Report on May, 2011 STRS Board meeting

From STRS, May 19, 2011

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 MEMBER TAIYIA L. HAYDEN WINS BOARD SEAT
Taiyia (Tai) L. Hayden was reelected to the State Teachers Retirement Board in the recent election. The term for this seat begins on Sept. 1, 2011, and ends on Aug. 31, 2015.

PENSION LEGISLATION ON HOLD PENDING INDEPENDENT REVIEW
During the May 12, 2011, meeting of the Ohio Retirement Study Council (ORSC), Sen. Keith Faber, who chairs the committee, announced that he is creating a subcommittee to develop a request for proposal for an independent actuary and policy advisor in regard to pension reform issues. This consulting expert will be asked to help the ORSC members analyze the plans the five public pension systems have developed to strengthen the solvency of their pension funds and other potential retirement-related changes. Faber noted he wants someone who can advise on reform trends in other states and the private sector. Through media reports, he indicated the Senate is not likely to proceed with any pension legislation until this review is completed. It is expected that this process will take pension reform discussions into the fall.

The members of the ORSC subcommittee, which will be chaired by Rep. Kirk Schuring, are Sen. Scott Oelslager, Rep. Dan Ramos and Lora Miller, who was recently appointed by the governor to the ORSC.

Faber has also been quoted as saying the Senate will be giving strong consideration to restoring the contribution shift (12% and 12% versus 10% and 14% from members and employers, respectively) in the budget bill, which is Substitute House Bill 153. STRS Ohio Executive Director Michael Nehf testified at the May 12 meeting of the Senate Finance Committee, which is holding hearings on the bill, reiterating that any discussion of contributions should be held within the context of the pension reform package proposed by the five Ohio statewide public pension systems. This would help allow any proposed changes to STRS Ohio's plan to be discussed and their actuarial impact analyzed in conjunction with the other plan components.

During the May ORSC meeting, STRS Ohio also presented its proposed operating and capital budgets for fiscal year 2012. There were no recommendations for changes from the council members.

One final note regarding the ORSC: The last vacancy on the nine-member panel has been filled by the governor, who named former state Rep. Seth Morgan to the council.

RETIREMENT BOARD CONTINUES DISCUSSION ABOUT 2012 HEALTH CARE PROGRAM
>From March through June each year, STRS Ohio staff discusses proposed premiums and any health care plan changes for the upcoming calendar year with the Retirement Board. In April, the board agreed to phase-in reductions over the next four years to the premium subsidy received by benefit recipients enrolled in the health care plans. The reduction in subsidy will increase premiums more than the usual increase for medical trend. During the May meeting, the board reviewed preliminary premiums for all plans for 2012; however, the board will not be asked to approve final premiums until the June board meeting. This allows staff to review the claims experience and trends for the first three months of 2011 before making final recommendations.

In calendar year 2012, STRS Ohio health care program participants who are eligible for Medicare Part B only will be able to enroll in the Aetna Medicare Plan (PPO) or the Medical Mutual Basic Plan (or one of the regional health care plans, if applicable). About 7,800 Medicare Part B only enrollees will benefit from the lower monthly premiums provided by the Aetna Medicare Plan (PPO). Previously, these individuals had to choose between the Medical Mutual Plus Plan, Medical Mutual Basic Plan or a regional plan.

The Aetna Medicare Plan (PPO) offers a number of enhanced benefits for its enrollees, including: a $1,500 maximum in out-of-pocket costs that includes the $500 deductible and all medical copayments and coinsurance; low office copayments of $15; ability to see virtually any physician/provider who accepts Medicare; and gym memberships at participating fitness centers. Additional information will be provided later this year through the STRS Ohio Web site, newsletters and health care open-enrollment materials.

RETIREMENT WEBCASTS PROVE SUCCESSFUL
More than 60 individuals have participated in the Retirement Countdown 2011 webcasts that began on May 11. The Member Education staff is offering these weekly to help members who have already met with a benefits counselor and have current retirement estimates, but need help completing the necessary paperwork for retirement this summer. These webcasts will be offered every Wednesday through June 29 from 4:30-5:30 p.m. Registration can be taken up to 4 p.m. on the day of the session. Registration information is posted on the STRS Ohio Web site under the "Counseling & Seminars" tab at: https://www.strsoh.org/resources/2.html.

STRS OHIO RECEIVES CERTIFICATE OF ACHIEVEMENT
STRS Ohio's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2010, has received the Certificate of Achievement for Excellence in Financial Reporting. This is the 21st consecutive year that STRS Ohio has received this award, which is given by the Government Finance Officers Association (GFOA).

EXTERNAL AUDITOR SELECTED
Clifton Gunderson has been selected to audit STRS Ohio financial statements for fiscal years 2011-2015. Clifton Gunderson was selected from four firms interested in performing the external audit work; the firm's pension experience played a key role in its selection. The first-year, fixed-fee bid of $101,500 is 12% less than the 2010 fee.

RETIREMENTS APPROVED
The Retirement Board approved 137 active members and 101 inactive members for service retirement benefits.

The May Board News can also be viewed as a PDF by clicking the following link: https://www.strsoh.org/pdfs/Board_News/May_2011.pdf