Report Shows Pension Funding Improved in Fiscal 2023
At the October board meeting, STRS Ohio’s actuarial consultant shared the results of its fiscal 2023 pension valuation report — an update on the financial condition of the pension fund. The report from Cheiron showed an improvement in the funded status of the plan, due primarily to investment returns in fiscal 2023 that exceeded the 7.0% assumed rate of return. Funding is measured in two ways — the funded ratio and the funding period. STRS Ohio’s funded ratio — that is, the asset value compared to liabilities — increased to 81.3% from 80.9% as measured at actuarial value.
The funding period is a measure of the time needed to reach a funded ratio of 100%. This measure also improved, decreasing to 11.2 years from 11.5 years in last year’s report.
Health Care Funding Remains Strong Following Plan Improvements
Cheiron also shared the results of its annual actuarial valuation of STRS Ohio’s health care plan. The report showed that recent coverage improvements and notable premium reductions increased the health care plan’s liabilities in fiscal 2023, but the health care program remains well-funded. At fiscal year end, health care fund assets stood at $4.78 billion, with a funded ratio of 168.5%. The fund is projected to remain solvent for all current retirees and active teachers. Plan payouts totaled about $376 million, an average of more than $1.03 million per day. There are currently more than 109,500 enrollees in the STRS Ohio Health Care Program.
Board Selects Meketa as New Investment Consultant
Following presentations by four firms, the Retirement Board voted to pursue a contract with Meketa as both the general investment consultant as well as the consultant for STRS Ohio’s defined contribution program. Callan currently serves as the board’s general investment consultant and will continue to work with the board as its alternative investment consultant.
Board Receives Alternative Investments Update
STRS Ohio investment staff shared an overview of alternative investments, noting the purpose of these investments is to provide diversification, growth and income. This asset class is comprised of private equity and opportunistic/diversified investments. Staff shared that alternative investments have increased total fund returns over the three-, five-, 10- and 20-year periods ending June 30, 2023.
Retirement Board Election Notices to Mail
Notices for the 2024 Retirement Board election will mail in early November to all employers to inform STRS Ohio members about the upcoming election. The spring 2024 election is for one contributing member seat, currently held by Dale Price. Those eligible to run for this seat include members presently contributing to STRS Ohio and those who have contributions on deposit with the pension system (including members receiving disability benefits). Members interested in running for this seat may request an election packet and nominating petitions beginning Nov. 1 by calling STRS Ohio toll-free at 888‑227‑7877. The deadline for STRS Ohio to receive nominating petitions is Feb. 23, 2024. Board members are not compensated for board service other than reimbursement for actual, necessary expenses.
The Retirement Board approved 341 active members and 92 inactive members for service retirement benefits.