Dan MacDonald's report on the February 2026 STRS board meeting

BULLETIN: FICHTENBAUM REMOVED

On February 19, 2026, Franklin County Judge Karen Held Phipps issued a ruling in a case that found Wade Steen and Dr. Rudy Fichtenbaum violated their fiduciary duty and are prohibited from serving as STRS Ohio board members.

Link: https://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/2026-2-19_Ruling.aspx 

Report on STRS board meeting February 17-18, 2026

ASSUMPTIONS REMAIN THE SAME

STRS February’s Committee meetings commenced on Tuesday, February 17th with the Investment Committee followed by the Human Resource Committee. I was attending the 279-R General Membership meeting in CLE and by the time I arrived at STRS, the meetings had concluded.

Reviewing the handout, December’s return was a positive 0.6%, making the net total return for the fiscal year a positive 7.5%. January’s preliminary fund return was a positive 1.5%, making the net total return for the fiscal year a positive 9.1%. Total investment assets ended January at approximately $107.0 billion, higher by $6.4 billion in FY 2026. [Reminders: The 2026 fiscal year began July 1, 2025, ends June 30, 2026.  The Rate of Return STRS currently seeks per calendar year is a minimum of 7.0%] The Investment Committee also had quarterly reports by outside consultants Meketa and Callan plus reviewed and adopted the Investment Committee Charter. The committee did an initial review of the Defined Contribution Plan Statement of Investment Objectives and Policy. The Human Resource Committee also met, and I was told, they elected a chair, Michelle Flanigan, then adjourned.

The Board meeting was called to order on February 18, 2026, and December and January minutes were approved. The Finance Department then had outside consultant Cheiron review economic assumptions [Think Discount Rate/Rate of Return, Inflation forecasting, Salary Scale which includes benefits, and Payroll growth which comes from actives and school districts] and discussed "guard rails” for the Sustainable Benefit Plan. Scenarios were presented using past STRS returns to illustrate high returns followed by low returns, low returns followed by high returns, straight 7% returns for ten years, and a couple others.

As stated, Cheiron ran 1997 to 2006 in high returns then suddenly low.  Cheiron simulated lower returns than high using return data from 2000-2009. Against each scenario, Cheiron showed what happened to the fund if there were no benefit changes, if maximum benefit changes were made each year and two mixes in-between. A very thoughtful discussion occurred.  [In decent economic growth, we tend to forget about the tech and real estate bubbles, COVID, and other happenstances that cause the market to plunge and the fund to plummet. Although the exact mix will probably never happen again, using STRS’s own data returns over ten years was enlightening.]

At the end of FY 2025, we were 80.3% funded, with 11.8 years to fully funded as long as assumptions are met and no benefit changes, no additional liabilities. [Think 34 years to teaching retirement or no COLA for 12 years or no STRS salary raises for 12 years. Not going to happen. I suggest to all to look at the video of this portion of the meeting by going to strsoh.org and under the top banner “About” go to Board meetings or review the materials under the Finance Committee Report under February’s Board meetings.]

Public Participation followed with ten speakers, all retirees.  [Two were fantastic.  Again, consider reviewing this part of the meeting by going to strsoh.org and find February’s meeting under “About.”]

Chair Fichtenbaum honored STRS Communication Director Dan Minnich on his retirement and also Darold Johnson, Legislative and Political Director for OFT on his upcoming retirement.

After lunch, outside consultant, Global Governance Advisors, shared results from a Board survey and had a brief discussion of the Strategic Plan, which was moved and passed.

Executive Director Toole presented his Executive Director report, followed by Routine Matters and then Old/New Business. The meeting adjourned at 3:40 p.m.

An all-day Financial Day will be part of the next Board meeting. It will be on Tuesday, March17. The 18th and 19th are also being held for the Board meeting and Board committees.