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Executive Director Allen Proctor reported that the Fund has had a positive response to the Amplified Payroll Reporting System (APRS) Amnesty program. By law, the Fund may penalize employers 5% for payroll reports that do not comply with the APRS system or late payments submissions. As an incentive for compliance, the Fund is offering an amnesty program to waive penalties and interest for the 1999 reporting period, as long as all payments and reports for 1999 are filed in proper form by March 31, 2000. As part of the amnesty program, Fund staff members visited Columbus, Cleveland, Marietta, and Toledo, per the request of those employers, to offer their assistance with compliance. Utilizing APRS, employers report more detailed payroll information and contributions to the Fund, which will ultimately result in more efficient and accurate retirement processing.
The Board approved the 2000 operating budgets and management plans of the Fund's real estate properties. Frank Blaschka from the Townsend Group, the Fund's real estate investment consultant, reported that the Fund's real estate portfolio performed relatively well in 1999 and is expected to perform well again in 2000 due to the strong economy. In addition, the Board approved staff suggested revisions to the real estate advisor agreements. Most of these revisions offer additional protection to the Fund and require the advisors to provide more detailed information to the Fund.
A recent report on the Fund's disability program showed a significant decrease in the number of appeal hearings since 1997. These three years were reported in order to assess disability trends before and after the Fund's introduction of the Disability Evaluation Panel (DEP) in 1998, which was a radical overhaul to its disability determination process. The significant decrease in the number of appeal hearings-36% appeal rate in 1997 vs. 13% through September of 1999-supports the Fund's belief that the DEP process makes disability determinations fair, consistent, and thorough. Through the use of the DEP, disability decisions are well supported and well documented. The number of disability grants has remained fairly consistent over the last three years as well, with 202 grants in 1997, 200 in 1998, and 198 through September 1999. The report also stated that the number of off-duty grants remained consistent.
The Board voted to oppose pending legislation sponsored by Rep. Williamowski that would permit a domestic relations order to be recognized by the Fund and the other state retirement systems so that the payment of benefits could be made directly to the member's former spouse, including payments for the division of marital property, subject to normal consumer credit limitations. Unlike private retirement plans, the pensions of Ohio's public employees are exempt from the Employee Retirement Income Security Act (ERISA). Ohio law currently does not permit the division or attachment of this benefit in domestic relation cases. As a result, the pension rights accrued by one spouse during a marriage cannot be divided under a Qualified Domestic Relations Order (QDROs). Therefore, in cases of divorce or legal separation, the law prohibits the Fund from recognizing any court order that splits a member's retirement account or orders the Fund to pay benefits directly to the member's former spouse.
After reviewing a proposed revision to the retirant health care contribution schedule, the Board requested that the Health Care Committee consider other alternatives to health care funding before changing retirant contributions. Over the past few years, the Health Care Committee has been struggling with providing quality health care while controlling the rising cost of providing health care to benefit recipients and their dependents. An actuarial review in 1998 predicted that health care reserves will be exhausted by 2014 unless changes are made in employer and retirant contributions to health care. However, employer contributions must first go toward funding pension benefits and attaining a 30-year funding status by 2007 as required by S.B. 82. The share of employer contributions going toward health care benefits was increased in 1999; however, retirant contributions have remained unchanged since 1992.
Board Chairman David Harker and Executive Director Allen Proctor publicly recognized Fund staff for ending a successful and productive year marked with improved service and benefits to members, as well as enhanced internal operations. Service improvements ranged from introducing a more effective process for members who visit the Fund, including free parking, to substantially faster processing of benefit payments for new retirees. Benefit enhancements included adding improved dental coverage and introducing an increase in survivor benefits and an expanded cost-of-living adjustment program to all eligible benefit recipients with the recent signing of House Bill 275. Enhancements to Fund internal operations involved tighter financial accounting controls, improved investment oversight, enhanced computer systems, a substantial upgrade of staff recruitment and training, and the introduction of rigorous legal and internal audit reviews. "The list could go on, but suffice it to say that the Fund is ending this decade proud that it is serving its members well and raising the level of performance every year," Proctor stated.
As part of the five-year rule review required by law, the Board voted to approve revisions to the Fund's administrative rules regarding interim payments, use of member records, and cost-of-living allowances (COLAs). The changes incorporated into these rules included clarification of language, updates of current Fund processes, and changes required by the passage of recent laws.