Jan. 21, 2005

New members join the Retirement Board
The final two members of the State Teachers Retirement Board took their seats in January. Dr. Stephen A. Buser was appointed to the board in December by Joseph Deters, before he left office as treasurer of the state of Ohio. Buser is a retired professor of finance from The Ohio State University. His appointment extends through Dec. 2, 2008. Geoffrey G. Meyers was the joint appointment to the Retirement Board by the speaker of the Ohio House of Representatives and the president of the Ohio Senate. Meyers is the chief financial officer and executive vice president of Manor Care. His appointment extends through Nov. 4, 2008. The 11-member board, as prescribed by the provisions of Amended Substitute Senate Bill, is now complete.

The Retirement Board consists of five elected contributing members; two elected retired members; an investment expert appointed by the governor; an investment expert appointed jointly by the speaker of the House and the president of the Senate; an investment expert designated by the treasurer of state; and the superintendent of public instruction or her designated investment expert.

More than 80 individuals benefit from Health Care Assistance Program
During the Health Care Committee meeting, it was reported that 87 STRS Ohio benefit recipients are now enrolled in the Health Care Assistance Program that was approved by the Retirement Board for implementation in January 2004. This program provides a set monthly premium of $40, as well as lower deductibles, drug copayments and out-of-pocket maximums. To qualify for the program, a benefit recipient must have 25 or more years of service credit, and no more than $20,000 in annual family income nor $20,000 in household assets.

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

• 27 disability retirements were granted.
• 175 active members were approved for service retirement; 86 inactive retirements were approved.
• In December, fixed-income purchases totaled $326 million, domestic equity purchases totaled $754 million and real estate purchases totaled $267 million.

Additional items reported at the meeting by Executive Director Damon Asbury

Federal focus for 2005
The emphasis from the Bush administration in the health care arena will be furthering the use and availability of Health Savings Accounts (HSAs). The idea is that consumers directly purchasing health care services will become more cost conscious and that competition will drive down prices and drive up the quality of the services provided.

At the same time as the debate on Social Security reform begins to take shape, there remains growing pressure from the public sector to eliminate the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP). Reps. Buck McKeon (R-CA) and Howard Berman (D-CA) have reintroduced their legislation from last session to completely repeal both provisions. The new legislation is H.R 147.

The Coalition to Preserve Retirement Security (CPRS), of which STRS Ohio is a member, has taken a position in the past to support modification of the GPO, but short of full repeal. There is real concern that a push for full repeal will be used as a bargaining chip in exchange for mandating Social Security coverage for state and local government employees.

CEM defined benefit administration benchmarking survey completed
STRS Ohio recently received the results of the 2004 benchmarking survey conducted by CEM (Cost Effectiveness Measurement, Inc.) of Toronto, Canada. STRS Ohio was compared to 52 leading global pension systems, including six systems that administer teacher-only plans and 12 U.S. participants of similar membership size. Study results show that STRS Ohio continues to be rated No. 1 in total service to members.

Fiduciary audit progress
A recent exchange of letters between STRS Ohio and the Ohio Retirement Study Council helps to clarify the procedures Independent Fiduciary Services (IFS) will follow in assessing STRS Ohio’s ability to attract and retain qualified staff, as well as measuring the effectiveness and efficiency of the organization. IFS will subcontract with a firm that specializes in employee compensation to review and update comparisons with the 2002 McLagan study for investment associates and with internal data for non-investment associates. The employee compensation firm will meet directly with STRS Ohio management and will be referenced in the final report. Additionally, IFS will review recent CEM reports and survey comparable organizations to measure the effectiveness of STRS Ohio.

Financial report now available
The 2004 Comprehensive Annual Financial Report (CAFR) was completed in December. The report is submitted annually to the Government Finance Officers Association for review and has been awarded the Certificate of Achievement for Excellence in Financial Reporting for the past 14 years. Again this year, the financial report has been printed internally and following the limited initial distribution, copies are printed on request. The complete report can be viewed and printed from the STRS Ohio Web site as well.

Financial disclosure by staff
Last year, Executive Director Asbury directed that all senior staff members and all investment staff members whose position involves a substantial and material exercise of discretion of system funds voluntarily file financial disclosure forms for calendar year 2003 with the Ohio Ethics Commission.

Sub. Senate Bill 133 requires the chief investment officer, assistant investment officers and asset managers to secure an investment license. STRS Ohio has determined that portfolio managers, regional real estate directors and strategy committee members should also secure a license. Under the law, individuals with an investment license will be required to file a financial disclosure form for calendar year 2004. Thirty associates in the Investment Department will be licensed and thus will file the necessary disclosure forms. In addition, senior staff and 16 other investment department members will file as voluntary filers. Thus, all who filed last year and who remain on the staff will be required, either by statute or by STRS Ohio, to file disclosure forms in 2005.

View past issues of Board News.