During the August meeting of the State Teachers Retirement Board, Investment Department staff reported that STRS Ohio’s total fund return for the year ending June 30, 2015, was +5.45%. The board’s investment consultant, Callan Associates, reported that STRS Ohio’s one-year return ranked in the top 3% of its public fund universe. Pensions & Investments, a national publication on money management, recently published a list of public pension fund investment returns for the one-year period ending June 30, 2015, with STRS Ohio outpacing other top funds including CalSTRS (4.8%), Oregon Public Employees (4.3%) and Illinois State Board of Investment (4.3%).
STRS Ohio’s fiscal year 2015 return was consistent with staff’s annual plan forecast of moderate, positive returns. The total fund return beat its performance benchmark by 0.37%, meaning the system’s active management of the funds — rather than relying on index funds — added approximately $180 million in value after all investment costs during the fiscal year. The 5.45% return follows a strong +16.83% return in fiscal 2014. The value of investment assets as of June 30, 2015, was $74.2 billion.
In June, the Retirement Board adopted the fiscal year 2016 operating and capital budgets. At that time staff also submitted a budget addendum to the board, recommending an additional capital budget request for $1.6 million to upgrade software used for member and employer data. The board took action on that request during its August meeting, voting to adopt the addendum to the fiscal 2016 capital budget.
Final figures for fiscal year 2015 show that STRS Ohio’s operating expenditures were approximately $1.7 million less than budgeted for the year. Less than expected expenditures for salaries, performance-based incentives and professional and technical services accounted for much of the savings. Each month, STRS Ohio posts approved administrative expenses on its website.
Board Discusses Health Care Funding
STRS Ohio health care staff led a strategic discussion with the board regarding funding of the retirement system’s health care program. In March 2014, the board took action to improve pension funding, discontinuing the allocation of 1% of employer contributions to the Health Care Fund. The 2015 health care valuation indicated the loss of this 1% contribution reduced the solvency period of the Health Care Fund by 29 years — it is now estimated to remain solvent until 2034. The board plans to continue these discussions throughout the year ahead as it evaluates the financial condition of both the pension and health care funds.
The Retirement Board approved 3,480 active members and 173 inactive members for service retirement benefits.
Other STRS Ohio News
Paperless Open-Enrollment Packet Offered to Health Plan Enrollees
Enrollees in the STRS Ohio Health Care Program will have the option this year to receive paperless open-enrollment information. The e-delivery option is being promoted through emails that are being sent to enrollees with an email address on file with STRS Ohio. The first email was sent Aug. 18 to more than 71,000 enrollees and included instructions on how to select this delivery option.
In mid-September, a second email will be sent reminding enrollees they have until Sept. 27 to take advantage of the online delivery opportunity. Enrollees must register for an online personal account on the STRS Ohio website. The open-enrollment packet will be available in late October and educates enrollees on the 2016 health care program, including eligibility, coverage and premiums. The personalized letter and supporting materials available electronically are the same as the paper-based materials, which are scheduled to mail in October.
STRS Ohio is continuing to evaluate other communications that can be delivered effectively through the Web.