Jan. 16, 2004

Orientation and Development Program Receives High Marks From Board Members
At its January meeting, the State Teachers Retirement Board members reviewed the current board orientation and development program that it conducts for new board members. Two major components of the program are the mentorship relationship between members, and attendance at professional workshops and seminars. Both of these components were strongly endorsed as an integral part of board members’ development.

As an illustration, both Eugene Norris, board chair, and Michael Billirakis, board member, shared information they received at the recent National Education Association Retirement and Benefits Forum and Trustee Workshop they attended. In meeting with their colleagues across the country, it was clear that health care coverage for retirees is a major issue for all pension plans. And, the board members learned that, unfortunately, some experts are predicting health care will not be addressed at the national level until the 2008 election. There is also a pattern of legislatures accessing pension funds to solve their own states’ budget problems.

During the board’s discussion, it was noted that firsthand training and exposure to other pension plan issues, such as that obtained at this NEA conference, are invaluable to board members. The board will continue its commitment to board education within the parameters of its new Travel Policy adopted in August. The success of the Orientation and Development Program has resulted in other systems looking at the program as a model.

Investment Committee Receives Good News
During the Retirement Board’s Investment Committee meeting, preliminary investment return results for the first six months of the fiscal year were reported. With an approximate return of 13.5% through Dec. 31, 2003, the market value of the fund is almost $53 billion. The rate of return exceeded the total fund benchmark by 0.6%.

During his monthly report to the board, Interim Executive Director Dr. Damon Asbury also shared preliminary investment return results for calendar year 2003, reporting an approximate return of 24.1%. Noting that the system has just gone through the worst three-year period in the stock market since the Depression, he reminded everyone that any gains experienced by the system must go toward funding pension liabilities.

Operating Expenses Continue to Decrease
During the monthly review of the system’s expenditures, it was noted that operating expenses for STRS Ohio continue to decrease. Fiscal year-to-date expenses for the first six months (through Dec. 31, 2003) are $6.3 million or 15% less than the same period last year. There has been a 10% reduction in staff since July 1, 2003.

Retirement, Investment Transactions Approved
The Retirement Board approved the following retirements and investment transactions:

Additional Items Reported at the Meeting

Pension Reform Legislation Remains in Limbo
Prior to the December holidays, both the Ohio House and Senate passed separate pension reform legislation — Amended Sub. H.B. 227 and Sub. S.B.133 respectively. Since the bills vary significantly, a compromise is needed to get a bill to the governor. The issues that are the most contentious are: “buy Ohio” investment provisions and super authority for the Treasurer of State contained in the House bill; composition of the retirement system boards of trustees; and selection of the final bill sponsor. It appears that a substitute bill will be presented in committee once legislative leadership has come to some agreement.

There is still time for members and retirees to let their elected officials know their positions on these issues — especially regarding any diversion of pension trust funds to special private sector interests.

Financial Report Completed
The 2003 Comprehensive Annual Financial Report was completed at the end of December and has been submitted to the Government Finance Officers Association for consideration of its Certificate of Excellence in Financial Reporting. This national award, which STRS Ohio has received for 13 consecutive years, recognizes conformance with the highest standards for preparation of state and local government financial reports.

As in the past, the complete report is posted on the STRS Ohio Web site; members and other interested parties can also request a print version from STRS Ohio. This year, printing the report in-house and encouraging access to the report via the system’s Web site have dramatically reduced printing and mailing costs.

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