ORSC Meeting Reviews Investment Performance, Addresses False Claims about STRS Ohio
The Ohio Retirement Study Council’s (ORSC) May 12 meeting included a review of all five retirement systems’ investment returns by the Council’s investment consultant, RVK, along with fiscal year budget presentations by STRS Ohio and the Ohio School Employees Retirement System.
ORSC Chair Phil Plummer (R-Dayton) took the opportunity to address a number of questions regarding STRS Ohio that he and ORSC staff had received. These included false allegations that STRS Ohio members receive only 77 cents for every dollar they contribute, that STRS Ohio staff is receiving a 6% raise, that STRS Ohio investment returns are among the worst in the nation and there is a lack of transparency. ORSC staff provided detailed information correcting each of those claims by informing the Council that:
STRS Ohio retirees receive benefits equal to their contributions within two to three years of retirement, depending on when they retired.
The increase in the STRS Ohio personnel cost is due largely to the fact that there are 27 pay periods in fiscal year 2023, instead of the usual 26 pay periods, which is true every 10 to 11 years for any employer that pays its employees on a bi-weekly basis.
Despite efforts, ORSC staff has not seen data to support the claim that STRS Ohio investment returns are the worst in the country — and the RVK report directly refutes that allegation.
Chair Plummer questioned Director Bill Neville about criticisms of a lack of transparency at STRS Ohio. Director Neville noted that STRS Ohio responds to over 100 public records requests annually and has been recognized by the Auditor of State’s office for its handling of public record requests; STRS Ohio streams all board meetings and posts them on the website; and staff has been working to make alternative investment fees more transparent on an industry-wide basis.
RVK’s investment presentation showed that STRS Ohio’s total fund return over the one-, three-, five-, seven- and 10-year periods ending Dec. 31, 2021, all ranked in the top 25% of the consultant’s database of plans with investment assets of $1 billion or more. RVK also noted that STRS Ohio’s asset allocation took on less risk than the peer group median over the five- and 10-year periods. During the meeting, Jim Voytko, president of RVK, said, “If you look at their performance versus their benchmarks…they have done well. And if you look at their returns against a large number of other public pension plans, they rank anywhere from the top quartile (25%) to top decile (10%).”
The ORSC meeting is available on the Ohio Channel at: https://ohiochannel.org/collections/ohio-retirement-study-council. RVK’s investment presentation takes place at the beginning of the meeting. STRS Ohio’s budget presentation and the discussion of false claims about STRS Ohio begins near the 1:22:20 mark of the May 12, 2022, video.