STRS Ohio Has Implemented Significant Cost-Saving Initiatives 

There has been discussion in some media this past weekend about the benefits provided to STRS Ohio associates. It is important that our members know that appropriate management of operating expenditures is one of the top priorities at STRS Ohio. During the past year, the Retirement Board and staff have made significant changes in both associate benefits and staffing levels that have resulted in the lowest operating budget in five years. To date, STRS Ohio has implemented the following changes:

• Significantly reduced the system’s operating budget. Expenditures for the 2003–2004 fiscal year (July 1, 2003–June 30, 2004) totaled $74,366,887, which was about $7.9 million less than had been budgeted. The operating budget for 2004–2005 reflects a 3.3% decrease from the 2003–2004 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.
• Ended the Performance Compensation Program for non-Investment associates, effective July 1, 2003.
• Revised the Retirement Board Travel and Education Policy. The board-approved changes include an annual travel limit of $6,000 per board member (excluding conference registration/tuition fees and travel within Ohio for official STRS Ohio business). The guidelines also establish a maximum of three trips per year per board member and a maximum of three board members per conference; set per diem limits for meals and lodging; and encourage more cooperative training locally with other Ohio pension systems and also the use of video and teleconferencing to limit the need to travel.
• Revised the Staff Travel and Expense Policy. It now includes per diem amounts for lodging and travel. The use of STRS Ohio-issued credit cards for business travel by associates was also discontinued.
• Eliminated the assignment of STRS Ohio-owned vehicles to eight senior-level associates, including the executive director.
• Revised the Performance Incentive Program for Investment associates to increase the maximum award potential to more closely match the maximum incentive levels given by OPERS. In addition, 20% of each eligible associate’s incentive award is now dependent on the total fund attaining a positive absolute return.
• Reduced staffing levels by 101 associates, primarily through attrition. As of Sept. 1, 2004, 634 associates are now employed at STRS Ohio, compared to the high of 735 associates in 2002.
• Adjusted associate fitness center fees and associate cafeteria costs to make them cost neutral.
• Implemented measures to make the child care center at STRS Ohio cost neutral for the 2004–2005 fiscal year.
• Increased associates’ proportion of the premium paid for their health care coverage.

STRS Ohio will be looking at the complete benefits and compensation package for all associates once the results of the independent fiduciary performance audit being conducted under the guidance of the Ohio Retirement Study Council is completed. (The ORSC is the legislative oversight body for the public pension plans in Ohio.) In May 2004, the ORSC awarded the project to Independent Fiduciary Services, Inc. The review includes a comprehensive study of benefits and compensation to determine “… whether compensation levels are sufficient to facilitate its (STRS Ohio’s) ability to attract and retain qualified pension fund professionals.” The report is expected to be completed in January 2005; the results will be shared with STRS Ohio members.

Damon F. Asbury
Executive Director

Return to the list of STRS Ohio news e-mails sent in 2004.