| September Board News Details Retirement Board Actions and Discussion
Last week, the State Teachers Retirement Board held several committee meetings, as well as its monthly meeting. Following 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 September report follows.
STRS Ohio Board News — Sept. 16, 2005
Three New Members Join State Teachers Retirement Board
Jeff Chapman (retired teacher), Mary Ann Quilter Flannagan (contributing member) and Dennis Leone (retired teacher) took their oath of office and were officially seated on the State Teachers Retirement Board on Sept. 1. All three will serve a four-year term, ending on Aug. 31, 2009.
Member Education and Engagement Campaign Approved by Retirement Board
In May 2005, the State Teachers Retirement Board adopted a Health Care Strategic Plan. During its September meeting, the board approved a proposal for an integral component of that plan — a Member Education and Engagement Campaign to be conducted this fall. Joining with STRS Ohio in this project are the Health Care Advocates for STRS (HCA).
The campaign has two goals: (1) educate members about the economic realities of health care costs; and (2) gauge support for a legislative initiative that increases employee and/or employer contributions to provide a dedicated revenue stream for health care for current and future retirees.
Right now, STRS Ohio is collecting the maximum it can from teachers and employers under current law (10% from employees/14% from employers). To collect more, the Retirement Board would need to go to the Legislature — but before it does this, it wants to be sure there is significant support from members.
This October and November, representatives from the HCA and STRS Ohio will host meetings around the state, including Toledo, Cleveland, Akron, Canton, Youngstown, Athens, Portsmouth, Cincinnati, Dayton, Lima and Columbus. Individuals unable to attend a meeting will be able to access the presentation through the STRS Ohio Web site at their convenience. More information will be communicated through mailings and the STRS Ohio Web site in the coming weeks.
Premium for Health Care Assistance Program Eliminated
The Retirement Board has reduced the member premium for the Health Care Assistance Program to $0 from $40 per month, effective Jan. 1, 2006. This program is designed to help qualified STRS Ohio benefit recipients who need financial assistance in paying for their STRS Ohio health care plan coverage. Currently, about 90 individuals are enrolled in the program.
Retirement, Investment Transactions Approved
The Retirement Board approved the following retirements and investment transactions:
- 29 disability retirements were granted.
- 706 active members were approved for service retirement; 47 inactive retirements were approved.
- In August, fixed-income purchases totaled $389.6 million, domestic equity purchases totaled $1 billion, and real estate purchases totaled $32.4 million.
Additional Items Reported at the Meeting by Executive Director Damon Asbury
Hurricane Katrina’s Impact Extends to STRS Ohio
Hurricane Katrina caused the U.S. Postal Service to suspend mail delivery in eight, three-digit postal ZIP code areas affecting delivery of monthly paper checks to four STRS Ohio benefit recipients. In addition, 24 members that receive their benefit payments through electronic funds transfer may have been affected by the storm. The Benefit Services and Member Services Center teams are attempting to contact all affected members to determine if replacement checks or EFTs for September benefits are needed.
During a national disaster, enrollees in the STRS Ohio Health Care Program often have problems obtaining prescriptions. In the aftermath of Hurricane Katrina, STRS Ohio suspended the refill-too-soon requirement and prior authorization rules for 275 enrollees living in Alabama, Mississippi and Louisiana. In addition, prescription drug copays were suspended for these individuals until the end of September. At that time, staff will reevaluate the situation and determine if these adjustments should continue.
Social Security Reform Stalled
In addition to death and destruction, Hurricane Katrina has likely cleared the agenda for Congress this fall. Dealing with hurricane-related needs — both financial and political fallout; confirming not one, but now two Supreme Court nominees; and dealing with the remaining 10 spending bills will be about all Congress can do by the end of the year.
Social Security reform is now probably dependent on one man — Rep. Bill Thomas, chair of the House Ways and Means Committee. He had planned to introduce a major bill this fall reforming Social Security and shoring up the program’s funding, while also tackling pension reform in general and tax reform. This is a pretty ambitious plan, even for someone known as one of the smartest and most powerful men in Congress. At this time, Social Security reform and revamping the tax code would appear to be on the back burner.
2005 Operating Expenditures Come in Below Budget
Final figures for the 2005 fiscal year (July 1, 2004–June 30, 2005) show that total operating expenditures for STRS Ohio were $6.8 million less than the budgeted amount. Reductions were recorded in all major expense areas for the system, including salaries and fringe benefits; professional and technical services; repairs and maintenance; travel; communications; utilities; and supplies and materials.
ORSC Adopts Adjustment to IFS Contract
During its Sept. 14 meeting, the Ohio Retirement Study Council (ORSC) approved an amendment to its contract with Independent Fiduciary Services (IFS), who is performing the fiduciary performance audit on STRS Ohio. The amendment allows for the results of the Aon/McLagan study of STRS Ohio’s associate salary and compensation program to be included in the fiduciary audit report. When IFS was awarded its original contract in July 2004, it became clear shortly afterward that there was a different perception held by IFS versus the ORSC and STRS Ohio regarding the depth of the study on compensation issues. In the meantime, the State Teachers Retirement Board authorized the executive director to engage an external consultant to perform a comprehensive compensation analysis — in order to bring closure to an issue of importance to STRS Ohio members and associates. The ORSC and IFS felt it was appropriate to now incorporate the Aon/McLagan study under the scope of the IFS study. All work done by Aon/McLagan will be critically reviewed by IFS. The contract amendment approved by the ORSC results in an additional fee of $10,000 to be paid to IFS.
Also at the ORSC meeting, the five Ohio pension systems presented the results of the Ohio-Qualified Broker and Manager Report for fiscal year 2005 (July 1, 2004–June 30, 2005) as prescribed in Substitute Senate Bill 133. Working together collectively, the five systems have increased the use of Ohio-qualified brokers and investment managers.
Survey Reveals Employers’ Satisfaction with Services Provided by Employer Reporting Staff
Every three years, STRS Ohio’s Employer Reporting staff surveys employers about their satisfaction with the many services provided to them, as well as to gather any suggestions or comments for future enhancements. This year’s results continued to show employers’ extreme satisfaction with the services provided by the Employer Reporting staff of the Finance Department. At least 97% of employers responded that they were either “extremely pleased,” “pleased” or “satisfied” with services such as the workshops, newsletters, Web site, manual and bulletins, and employer advisors and other members of staff. In addition, the surveys showed that an increasing number of employers prefer to use the Employer Web Site and e-mail as their reporting and communication tools. This latter finding reinforces the work that Employer Reporting, Communication Services and Information Technology Services are currently undertaking to do an “extreme makeover” of the site. Project components include making information and applications easier to access, adding new features and updating existing sections of the site. The launch date for the new site is Oct. 1.
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