Monthly Board Report

Public Safety Pension Modernization Act announced

Ohio State Representatives Cindy Abrams and Brian Baldridge introduced the Public Safety Pension Modernization Act on Dec. 2, 2021. The bill has many components, but the most significant change updates employer’s contributions to the pensions of OP&F members.

While the pension’s financial outlook appears rosy, meeting and beating the benchmark 30-year solvency, the forecast is based on a higher-than-industry-average investment returns of 8.0 percent. OP&F’s success so far has also been dependent on $3.2 billion in benefit cuts (which includes a 2.25 percent increase in employee contributions) and an additional $150 million from changes to retiree health care in the last eight years.

It’s important to note that employers’ contributions have remained unchanged since 1986.

Add on new pressures like an increasing number of early retirements and more difficulty recruiting first responders, which limits payroll growth, and the formula is there for future challenges.

Representative Abrams said that the time is now to make these changes.

“This bill is meant to ensure the long-term stability of the pension fund,” Abrams said. “This is good government at its best – looking ahead, acknowledging challenges on the horizon, and answering those challenges in a fiscally responsible way before it’s too late.”

It’s important to note that reducing the fund’s assumed rate of return by just one quarter of one percent moves the fund outside the 30-year required funding window.

Representative Baldridge said that first responders have always deserved and received the support of Ohio taxpayers.

“I’m proud of our commitment to first responders, and I’m glad this pension fund has been a stable source for retirees, but after cuts and increasing what the employee must contribute to their pension, we must look for bigger solutions to ensure the next generation of first responders has our full support.”

The bill has the support of the OP&F Board of Trustees. Additionally, the Fraternal Order of Police of Ohio and the Ohio Association of Professional Firefighters support this bill.

“This is a vitally important issue, and I’m proud that the Ohio Police and Fire Pension Fund is addressing this issue now, said Ohio FOP President Gary Wolske.

“We’re here in solidarity with our police brothers and sisters,” said OAPFF President Mike Taylor. “And we’re here to ensure that the public investment in our retirement fund is equitable.”

OP&F Executive Director Mary Beth Foley praised Representatives Abrams and Baldridge for their help.

“Representative Abrams and Baldridge have been great partners for us as we work to modernize our fund for the next generations,” Foley said. “Their experience as first responders coupled with their commitment to good government should be an example for every member of the general assembly.”

The Public Safety Pension Modernization Act will now pass through hearings and a house vote before going to the Senate.

PORTFOLIO UPDATE

OP&F’s investment portfolio value:

• Current value (11/30/21): $19.0 billion
• End of October value: $19.1 billion
• End of September value: $18.6 billion

Board of Trustees Committee Notes

(Motions voted on by the Board are listed separately)

• ADMINISTRATION/AUDIT: The Committee received the Internal Audit Status Update Report and an Information Technology update in addition to voting on several items (listed in Motions below).
• DISABILITY: The Committee conducted its scheduled initial determination and appeal hearings and also received an update on the status of Annual Earnings Statements, the Annual Report of Disability Terminations, the Annual Report of Disability and Fraud Activity and the 3rd Quarter Disability Experience Report.
• PERSONNEL: The Personnel Committee met and approved its schedule for 2022, along with reviewing compensation adjustments, succession planning, the 2022-2024 Strategic Plan and discussing aggregate staffing data.
• HEALTH CARE: Representatives from Aon Retiree Health Solutions were present to discuss the current open enrollment season and plan choices available to retirees in 2022. The Committee also reviewed the 3rd Quarter Health Care Stabilization Fund report.
• INVESTMENT: Staff discussed the month-end portfolio values, significant cash movements and investment performance. Wilshire presented the Investment Performance Report for periods ended Sept. 30, 2021 as well as the Private Equity and Private Credit Program analysis for periods ended June 30, 2021. Staff also presented the Private Markets Program Review and the Semi-Annual Proxy Voting Report for the period ended June 30, 2021.

Motions:

At its November/December 2021 meeting, the OP&F Board of Trustees approved the following motions:

• Approved the Internal Audit Department Charter. Motion passed by unanimous vote (Administration/Audit Committee).
• Approved the 20022 Audit Plan. Motion passed by unanimous vote (Administration/Audit Committee).
• Approved the Board Governance Policy Manual. Motion passed by unanimous vote (Administration/Audit Committee).
• Approved the 2021 Communications Plan. Motion passed by unanimous vote (Administration/Audit Committee).
• Approved Townsend’s recommendation to make no changes to the Real Estate Investment Policy. Motion passed by unanimous vote (Investment Committee).
• Approved Townsend’s recommendation to commit up to $125 million to Prologis Targeted US Logistics Fund. Motion passed by unanimous vote (Investment Committee).
• Approved Townsend’s recommendation to make no changes to the Real Assets Investment Policy. Motion passed by unanimous vote (Investment Committee).
• Approved staff’s and Aksia TorreyCove’s recommended changes to the Private Markets Investment Policy. Motion passed by unanimous vote (Investment Committee).
• Approved staff’s and Wilshire’s recommended 2022 Private Markets Investment Plan. Motion passed by unanimous vote (Investment Committee).
• Approved staff’s and Wilshire’s investment manager rating recommendations for Arrowstreet, Harding Loevner, State Street Global Advisors, Western Enhanced Cash and Bridgewater GM and TIPS mandates. Motion passed by unanimous vote (Investment Committee).
• Voted to conclude the State Posttraumatic Stress Fund Study. Motion passed by unanimous vote (Disability Committee).
• Approved OP&F Strategic Plan for the years 2022-24. Motion passed by unanimous vote (Personnel Committee).
• Approved the following from the Disability Committee:
• The recommendations for 11 Initial Determination Hearings and three were disapproved
• The recommendations for the one Death Benefit Fund case
• The recommendations for the four Appeal Hearings and one was postponed
• The Disability Reporting Waivers List

NEXT BOARD OF TRUSTEES MEETINGS: Jan. 25-26, 2022

Posted 12/8/2021