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February 5, 2016

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Feb. 5, 2016
Health Care Funding Challenges Will Be Key Focus in 2016
During its 2016 retreat, the State Teachers Retirement Board took an intensive look at the funding challenges facing the STRS Ohio Health Care Program. The board retreat, held at the STRS Ohio offices in Columbus, provided the board an opportunity to review in depth health care presentations from staff and consultants. The key takeaway is that the projected life of the health care fund has significantly dropped due to increasing health care claims payments and the lack of a dedicated source of funds for health care.
The Challenge — a Closer Look
• In late 2011, the board adopted a strategic framework for health care based on receiving a continuous allocation of 1% of the employer payroll contribution (about $100 million annually). By the end of 2013, the health care fund solvency grew to 49 years.
• Effective July 2014, the board discontinued the 1% employer allocation to the health care fund in an effort to strengthen the financial condition of the pension fund and as part of STRS Ohio’s plan to eliminate its unfunded liabilities in less than 30 years (as required by state law). The projected life of the health care fund dropped to 19 years. The hope was to restore this funding for health care within a few years.
• Today, the suspension of employer contributions to health care will continue because all of the employer contribution is needed for the pension fund. Depletion of the health care fund is now a major concern. While the projected life of the health care fund is expected to be about 17 years, this figure is an average — meaning there is a 50% confidence level that the health care fund has at least 17 years of solvency. Depending on the strength of the financial markets, the amount of health care claims and whether additional funding is available, there is a chance the life of the fund could be 10 years or less.
Next Steps
The Retirement Board identified several steps for staff to pursue while continuing to study potential funding solutions. These steps include:
• Work with membership and stakeholder groups to determine the components that deliver a plan that represents a good value and determine how long — with a high degree of confidence — STRS Ohio can offer a meaningful plan.
• Evaluate the impact of additional health care plan changes in the areas of eligibility, plan design and subsidy levels.
• Work with membership and stakeholder groups on approaches to increase funding for retiree health care.
• Continue open and honest communication with the membership and stakeholders.
The Retirement Board and staff will explore options to allow STRS Ohio to continue providing a health care program that is of value to members and will communicate with members throughout the discussion of possible options. STRS Ohio will use its website, newsletters and eUPDATE email news service to keep members informed.
Additional facts about the STRS Ohio Health Care Program
• Health Care Program costs for fiscal year 2015 totaled $673 million — more than $1.8 million in health care expenses per day. The total cost has grown more than 51% since 2005 when the program costs were $444 million.
• Health Care Program has 131,193 enrollees in 2016, an increase of nearly 17% from 2006 when the number of enrollees was 112,310.
The STRS Ohio eUPDATE is designed solely to provide timely and accurate news and information about legislation, benefits and other issues affecting the STRS Ohio membership.
If you wish to comment on a topic, please either email contactus@strsoh.org or call the Member Services Center toll-free at 1-888-227-7877.
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Nov. 21, 2014

 

November Board News

 

Retirement Board Reviews Methods to Monitor Funding Progress
During the November meeting of the State Teachers Retirement Board, Segal Consulting made a presentation on funding policy elements that could result in a more robust way to monitor the progress of the pension fund. Segal, the board’s actuarial consultant, described a funding policy as a roadmap for measuring the pension plan’s funded status and noted that public plan funding policies are gaining national attention.
The presentation included a funding policy overview based on best practices issued by the Government Finance Officers Association (GFOA) and guidance from other actuarial organizations. STRS Ohio’s current funding period — the length of time it is projected to take to pay off the system’s unfunded liabilities — is 29.5 years. Ohio’s public retirement systems are required by law to amortize any unfunded liabilities over a period of not more than 30 years. However, the GFOA recommends a more conservative standard of not more than 25 years.
Segal also reviewed additional reports and analysis the board could request to outline how the pension plan is measuring up to these standards. The board is expected to continue funding policy discussions in the months ahead.
Retirements Approved
The Retirement Board approved 219 active and 130 inactive members for service retirement benefits.
Other STRS Ohio News
Retirement Board Election Process Begins this Month
On Nov. 7, notices were sent to all STRS Ohio reporting employers and other interested parties about the upcoming Retirement Board election for one contributing member seat. In addition, election information is posted on the STRS Ohio website and is included in the fall newsletters. Individuals interested in running for a seat on the State Teachers Retirement Board can request petitions from STRS Ohio. The deadline for returning petitions is Feb. 27, 2015.
Satisfaction Survey Responses Reflect 96% Satisfaction Rating for First Quarter
During the first quarter of the fiscal year, nearly 1,900 members who met with a counselor completed a satisfaction survey, with 97% responding that the service met or exceeded their expectations. Of those members who met with a counselor, 66% provided a perfect 10 for overall service. Staff continues to be rated the highest in the areas of professionalism, courtesy and knowledge, with more than 70% providing a perfect 10 rating.
About 400 members who attended a Member Education program also completed satisfaction surveys for the quarter, with 93% stating that the program met or exceeded their expectations and 41% rating the program a perfect 10. More than 70% of respondents rated the Member Education staff a perfect 10 regarding professionalism, courtesy and knowledge.
The STRS Ohio eUPDATE is designed solely to provide timely and accurate news and information about legislation, benefits and other issues affecting the STRS Ohio membership.
If you wish to comment on a topic, please either email contactus@strsoh.org or call the Member Services Center toll-free at 1-888-227-7877.