September Board News (9/15/06) from STRS, including procedures for filling vacancies on the Board; State Auditor to conduct review
SEPTEMBER BOARD NEWS
NEW BOARD MEMBER TAKES SEAT ON SEPT. 1; FALL ACTIVITIES INCLUDE FILLING VACANT BOARD SEAT AND DISTRIBUTING PETITIONS FOR SPRING 2007 ELECTION
During the September Retirement Board meeting, board members welcomed their newest member, Mark Meuser. Meuser, who teaches in the Gahanna-Jefferson City Schools in Franklin County, was elected last spring to a four-year term that ends on Aug. 31, 2010.
At the September board meeting, it was also announced that a letter of resignation had been received from Michael Billirakis. Ohio statute and the board's administrative rules provide the framework for a process that will enable the balance of the board members to elect a replacement for Billirakis at its Nov. 16, 2006, meeting. Contributing STRS Ohio members interested in filling his position on the board should send a letter indicating their interest and a résumé to the attention of Damon Asbury, executive director, STRS Ohio, 275 E. Broad St., Columbus, OH 43215-3771. All letters will be forwarded to the Retirement Board. Upon receipt at STRS Ohio, these letters and any accompanying information may also be released in response to requests from the media and others.
According to board rule, each remaining member of the board may nominate one eligible candidate for the vacancy by Oct. 29, 2006. Asbury will then notify the individuals of their nomination and request biographical information. Each nominee will also be asked to attend the Nov. 16, 2006, board meeting, where each nominee will be interviewed by the board. Following this, the board will elect Mr. Billirakis' replacement through successive ballots. The individual chosen for this seat will hold it through Aug. 31, 2007.
Should the individual elected to fill Billirakis' seat want to continue in this seat beyond Aug. 31, 2007, he or she will have to run in the spring 2007 election. The process for that election begins with a mailing of notices to all STRS Ohio reporting employers and representatives of educational organizations by Dec. 1, 2006, announcing the upcoming election and providing information on how to obtain petitions. This information will also be posted on the STRS Ohio Web site in November. The four-year term for this seat begins on Sept. 1, 2007, and ends on Aug. 31, 2011. This is the only seat open for election in 2007.
AUDITOR OF STATE WILL REVIEW LEGAL FEE PAYMENT
Earlier this year, two STRS Ohio associates were reimbursed for the legal expenses they incurred in assisting the Ohio Ethics Commission and the Columbus City Attorney's office in the prosecution of a former board member for ethics violations. A total of $1,400 has been reimbursed. During its Sept. 14, 2006, meeting, the Retirement Board voted to waive the board's attorney-client privilege for discussions held in executive sessions on May 17, 2006, and Aug. 18, 2006, regarding the payment of these fees. By taking this action, the board is enabling the Auditor of State to discuss the expenditure with board and staff members to determine if this reimbursement is allowable.
BOARD CONSULTANT GIVES HIGH MARKS TO INVESTMENT PROGRAM
John Osborn, from Russell Investment Group, presented a review of STRS Ohio's investment program during the September meeting. Russell serves as the Retirement Board's investment consultant. As part of his comments, Osborne noted that:
- Overall investment fund returns have exceeded the board's goals over the past one- and three-year periods and have shown a strong recovery after the down markets of 2000 through 2002.
- Both asset allocation and active management by STRS Ohio associates and outside managers have contributed to these good results.
- The breadth and strength of the current out-performance substantially exceeds Russell's expectations and will probably moderate in the coming years.
- The risk levels associated with active management remain low, and the diversification levels across asset classes (i.e., domestic and international equities, fixed income, real estate and alternative investments) remain broad.
- The external managers that STRS Ohio uses for approximately 20% of its investment assets are all favorably ranked by Russell.
RETIREMENT, INVESTMENT TRANSACTIONS APPROVED
The Retirement Board approved the following retirements and investment transactions:
- 689 active members were approved for service retirement; 35 inactive retirements were approved.
- In August, fixed-income purchases totaled $485 million, domestic equity purchases totaled $368 million, and real estate purchases totaled $53.6 million.
ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR DAMON ASBURY
ELECTION 2006 OFFERS OPPORTUNITY TO SHARE INFORMATION WITH CANDIDATES
During this election cycle, mailings profiling STRS Ohio and the issues of concern to the members and retirees of the system will be sent to the home of every candidate for the Ohio General Assembly. This effort has proved beneficial in past elections in helping the new candidates understand what STRS Ohio is all about and in answering questions from their constituents. For incumbents, the mailing provides up-to-date information on what is happening at the system. Health care will be a primary focus this year.
