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May 21, 2004
Election Results
Received by Retirement Board
John Lazares, superintendent of the Warren County Educational
Service Center, was elected to an active teacher seat on the
Retirement Board during the recent election. He received 22,625
votes; Eugene Norris, who is currently serving as the chair
of the Retirement Board, received 22,351 votes. Lazares will
serve a four-year term, from Sept. 1, 2004, through Aug. 31,
2008.
Budgets Approved
for 2004–2005 Fiscal Year
During its May 21 meeting, the State Teachers Retirement Board
approved its budgets for the 2004-2005 fiscal year (July 1,
2004–June 30, 2005). The operating budget, which totals
$79,568,900, represents a 3.3% decrease from the 2003-2004
fiscal year budget and is the lowest operating budget for
the system in the past five years. The capital budget totals
$2,879,500 — a 22% decrease from the 2003–2004
fiscal year. Allocations to the State of Ohio include $250,000
for the Ohio Retirement Study Council (the legislative oversight
body for the public pension funds in Ohio), $30,000 to the
Treasurer of State’s Office for check processing, and
an allocation of $550,000 for the independent fiduciary performance
audit that will be conducted for STRS Ohio under the direction
of the ORSC.
Board Takes Action
on Associate Compensation Programs
On May 20, during the Staff Benefits Committee meeting of
the Retirement Board, Executive Director Dr. Damon Asbury
recommended that the performance compensation awards earned
by eligible associates during 2002–2003 be paid. After
much deliberation, the committee took three actions, which
were accepted by the board during its May 21 meeting.
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The Retirement Board voted to formally terminate
the Performance-Based Incentive Plan for non-Investment associates
(that was discontinued at the start of the 2003–2004
fiscal year) retroactive to July 1, 2003.
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The Retirement Board voted to not award the
Performance-Based Incentive Plan payments to non-Investment
associates for work performed in 2002–2003.
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The Retirement Board voted to award the Performance-Based
Incentive Plan and Investment Associate Recognition and Retention
Program payments for 2002–2003 for Investment staff.
As a result, approximately $2.1 million will be awarded to
102 Investment associates. This allocation is contained in the
current fiscal-year budget. The remaining $1.7 million contained
in Dr. Asbury’s recommendation for 268 associates will
not be paid.
New Health Care Program Will Enhance
Quality of Care for STRS Ohio Members
The Retirement Board approved the implementation of a new program
called Prescriber Advisor. Under this program, prescription
claims data is analyzed by an independent company and letters
are sent to physicians, alerting them to any safety, compliance
or drug interaction problems their patients could experience.
The program adheres to strict confidentiality policies and is
in compliance with the Health Insurance Portability and Accountability
Act (HIPAA) that protects confidentiality of personal health
information.
Retirement, Investment Transactions
Approved
The Retirement Board approved the following retirements and
investment transactions:
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34 disability retirements were granted.
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79 active members were approved for service
retirements; 63 inactive retirements were approved.
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In April, fixed-income purchases totaled
$518 million, domestic equity purchases totaled $724 million
and real estate purchases totaled $18.7 million.
Additional Items Reported at the
Meeting
Pension Reform Legislation Remains at an Impasse
After many months, pension reform legislation remains at an
impasse. At the request of Gov. Taft, the five pension system
directors have had several meetings with legislative leaders
and representatives of the banking industry to discuss the “buy
Ohio” mandates. In the event Gov. Taft, Speaker Householder
and Senate President White come to an agreement on the unresolved
issues this week or early next, there is the possibility that
a conference committee will be convened before the General Assembly
leaves for summer recess. So far, however, any compromise proposals
the systems have offered as alternatives to the “buy Ohio”
provisions have been rejected by the vendors.
CEM Results in — STRS Ohio Remains No. 1 in
Service
Cost Effectiveness Measurement Inc. (CEM) recently delivered
the results of its September 2003 survey. Each year STRS Ohio
participates in the international benchmarking survey on customer
service. This survey began in 1998 with eight systems and has
since grown to a comparative study of 52 pension systems. STRS
Ohio service levels have ranked No. 1 every year since the survey
began.
CEM develops a service-level score based on key service metrics.
Examples of key metrics include: Percent of calls resulting
in a desired outcome (reach a person, no busy signal, low abandon
rate, forced to self-service option); average wait time; information
available to callers and on the Web site; availability of interactive
calculators; one-on-one private counseling services vs. small
group sessions; after-hours access; remote access; turnaround
time; and ease of beginning new pensions.
On a 100-point scale, STRS Ohio received 90 points this year
compared to the peer average of 72 and the overall average of
71. The second-highest system scored 83. STRS Ohio ranked first
among our 18 peer systems for pension inceptions, pension estimates,
counseling services, mass communications and purchasable service
processing.
When compared to all 52 participants, STRS Ohio ranked first
for counseling services, mass communication and purchasable
service processing.
AdvancePCS Contract Signed
A new three-year contract has been signed with AdvancePCS to
enable it to continue to serve as the pharmacy benefits manager
for benefit recipients and their dependents participating in
the Aetna, Medical Mutual or Paramount HMO health care plans
through STRS Ohio. The new contract includes the following features:
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Significant cost savings:
The financial terms of this contract will save the STRS Ohio
Health Care Stabilization Fund more than $7.3 million in the
first year over the current contract.
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Best price guarantee: The
contract includes a provision that guarantees that AdvancePCS
will match the price if the other public pension systems receive
a better price from another PBM for the administration of
their prescription drug programs.
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Better price than State of Ohio:
The costs contained in this contract are lower than those
contained in the multi-state plan referred to as the “West
Virginia Plan.” (Note: The West Virginia Plan currently
covers West Virginia, Delaware, Missouri and New Mexico and
will soon be extended to the state workers of Ohio.) While
the “West Virginia Plan” was projected to save
STRS Ohio an estimated $5.6 million in the first year of the
contract, it does not achieve the $7.3 million savings to
be realized from the AdvancePCS renewal.
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Cancellation clause: The
contract includes a 90-day clause that allows either party
(STRS Ohio or AdvancePCS) to terminate the contract for any
reason, so if something does occur during the contract period
that would cause STRS Ohio to want to end the business relationship,
it can do so without incurring a penalty.
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