system’s funded ratio to 66.3%