Within the next few months, the Fund should know the results of an audit the State Auditor is conducting on non-COLA (cost of living adjustment) payments to retired Akron firefighters. The Fund has notified all affected retirees, their member organizations, and their employers of the auditor's activities. The Fund requested the audit after discrepancies were found on comp time reporting which is used for non-COLA pension calculations.
Executive Director Proctor reported that the Treasurer of State has allowed Fund staff to participate in writing contract language pertaining to the current negotiations with State Street Bank, who will become the Fund's international subcustodian. As a result, staff expects that a contract will be produced to provide the Fund with new tools for overseeing and managing custody services and expenses.
The Board voted to approve twelve new and revised rules developed to ensure that PFDPF is in full compliance when H.B. 648 goes into effect on September 16, 1998. The issues addressed within those rules include: pre-employment medical testing, annual earning statements and medical examinations for disability retirants, resumption of benefits for remarried surviving spouses, employer payment dates and penalties. Eight other rules were revised to reference the correct statutory reference. The Executive Director will file these rules with the Joint Committee on Agency Rule Review, the Secretary of State, the Legislative Service Commission, and the Ohio Retirement Study Council (copies will be posted on our website after final form has been completed).
In a study released to the Ohio Retirement Study Council, Milliman & Robertson reported that, overall, the Police & Fire Fund is financially sound, but cautioned that rising health care costs will be a major challenge in future years. In testimony addressed to the Ohio Retirement Study Council, who commissioned the study to examine the financial health of all of the Ohio Retirement Systems, Proctor reported that the Board has taken strides to address the challenge of rising health care costs. In addition, Proctor cautioned that the financial information presented in the report is based on theoretical information which can mislead others into believing that the Fund has already attained an amortization period of under 30 years. In reality, the Fund's unfunded liability still exists; however, the Fund is ahead of schedule on the reduction of this liability.
The office building in which the Fund's headquarters currently exist, the Town Center, will be recharacterized from a PFDPF investment to an operating asset. If the building were to remain part of the Fund's investment portfolio, it could potentially be sold to a third party who may not be able to meet PFDPF's space needs or even renew PFDPF's lease. As the Fund's space requirements continue to grow, running the building as an operating asset would give the Fund more control. In addition, extensive research showed that it would be less expensive for the Fund to expand within its existing building than to find or build new space. The income from leasing the portion of the building not occupied by PFDPF will continue to finance all expenses for operating the building.
As reported in past issues of the Report on Executive and Policy Actions, the Board is currently considering the possibility of re-opening the pre-payment program last offered to employers in 1994. Richard Balazs, Chairman of the Board's Finance Committee, stated that the committee hopes to have a recommendation on this matter to the full Board in October.
In an effort to enhance financial controls and provide even greater assurance that PFPDF funds are being appropriately spent, the Fund began full-time work this month on a project to replace its current accounting computer system. A task force consisting of internal staff is expected to complete the project by some time next year.
In preparation for an informational session on the Disability Evaluation Panel, production began on a video designed to illustrate the panel's process in evaluating and making determinations on disability cases. The Fund recently distributed a flyer soliciting interest in the informational session to individuals involved in the disability process including agents, member attorneys, representatives from various police and fire organizations and other interested parties. The session is targeted for November. The exact date and location will be announced once the interest level is assessed.
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