Nov. 19, 2004

Retirement Board Approves Actuarial Report
During its November meeting, the State Teachers Retirement Board approved the final annual valuation report from the board’s actuary, Mellon. This report shows the following:

STRS Ohio Joins Leapfrog Group
The Retirement Board has authorized STRS Ohio to join the Leapfrog Group. Leapfrog is a nonprofit organization that is dedicated to reducing preventable medical mistakes and improving the quality and value of health care. It encourages public reporting of health care quality so consumers and purchasing organizations such as STRS Ohio can make more informed health care choices. By joining Leapfrog, STRS Ohio can play a role in helping urban hospitals and health systems deliver better value, safety and outcomes, which over time should result in reduced health care costs. There is no cost to STRS Ohio to join Leapfrog.

Election Process Begins for Retirement Board Seats
Notices will be sent to all STRS Ohio reporting employers and representatives of educational organizations by Dec. 1, announcing the upcoming election for a contributing member seat and two retired teacher seats on the State Teachers Retirement Board. The four-year term for these three seats begins on Sept. 1, 2005, and ends on Aug. 31, 2009. Petition forms can be obtained from STRS Ohio by calling toll-free 1-888-285-2192. The deadline for return of petitions is Feb. 25, 2005.

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

Additional Items Reported at the Meeting

Board Appointments Continue
On Nov. 4, the speaker of the Ohio House of Representatives and the president of the Ohio Senate announced the selection of their joint appointment to the State Teachers Retirement Board. Joining the board will be Geoffrey G. Meyers, the chief financial officer and executive vice president of Manor Care. Prior to joining Manor Care, Meyers worked with Owens-Illinois and had experience in its health care area. He resides in Toledo, Ohio. His appointment extends through Nov. 4, 2008.

According to the provisions of Amended Substitute Senate Bill 133, Meyers will not be seated on the board until there is an odd number of board members. The remaining member of the board is the Treasurer of State’s appointment, which must be made by Dec. 15, 2004.

ORSC Holds First Meeting in Six Months
On Wednesday, the Ohio Retirement Study Council (ORSC) met for the first time since May. Included on the agenda was the semiannual presentation by ORSC’s investment consultant, Evaluation Associates (Milliman). In commenting on the six months ending June 30, 2004, Evaluation Associates noted that all five Ohio public pension systems experienced positive results. It was also noted that all of the funds ranked well above the median in a comparison of 173 federal, state and local funds (the public funds universe in the Wilshire Co-operative). STRS Ohio ranked 21st. The report also noted that STRS Ohio has outperformed its policy benchmark for the past five years. In addition, STRS Ohio has 10-year returns that are above its actuarial interest rate assumption of 8%.

As part of its remarks to the ORSC, Jeff Van Orden of Evaluation Associates noted that the “prudent person rule” governing the funds’ investment authority has served the systems well since its adoption in 1997.

Following presentations by three of the Ohio systems (Highway Patrol Retirement System, Ohio Police and Fire Pension Fund and Ohio Public Employees Retirement System) concerning their unfunded liability status and the difficulty of funding both pensions and health care, legislators raised questions about whether active consideration was being given concerning the need to increase employee contribution rates or to require members to work longer prior to retirement. Other items of interest to legislators were the use of medical savings accounts for active members and requirements that reemployed retirees and dependents get their health care through their employer.

Pension-Related Matters Likely to be Acted on at Statehouse
With the election of President Bush to a second term, it appears Social Security reform will be at the top of the priority list. The president has made it clear that some form of private accounts will be pursued next year. As is always the case with discussions of reform, mandatory coverage will undoubtedly come up.

At the state level, the General Assembly is trying to clear as much legislation as possible during the lame-duck session. There are three pension bills before the Senate Health, Human Services and Aging Committee. These pieces of legislation are likely to be acted upon by the Legislature prior to close of business for the current session.

H.B. 455, sponsored by Rep. Michelle Schneider (R-Cincinnati), would grant system retirees one year to make changes to their benefit plan of payment following a marriage or remarriage.

H.B. 449, sponsored by Rep. Bill Seitz (R-Cincinnati), may also see some action. The bill would permit reemployed retirees to withdraw their accumulated contributions and interest after termination but prior to age 65. Under the bill there would be no matching employer contribution.

Finally, a bill that had been placed on the back burner for quite some time — H.B. 98 sponsored by Rep. John Willamowski (R-Lima) — appears to be back in the mix. The bill, introduced at the request of domestic relations judges, provides a mechanism by which cost-of-living increases awarded to retirees of the five pension systems can be divided between the retiree and former spouse or spouses. It would also provide the continuation, after a retiree’s death, of payments to a former spouse receiving a portion of the benefit under a division of property order. Finally, H.B. 98 permits an option governing the manner in which a retirement allowance is paid to provide for payments to more than one surviving beneficiary.

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