From Dan MacDonald
June 16, 2025
PERSONAL JUNE STRS BOARD SUMMARY
Dan MacDonald attended the June 2025 STRS meeting. I was not present when the meeting commenced at 8:30 a.m. on June 11 and went into executive session. The public part of the meeting was to begin at 12:30 a.m. and I was present. It actually started at 1:53 p.m. with a 6-5 vote to authorize hiring Steven Toole as the next STRS Executive Director. Mr. Toole was the former director of the Retirement Systems Division of North Carolina. [Restorers 6 and appointed and one elected active 5]. The Board then motioned to terminate outside consultant Corn Ferry which had conducted the search for an executive director. Vote 8-1with an abstention and an active elected member not voting. The Chair also welcomed new board member Lynn Sautter Beal appointed jointly by the speaker of the House and the Senate president.
The Investment Committee was called to order at 2:01 p.m. May was a good investment month. The fund’s net value grew by a plus 3.0%. The total net fund return for the fiscal year to date is 7.7%. The total fund is $98.5 billion, higher by $3.2 billion since the start of FY 2025. [The fund was 4.5% my last report and I was cringing then that the investment goal of 7% per fiscal year was not going to be met. The general fund still needs to survive June 2025. Remember STRS FY is July 1 thru June 31. FY 2026 starts July 1, 2025.] Outside consultants Meketa and then Callan shared their quarterly performance reviews as of March 31, 2025, of the funds. The reports were glowing in light of the turmoil since January.
There were reviews of the semiannual Broker Evaluations and Associated Policies and the Statements of Fund Governance and adoption of the Statement of Investment Objectives and Policy. Comments were shared and the committee motions passed.
The committee then spent close to three hours in discussion of the Performance Based Incentive Plan. [Think investment bonuses. The meeting recessed at 6:45 p.m. I departed at 5:30 p.m.]
The Board was called to order at 8:32 a.m. on Thursday, June 12. The proposed Fiscal 2026 Budget was presented by the Finance Department and Interim Director Aaron Hood. Half the staff of STRS is eligible to retire within 5 years. [A concern]. The budget addressed the significant rise in anticipated retirements and includes level-setting compensation and the addition of 20 employees and the goal to make STRS Ohio “return to its status as an employer of choice in Columbus and in the public pension world.” [Read that quote again. Since the budget with an amendment ultimately passed unanimously, actives and retirees need to be demanding of our employees. We are to be the choice employer in Columbus and the public pension world, and the Board unanimously voted for that to happen].
The Member Benefits Department presented the 2026 Health Plan changes. Under Medicare, the maximum out-of-pocket increases from $2,000 to $2,100. The subsidized premium rates are rising by up to $81 per month depending on plan. Spousal coverage is rising by up to $104 per month depending on plan. The motion passed 10-0. Looking forward, the Benefits Department will be doing strategic planning with the Board. In 2023 the health care fund was 169% funded; in 2024 the funded status was 158%; the funded status is expected to fall below 150% funded in the next valuation.
Following Benefits, the Board went into Executive Session. Upon return and before Public Participation Board member Allison, under a Point of Information, stated that on behalf of the Board, publicly it should be known that the 14-page anonymous letter written by two STRS staff lawyers to the AG, governor, and some legislators, was drafted at the direction of an STRS Board member and a STRS manager. [I saw this as an attempt toward transparency. No one said more. The chair immediately went to Public Participation. I can make an educated guess as to the Board member, but the manager is another issue, particularly if still on staff]. During Public Participation, eleven people spoke. Nine retirees and 2 actives. One of the actives was recently elected Chad Smith who introduced himself. Others spoke to 14-page authors being villains or heroes, STRS culture, the politics within STRS, investment fees, ORSC, Siedle’s audit, COLA, PBIs and Budget.
After a 90-minute lunch and Executive Session, Interim Director Hood gave the Director’s Report. Retirements are on an uptick. In 2023, at this time of year, there were 422; in 2024 there were 330, right now there are 1,072 of which 396 are retiring with 32 years of service. [Good call Board member Davidson]. Three staff members were also recognized for their 25 and plus years of service at STRS.
Routine Matters paid the bills, but the real focuses were motions on the 2026 Budget and from the Investment Committee: Broker evaluation, Statement of Investment Objectives & Policy, Fiscal 2026 Investment Plan, and the 2026 Performance-Based Incentive Policy [PBI]. Board member Davidson moved to amend the 2026 Budget to raise the non-investment side merit-based salary increases approximately1%. The average increases in salary for the Investment Department were above 5%; for non-investment staff below 5%. The PBI policy by the full Board was again discussed. Board member Harkness pushed the Investment Department to search for ways to bring in-house more of the investments that are being outsourced. [As I have previously reported, STRS in-house investments represents 60% of the general fund; 30% of the fund is outsourced and costs 5 times greater than what is in-housed.] The Budget with amendment and the PBI policy all passed unanimously.
Old/New Business was never mentioned. The meeting adjourned at 1:51 p.m.
The next meeting is scheduled for August 20, 21, 22, 2025.