Dan MacDonald's report on the April 16 and 17, 2025 STRS board meeting sessions

From Dan MacDonald

April 21, 2025

BOARD APPROVES A ONE-TIME 1.5% COLA FOR RETIREES AND 32 YEARS OF SERVICE FOR ACTIVES 

Local 279R Executive Director Dan MacDonald attended the STRS meetings of April 16 & 17, 2025.  Wednesday started with the Legislative Committee. HB 96, the state biennial budget was discussed ... basically $600 million in bond issued for Browns and not to implement the third and final phase of the Fair School Funding Act. According to the Ohio League of Women public schools will lose $400 million. SB 69, pension system reform was discussed...Acting Director Aaron Hood stated that nothing would happen to the fall but on Thursday after a COLA and 32 years of service was voted, thought the employer's contribution going from 14 to 18 percent over 8 years didn’t have a chance. 

The Investment Committee then met. The general fund in March dropped by a negative 1.8 percent. Total fund net return for the year is a positive 4.0 percent. The investment assets ended march at approximately $95.7 billion.  [This was not good especially in the light of April 2 and tariffs and the markets. Throughout the world, investment advisors are concerned. Remember, STRS is trying to get a return of 7% each fiscal year.] Outside consultants Meketa and Callan then discussed the implementation of the new asset liability divisions over a three-year timeline and benchmarking each area. The asset classes are US Equity19.25%; International Equity 15.75%; Private Equity 9.0%; Private Credit 10.0%; Liquid Alternatives 7.0%; Real Estate 8.0%; Core Plus Fixed Income 21.5%; Liquid Treasury Portfolio 5.5%; Cash Equivalents 1.0%; Long Treasury Portfolio 3.0%. 

The Board meeting then commenced a little after 4 p.m. approving the March minutes and having a Zoom meeting with their outside consultant GGA, Global Governance Advisors.  GGA pushed for a formal communication policy ASAP and suggested by May it be voted. “This is a policy that will equally apply to everyone. Which is a best practice and always in the best interest of the System.” Dr. Fichtenbaum pushed back hard on this slide insisting that “System” be replaced by “Members.” GGA said they will replace [we will see] There was also discussion around the Board speaking with “One Voice” once something had been voted. [This got contumacious. One Voice was discussed in February. Someone sent emails [90 was number used] to the Governor, Legislators, ORSC and others, saying the presentation was illegal. Acting Director Hood and GGA presented the concern.  Also, a member of the Board checked GGA references during due diligence. [Ultimately GGA stated it would send some commo policies to members of the Governance Committee and no one from the Board sent the emails. I suggest we all look at the February 2025 Governance Committee meeting at STRSOH.org] The Board meeting closed at 5:45 p.m. 

The Board was called to order on Thursday, April 17 at 9 a.m. The meeting commenced with Acting Director Hood stating that everyone knows that compensation and benefits are 80% of any budget. Then, as in years past, the number of employees was shown. The number has decreased by 242 since 2002. [I observed that from the past couple years to the present wasn’t shown; iw it up or down?] 

Hood then shared how STRS staff over the last five years have “shared sacrifice” with actives and retirees by their salaries falling well below market value.  Outside consultant CBIZ supported Hood’s remarks by showing non-investment staff numbers and percentage increases needed to bring staff in range with central Ohio marketplace. Merit-based raises include 26 at no raise then 341 ranging from 1-2% to 10+%. Investment Staff was also presented. They also need to be “caught up.” CBIZ suggested either increasing salaries or leaving salaries and increasing bonuses, Performance Based Incentives, PBI. A proposed budget for 2026 was presented with a requested 9.2% increase. Part of the presentation included an ageing STRS workforce and the difficulty currently with hiring staff. [Speechless.] 

Public Participation – 11 retirees spoke along with one former STRS staff member who resigned about a year ago.  

After the Board’s Executive session [which includes lunch] Cheiron presented its SBP (Sustainable Benefit Plan) Budget for 2025. It amounted to $2.342 billions of which the Board had already spent $302 million [think retirees’ Supplemental deposit in December, 2024]. The Board was surprised by the amount. Lots and lots and lots of discussion. Spend it. Save it.  The media and governmental eyes watching STRS. Warnings given including creating “cliffs” and the continual use of the SBP needing to be noted by the auditor. Pat Davidson certainly pushed the charge with a temporary 32 years of service for full retirement and a 1.5% one-time COLA. Before the vote the Benefit Department addressed premiums and Health Care for 2026. With what is happening nationally, premiums and plans will have to be adjusted for 2026 upward both for Medicare and Non-Medicare STRS plan users. [Yes, you are reading this correctly. I’ve warned you in the past that the $25 monthly premium for STRS Medicare could not last. How much and plan changes will not be announced for a couple of months]. With that Information in hand the Board voted 6-4 for 32 years and a 1.5% COLA. [No votes: Allison, Correthers, Falls, Frey] 

The meeting concluded at 6:36 p.m. after a very shortened Executive Director’s Report, Routine Matters, and Old/New Business. The Next meeting is May 14, 15, 16, 2025.