Dan MacDonald's report on the October 2025 STRS board meeting

From Dan MacDonald

October 20, 2025

ROBUST STRS OCTOBER BOARD MEETING 

I had to again attend the October STRS Board meeting via Zoom since I was hospitalized the previous weekend.  [This really has to stop.] I was not able to Zoom Wednesday’s Investment Committee at 4 p.m.  since it never came into session at its announced time. Calling STRS, the meeting was held earlier in the day [Sunshine Law?] From slides, September’s preliminary net return was a positive 1.9% with the total net return for FY 2026 a positive 4.8%, total investment assets approximately $104.1 billion, up $3.5 billion during FY 2026. 

The STRS Board meeting was called to order Thursday, October 16, 2025, at 8:33 a.m. by Chair Dr. Rudy Fichtenbaum, the minutes were approved, and committee assignments amended to include elected contributing Board member Chad Smith. The Finance Department report then took up the remainder of the morning. Concerns were shared. Defined benefit retiree count was up significantly from last year’s eligibility changes, 32 years full pension. Approximately 1,500 more actives retired than the “expected” additional surge of 700.  As a result of higher retirements total active count is down 1.1% from last year and there is a slow, steady increase in Define Contribution participation. {There was discussion around the DC Plan and whether “increasing” was correct.]  Bottom line, there is a significant negative cash flow, from a negative 4.6% to a negative 4.8%. The amortization period increased from 10.2 years to 11.8 years [think years to 100% fully funded.] The funded ratio is now 80.31% down from 82.03%. One presentation slide was titled “Plan and assumption changes are significant to UAL” (Unfunded Actuarial Liability). Much discussion. State treasurer appointed Board member Falls summary implied that the elected Board member changes hurt the fund while elected Board member Davidson pointed out that even if no changes were made this would be a year of loss because of four-year smoothing which removed the substantial FY 2022 general fund return.  Cheiron admitted this was true. Davidson further pushed that unless this FY is a disaster the fund will spring back next year. According to Cheiron, “True.”  I do not want to imply that Davidson was the only push back on these numbers, but he did lead the way. Additionally, “Retiree Mortality” exceeded expectations and was a $123.6 million gain for the fund.  Retirees died off more than expected in FY 2025. [Stay alive retirees; enjoy your retirement; commit yourself to showing up at a Board meeting.] 

Cheiron then did a presentation on the Healthcare Plan. The plan’s funding dropped from 158% to 128.3% funded, from green all is ok to red, action needed. Why? Prescription cost increases for Medicare and non-Medicare plans exceeded trend assumptions plus Medicare added a fee in its inpatient utilization management program. The expansion of eligibility to 32 years for full retirement also impacted changes by adding more people than expected into the plans. “Further expansion of retirement eligibility for active teachers (including making existing temporary permanent will continue to put stress on the Health Plan” was on a slide. Again, much discussion. [Think Fed and Congress’s actions on healthcare and the Big Beautiful Bill.]  Any plan changes will be in 2027 since the healthcare plans for 2026 happens January 1st and it’s too late for changes, BUT outside actuary consultant Cheiron will present “levers” to consider next month [Think changing subsidy, increasing premiums, changing co-pays, deductibles, plan coverages.]  Again, your elected Board members presented pushback at the mention of “levers” to solve. The Board’s attorney pushed back on elected Board members on what they can and maybe cannot do. [Interesting to me since adding to the healthcare fund has been brought up in the past without comment.] 

Public Participation. Six retirees spoke. One did not worry by legislative appointees because of the quality of appointees and STRS mission. ORTA’s Rayfield challenged the use of unaudited end-of year data to determine Performance-Based Incentives eligibility instead of a fully audited version [Great point]. 

After Executive session/lunch there was a presentation on Succession Planning, 58% of STRS leaders [64] are eligible for retirement in 5 years. 45% [213 associates] are eligible for retirement in 5 years. There is concern about institutional memory and skilled people fulfilling tasks. Management has a plan, and it sounded like AI additions will be in future budgets. 

Outside consultant GGA, Global Governance Advisors, then had a “Board Governance Discussion.” After a few slides on the importance of Strategic Planning, the presenter, in my opinion, became a “circus barker.” He shared that 89% of all Canadian funds are in a surplus position, 59% above 120%. The presenter thinks STRS is on the edge of similar success because of the way the investment department is/could be further structured. The presenter even brought up our real estate investments and nationwide offices. [Google “Maple 8” and think STRSOH.] It was a very interesting 100-minute presentation which I encourage you to watch by going to STRSOH.org, then ABOUT then Board meetings, then October’s. The presenter’s enthusiasm was met by skepticism, but he addressed all concerns to include fitting outside consultant Meketa’s asset allocation and state house buy-in. Truly, he was a salesman extraordinary, a circus barker. 

Our Executive Director, Steven Toole, then shared his report. He addressed the bomb-sniffing dog in the foyer [safety of staff and visitors], showed a video of Ohio State Representatives Bird and Brennan and their visit to STRS, addressed town hall meetings and strategic communications plus automating more of STRS.  

Routines matters and the election of Rudy Fichtenbaum to Chair and Pat Davidson to Vice Chair rounded out the meeting. Next Board meeting November 12-14, 2025 

As of now, 11:15 a.m. Monday, October 20, 2025, I have not received STRS October  e-Update.