| March Board
News Details Retirement Board Actions and Discussion
This week, the State Teachers Retirement Board held several committee
meetings, as well as its monthly meeting. On the Friday of regularly
scheduled board meetings, a report titled “Board News”
is posted on the STRS Ohio Web site, as well as sent to a number
of members and education organization representatives who have
requested it. As a registrant on the STRS Ohio news e-mail list,
you will also receive this report each month.
The March report follows.
STRS Ohio Board News — March 18, 2005
Retirement Board Adopts Guiding Principles
and Goals for STRS Ohio Health Care Program
Recent meetings between the Health Care Subcommittee of the State
Teachers Retirement Board, STRS Ohio staff and the Health Care
Advocates (HCA) for STRS have resulted in revisions to the Guiding
Principles and Goals for the STRS Ohio Health Care Program. At
its March meeting, the board adopted this new set of principles
and goals.
The Guiding Principles and Goals provide the framework for developing
the 2006 Health Care Program Strategic Plan, as well as a longer
range plan for 2007–2009. The new Guiding Principles, and
accompanying rationale for each, are as follows:
- Allocate the Health Care Program’s resources to provide
a voluntary health care program for both current and future
eligible retirees.
Rationale: Reinforces program’s purpose is
for both current and future eligible retirees.
- Provide a cost-effective health care program focused on quality
outcomes and services while meeting pension obligations.
Rationale: Emphasizes “end” results,
not program structure; reinforces fiduciary responsibility
of board to meet pension obligations.
- Continue to strive for a high level of member satisfaction
and confidence in the delivery of health care services to the
extent resources are available.
Rationale: Acknowledges member satisfaction may
decline as fewer STRS Ohio resources are available to help
with the cost of health care coverage.
- Recognize the longevity of Ohio service credit when allocating
available health care resources.
Rationale: Maintains board’s desire to reward
career teachers when allocating health care resources.
- Promote and provide support for members’ participation
in the active management of their health.
Rationale: Encourages members to take responsibility
for managing their health and restates STRS Ohio’s role
in providing tools to help members manage their health.
- Encourage enrollees to use health resources efficiently and
to take responsibility for the management of their health.
Rationale: Encourages enrollees to be wise consumers
and reinforces members’ ability and responsibility to
influence their health status.
- Contract with vendors who deliver high-value, cost-effective
programs and services.
Rationale: Emphasizes cost-effective purchasing
of health care services focused on retiree populations; encourages
partnership with vendors who make a commitment to high quality;
bases programs and service selection on proven track record;
and encourages assessing high-value programs and services
based on evidence in the field.
- Apply sound business principles in proactively managing the
health care program focusing on continuous operational improvement.
Rationale: Emphasizes the importance of striving
to provide a quality health care program despite limited resources;
clarifies that “continuous improvement” applies
to operations, not benefits.
- Use data, consistent with state and federal privacy regulations,
to identify opportunities for program management, and, when
appropriate, solicit member input to evaluate program management
options.
Rationale: Gives staff direction in basing program
changes on data and seeking member input in the development
of those changes.
The five goals for the STRS Ohio Health Care Program and accompanying
rationale are as follows:
- Continue the integration of Medicare Part D to preserve the
viability of the STRS Ohio Health Care Program.
Rationale: Gives direction on a major, new public
initiative that impacts two-thirds of STRS Ohio Health Care
Program enrollees.
- Make necessary changes to the STRS Ohio Health Care Program,
including an aggressive cost-management program, to maintain
a principal of $3 billion in the Health Care Stabilization Fund
through 2009.*
Rationale: Changes the goal from a 10-year solvency
on a rolling basis that would deplete the fund to maintaining
a principal of $3 billion in the Health Care Stabilization
Fund; provides a longer-term operating framework.
- Explore options for new funding sources for the STRS Ohio
Health Care Program while meeting pension obligations.
Rationale: Gives direction to board, staff and stakeholders
to develop a strategy for increasing funding to the health
care program while meeting pension obligations.
- Educate members and other stakeholders on the economic realities
associated with health care financing and gain necessary support
for sustaining health care in the future.
