August Board News
STRS Ohio Reports +16.8% Total Fund Return for Fiscal Year 2014
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, 2014, was +16.8%, and the market value of assets at fiscal year end was $74.8 billion. The strong return exceeded the fund’s assumed actuarial return of 7.75% and followed a +13.7% return in fiscal year 2013.
The Retirement Board’s investment consultant, Callan Associates, noted that STRS Ohio’s fiscal year 2014 returns ranked above the median of the Callan Public Fund Sponsor database, but an overweight to liquidity reserves detracted from returns. Following two years of solid market returns, STRS Ohio’s 2015 Investment Plan calls for only moderate growth in the capital markets in fiscal year 2015.
STRS Ohio’s assumed actuarial rate of return+7.75%
Total fund return (five years) +13.6%
Total fund return (10 years) +8.0%
Total fund return (20 years) +8.3%
Total fund return (30 years) +9.6%
Fiscal 2014 Operating Expenses Total $4.5 Million Under Budget
Final figures for fiscal year 2014 show that STRS Ohio’s operating expenditures were approximately $4.5 million less than budgeted for the year. Less than expected expenditures for salaries, performance-based incentive payments and professional and technical services accounted for much of the savings. Each month, STRS Ohio posts approved administrative expenses on its website.
CEM Study Reflects Higher Service Level Score for STRS Ohio
Results of the CEM Pension Administration Benchmarking report for fiscal year 2013 showed improvement in STRS Ohio’s service level score. Jan Hartford, a partner at Cost Effectiveness Measurement, Inc. (CEM) shared the study results at the August board meeting. STRS Ohio’s service score was the second highest among its peer group of 14 systems and also ranked second overall of the 55 plans that participate in the study, and STRS Ohio’s Call Center ranked first among all participating systems. STRS Ohio is on track to improve its overall service score again next year as more online services have been initiated.
The report also measures each plan’s administrative cost per member and annuitant. STRS Ohio’s cost per member remained steady — higher than the peer average, but below the cost of all participating systems. Hartford told the board that STRS Ohio’s costs per member and annuitant have decreased by 1.7% between 2010 and 2013, while the average costs of the peer group increased by 1.5% per year.
The Retirement Board approved 2,241 active members and 210 inactive members for retirement.
Other STRS Ohio News
NIRS Report Details Positive Economic Impact of Defined Benefit Pensions
A new report from the National Institute on Retirement Security (NIRS) found that public and private retiree pensions provide important support to the U.S. economy, including more than $943 billion in total economic output and 6.2 million jobs. The full report is available on the NIRS website, along with state-by-state fact sheets. STRS Ohio has a link to the report on the retirement system’s website.
Australian Pension Administrator to Visit STRS Ohio Call Center in September
First State Super, an Australian pension system with 775,000 members, will visit STRS Ohio in September to gain a better understanding of how the retirement system operates its Call Center. CEM Benchmarking recommended STRS Ohio to First State Super based on high service scores coupled with average-per-call costs.
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