Dan MacDonald's report on the June 16, 2022 STRS Board meeting

From Dan MacDonald

Personal Summary of the June 16^th STRS Board Meeting

I attended the June 16 STRS Board meeting. After roll call and minute approval the 2022 Fiduciary Performance Audit of STRSOH was presented by Funston Advisory Services, LLC. The audit produced no “red flags” but 170 recommendations across six areas were made. Interestingly, during the presentation a slide was designated that refuted the Ohio Retired Teachers Association “Comments” about the audit. [I’d say an unneeded  slap at ORTA and Edward Siedle’s audit. ] The summary did point out a need, amongst many others, for changes in committees, their structure and processes along with improving communications and transparency. The audit didn’t see why video of Board meetings couldn’t happen or why there is no archived meetings. [To see a shortened version of the presentation Goggle “The Ohio Channel Ohio Retirement Study Council June 9, 2022.”  Go into the meeting 8 minutes and 27 seconds to listen to the audit report]

The Report of the Finance Department was next. Appointed Board member Claudia Herrington did question some areas of increases in the budget, but nothing dealing with compensation. No one questioned the $2.1 million added to the FY 2023  budget for a 27^th check which will include the 3% merit-based raise. Only Fichtenbaum voted against the budget. [Steen was not present until the afternoon session]

The Report from the Member Benefits Department then occurred. Premiums were shared and approved by the Board. 96% of enrollees will have premium decreases on January 1. The Dental Plan and Vision Plan premiums were set and approved. Vision premiums remain the same but Dental has increases. The Dental and Vision plans last two years. Enrollment will be in the fall with a January 1 starting date. The plans cover two years of coverage and are available only every other year.

Neville reported on 7 areas during his Executive Director Report. Cost-of-Living Adjustments should begin to appear in July’s pension deposits; retirement applications are down roughly 17% and five other areas. Six people spoke during public participation. All felt betrayed by the Board. Two were actives. [I’d like to thank John Boyd from Oregon and Tim Watson from Lower Sandusky, for attending and speaking.]

An hour lunch then occurred which turned into a two and a half break. When the Board returned they voted on changes to Executive Director Neville’s contract. No details were shared. The Report of the Investment Department followed. The FY 2023 Broker Evaluation and the Performance-Based Incentive Program were approved. [Think bonuses for paralleling the down market.] The FY 2023 Investment Plan supervisors addressed their departments in the areas of  economic outlooks, fixed income, domestic equities, international equities, real estate investments, alternative investments, and risk management. Outside consultants Callan, and then Cliffwater, raved briefly about the investment department’s plan. The plan was approved.

As to one of active/retiree concerns, the total fund return for May was a positive 0.52%. The preliminary FY 2022 Total Fund return is estimated at a positive 0.71%. Total fund assets ended May at $91.8 billion, lower by $3 billion for FY 2022. It was pointed out a little less than the cost of benefits paid out. [Remember, the expected Rate of Return is 7%.  +0.71% is no where near that.  STRS adds in “smoothing.”  So over 5 years with the FY2021 return close to 30%, life at the investment department of STRS still looks good. Retirees should realize that if we all died then benefits would not be paid out and we could have made STRS staff look so much better]

The meeting concluded with Routine Matters, no old/new business.

 

The meeting ended with Dale Price being nominated and  elected Vice-chair for the new Board which will start in September. 

The next Board meeting will be August 18, 2022. If you are available, try to be present. It will be the last Board meeting for Robert McFee, Jeffrey Rhodes, & Rita Waters.