During the February meeting of the State Teachers Retirement Board, STRS Ohio staff presented a number of items for the board to evaluate as it considers potential health care program changes for 2017. The presentation follows discussion that took place at the board’s annual retreat in January regarding the funding challenges facing the health care program.
Staff’s primary objective is to consider plan adjustments that remain consistent and competitive with the health care marketplace. The items submitted for consideration fall into three general categories: plan design, plan eligibility and plan subsidy. The board did not take action on any of the proposed changes and is expected to continue to discuss the items at its March meeting.
Plan design changes for consideration include:
Plan eligibility changes for consideration include:
Plan subsidy changes for consideration include:
The proposed changes focus on reducing STRS Ohio’s long-term plan costs and extending the solvency of the health care fund.
At the February board meeting, Dr. Marty Saperstein presented the findings of the 2015 membership survey. Phone surveys were conducted in November and December with active members and retirees. Notable findings from the survey results included:
The Retirement Board and staff continued their work on refining the board’s funding policy. Executive Director Michael Nehf reviewed with the board a draft of a revised funding policy that includes the stated goal of managing “the risk of unanticipated benefit changes and to safeguard members’ benefits in the long term.” The draft policy lays out clear criteria for making decisions regarding changes to funding and benefits, as well as when those changes should be considered by the board.
The board also reviewed proposed changes to STRS Ohio’s strategic goals for 2016, including a new goal to address STRS Ohio’s health care funding challenges. Staff also recommended an addition to one of the current strategic goals that would address strengthening STRS Ohio’s business continuity capabilities. Board action on these updates could be considered at its March meeting.
The Retirement Board approved 176 active members and 173 inactive members for service retirement benefits.
Health care fund drops by $196 million in 2015
Year-end analysis shows the health care fund net position was $3.258 billion as of Dec. 31, 2015, a decrease of $196 million from the prior calendar year net position of $3.454 billion. Premiums received from health care recipients in calendar 2015 increased to $331 million from $286 million in calendar 2014. Payments from the health care fund in calendar 2015 increased to $693 million from $658 million in 2014, a 5.3% increase. Effective July 1, 2014, the allocation of 1% of employer contributions to the health care fund was discontinued and directed to the pension fund, resulting in no employer contributions to the health care fund for 2015. Financial and claim information from the health care fund were provided to actuaries at Segal Consulting, who will present the health care valuation report to the board in March.
The next regularly scheduled board meetings are on March 16, 17 & 18, 2016.