STRS report on May 2010 board meeting

From STRS, May 21, 2010

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 May report follows.

MAY BOARD NEWS

CONTRIBUTING MEMBERS MARK HILL AND DALE PRICE WIN BOARD SEATS Mark Hill and Dale Price were elected to the State Teachers Retirement Board in the recent election. These two individuals will take their seats on the board on Sept. 1, 2010, and serve a four-year term through Aug. 31, 2014.

RETIRING BOARD MEMBER STEVEN M. PUCKETT RECOGNIZED FOR BOARD SERVICE During its May 2010 meeting, the State Teachers Retirement Board passed a resolution recognizing the valuable and significant service provided by Dr. Steven M. Puckett during his tenure as a board member. He joined the board in January 2003 as the representative of the State Superintendent of Public Instruction. He is retiring from the State Department of Education on June 1.

BOARD REVIEWS ENROLLMENT, COST TRENDS AND IMPACT OF FEDERAL HEALTH CARE LEGISLATION ON 2011 HEALTH CARE PROGRAM PREMIUMS The factors that affect health care costs nationwide continue to also affect the STRS Ohio Health Care Program. At the May Retirement Board meeting, STRS Ohio staff reviewed these factors and their impact on the annual premiums for each of the plans offered under the STRS Ohio Health Care Program. At the June board meeting, staff will present proposed premiums for all of its health care plans for calendar year 2011 for the board's approval. This allows staff to review the claims experience and trends for the first three months of 2010 before making final premium recommendations.

During the May presentation, staff noted that escalating health care premiums, along with accompanying higher out-of-pocket expenses, remain a national issue. National medical and drug trends continue to outpace the Consumer Price Index (CPI). The continued introduction of new medical technologies and specialty prescription medications play a significant role in these trend rates. STRS Ohio plan enrollees' use of services and claims experience also affect their premiums. The claims experience is particularly high among the non-Medicare Plus and Basic Plan enrollees, as more healthy individuals are not enrolling in the STRS Ohio program due to the availability of less costly plans in the marketplace. In determining premiums, staff must also consider changes resulting from the recent federal health care legislation. For example, this legislation capped Medicare Advantage plan subsidy levels for 2011 at the 2010 levels; yet, medical costs continue to rise. This will mean higher premiums for STRS Ohio's Aetna Medicare Plan (PPO). Nevertheless, it appears that the Aetna Medicare Plan (PPO) will still be less expensive than the Medical Mutual Plus Plan in 2011 for Medicare Parts A & B enrollees and will continue to also provide a savings to the STRS Ohio Health Care Program. The coverage levels and popular features provided by the Aetna Medicare Plan (PPO) will not change for next year.

This fall during the annual health care plan open-enrollment period, STRS Ohio benefit recipients will also have the opportunity to enroll in the dental and vision plans for the period extending from Jan. 1, 2011, through Dec. 31, 2012. There will be no changes in coverage or premiums for the dental plan offered through Delta Dental and the vision plan offered through VSP for this next two-year period.

DRAFT PENSION LEGISLATION LANGUAGE EXPECTED SOON STRS Ohio has been told that the Ohio Retirement Study Council (ORSC) anticipates receiving draft pension bill language from the Legislative Service Commission soon. The five Ohio public pension systems can then review their pertinent sections and make any necessary corrections. In the coming months, STRS Ohio also expects to receive a separate package containing language for the additional supplemental changes approved by the Retirement Board in December 2009. These changes primarily focus on disability and survivor benefits and the cost to purchase service credit. Following the close of fiscal year 2010 on June 30, the board will receive updated financial information this fall about the pension fund to consider as it evaluates any further changes to the draft bill, including the proposal presented earlier this year to the board by the Healthcare & Pension Advocates for STRS (HPA).

RETIREMENTS APPROVED The Retirement Board approved 129 active members and 75 inactive members for service retirement benefits.

STRS OHIO RECEIVES CERTIFICATE OF ACHIEVEMENT RECOGNITION The Government Finance Officers Association has awarded its Certificate of Achievement for Excellence in Financial Reporting to STRS Ohio for the 2009 Comprehensive Annual Financial Report. This is the 20th consecutive year STRS Ohio has received this national award, which recognizes annual reports that achieve the highest standards in government accounting and financial reporting.