CliftonLarsonAllen reported the results of its audit of the STRS Ohio financial statements for the fiscal year ended June 30, 2012, at the December Retirement Board meeting. The report noted that the system's financial statements were fairly stated in accordance with generally accepted accounting principles; further, no material weaknesses in internal controls or instances of statutory noncompliance were found. As a result, STRS Ohio received an unqualified audit — known as a "clean" opinion — which is the highest level of opinion that an organization can achieve.
STRS Ohio's financial statements are included in the 2012 Comprehensive Annual Financial Report, which will be posted on the STRS Ohio website by Dec. 28, 2012. Copies of the report can also be requested by calling STRS Ohio's Member Services Center toll–free at 1–888–227–7877. In addition to the financial statements noted above, the report includes investment, actuarial and statistical information about STRS Ohio.
At its December meeting, the State Teachers Retirement Board voted to amend 29 Ohio Administrative Code rules, to rescind one rule and to adopt three new rules as part of the implementation process for pension reforms included in the passage of Substitute Senate Bill 342. These actions do not result in any additional changes beyond what was included in the pension reform legislation, but they are necessary to implement the changes to Ohio Revised Code Chapter 3307 that become effective on Jan. 7, 2013.
Nine of these rule changes pertain to changes in the rules that govern service credit purchases. The cost for certain purchases will increase to 100% of the liability created by the purchase of credit. This could result in costs two–to–four times higher than under current rates. For service credit certified with STRS Ohio by Dec. 31, 2013, members will have until June 30, 2014, to purchase credit at the current cost. Members who are currently purchasing service through a payroll deduction plan can continue to complete the payoff at their current rate. For more information about these changes, members can contact STRS Ohio's Member Services Center toll–free at 1–888–227–7877.
Board Discusses Potential Refinements to Defined Contribution and Combined Plans
The passage of Sub. S.B. 342 in September addressed pension plan changes for members and beneficiaries of STRS Ohio. STRS Ohio newsletters have detailed the changes enacted for members who are enrolled in the Defined Benefit Plan (i.e., higher contribution rates, lower benefit formula, increased years of service for retirement eligibility, a five–year final average salary calculation and changes to the COLA). At the December Retirement Board meeting, executive director Michael Nehf made a presentation to the board about possible changes that would affect members enrolled in STRS Ohio's Defined Contribution and Combined Plans.
The board viewed the current contribution and benefit structure offered in these plans, as well as the possibility of more investment allocation choices and lower fees for participants. In addition, the board reviewed how much of employer contribution rates — a required and vital part of the long–term funding of STRS Ohio — are now used to pay down the retirement system's unfunded liability under each of the three retirement plan options. Under rules adopted by the Governmental Accounting Standards Board, employers will begin to show these liabilities on their financial statements, beginning in fiscal year 2014–2015. At a future meeting, the Retirement Board will begin to consider potential adjustments to these rates that could affect members enrolled in STRS Ohio's Defined Contribution and Combined Plans, reemployed retirees and higher education faculty who are enrolled in an alternative retirement plan through a private vendor.
The Retirement Board approved 131 active members and 123 inactive members for service retirement benefits.
Other STRS Ohio News
PPCC Recognizes STRS Ohio
STRS Ohio received a Public Pension Standards Award for Funding and Administration for 2012 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. As a result of Sub. S.B. 342, STRS Ohio was eligible for the funding portion of the award for the first time in several years.
STRS Ohio Issues RFP for Actuarial Consulting Services
STRS Ohio's contract with PricewaterhouseCoopers (PwC) for actuarial consulting services expires at the end of March 2013. Staff prepared and distributed a Request for Proposal (RFP) in November and posted the RFP on the STRS Ohio website.