Kevin Kroskey's Ohio Faculty Advisor

(The text below is reprinted from the news release by STRS on 5/22/15.) Board Approves STRS Ohio Health Care Program Changes for 2016 Following a review that took place during its April meeting, the State Teachers Retirement Board approved the following changes to the STRS Ohio Health Care Program for 2016: Prescription Drug Program — Adopt a methodology of setting the self-insured prescription program annual deductible to 63% of standard Medicare Part D deductible limit rounded down to the nearest $25 increment. Using this methodology, the 2016 Express Scripts deductible will increase to $225 from $200. Regional Plans — Change the national base plan for non-Medicare regional plans to the Medical Mutual Basic Plan. STRS Ohio staff will present 2016 premiums for board approval in June. Last year, the Retirement Board approved a number of changes to the health care program for 2016. The changes approved last year included: Premium subsidy and reimbursement Reduce the subsidy multiplie...

  The Retirement Board voted to increase the mitigating rate by 1%, which will impacts those in the Defined Contribution (DC), Combined Plan, and alternative retirement plan participants (ARP).   The mitigating rate subtracts from the teacher's total contributions -- legislated at 14% employee and 14% employer once recent increases are phased in by July 2016. It then allocates the subtracted portion to the traditional defined benefit plan, which said teacher does not participate in nor derives benefit from, in order to "offset the negative financial impact of participation in a DC plan" (per Ohio STRS).   A few things are interesting about this to me: It's good to pause and realize a 14% employer contribution for STRS is very rich and unheard of in private companies. The mitigating rate for Ohio STRS will be a whopping 5.5% yet Ohio PERS is only increasing to 2%. Compound 3.5% of salary over a working lifetime and that equates to a substantial dollar...

(The text below is reprinted from the news release by STRS on 3/20/15.) Hayden Unopposed for Retirement Board Election In 2011, members elected Taiyia Hayden to a contributing member seat on the Retirement Board for a term that ends Aug. 31, 2015. Ms. Hayden was the only STRS Ohio contributing member to file enough completed petitions for the 2015 election for this seat by the deadline of Feb. 27, 2015. Since she is unopposed, in accordance with Ohio statute, no election needs to be held and she will continue in this seat through Aug. 31, 2019. Hayden is an elementary school teacher for Columbus Public Schools. Board members receive no compensation other than reimbursement for necessary expenses. Board Committee Discusses Further Development of Funding Policy The State Teachers Retirement Board’s Ad Hoc Committee to Study Funding Policy met in March to discuss potential improvements to the board’s funding policy. STRS Ohio staff shared with the board a presentation on plan ...

(The text below is reprinted from the news release by STRS on 2/20/15.)   Funding Policy Discussion Leads to Board Action on a 30-year Closed Amortization Period During the February meeting of the State Teachers Retirement Board, the board and staff continued discussion on funding policy elements and potential improvements to the current funding policy. The pension fund currently uses a 30-year open amortization method — meaning the unfunded accrued actuarial liability (UAAL) is re-amortized over a new 30-year period every year. In an effort to put greater focus on improving system funding, the board agreed to adopt a 30-year closed funding period beginning July 1, 2015. Closing the funding period effectively targets a date when the UAAL will be paid off and the pension fund will be fully funded, strengthening the pension fund’s ability to provide a secure retirement for STRS Ohio members. Further, a closed funding period provides a good benchmark to compare to and will help...

(The text below is reprinted from the news release by STRS on 12/19/14.)   CEM Benchmarking Report Shows STRS Ohio leads Peers with Lowest Investment Costs, Highest Five-Year Net Return At the December meeting of the State Teachers Retirement Board, the board reviewed the results of a recent investment benchmarking study that showed the pension fund’s investments performed favorably compared to its peer group. CEM Benchmarking, a leading global research company, conducted the study that compared investment data for the five-year period ending Dec. 31, 2013, from 16 large U.S. public fund sponsors. This year’s report showed that STRS Ohio’s total investment costs were the lowest among the peer group, primarily due to STRS Ohio’s use of internal investment managers. According to the report, STRS Ohio saved about $101 million by using internal managers for about 75% of the system’s assets. The savings is based on the peer group’s median external management costs.   The...

(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 act...

(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...