FINANCIAL STATEMENT AUDITOR RESIGNS
Outside counsel for the Attorney General's office recently included KPMG as a defendant in securities litigation filed on behalf of STRS Ohio, Ohio Public Employees Retirement System and the Bureau of Workers' Compensation. Consequently, accounting professional standards required that KPMG resign as STRS Ohio's financial statement auditor for lack of independence. A request for proposal for new auditors was issued through the Auditor of State's office on Sept. 6 to 12 accounting firms who have expressed an interest. STRS Ohio staff anticipates an auditor will be selected by early October.
FINAL PREPARATIONS MADE FOR HEALTH CARE PROGRAM OPEN ENROLLMENT
Plans for open enrollment for the health care, dental and vision plans have moved one step closer to implementation as materials are printed, final programming changes are made and staff training is developed. Enrollees will find this year's open-enrollment materials more user-friendly and appealing. Staff improved the materials to make the writing style more inviting, easy to read and similar to information produced by plans in the marketplace. The materials point out the many advantages of the STRS Ohio Health Care Program. New information added this year includes questions that prompt enrollees to evaluate their current medical and prescription drug coverage as they review their options for next year.
Benefit recipients will be mailed a newsletter that highlights important information about the STRS Ohio Health Care Program for 2007 in early October. Health care open-enrollment packets will be mailed to all currently enrolled benefits recipients on Oct. 9. A separate dental and vision open-enrollment packet will be mailed to benefit recipients during the same time period. The deadline for the open-enrollment period is Nov. 22, 2006.
PHARMACY BENEFIT CONSULTANT SELECTION UNDER WAY
STRS Ohio, in conjunction with the Ohio Public Employees Retirement System (OPERS), conducted a Request for Proposal for a pharmacy benefits manager consultant. The purpose is to engage a consultant to evaluate both traditional pharmacy benefits manager (PBM) purchasing models as well the viability of alternative PBM models. The current PBM contracts for both systems end Dec. 31, 2007.
Eight consulting firms responded with proposals and STRS Ohio and OPERS staff narrowed the field to three finalists. Staff members interviewed the finalists to assess the capabilities of each organization Aug. 29-30. During the next few weeks, staffs at both retirement systems will select a consultant and finalize terms of engagement.
By working with OPERS, STRS Ohio can maximize its purchasing power and share expertise. Collectively, STRS Ohio and OPERS represent about 300,000 lives and more than $650 million in gross drug spend annually. This project began months ago with discussions among all of the Ohio retirement systems, the Department of Administrative Services and The Ohio State University to explore concepts around better approaches to prescription drugs. However, only STRS Ohio and OPERS were able to move forward with the current project.
NEW BOARD MEMBER TAKES SEAT ON SEPT. 1; FALL ACTIVITIES INCLUDE FILLING VACANT BOARD SEAT AND DISTRIBUTING PETITIONS FOR SPRING 2007 ELECTION
During the September Retirement Board meeting, board members welcomed their newest member, Mark Meuser. Meuser, who teaches in the Gahanna-Jefferson City Schools in Franklin County, was elected last spring to a four-year term that ends on Aug. 31, 2010.
At the September board meeting, it was also announced that a letter of resignation had been received from Michael Billirakis. Ohio statute and the board's administrative rules provide the framework for a process that will enable the balance of the board members to elect a replacement for Billirakis at its Nov. 16, 2006, meeting. Contributing STRS Ohio members interested in filling his position on the board should send a letter indicating their interest and a résumé to the attention of Damon Asbury, executive director, STRS Ohio, 275 E. Broad St., Columbus, OH 43215-3771. All letters will be forwarded to the Retirement Board. Upon receipt at STRS Ohio, these letters and any accompanying information may also be released in response to requests from the media and others.
According to board rule, each remaining member of the board may nominate one eligible candidate for the vacancy by Oct. 29, 2006. Asbury will then notify the individuals of their nomination and request biographical information. Each nominee will also be asked to attend the Nov. 16, 2006, board meeting, where each nominee will be interviewed by the board. Following this, the board will elect Mr. Billirakis' replacement through successive ballots. The individual chosen for this seat will hold it through Aug. 31, 2007.
Should the individual elected to fill Billirakis' seat want to continue in this seat beyond Aug. 31, 2007, he or she will have to run in the spring 2007 election. The process for that election begins with a mailing of notices to all STRS Ohio reporting employers and representatives of educational organizations by Dec. 1, 2006, announcing the upcoming election and providing information on how to obtain petitions. This information will also be posted on the STRS Ohio Web site in November. The four-year term for this seat begins on Sept. 1, 2007, and ends on Aug. 31, 2011. This is the only seat open for election in 2007.
