June Board News
Retirement Board Names Chair, Vice Chair
During its June meeting, the State Teachers Retirement Board elected contributing teacher member Robert A. McFee (Willoughby Eastlake City Schools, Lake County) as its vice chair for the coming year. According to Board Policies, Rita Walters, who is currently serving as vice chair, automatically moves into the position of chair. McFee and Walters will assume their new responsibilities on Sept. 1, 2020. Board members receive no compensation for serving on the board other than reimbursement for actual, necessary expenses.
Board Recognizes Executive Director Nehf For Outstanding Service
The Retirement Board recognized Michael J. Nehf who is retiring after 12 years as executive director at STRS Ohio. Nehf served as just the ninth executive director in the retirement system’s 100-year history. The board noted STRS Ohio’s numerous accomplishments under Nehf’s leadership, especially his work to improve the funding level and sustainability of the system, to the benefit of all members and retirees. Last year, Nehf announced his plans to retire June 30, 2020, but he has agreed to extend his time at STRS Ohio until a new executive director is in place. The board is in the final stages of naming his replacement.
Board Adopts Fiscal 2021 Investment Plan
STRS Ohio Investment staff presented its fiscal 2021 Investment Plan to the board. The plan details staff’s investment strategy for each asset class in the system’s investment portfolio. The board adopted the plan as presented. The fiscal 2021 Investment Plan projects returns for the upcoming year at-to-below STRS Ohio’s policy objective investment returns of 6.84%. The board’s investment consultants, Callan and Cliffwater LLC, reviewed and expressed support for the fiscal 2021 Investment Plan. Staff will evaluate the need to issue an addendum to the Investment Plan once market levels are set on June 30, 2020. STRS Ohio will post the fiscal 2021 Investment Plan on its website in early July.
Board Approves Health Care Premiums for 2021 — Most Current Enrollees Will See Monthly Increase of $3 or Less; Medicare Part B Reimbursement to Continue
The Retirement Board approved health care premiums for the 2021 plan year along with several changes to the STRS Ohio Health Care Program for 2021. The approved premiums will result in a monthly premium increase of $3 or less for about 85% of current enrollees. A complete list of premiums is posted on the system’s website or can be obtained by calling STRS Ohio’s Member Services Center toll-free at 888‑227‑7877. Below is a sample of monthly premiums for calendar year 2021 for a benefit recipient with 30 or more years of service.
| Plan | Total Cost | STRS Ohio Pays | Benefit Recipient Pays |
|---|---|---|---|
| Aetna Medicare Plan (Medicare Advantage PPO) | $343 | $216 | $127 |
| Medical Mutual Basic Plan (Indemnity or PPO) | $341 | $215 | $126 |
| AultCare PrimeTime Health Plan (Medicare Advantage HMO-POS) | $390 | $216 | $174 |
| Paramount Elite HMO (Medicare Advantage) | $389 | $216 | $173 |
| Plan | Total Cost | STRS Ohio Pays | Benefit Recipient Pays |
|---|---|---|---|
Medical Mutual & Aetna Basic (Indemnity or PPO) |
$1,071 | $660 | $411 |
| AultCare (PPO) | $928 | $572 | $356 |
| Paramount Health Care (HMO) | $922 | $568 | $354 |
Board approves health care changes for 2021
Approved health care program and plan changes include:
- Continuing indefinitely the $29.90 Medicare Part B partial premium reimbursement.
- Allowing for premium subsidies for pre-Medicare benefit recipients to be increased by the amount (if any) not needed to meet the board’s Health Care Plan Management Policy to provide a baseline of up to 6% inflation-protection for the Medicare subsidy.
- Adjusts eligibility for STRS Ohio’s Health Care Assistance Program — setting income and combined total liquid asset limits for eligibility to 175% of the Federal Poverty Level for a family household of two persons.
- Increase drug maximum out-of-pocket limit to $6,550 from $6,350 for the Medicare plans to align with the 2021 standard Medicare prescription plan.
- Increase the annual prescription deductible to $275 from $250 to align with the previous board directive to set at 63% of standard Medicare Part D plan deductible.
- Add SaveonSP manufacturer copay assistance program for non-Medicare enrollees (provided successful contract terms are reached).
Board Adopts Fiscal 2021 Operating Budget That Reflects Slight Decrease From Current Year
The Retirement Board voted to adopt the proposed system budgets for fiscal year 2021 (July 1, 2020–June 30, 2021). The fiscal 2021 operating budget totals $104.2 million, a decrease of 0.2% from the current year budget. The Retirement Board and staff continue to carefully monitor system expenses, and the fiscal 2021 budget calls for a seventh straight year of declines in the total number of associates, as technology continues to automate more processes. STRS Ohio is budgeting for 530 full-time equivalent associates, down from a high of more than 700 associates in fiscal 2002. The approved fiscal 2021 budget includes a 1.5% decrease in compensation, which includes smaller than expected performance-based incentive payouts, reduced headcount and modest merit increases, promotions and adjustments.
The board also adopted a capital budget for fiscal 2021 that totals $5.2 million, an increase of about 4.5% over the current year’s budget. Capital projects for the upcoming year include costs to replace the 25-year-old legacy investment accounting system, as well as information technology upgrades and enhancements. STRS Ohio shared budget information with the Ohio Retirement Study Council (ORSC) in April and reviewed its budgets with the ORSC at the Council’s June 18, 2020, meeting. Expense information is posted on STRS Ohio’s website each month and detailed payments by vendor are also uploaded to the Ohio Treasurer’s Open Checkbook site each year.
Report Shows STRS Ohio Receives High Ranking For Service Level While Maintaining Costs
CEM Benchmarking shared the results of its annual Pension Administration Benchmarking survey for fiscal year 2019 activity and STRS Ohio earned the second highest service level score among all participating systems. STRS Ohio had earned the top service score in each of the previous four years. The survey benchmarked 46 participating pension systems from the United States and Canada. STRS Ohio earned the highest overall service level score for the following areas of business: Call Center, pension payments, written pension estimates, member presentations, member statements and disaster recovery.
While service ranked very high, the administrative costs per active member and annuitant remained at $105. The survey also showed that over the past eight years, STRS Ohio’s administrative costs per member have decreased by 0.9% per year while peer costs have increased by 2.1% per year.
Retirements Approved
The Retirement Board approved 468 active members and 61 inactive members for service retirement benefits.