Kevin Kroskey's Ohio Faculty Advisor

(The text below is reprinted from the news release by STRS on 9/17/10.) HILL AND PRICE TAKE SEATS AT BOARD TABLE Mark Hill and Dale Price began their four-year terms on the State Teachers Retirement Board this September, following their election to the board last spring. BOARD BEGINS HEALTH CARE STRATEGIC PLANNING DISCUSSION As noted in previous STRS Ohio communications, funding for the STRS Ohio Health Care Program will be depleted by 2021. At the September 2010 meeting, the Retirement Board and staff began a review of the history and current status of the health care program as the first step in developing a strategic plan for retiree health care for adoption next spring. When the STRS Ohio Health Care Program began in 1974, health care costs were insignificant compared to today. Just as an example, the limit for lifetime health care benefits for an enrollee was just $20,000. In 2010, the lifetime coverage is $2.5 million and it will be unlimited in 2011. During the last 20...

(The text below is reprinted from the news release by STRS on 3/22/2010.) PENSION COMMUNITY CONTINUES IN HOLDING PATTERN Though recommendations relative to maintaining long-term solvency were submitted to the Ohio Retirement Study Council (ORSC) from the state's five public plans in September 2009, legislation has yet to be introduced. ORSC staff, however, anticipates having a bill before the council members in April, at which time staff will review the bill and provide its recommendation. A vote by ORSC members regarding their recommendation for passage and/or changes to the bill would then likely take place in May. While formal introduction of a bill and committee hearings in the Ohio House of Representatives could occur this spring, it is more likely that serious discussion on the bill will occur after the November election. IMPACT OF HPA'S PROPOSED PENSION PLAN CHANGES REPORTED AT MARCH MEETING At the February 2010 board meeting, the Healthcare & Pension Advocat...

(The text below is reprinted from the news release by STRS on 2/22/2010.) PENSION LEGISLATION SPONSORSHIP WILL BE BIPARTISAN The five Ohio retirement systems, including STRS Ohio, are still waiting for the Legislative Service Commission to finish its work in drafting the legislation designed to keep the systems financially strong and sustainable for all current and future public employees. During the February meeting of the State Teachers Retirement Board, Executive Director Michael Nehf reported that STRS Ohio has learned that the bill sponsorship will be bipartisan. House Assistant Minority Leader Louis Blessing (R-Cincinnati) has agreed to co-sponsor the legislation with Ohio Retirement Study Council Chair Rep. Todd Book (D-Portsmouth). It is anticipated that once a bill is introduced, hearings may occur this spring; however, voting on a bill is not expected until after the November election. On Capitol Hill in Washington, D.C., the focus of legislators and the president appea...

(The text below is reprinted from the news release by STRS on 10/16/2009.) 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. OCTOBER BOARD NEWS ANNUAL ACTUARIAL VALUATION REPORT CONFIRMS NEED FOR PENSION FUNDING CHANGES At its October 2009 meeting, the State Teachers Retirement Board received its first look at the annual actuarial valuation report of STRS Ohio's pension fund from its actuarial consultant, PricewaterhouseCoopers (PwC). This report provides a "snapshot" of the actuarial position of the retirement fund as of July 1, 2009. As expected, the PwC report confirmed the data shared much earlier in the year with...

(The text below is a copy of the release from STRS made 09/21/2009) Last 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 September report follows. SEPTEMBER BOARD NEWS OHIO'S FIVE PENSION SYSTEMS PRESENT THEIR PLANS TO THE ORSC On Sept. 9, all five Ohio public pension systems - STRS Ohio, Ohio Public Employees Retirement System, School Employees Retirement System, Ohio Police & Fire Pension Fund and the Highway Patrol Retirement System - presented their plans for achieving or maintaining a 30-year funding period to the Ohio Retirement Study Council (ORSC). This council serves as the legislative oversight body for the five systems....

As seen from the full post of the STRS announcement , STRS finally came out with their proposed changes to the pension plan. These changes will be presented to the Ohio Retirement Study Council next week in conjunction with the other state pension systems for public employees. These other state pension systems face similar issues as STRS and change within these other pension systems is likely not far behind. It's important to note that state law must actually be changed before these proposed changes can actually be put into force, so there is still considerable length to this process of change. Change in some form is eminent. Private, non-government pension systems have been vanishing over the last decades because in part because as our life expectancy has continually increased over time, the pensions have had to be paid longer than expected. Pensions put an open-ended liability on the shoulders of the private companies and these pensions and healthcare benefits provided to both e...

(The text below is a copy of the release from STRS made 09/01/2009) Today, the State Teachers Retirement Board held a special meeting. Following board 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 whenever it is issued. RETIREMENT BOARD ADOPTS PLAN FOR PENSION DESIGN AND CONTRIBUTION CHANGES Following many months of discussion and after receiving significant input from STRS Ohio members, the State Teachers Retirement Board unanimously approved a multifaceted plan today to strengthen the financial condition of the retirement system. In approving the plan, board members cited the difficulty in making the decision, noting that these changes impact all STRS Ohio members. The plan includes an increase in contributions; an increase in final average salary ye...

As the market downturn has hurt pension plans nation-wide, STRS is conducting various contingency planning scenarios to ensure the pension plan is more adequately funded for current and future retirees. Some of the changes, if implemented, could impact current retirees, potentially reducing or eliminating the COLA--cost of living adjustment--for example. This could pose a difficult scenario for current retirees, as a promised and likely planned-for benefits could be reduced. In a future post, I will discuss the pros and cons of using the PLOP--Partial Lump Sum Option--available through STRS and other state pension systems. The PLOP transfers investment risk to the participant but can reduce the risk of negative changes to the pension systems such as a reduced COLA. Notes from STRS' July Update are shown below. To Your Prosperity, Kevin Kroskey ---------------------------------------------------------------- (From STRS Ohio's July Update) LONG-TERM CONTINGENCY PLANNING WORK CONT...