May 2013 Monthly Board Report

BOARD-APPROVED CHANGE MEANS 30-YEAR FUNDING WITHIN REACH FOR OP&F
At its May meeting, the OP&F Board of Trustees approved a change to its health care funding that is expected to result in the retirement system reaching the desired 30-year funding status. Trustees unanimously approved a reduction in the amount of the employer contributions earmarked for health care from 4.69 percent to 2.85 percent. The additional funds now go toward pension funding. The change maintains an 18 year solvency period for OP&F's retiree health care plan.

Strong investment returns in 2012 and so far in 2013, paired with the landmark pension reform provisions included in Senate Bill 340 last year brought OP&F much closer to the required 30-year funding measurement established by the Ohio General Assembly. The additional funds now going toward pensions is expected to bring OP&F into compliance. Future actuarial studies will determine OP&F's actual funding status. The funding structure in place at the time these studies are conducted will also impact the funding status.

UPCOMING BOARD MEETINGS
While OP&F will conduct its June meetings as scheduled (June 25-26), there will not be a meeting in July. Also, the October Board of Trustee meetings have been changed to Oct. 22 and 23, 2013.

PORTFOLIO UPDATE
OP&F's investment portfolio value:

Board of Trustees Committee Notes
(Motions approved by the Board are listed separately)

• DISABILITY: The Committee/Board reviewed disability cases in addition to the regularly scheduled hearings and appeals. The Committee/Board also was provided with an update on efforts to recruit a new Disability Evaluation Panel member to replace Dr. Ernest Johnson.

• BENEFITS: The Committee reviewed Deferred Retirement Option Plan statistics for February, March and April 2013, including a breakdown of participants by years in the plan and dollars accrued. Staff informed the Committee that letters were mailed to members who were eligible to enroll in DROP by July 1. The Committee also discussed deadline dates and the way OP&F communicates these dates to membership. Staff will develop a summary of letters for review by the Committee. Also discussed was the process of granting military service credit and the availability for all elected trustees to attend training programs offered by the National Conference on Public Employee Retirement Systems and also the Wharton School of Business.

• HEALTH CARE: The Committee/Board reviewed and discussed the most recent Health Care Stabilization Fund report, then received an update from UnitedHealthcare. The UnitedHealthcare update included information on the June 1 transition to OptumRx as the pharmacy benefit manager. UHC also presented a no-change proposal to the 2014 contribution rates for retiree dental and vision coverage. OP&F's actuary, Buck Consultants, proposed the 2014 health care costs and contribution rates for 2014.
  

• INVESTMENT: In addition to the monthly portfolio update, the Committee/Board reviewed and discussed the first quarter 2013 Investment Performance Review and the fourth quarter 2012 Real Estate Performance Report. Additionally, OP&F's investment consultant, Wilshire, presented the initial U.S. equity structure review and will return in June with options and recommendations. The Committee/Board also discussed a report released by the American Federation of Teachers.

• Approved staff and Wilshire's recommended changes to the Investment Guidelines of PENN Capital and MacKay Shield Active Core to allow a focus on bank loans. Motion passed by unanimous vote (Investment Committee).
• Approved the investment manager guidelines for OP&F's Master Limited Partnership managers (Harvest Fund Advisors, Salient Partners and Tortoise Capital Advisors). Motion passed by unanimous vote (Investment Committee).
• Approved the manager ratings for Investcorp and Columbia as presented by staff. Motion passed by unanimous vote (Investment Committee).
• Approved the Committee recommendations for the initial determination of disability for the 16 members as identified in the initial determination hearings list presented to the Board on May 29, 2013. Motion passed by unanimous vote (Disability Committee).
• Approved the determination for reconsiderations for the members identified. Motion passed by unanimous vote (Disability Committee).
• Approved the recommendations for the appeal hearings for the seven members identified in the appeals list presented to the Board on May 29, 2013. Motion passed by unanimous vote (Disability Committee).
• Approved the recommendations for Death Fund benefits for the members identified. Motion passed unanimously (Disability Committee).
• Approved the determination for Death Fund reconsiderations for the members identified. Motion passed by unanimous vote (Disability Committee).
• Waived the 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 May 29, 2013. Motion passed by unanimous vote (Disability Committee).
• Approved the termination of disability benefits for the member identified in staff's memorandum dated May 28, 2013, for the reasons outlined in that memorandum. Motion passed by unanimous vote (Disability Committee).
• Approved the 2014 contribution rates for retiree dental and vision coverage as presented by UnitedHealthcare on May 29, 2013. Motion passed eight votes in favor and one abstention (Health Care Committee).
• Approved the 2014 health care costs and contribution rate increases for retiree non-Medicare medical and prescription drug coverage as recommended in Scenario 1 by Buck Consultants in its presentation on May 29, 2013. Motion passed 6-3 (Health Care Committee).
• Approved the pharmacy clinical program opportunities as presented by UnitedHealthcare on May 29, 2013. Motion passed by unanimous vote (Health Care Committee).
• Approved a change to the employer allocation to the Health Care Stabilization Fund to 2.85 percent. Motion passed by unanimous vote (Health Care Committee).
• Approved two travel motions for Trustee Roulston. Motion passed by unanimous vote (Health Care Committee).
  

Next Board of Trustees Meetings: June 25-26, 2013