Board of Trustees News

Latest actuarial study shows OP&F still meets funding requirements

The annual actuarial valuation presented this month to the Ohio Police & Fire (OP&F) Board of Trustees shows that the retirement system continues to meet state funding requirements. The study, which includes data through Jan. 1, 2019, shows that OP&F’s funding period is 29 years. Ohio requires that retirement systems are able to pay off all unfunded liabilities within 30 years or less. By having a funding period of 29 years, OP&F meets the criteria.

The funding period increased one year from the previous valuation, from 28 years to 29, primarily due to the poor investment environment in 2018. The funding ratio as of Jan. 1, 2019 is 69.4 percent. The ratio is the amount of assets vs. liabilities in the pension system. In the 2018 valuation, the ratio was 69.9 percent.

Pension reform legislation passed in 2012 requires the Ohio Retirement Study Council to review OP&F’s actuarial valuation every three years, including 2019. For both the 2016 and 2019 valuations, OP&F has remained compliant with Ohio’s funding requirements. The next required ORSC review will be when the Jan. 1, 2022 study is completed.

Cavanaugh Macdonald Consulting, OP&F’s independent actuary, conducted the study.

Court dismisses claims against OP&F in retiree health care case

The court handling lawsuits filed against OP&F unanimously dismissed all claims on Oct. 21. The cases resulted from OP&F’s decision to move away from a self-funded retiree health care insurance model as of Jan. 1, 2019, to a stipend model where retirees can select plans from the health insurance marketplace.

While the transition was difficult at times in the first year, the decision appears to have had the intended result – extending the solvency of the health care fund. A recent actuarial study found that without the move the health care fund solvency would have been less than seven years. After the move, the health care fund will be solvent for nearly 14 years. The health care fund is separate from, and measured differently, than the actual pension fund.

Next Board meeting will be Dec. 3-4

OP&F has consolidated its year-end Board meetings, eliminating the November meeting and instead scheduling meetings on Dec. 3-4. The Board will resume monthly meetings in January.

PORTFOLIO UPDATE

OP&F’s investment portfolio value:

  • Current value (10/22/19): $15.75 billion
  • End of September value: $15.78 billion
  • End of August value: $15.68 billion

Board of Trustees Committee Notes

(Motions voted on by the Board are listed separately)

  • DISABILITY: In addition to the scheduled hearings and appeals, the Committee was provided an update on the status of disability benefit recipients who have not submitted the required Annual Earnings Statement. The Committee also received the Disability Experience Report for the third quarter of 2019.
  • FINANCE: The Committee reviewed and discussed the 2020 OP&F budget with staff.
  • BENEFITS: The Committee received and discussed the Deferred Retirement Option Plan Experience Report for the 3rd quarter of 2019. Representatives from Cavanaugh Macdonald Consulting presented the Annual Actuarial Valuation report and discussed key results for the pension plan, the Health Care Stabilization Fund, and DROP cost neutrality. They also discussed the DROP interest rate floor proposal and confirmed that such action will not affect DROP neutrality.
  • HEALTH CARE: The Committee reviewed the 2nd Quarter 2019 Health Care Stabilization Fund and Net Cost Report. Representatives from OP&F’s health care partner, Aon, presented information on the September health care meetings and discussed with the Board the open enrollment periods. Board Chair Daniel Desmond discussed several items in the open discussion portion of the meeting, including the OAPFF task force report, his recent trip to meet with legislators in Washington, D.C., and the recent conclusion of litigation on OP&F retiree health care.
  • INVESTMENT: Staff discussed the monthly portfolio performance update and significant cash movements. Investment consultant, Wilshire Associates, discussed the status of OP&F’s core fixed income allocation and offered thoughts on how to continue the transition toward its long-term policy structure.

Motions:

At its October 2019 meeting, the OP&F Board of Trustees approved the following motions:

  • Approved staff’s and Wilshire’s recommended changes to the Total Safety Oriented Assets rebalancing range. Motion passed by unanimous vote (Investment Committee).
  • Approved staff’s and Wilshire’s investment manager rating recommendations for Dimensional Fund Advisors, Franklin Templeton and Bridgewater’s U.S. TIPS mandate. Motion passed by unanimous vote (Investment Committee).
  • Approved Townsend’s recommendation to commit up to $60 million to Exeter Industrial Value Fund V. Motion passed by a vote of 6-1 (Investment Committee).
  • Approved staff’s recommendation to approve TorreyCove’s Private Markets Co-Investment proposal. Motion passed by unanimous vote (Investment Committee).
  • Approved staff’s recommended changes to the Short Term Cash Management Investment Guidelines. Motion passed by unanimous vote (Investment Committee).
  • Approved staff’s and Wilshire’s recommendation to commit up to $50 million to Annaly Credit Opportunities Fund, LP. Motion passed by unanimous vote (Investment Committee).
  • Approved staff’s and TorreyCove’s recommendation to commit up to $20 million Odyssey Investment Partners VI, LP. Motion passed by unanimous vote (Investment Committee).
  • Approved the Committee recommendations for the initial determination of disability for the members as identified in the initial determination hearings list presented to the Board on Oct. 23, 2019. Motion passed by unanimous vote (Disability Committee).
  • Approved the Committee recommendations for appeal hearings for the members identified in the appeals list presented to the Board on Oct. 23, 2019. Motion passed by unanimous vote (Disability Committee).
  • Approved the Committee recommendation for Death Fund benefits for the members identified. Motion passed by unanimous vote (Disability Committee).
  • Approved the Committee recommendation to waive mandatory medical evaluation and filing of annual earnings statements for future years for the members identified in the disability reporting waivers list presented to the Board on Oct. 23, 2019. Motion passed by unanimous vote (Disability Committee).
  • Approved the Administrative Rules outlined in staff’s memorandum dated Oct. 23, 2019 and authorizes the requird filing of the rules with the proper agencies. Motion passed by unanimous vote (Benefits Committee).
  • Adopted the proposed changes to Administrative Rule 742-4-09 to set a 2.5 percent floor for the DROP interest rate, and to continue to annually re-confirm with the Board’s actuary the appropriateness of the DROP interest rate as outlined in staff’s memorandum dated Oct. 23, 2019, and that the Board re-affirm the current rate by Board vote at least once each year. Motion passed by unanimous vote (Benefits Committee).
  • Approved the 2020 Annual Budget in the form submitted to the Board of Trustees on Oct. 22, 2019. Motion passed by unanimous vote (Finance Committee).

NEXT BOARD OF TRUSTEES MEETINGS: Dec. 3-4, 2019

Posted 10/30/2019


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Monthly Board Report

Board of Trustee Elections

In 2020, OP&F will hold elections for three positions on the Board of Trustees; a retired police representative, an active police representative and an active fire representative.

Board and Committee Meetings

OP&F encourages you to come to our monthly board meetings. Board agendas and minutes can be viewed by clicking the link below.

Board Members and Committee Assignments

Please click the links below to view Committee Assignments and Board Members.