June Board News from STRS

From STRS, June 11, 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 June report follows.

JUNE BOARD NEWS

RETIREMENT BOARD CHAIR, VICE CHAIR NAMED; MEUSER RECOGNIZED FOR SERVICE During its June meeting, the State Teachers Retirement Board elected James McGreevy as its vice chair for the coming year. According to Board Policies, Tim Myers, who is currently serving as vice chair, automatically moves into the position of chair. Normally, both Myers and McGreevy would be moving into these leadership positions on Sept. 1, 2010. However, Mark Meuser, the current board chair, has announced his retirement from his position with the Gahanna-Jefferson City Schools and thus is resigning from the Retirement Board. As a result, Myers and McGreevy will assume their new responsibilities on July 1.

During the board meeting, a resolution recognizing Meuser's service was presented. In it the board expressed its deep appreciation for the valuable and tireless service he rendered to the membership and associates of STRS Ohio upon being elected to the board in 2006.

RETIREMENT BOARD ACCEPTS THE ANNUAL INVESTMENT PLAN The Retirement Board voted to accept the Investment Plan for fiscal year 2011 (July 1, 2010-June 30, 2011). The plan details staff's investment strategy for each asset class comprising the system's investment fund.

STRS Ohio staff expects the U.S. economy to remain on a positive growth path during fiscal year 2011 that will spread to sectors beyond business inventories. Rather than the typical "V-shaped" expansion that usually follows a deep recessionary plunge, staff is forecasting a moderate "U-shaped" expansion. Outside the United States, a modest recovery and expansion is expected for many developed countries, while stronger growth is forecasted for emerging countries. Though inflation will remain largely contained, staff noted that monetary and fiscal policymakers around the world will need to slowly remove the extraordinary stimulus they introduced to ward off another Great Depression. The economic threats from a potential sovereign debt contagion that began in Greece will restrict growth potential and could threaten economic expansions in the United States and elsewhere. Staff noted that policymakers will need to walk the tightrope of tending to longer-term fiscal sustainability while not jeopardizing the cyclical recoveries by removing stimulus too soon.

On July 1, 2010, the Fiscal 2011 Investment Plan will be posted on the STRS Ohio Web site (www.strsoh.org) or available by calling STRS Ohio's Member Services Center toll-free at 1-888-227-7877.

FISCAL YEAR 2010 BUDGETS ADOPTED The Retirement Board adopted the proposed budgets for fiscal year 2011 (July 1, 2010-June 30, 2011). The operating budget totals $89,773,600, which represents a 2.1% increase over this year's operating budget. No merit or cost-of-living salary increases for STRS Ohio associates are included in the budget. The capital budget for fiscal year 2011 totals $2,101,000. Additionally, the system expects to spend $580,000 in contract payments for the STaRS system that has replaced STRS Ohio's former obsolete pension management computer system.

RETIREMENT BOARD APPROVES HEALTH CARE PREMIUMS AND PROGRAM CHANGES FOR 2011 The Retirement Board approved three eligibility changes for the STRS Ohio Health Care Program resulting primarily from the health care reform bill recently passed in Washington, D.C.

1) Dependent children, as well as incapacitated children, will now be eligible for health care coverage until the end of the month in which they turn age 26, if they do not have access to other employer-sponsored health care coverage.

2) Upon reaching age 26, the monthly premium charged for a person incapacitated since childhood will be the same rate as the spouse premium.

3) The waiting period for late enrollees in the health care program will be reduced to 90 days from six months.

These changes go into effect on Jan. 1, 2011.

The board also approved the 2011 premiums for all the plans offered through the STRS Ohio Health Care Program. A complete list of these premiums will be posted on the STRS Ohio Web site (www.strsoh.org) on June 25, 2010, or can be obtained by calling STRS Ohio's Member Services Center toll-free at 1-888-227-7877 after that date. Additional information about the 2011 STRS Ohio Health Care Program will be provided in upcoming newsletters and on the STRS Ohio Web site. In late October, all current enrollees will also receive personalized health care plan information in preparation for the fall open-enrollment period, which extends from Nov. 1-23, 2010.

RETIREMENTS APPROVED The Retirement Board approved 239 active members and 71 inactive members for service retirement benefits.

OTHER STRS OHIO NEWS

LEGISLATIVE NEWS INCLUDES UPDATE ABOUT PENSION PLAN ACTIONS AROUND THE COUNTRY The June 2010 issue of STRS Ohio's Legislative News includes a report from the National Association of State Retirement Administrators listing reforms to public pension plans in progress around the country. The newsletter can be accessed via the STRS Ohio Web site at www.strsoh.org.

STRS Ohio staff is still awaiting the draft legislation containing the Retirement Board's proposed changes for the pension fund, as well as language reflecting changes proposed by the other Ohio retirement systems. STRS Ohio staff continues to meet with legislators, stressing the importance of the legislation to the system's long-term viability.

E-MAIL NEWS SERVICE TOPS 100,000 SUBSCRIBERS During May, the number of subscribers to STRS Ohio's e-mail news service surpassed the 100,000-mark. This service is used to keep both STRS Ohio members and non-members apprised of actions taken at each Retirement Board meeting, as well as other important news and events.

RECENT HEALTH CARE PROGRAM CHANGES RESULT IN SIGNIFICANT SAVINGS Since mid-July 2009, several changes to the STRS Ohio Health Care Program have gone into effect. These changes are resulting in positive outcomes for program participants, as well as significant savings for them and the Health Care Stabilization Fund.

Here are a few examples:

- The medical care management program offered under the Aetna Medicare Plan (PPO) includes a Health Risk Assessment (HRA). During first quarter 2010, 70.5% of the enrollees in the program completed the HRA; these assessments and other case management triggers resulted in about 4% of the enrollees now receiving case management assistance.

- The use of generic prescription drugs has increased as a result of the "Call for Generics" program that began in mid-summer 2009. From July 2009 through April 2010, the estimated savings from the program is $1.8 million for the health care fund, with member savings resulting from lower copayments totaling about $1 million.

- Other changes to the Express Scripts prescription drug program (e.g., $150 deductible for Tier 2 and Tier 3 medications) has resulted in a more than $10.5 million reduction in program costs.