Robin Rayfield's report on the February 17, 2021 STRS Board meeting

From Dr. Robin Rayfield, Executive Director

Ohio Retired Teachers Association

Report to ORTA members

March 10, 2021

STRS News

The STRS trustees met in February. On Wednesday, the 17th the investment committee met to review what is taking place with the numerous asset classes or areas in which STRS invests our money. The discussions were routine with many questions from trustees on the real estate investments and the alternative investments. There was some degree of controversy near the end of this lengthy committee meeting. Board member Wade Steen revisited the ‘performance incentive’ (bonus) topic. He made a motion that each trustee would receive the information on the bonuses paid to our investment 50 days prior to any vote on these payments. Mr. Mayerfeld 2nd the motion. The discussion included the fact that the benchmarks are not well defined, and Mr. Steen felt that he wanted to be able to better understand if the benchmarks for earning a bonus were met. 50 days would allow him to ask questions and seek clarification. Mr. Mayerfeld and Mr. Steen voted to recommend this 50-day provision to the entire board. Ms. Walters, Ms. Herrington, and Mr. Scott did not support this effort at transparency. They were more concerned that the bonuses be paid in a timely manner than they were as to whether the bonuses were earned. 

The following day the STRS board met. Takeaways from the meeting were:

• STRS is experiencing a good year with nearly 16% earnings in the 1st half of the fiscal year.

• Mr. Morrow, chief investment officer will retire in April of 2021. STRS manager of alternative investments and fixed income, Mr. Worley, will replace Mr. Morrow. STRS will hire two people to replace Mr. Worley.

• Mr. Bill Neville, Executive Director of STRS, advised the board that STRS Assumed Rate of Return (ARR) is higher than most pension systems across America. It appears that STRS staff is preparing the STRS board for a recommendation that the ARR be lowered. This is of great significance as it is the ARR that determines the funding ratio of our pension system. Lowering the ARR by just ¼ of 1% from 7.45% to 7.20% would increase our liabilities pushing our funding ratio lower. With no serious consideration of COLA prior to an 85% funding ratio lowering this assumed rate of return will push any discussion of COLA out by as much as a decade. Remember, STRS does not predict reaching the 85% threshold before 2038 with the current assumed rate of return.

• Mr. Gary Russell (Deputy Director of STRS) presented information comparing STRS to other public pensions across the U.S. What I found interesting is that STRS has the highest individual contribution rate and the lowest employer contribution rate.

• Mr. Nick Treneff presented the results of the STRS annual membership satisfaction survey results. According to the 300 people surveyed, STRS rates high in member satisfaction.

Forensic Audit

Mr. Siedle has begun his work on the forensic audit of STRS. His public records request can be seen here: https://www.orta.org/advocacy. His work is expected to take about 4 months to complete. Check ORTA’s website for any updates.

Dr. Robin Rayfield, ORTA
Executive Director