AUDITOR OF STATE WILL REVIEW LEGAL FEE PAYMENT
Earlier this year, two STRS Ohio associates were reimbursed for the legal expenses they incurred in assisting the Ohio Ethics Commission and the Columbus City Attorney's office in the prosecution of a former board member for ethics violations. A total of $1,400 has been reimbursed. During its Sept. 14, 2006, meeting, the Retirement Board voted to waive the board's attorney-client privilege for discussions held in executive sessions on May 17, 2006, and Aug. 18, 2006, regarding the payment of these fees. By taking this action, the board is enabling the Auditor of State to discuss the expenditure with board and staff members to determine if this reimbursement is allowable.
BOARD CONSULTANT GIVES HIGH MARKS TO INVESTMENT PROGRAM
John Osborn, from Russell Investment Group, presented a review of STRS Ohio's investment program during the September meeting. Russell serves as the Retirement Board's investment consultant. As part of his comments, Osborne noted that:
- Overall investment fund returns have exceeded the board's goals over the past one- and three-year periods and have shown a strong recovery after the down markets of 2000 through 2002.
- Both asset allocation and active management by STRS Ohio associates and outside managers have contributed to these good results.
- The breadth and strength of the current out-performance substantially exceeds Russell's expectations and will probably moderate in the coming years.
- The risk levels associated with active management remain low, and the diversification levels across asset classes (i.e., domestic and international equities, fixed income, real estate and alternative investments) remain broad.
- The external managers that STRS Ohio uses for approximately 20% of its investment assets are all favorably ranked by Russell.
RETIREMENT, INVESTMENT TRANSACTIONS APPROVED
The Retirement Board approved the following retirements and investment transactions:
- 689 active members were approved for service retirement; 35 inactive retirements were approved.
- In August, fixed-income purchases totaled $485 million, domestic equity purchases totaled $368 million, and real estate purchases totaled $53.6 million.
ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR DAMON ASBURY
ELECTION 2006 OFFERS OPPORTUNITY TO SHARE INFORMATION WITH CANDIDATES
During this election cycle, mailings profiling STRS Ohio and the issues of concern to the members and retirees of the system will be sent to the home of every candidate for the Ohio General Assembly. This effort has proved beneficial in past elections in helping the new candidates understand what STRS Ohio is all about and in answering questions from their constituents. For incumbents, the mailing provides up-to-date information on what is happening at the system. Health care will be a primary focus this year.
FINANCIAL STATEMENT AUDITOR RESIGNS
Outside counsel for the Attorney General's office recently included KPMG as a defendant in securities litigation filed on behalf of STRS Ohio, Ohio Public Employees Retirement System and the Bureau of Workers' Compensation. Consequently, accounting professional standards required that KPMG resign as STRS Ohio's financial statement auditor for lack of independence. A request for proposal for new auditors was issued through the Auditor of State's office on Sept. 6 to 12 accounting firms who have expressed an interest. STRS Ohio staff anticipates an auditor will be selected by early October.
FINAL PREPARATIONS MADE FOR HEALTH CARE PROGRAM OPEN ENROLLMENT
Plans for open enrollment for the health care, dental and vision plans have moved one step closer to implementation as materials are printed, final programming changes are made and staff training is developed. Enrollees will find this year's open-enrollment materials more user-friendly and appealing. Staff improved the materials to make the writing style more inviting, easy to read and similar to information produced by plans in the marketplace. The materials point out the many advantages of the STRS Ohio Health Care Program. New information added this year includes questions that prompt enrollees to evaluate their current medical and prescription drug coverage as they review their options for next year.
Benefit recipients will be mailed a newsletter that highlights important information about the STRS Ohio Health Care Program for 2007 in early October. Health care open-enrollment packets will be mailed to all currently enrolled benefits recipients on Oct. 9. A separate dental and vision open-enrollment packet will be mailed to benefit recipients during the same time period. The deadline for the open-enrollment period is Nov. 22, 2006.
PHARMACY BENEFIT CONSULTANT SELECTION UNDER WAY
STRS Ohio, in conjunction with the Ohio Public Employees Retirement System (OPERS), conducted a Request for Proposal for a pharmacy benefits manager consultant. The purpose is to engage a consultant to evaluate both traditional pharmacy benefits manager (PBM) purchasing models as well the viability of alternative PBM models. The current PBM contracts for both systems end Dec. 31, 2007.
Eight consulting firms responded with proposals and STRS Ohio and OPERS staff narrowed the field to three finalists. Staff members interviewed the finalists to assess the capabilities of each organization Aug. 29-30. During the next few weeks, staffs at both retirement systems will select a consultant and finalize terms of engagement.
By working with OPERS, STRS Ohio can maximize its purchasing power and share expertise. Collectively, STRS Ohio and OPERS represent about 300,000 lives and more than $650 million in gross drug spend annually. This project began months ago with discussions among all of the Ohio retirement systems, the Department of Administrative Services and The Ohio State University to explore concepts around better approaches to prescription drugs. However, only STRS Ohio and OPERS were able to move forward with the current project.
posted by Kathie Bracy at 12:59 PM
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