Dan MacDonald's report on the March STRS board meeting March 17-19, 2026

From Dan MacDonald

March 31, 2026

A 1.6% COLA HAS BEEN APPROVED FOR FY 2027

March at STRS featured 3 days of meeting.  Day 1 was an investment seminar day.  Outside consultant Meketa presented on the construction and overseeing of an investment portfolio with an eye to “bad times,” which will happen [currently started Feb 28, the Iran war] and not just a portfolio of investments.  Asset classes were compared to a baseball team with each position’s strength and weaknesses with diversity helping in bad times. Just a portfolio of investments was compared to the S&P 500 which was created in 1957.  Over the next 50 years, only 17% of the original constituents survived.  In asset classes where there is economic growth/corporate risk, failures will happen; losses will happen. An investment portfolio is diversified and constructed for good time and bad and needs to be overseen and adjusted.

Outside consultant Callan then presented on Private Markets.  Private markets are investments that are not listed or traded on public exchanges. Aaron DiCenzo, the Deputy Director of the Investment Department, presented STRS’s direct and co-investment strategic initiative. Meketa returned and presented global equity which remains a critical element of STRS’s total portfolio and represents the highest returning liquid markets component.

Following the lesson on an investment portfolio, Representative Bird and Senator Romanchuk of the Ohio Retirement Study Council were invited to speak.  These controversial gentlemen proposed changing the makeup of the STRS Board to more appointees and less elected members.  Neither spoke to the legislation but rather addressed the importance of a Define Benefit plan. [Take a moment and watch this portion of the seminar at strsoh.org under the banner “About” then Board meetings. I was angry and speechless. Look for your reaction and be sure to VOTE in November.]

After a full day of seminar presentations, the Investment Committee meeting started at 3:45 pm. A vote was taken and passed the Defined Contribution Statement of Investment Objectives and Policy followed by an initial review of the Statement of Fund Governance, Defined Benefit Plan and Health Care Plan Statements of Investment Objectives.

Preliminary investment net returns for February were 1.6%.  The preliminary net total fund return for the FY to date was 11.0%.  Total investment assets ended at approximately $108.3 billion.  [Remember, the assumption is 7% for the FY.  As of March 17, the USA was at war with Iran, the Strait of Hormuz was a concern for tanker oil flow, and the market had dropped.  For the FY returns had fallen to a tad over 7.5%] The day ended about 4:10 pm.

Day 2 began with the Ad Hoc Actuarial Committee meeting. Three firms will be interviewed next month to be the next outside actuarial consultant: Cheiron, GRS, and Deloitte will be interviewed. The chosen company will be starting May 2026.

The Legislative Committee met and had updates on Ohio Senate Bill 69 and House Bill 719. [Goggle, they deal with STRS Board composition and directives that effect actives.]

The Human Resources Committee met with presentations on Succession Planning, Leadership Assessment, Performance Reviews, and a staff Engagement Survey.

Day 3 was the actual Board meeting which began with the approval of last month’s minutes. Board leadership elections then took place.  Michael Harkness was unanimously elected to chair the Board. [Remember that Rudy Fichtenbaum was removed last month] Pat Davidson remains as Vice Chair. Since Dr. Rudy Fichtenbaum is no longer on the Board, in April each Board member will be able to nominate a retiree to replace his seat.  Voting will take place until a nominee has the majority of 11 votes.

Public Participation followed the election. Nine people presented, 8 retirees and the former HR director of STRS. [I did speak, but it was extemporaneous based on my prepared speech that just didn’t fit the three days. Since my speech was ad-libbed, I do not have a written copy.]

The Finance Department presented next. A Purchasing Power illustration was presented. Purchasing power is the ratio that measures how a retiree's income (numerator) tracks against inflation (denominator). For instance, if you retired in 2011 or 2012, your purchasing power is 80%, but if you retired in 2013 it is 76%. 2014 and 2015 are 77%; 2016 is 79%; 2017 and 2018 is 80%; 2019-81%; 2020-82%; 2021-85%; 2022-92%; 2023-95%; 2024-97%; 2025-100%.

Next discussed was a decision framework for the Sustainable Benefit Plan. After much discussion and several tweaks, a framework was adopted by the committee. Outside actuarial consultant Cheiron then presented several benefit improvement scenarios which Board members had requested that led to health care plan scenarios and redesign options.  Health care will be under serious discussion at the next several Board meetings.

Following lunch, the Finance Committee continued sharing member/retiree survey results. 50,000 surveys were issued; 25,000 actives.  25,000 retirees. More than 1,200 active responses and more than 2,400 retiree responses were returned.  The results are being compiled. Currently actives’ biggest desire is lowering the years of service for retirement eligibility followed by strengthening the long-term sustainability of the pension system. Currently retirees' biggest desire is strengthening the long-term sustainability of the pension system followed by providing retired members larger, more frequent COLAs. [I didn’t get a survey either.]  Cheiron then live-modeled the Sustainability Benefit Plan.  Ultimately, Cheiron determined there was $2.498 billion available for benefit restoration. The Board chose to extend 32 years of service until May 1, 2035 [with hope that next year it will become permanent through de minimis] and a 1.6% one-time COLA for eligible retirees. [A “one-time” COLA does continue from year to year once it is added to your initial pension amount, but it is added in FY 2027.  I know this is confusing.  It is NOT a “continuing” addition of another 1.6% in 2028 and another 1.6% in 2029, etc.  It is “one time” added in FY 2027 depending on the month you retired and will remain as your new pension amount in subsequent years.]

Mr. Toole then had his Executive Director Report. He warned that he will be presenting the 2027 Budget with an 8.5% increase for the needs of the organization.  Additionally, he shared: retirement applications are up; technology initiatives are underway; employer seminars are happening; and Julie Sellers and Elizabeth Jones are the only candidates for the Retirement Board elections for a contributing seat and a retiree seat. Both are current Board members.

Routine Matters then took place.  There was no Old/New Business.  The next Board meeting was scheduled for April 15, 16, & 17, 2026.  Adjournment: 2:50 p.m.