October 2015 Monthly Board Report

FUNDING REPORT SHOWS OP&F MEETS STATE REQUIREMENT

An actuarial report presented to the Ohio Police & Fire Pension Fund (OP&F) Board of Trustees on Oct. 21 shows that the retirement system is in compliance with the state’s funding requirement.
An independent actuarial firm, Buck Consultants, presented the findings which showed that as of Jan. 1, 2015, OP&F’s funding period is 30 years, an improvement from 33 years in the 2014 valuation study. The funding period projects the amount of time it will take to pay down the system’s unfunded accrued liabilities. The State of Ohio requires a 30-year funding period or a plan to reach that level.
OP&F’s funding ratio also improved from 2014 to 2015. The ratio is now 70.8 percent, compared to 66.7 percent in 2014. The funded ratio measures a pension system’s assets to its liabilities.
Pension reform legislation passed in 2012 greatly improved OP&F’s long-term funding status, resulting in the current 30-year funding level. Significant funding provisions were the basis for the legislation and included increased member contributions, an increase in the minimum retirement age for new hires and adjustments to the Deferred Retirement Option Plan and cost of living allowances. OP&F also shifted more dollars toward pensions from its health care funding stream. These factors all contributed to OP&F meeting the state’s funding requirement without any additional taxpayer dollars.

PORTFOLIO UPDATE
OP&F's investment portfolio value:

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

• DISABILITY: In addition to the regularly scheduled hearings and appeals, the Disability Committee received the Disability Experience Report for the 3rd quarter of 2015. Staff provided a report to the Committee with details of the eight disability benefit recipients who have not submitted the required Annual Earnings Statement to date. Also discussed were the disability case file triage process and the size of some recent case files. This issue will be discussed in detail with physicians and experts included during the November Disability Committee meeting.
• BENEFITS: The Committee reviewed and discussed the 3rd Quarter 2015 Deferred Retirement Option Plan (DROP) Experience Report. The Committee also was given a demonstration of the new DROP estimator that is now available on the OP&F website. Staff also informed the Committee that Optum Rx is transitioning their specialty dispensing pharmacy to the legacy Catamaran BriovaRx. Effective Nov. 1, a small group of members will transition to BriovaRx. Members will be moved in a phased-in approach over the next nine months to BriovaRx specialty pharmacies.
• ADMINISTRATION/AUDIT: The Committee received and discussed a presentation on the recently completed Compensation Study. Also discussed were the salary and wages budget planning and employee health care budget planning for 2016. OP&F’s new internal auditor, Caren Sparks, provided the Committee with a status report on her audit schedule and processes.
• FINANCE:  The Committee received and discussed the proposed 2016 Finance Department Budget and the proposed 2016-18 Capital Budget.
• INVESTMENT: In addition to the monthly portfolio update, the Board discussed several items requiring motions and votes. The results of these motions are detailed in the next section of the Board Report.

• At its October 2015 meeting, the OP&F Board of Trustees voted on the following motions:
• Approved manager ratings for OP&F’s real estate managers as recommended by The Townsend Group. Motion passed by unanimous vote (Investment Committee).
• Approved Townsend’s recommendation to commit up to 50 million Euros to PW Real Estate Fund III. Motion passed by unanimous vote (Investment Committee).
• Approved staff’s and TorreyCove’s recommendation to commit up to $40 million to Harvest Partners VII. Motion passed by a vote of 8-1 (Investment Committee).
• Approved staff’s recommended manager ratings for DFA, Franklin Templeton, Pyramis Global International Small-Cap mandate and the PIMCO fixed income mandate. Motion passed by unanimous vote (Investment Committee).
• Approved staff’s request to waive OP&F’s Investment Manager Search Policy with respect to OP&F’s search for a multi-strategy manager. Motion passed by unanimous vote (Investment Committee).
• Approved the submission of the Actuarial Pension Valuation and the Health Care Valuation as of Jan. 1, 2015 to the Ohio Retirement Study Council, as presented by Buck Consultants. Motion passed by unanimous vote (Full Board).
• 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. 21, 2015. Motion passed by unanimous vote (Disability Committee).
• Approved the Committee recommendation for reconsideration for the members identified in the reconsideration hearings list presented to the Board on Oct. 21, 2015. Motion passed by unanimous vote (Disability Committee).
• Approved the recommendation for the appeal hearing for the members identified in the appeals hearings list presented to the Board on Oct. 21, 2015. 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 2016 Member Services Budget to the Finance Committee for review and approval. Motion passed by unanimous vote (Benefits Committee).
• Approved the 2016 budgets for the Administration Department, Business and Technology Solutions Department and Trustees to the Finance Committee for review and approval. Motion passed by unanimous vote (Administration/Audit Committee).
• Authorized the expense for a bench in the Police and Fire Memorial Park to honor Darryl Dever, OP&F’s long-time legislative consultant who passed away last month. Motion passed by unanimous vote (Finance Committee).
  

Next Board of Trustees Meetings: November 17-18, 2015