Rationale: Gives priority to education efforts that
help members and other stakeholders understand the challenges
associated with the financing of retiree health care; acknowledges
that efforts to preserve the health care program need the
active support of all stakeholders.
- Guide members to understand and accept personal responsibility
for their health and for the cost-effectiveness of their health
care.
Rationale: Emphasizes members’ role in helping
to control health care cost trends.
During the next four weeks, the Health Care Subcommittee will
meet with staff and HCA to develop a draft Health Care Program
Strategic Plan for discussion at the April board meeting.
Proposed Budgets for 2005–2006
Presented to Retirement Board
At its March meeting, the Retirement Board had its first look
at the proposed system budgets for the 2005–2006 fiscal
year. The proposed operating budget total of $85,953,800 reflects
a 1% decrease from the 2004–2005 fiscal year budget, which
totals $86,565,900. (Both of these totals reflect the addition
of banking fees, which traditionally had not been included in
the operating budget, but are now included to make the budget
format conform with new Ohio Retirement Study Council requirements.)
The proposed 2005–2006 budget is the lowest operating budget
in the past five years. It includes an 11% decrease in travel,
7% decrease in communications, a 22% decrease in supplies and
materials, and a 19% decrease in other expenses, plus a $1.1 million
reduction in contract services for information technology. The
proposed capital budget for 2005–2006 totals $2,994,900.
The Retirement Board will be asked to approve the budgets at its
May meeting.
In developing the budgets, staff was driven by the following
goals:
- Make system operations in all areas as “lean”
as possible, without jeopardizing delivery of pension benefits
and services and health care coverage to members; adversely
impacting investment operations; or failing to meet fiduciary
responsibilities or legal requirements.
- Provide an appropriate compensation and benefits package and
work environment to attract, retain and engage highly motivated
associates.
- Comply with all Board Policies.
- Address Retirement Board priorities.
- Demonstrate and communicate to members that STRS Ohio is managing
operating expenses prudently.
Board Approves Associate Compensation
Study
During the Retirement Board’s Staff Benefits Committee meeting,
the board passed a motion authorizing the executive director to
engage an external consultant to complete a full compensation
analysis for STRS Ohio. The analysis will include investment and
non-investment positions, utilize public and private sector data,
and recommend the mix and amount of base pay vs. variable pay
for all positions. It is estimated that the board will receive
the results of the study within six months.
During the meeting the committee also received an update on the
C. James Grothaus Child Care Center. Current staffing, enrollment
and tuition rates were reviewed, along with recent cost reductions
in operating the center. It was pointed out that the child care
center adds value to STRS Ohio and its members as evidenced by:
- Longer retention of associates, thus reducing turnover costs
and saving up to $370,000 in recruiting and training costs per
year.
- Increased productivity and flexibility of work schedules for
associates due to the fact the center is open 11 hours per day.
- Helping to provide career opportunities for women associates,
in particular.
- Improving morale and work/life balance for associates.
- Contributing to associate recruitment.
Going forward, it is important that the center reach full enrollment
as quickly as possible, and staff presented ideas for marketing
the center. Through a combination of increases in revenues and
reductions in costs, it is expected that the center will be cost
neutral by the 2007–2008 fiscal year.
Retirement, Investment Transactions
Approved
The Retirement Board approved the following retirements and investment
transactions:
- 35 disability retirements were granted.
- 125 active members were approved for service retirement; 84
inactive retirements were approved.
- In February, fixed-income purchases totaled $512 million,
domestic equity purchases totaled $543 million and real estate
purchases totaled $25 million.
Additional Items Reported at the
Meeting by Executive Director Damon Asbury
Ballots Go in the Mail in April
VR Election Services will be mailing candidate information, ballots
and instructions for voting to all eligible voters on April 4,
2005, for this year’s Retirement Board election. The deadline
for voting by mail, telephone or Internet is May 2, 2005. The
election results will be released on May 7, following certification
by the boards of tellers. The candidates for the two retired teacher
member seats are: Jeff Chapman, Teresa M. Green, L. Neil Johnson,
Dennis Leone and W. David Speas. The candidates for the one contributing
member seat are: Rolla Beach, Mary Ann Quilter Flannagan, Mark
Fredrick and F. James Norris II.
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sent in 2005. |
