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

From Dan MacDonald

June 27, 2026

HEALTH PREMIUMS RISE IN 2027

The June 25, 2026, STRS meeting opened with the approval of May’s minutes and right into the Member Benefits Department 2027 Health Care Plan Premium Rate discussion. The projected hour discussion turned 90 minutes. After much discussion by Board members and including the Board’s and A.G.’s lawyers, there were three voted motions. The first two voted down. The third was approved in a 5-4 Board vote with an abstention. The passed motion- a 10% increase of the 2026 cost plus a subsidy glidepath.  What does that mean? Aetna Medicare Plan medical/prescription monthly premiums of $214 [with 30 Years Of Service-$45]; Aetna Medical Basic Plan medical/prescription monthly premiums of $418 [with 30 YOS - $249] and Aetna non-Medicare Basic Plan medical/prescription monthly premiums of $1,495 [with 30 YOS - $387] and further approved a subsidy glidepath of reducing the non-Medicare multiple from 2.47% to 2.1% and the Medicare multiple from 2.17% to 1.8% starting in 2028 by reducing both multiples 0.03% per year until the end multiple is reached in 2040.

[Medical costs continue to rise faster than inflation and the STRS health plans experience 2026 reviews were high. STRS staff and some Board members desired Aetna Medicare Plan medical/prescription monthly premiums of $246; Aetna Medical Basic Plan medical/prescription monthly premiums of $458; and Aetna non-Medicare Basic Plan medical/prescription monthly premiums of $1,635. Other Board members, who prevailed, approach is a one year wait and see what happens. Remember that the STRS medical fund is closed. Moneys going into the fund are only monthly paid premiums and investment earnings. An increase of $407, monthly, in the non-Medicare plan was projected for the 2028 premium with the above choice chosen. Think $1,902 full monthly premium in 2028 if projections are accurate.  Retirees under 65, because they are not on Medicare, are extremely hard hit. Decisions are made. Your Board is working hard and attempting to weigh all input to do its best for you. If you need to vent, call me, Dan MacDonald, 440-564-1200.]

The Governance Committee then approved changes to seven Board Policies and added a new “Communication Policy.”  The Legislative Committee followed with a legislative calendar update, priorities, and timing. Basically, the politicians are at home campaigning and not due back until November 10. COLA was briefly discussed, particularly how to address different cohorts to keep purchasing power at 85% of initial retirement power.

The Investment Committee reported a May return of a positive 2.2%. The preliminary net total return for the fiscal year is a positive 14% [Remember the assumption is 7%; this is good.] Total assets $110.4 billion, higher by $9.8 billion in FY 2026. [The 2026 FY ends July 31, 2026.] Outside consultants Maketa and Callen each gave quarterly performance reviews through March 31, 2026. Both consultants praised the investment department and ranked the department high against its peers. The Fiscal 2027 Investment Plan was then presented by department heads for risk management, fixed income, domestic equity, international equity, liquid alternatives, real estate [doing better], private equity, and private credit. Each head did a 2026 review followed by a 2027 outlook and strategy. In summary, the staff forecasts near-trend but uneven growth, with a wide, negatively skewed distribution of outcomes with risks increasingly skewed downside, driven by persistent inflation, geopolitical conflict, and constrained monetary policy.Seven retirees spoke during Public Participation. Most spoke on COLA. [I was disappointed that no active spoke to their concerns.] After lunch, the Executive Director gave his report which addressed the Funston Fiduciary Performance Audit; AI and a strategic investment platform roadmap; an associate engagement survey [think teamwork makes the dream work]; and general updates including a Columbus Education Association town hall meeting. Routine Matters, Old/New Business concluded the day. The next Board meeting is scheduled for August 17 – 18, 2026, a Monday, Tuesday.