Pension Valuation Report Shows Slight Improvement in STRS Ohio’s Funding Status
At the October meeting of the State Teachers Retirement Board, Cheiron, the board’s actuarial consultant, presented its annual pension valuation report. The report showed progress for STRS Ohio’s funded ratio and funding period, as both made slight improvements in this year’s valuation report. The funded ratio is the value of the system’s actuarial assets compared to the actuarial accrued liabilities. Cheiron said the funded ratio improved to 76.1% from 75.5% last year. The funding period is the amount of time needed until actuarial assets match actuarial liabilities — if future experience matches the valuation assumptions. The report showed the funding period improved to 16.6 years in 2019 from 17.8 years in fiscal 2018.
In May 2019, the Retirement Board adopted amendments to its funding policy following several months of review and discussion. One of the funding objectives in the policy is to reach a funded ratio of 100%, noting that “At 85% or greater, the Board may consider plan changes that in the determination of the Board’s actuary do not materially impair the fiscal integrity of the system.” While the report revealed slight funding improvements, STRS Ohio staff estimates that based on the market volatility associated with the pension fund’s current investment asset mix, the fund has a greater than 25% chance of seeing its funded ratio drop to 50% (or lower) in the next decade.
Cheiron also shared its health care valuation report at the October board meeting. This report showed that the health care fund remains in a solid position despite no new funding for the account. See story for more details. Findings from the pension and health care valuation reports were also shared in Board News, which is distributed following the board meetings to all STRS Ohio members who have an email address on file with the retirement system. Board News is also posted on the system’s website.
Retirement Board Election Process Underway
The contributing member seat currently held by Dale Price will be up for election in 2020. The four-year term for this seat will begin on Sept. 1, 2020, and run through Aug. 31, 2024. Board members are not compensated for board service but may be reimbursed for actual necessary expenses incurred while serving on the board.
Members eligible to run are current contributing STRS Ohio members, members who have contributions on deposit at STRS Ohio and disability benefit recipients. Individuals interested in running for this seat can request petition forms from STRS Ohio by calling toll-free 888‑227‑7877. Election information is also posted on the STRS Ohio website. STRS Ohio members will receive their ballots and voting information in April 2020 and will have through May 4, 2020, to cast their votes by mail, phone or online.
STRS Ohio Executive Director Michael Nehf to Retire June 30
Executive Director Michael Nehf announced his plans to retire when his current contract ends on June 30, 2020. Nehf served as just the ninth executive director in the Retirement System’s 100-year history. He joined STRS Ohio in 2008.
“It has been an honor to serve Ohio’s public educators as executive director of the system,” Nehf said. “The Retirement Board, STRS Ohio staff and I have shared a commitment to the system’s mission — to partner with our members in helping to build retirement security. The financial markets took a downturn shortly after I joined the STRS Ohio team. With the cooperation and understanding of STRS Ohio stakeholders, we have seen steady improvements in the system’s funding levels. I hope to see this progress continue as the system embarks on its second century of service to our members.”
Under Nehf’s leadership, STRS Ohio:
- Grew assets to the current total of more than $78 billion — despite the Great Recession (when assets dropped to as low as $46 billion).
- Successfully gained support and passage of a pension reform bill that significantly improved the funding level and sustainability of the system.
- Successfully worked with the board, staff and stakeholders to improve the solvency of the retiree health care program.
- Maintained its commitment to providing exceptional service to STRS Ohio members and retirees, as the system earned the #1 service level in CEM Benchmarking’s Pension Administration Survey in each of the past four years.
- Earned highly positive overall impressions of active and retired members as measured by annual member surveys.
Nehf also noted that it has been a team effort to make these strides. “I would like to thank all of the board members, STRS Ohio associates and stakeholders who have worked with me over this past decade to partner in our accomplishments.”
Carol Correthers, chair of the State Teachers Retirement Board, recognized Nehf’s contributions to the Retirement System, “We have been very fortunate to have Mike’s steady hand at the helm during this time in the system’s history. He helped STRS Ohio navigate needed pension reforms and now the condition of the fund is steadily improving. His commitment to STRS Ohio’s membership has been unwavering, he’s fostered a positive culture among staff and worked effectively with Ohio’s legislators. My board colleagues and I are grateful for his leadership.”
The Retirement Board selected executive search firm Korn Ferry to assist in its search for STRS Ohio’s next executive director. Interested parties may be referred to the STRS Ohio website for additional details. The board plans to have a new executive director named by June 30, 2020.
Retirement Board Chair, Vice Chair Named
The State Teachers Retirement Board elected retired teacher member Rita Walters as its vice chair for the September 2019–August 2020 year. According to Board Policy, contributing teacher member Carol Correthers (Lorain City Schools, Lorain County), who was previously serving as vice chair, automatically moved into the position of board chair. Walters and Correthers assumed their new responsibilities on Sept. 1, 2019.
100th Anniversary Update — Members, Retirees Share Their Stories
A STRS Ohio recognizes its 100th anniversary during fiscal year 2020, members and retirees have been sharing their stories on the STRS Ohio website. Among them...
“The guidance from STRS as I head toward retirement has been wonderful. I feel that I have been on the right path since I began my career with the workshops, etc., STRS provided throughout my teaching career.”
A. Martin — Current Teacher, West Liberty-Salem Schools, 29½ Years
“Students have inspired me to do whatever it takes to help a child to find success.”
C. McDonald — Retired 2012, Orange City Schools, 40 Years
“Everything you do and say will be remembered by many of your students for the remainder of their lives. You are given the opportunity to ‘form the very lives’ of your students.”
P. Sites — Retired 2000, Jackson City Schools & Wellston City Schools, 54 Years
A young lady asked, “Do you remember Jack Jones?” I thought for a moment and responded. “Yes. He was one of my first students.” She responded, “He talks about you all the time.” I asked, “Is that your father?” She answered, “No. It’s my grandfather.”
P. Sites — Retired 2000, Jackson City Schools & Wellston City Schools, 54 Years
“I am very happy with my pension. It has enabled me to continue the standard of living I had when teaching.”
M. Allgood — Retired 1986, Pulaski (Wilmington) School District and Taylor (New Castle) School District (both Pennsylvania); Poland Local Schools, 34
“STRS brought me security in my retirement.”
R. Emmitt — Retired 1974, Akron City Public Schools, 32 Years, STRS Ohio Centenarian Member
STRS Ohio Earns Awards From Public Pension Coordinating Council
STRS Ohio received the Public Pension Standards Awards for Funding and Administration for 2018 from the Public Pension Coordinating Council (PPCC). PPCC is a confederation of the National Association of State Retirement Administrators, the National Conference on Public Employee Retirement Systems and the National Council on Teacher Retirement. The awards recognize public pension plans that meet key standards in several assessment areas, including actuarial, audit, benefit programs and communications.
STRS Ohio Earns GFOA Certificate of Achievement
The Government Finance Officers Association (GFOA) awarded STRS Ohio its Certificate of Achievement for Excellence in Financial Reporting for the system’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2018. This award is the result of a coordinated effort from many departments including Communication Services, Finance, Investments, ITS and Member Benefits. STRS Ohio has received the GFOA award each year since 1990. Staff consolidates financial, investment, actuarial and statistical information into one publication that meets the standards established by the GFOA to receive this recognition.