From STRS, November 17, 2006
November Board News Details Retirement Board Actions and Discussions
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. The November report follows.
NOVEMBER BOARD NEWS
NEW MEMBER SELECTED FOR VACANT SEAT; ELECTION PROCESS BEGINS FOR SPRING ELECTION Taiyia L. Hayden was selected by the current eight Retirement Board members to fill the contributing member seat vacated by Michael Billirakis in September. She will complete Billirakis' term, which runs through Aug. 31, 2007. Hayden is a kindergarten teacher in the Columbus Public Schools, where she has worked for the past 10 years. She received her bachelor's degree from Central State University and has done graduate work at The Ohio State University and Walden University.
Should Hayden want to continue in her board seat beyond August 2007, she will have to run in the spring 2007 election. The process for that election began this month with the mailing of notices to all STRS Ohio reporting employers and representatives of educational organizations on Nov. 10, announcing the upcoming election. The four-year term for this contributing member seat begins on Sept. 1, 2007, and ends on Aug. 31,
2011. Petition forms can be obtained from STRS Ohio by calling toll-free
1-888-285-2192. The deadline for return of petitions is Feb. 23, 2007.
MEDICARE PART B REIMBURSEMENT AMOUNT SET During its November meeting, the Retirement Board determined the Medicare Part B premium reimbursement for calendar year 2007. Under Ohio statute, STRS Ohio is required to pay a minimum of $29.90 per month, and may pay up to 90% of the Medicare Part B (medical) premium for STRS Ohio benefit recipients. In calendar years 2004 and 2005, the board kept the reimbursement amount frozen at the 2003 amount to help maintain the solvency of the Health Care Stabilization Fund. However, for calendar year 2006, the board increased the reimbursement amount, with the reimbursement cap returning to the 2003 amount thereafter.
In keeping with its decision last year, the board has returned to the
2003 reimbursement amount for calendar year 2007. This means the reimbursement amount will be 1.8835% for each year of service credit. The maximum amount STRS Ohio will pay is $52.83 a month for retirees with 30 or more years of service. The benefit recipient is responsible for the balance of the basic Medicare Part B premium, which totals $93.50 per month for calendar year 2007. Reimbursement amounts are based on years of service, with the minimum monthly reimbursement from STRS Ohio remaining at $29.90 for benefit recipients with less than 17 years of service.
This reimbursement amount maintains the solvency of the Health Care Stabilization Fund and supports the current health care legislative initiative. This initiative calls for a total increase in member and employer contributions of 5% to fund the current level of health care coverage on a full-reserve basis (i.e., a 30-year funding period). If the Medicare Part B premium reimbursement was increased beyond the 2003 levels, it is likely that more than 5% would be needed.
MEMBER SURVEY RESULTS PRESENTED Dr. Marty Saperstein of Saperstein Associates presented the results of this year's telephone surveys of STRS Ohio active and retired members that were completed in October 2006. The research measures the membership's perceptions and attitudes about a number of issues. The results were also compared to previous surveys conducted in 2003, 2004 and 2005.
In summarizing the research results, Saperstein noted that, overall, impressions of STRS Ohio, the Retirement Board and the pension benefits provided are positive among both retired and active members. However, members' impressions about health care are not as positive -- and these perceptions ripple through all the data and create a ceiling for how positive members can feel about the organization. Health care is the top issue among both actives and retirees -- primarily due to cost.
A number of factors contribute to members' positive impressions about STRS Ohio, including past changes in leadership and practices; improved investment returns; excellent service by staff; and open and honest communication about issues of relevance to members. At the same time, the research results show it is important that STRS Ohio continue to address members' priorities, which are health care; financial management, including operating expenditures; and maintaining pension benefits.
Additional details about the survey results will be included in the February 2007 issues of the STRS Ohio newsletters to members and benefit recipients.
ANNUAL ACTUARIAL VALUATION REPORT ACCEPTED During its November meeting, the Retirement Board voted to accept the annual actuarial valuation report of STRS Ohio's pension fund for July 1, 2006, from its actuary, Buck Consultants. The report shows that STRS Ohio made advances in the two primary measures of funding progress. The funded ratio improved to 76.1% from 74% in 2005, and the amortization period for the unfunded liability declined to 47.7 years from 55.5 years. The board also voted to maintain the 5% annual interest rate on money purchase benefits and reemployed retiree annuities for the 2006-2007 fiscal year (July 1, 2006-June 30, 2007).
RETIREMENT, INVESTMENT TRANSACTIONS APPROVED The Retirement Board approved the following retirements and investment transactions:
- 257 active members were approved for service retirement; 59 inactive retirements were approved.
- In October, fixed-income purchases totaled $257.8 million, domestic equity purchases totaled $680.7 million and real estate purchases totaled $26.2 million.
ADDITIONAL ITEMS REPORTED AT THE MEETING BY EXECUTIVE DIRECTOR DAMON ASBURY
DEMOCRATS TAKE BACK CONGRESS; BUSH AND NEW LEADERS LOOK TO SET ASIDE POLITICS The fall midterm elections allowed Democrats nationally to gain control of both the U.S. House of Representatives and the Senate. A lot was riding on these midterm elections -- all 435 House seats (though only a relatively small percentage were actually in play) and 33 Senate seats. While none of us had the ability to cast a ballot for or against President Bush's agenda for the next two years, it is by far one of the biggest things to be compromised by these elections. As the 2006 elections make way for the 110th Congress that will convene in January, chairmanship of all the committees will be relinquished by the current Republican occupants to Democrats. With all the changes in Washington, it remains to be seen how two issues of paramount importance to STRS Ohio members -- mandatory Social Security and health care -- will fare.
TECHNICAL CHANGES DRAFTED FOR POSSIBLE INTRODUCTION DURING LAME-DUCK SESSION STRS Ohio staff has drafted language for technical changes that had previously been sought through House Bill 272. These changes were originally presented to the Retirement Board in October 2005 for inclusion in H.B 272, the OPERS technical corrections bill. During the year, most non-OPERS items have been removed and, as a result, STRS Ohio staff is pursuing a technical corrections bill that contains changes presented in October 2005. These changes include:
- Change the "default" to the members' current plan for those members who have the final retirement plan selection option in their fifth year of membership.
- Restrict qualifying credit for service retirement, disability retirement and survivor benefits to service earned through public employment in Ohio. Current law makes it possible for a member to qualify for service retirement with as little as 1.25 years of Ohio public employment when combined with out-of-state and military service purchases.
- Specify the appropriate reemployment penalty for retirees who work the first two months of retirement.
- Specifically state the "Defined Benefit Plan," "Defined Contribution Plan" and "Combined Plan" in various sections of the code to clarify statutory references.
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