STRS Ohio

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1 STATE TEACHERS RETIREMENT SYSTEM OF OHIO Newsletter for Reporting Employers GASB 68 will impact employers financial statements The Governmental Accounting Standards Board (GASB) recently approved new rules that will require employers to include their share of pension liabilities and expenses in financial statements. Statement 68, Accounting and Financial Reporting for Pensions, is intended to increase the transparency and consistency of pension information across state and local governments. Statement 68 replaces Statement 27 and is effective for the fiscal year ending June 30, 2015, and later. What is required? Statement 68 requires employers participating in a cost-sharing multipleemployer pension plan, like, to recognize their long-term obligation for pension benefits as a liability. Historically, GASB viewed an unfunded pension obligation as a future liability rather than as an existing one, allowing information about the total liability to be disclosed in required supplemental information. A shift to an accounting-based approach from a funding-based approach will now require employers to report their share of the unfunded liability for the entire pension plan on their balance sheets for fiscal year ending June 30, 2015, and later. As an employer, this means reporting your proportionate share of s net pension liability. Your proportionate share will be based on your school s percentage of total employer contributions received by for the fiscal year. The proportionate share of the net pension liability for employers throughout the state will be substantial. It is important to note that these new reporting requirements will not reflect the financial condition of an employer. It is not yet clear how credit rating agencies will react to these new reporting requirements, although Moody s has indicated as little as 2% of the affected government entities will be placed under review for potential downgrades. Due to pension reform changes, expects the retirement system s funding to improve over time, which would lower these liabilities for employers. The pension liability is being paid over a long period of time through a portion of the employer contributions. How to prepare. In the coming months, will assist employers in meeting the standards of Statement 68. Information about GASB standards will be available in the new GASB Resources section of the Employer Website (coming soon). Be sure to check the site regularly, as resources Example Net Pension Liability (dollar amounts in thousands) Fiscal Year Ended June 30 Total pension liability $ 95,387,250 Plan net assets (66,272,199) Net pension liability (NPL) $ 29,115,051 Total employer contributions $ 1,447,812 Employer Employer contributions $ 4,344 Proportionate share ($4,344 / $1,447,812) 0.30% Net pension liability ($29,115,051 x 0.30%) $ 87,345 will be added as they become available. Relevant information will also be shared in future newsletters, eupdates and targeted communications to individuals who prepare your financial statements. plans to a questionnaire to employers requesting contact information for all individuals, including independent auditors, who coordinate or prepare financial statements in accordance with GASB standards. Please return the questionnaire to by the deadline requested in the so we can assist you with meeting the requirements of GASB 68. May 2014 No. 55 Changes effective July 1, % member contribution rate increase The member contribution rate will increase to 12% for work performed on and after July 1, Ensure your payroll system can accommodate the additional 1% in member contributions and withhold contributions at two different rates depending on the fiscal year in which the compensation is earned. (The employer contribution rate will remain 14%.) Also remember to review your pickup plans and calculations. See related article on Page 2. Elimination of retirement incentive credit The provision allowing employers to offer an Retirement Incentive Plan will be eliminated. Retirement incentive credit will not be granted for retirement effective dates of Aug. 1, 2014, or later. Reemployment restriction at retirement Members who hold more than one position with, OPERS or SERS and who plan to retire from the higher paying position with one employer and continue working in the lower paying position with another employer may do so only if they have continuously held the lower paying position for at least 12 consecutive months immediately prior to retirement.

2 Take time to review your pickup plans and calculations As you prepare for July 1, keep in mind the member contribution rate increase will affect your employer pickup plans. Last year, all employers were required to amend their pickup plans to include the additional 1% in member contributions. Some employers indicated specific percentages, while others adopted plans at the rate in effect. Please review last year s pickup plan documentation effective July 1, 2013, to determine if you need to amend your plan. If you adopted a plan at the rate in effect, your plan will automatically be updated to include the 1% member contribution rate increase. You do not need to amend your plan unless you want to change the type of plan or percentage being picked up. However, if you adopted a plan with specific percentages, you must amend it to include the additional 1% in member contributions. Please submit a Notification for Employer Pickup of Employee Contribution form effective July 1, 2014, along with a copy of the applicable board resolution. The notification form and a sample resolution are available under Employer Pickup in the forms section of the employer website. Additional information about amending your plan, including examples, can also be found in the Pension Legislation section under FAQs & Resources. Pickup-on-pickup calculations Employers offering a fringe benefit included in compensation (pickupon-pickup) plan agree to pay all or a part of the member s contributions. If you offer this type of plan, it is critical to calculate member and employer contributions properly when the rate change takes effect. The following examples will guide you through the calculations for a full 12% pickupon-pickup plan, as well as a pickup-on-pickup plan with salary reduction (split plan). Calculating full 12% pickup-on-pickup If you offer a full 12% pickup-on-pickup plan, the following example shows how to correctly calculate member and employer contributions. Calculate earnings for purposes Base contract amount $70,000 12% pickup-on-pickup plan paid by employer ($70,000 x 12%) + $8,400 Earnings for purposes $78,400 Total member contributions due to Earnings for purposes $78,400 x 12% member contribution rate x 12% Total member contributions due to $9,408 Total employer contributions due to Earnings for purposes $78,400 x 14% employer contribution rate x 14% Total employer contributions due to $10,976 Many employers prefer to use the base contract amount, instead of earnings for STRS Ohio purposes, when calculating member contributions due for employees with pickupon-pickup plans. If you calculate contributions due using the base contract amount, you must program your payroll system with adjusted percentages to ensure calculations are correct. To do this, calculate member contributions at 13.44% and employer contributions at 15.68% of the base contract salary for a full pickup-onpickup plan. Calculating pickup-on-pickup with salary reduction (split plan) Last year, many employers chose to offer 10% pickup-on-pickup while increasing the amount of salary reduction for employees. If you want to continue offering 10% member contributions paid by the employer as pickup-on-pickup with the additional 2% paid by the employee as salary reduction, you must still make adjustments to your calculations. The member contributions paid by the employer will still increase even if you continue to offer a 10% pickup-on-pickup plan. Remember, the employer has agreed to pay a designated percentage of the member s contributions and include the amounts in the member s salary for retirement purposes. As a result, employers are paying contributions on the base contract salary, as well as the picked up member contributions. The member contribution share being paid by the employee as salary reduction is calculated on the base contract salary, not the earnings for purposes. Assume you offer a split plan with 10% member contributions paid by the employer as pickupon-pickup and the remaining 2% paid by the employee as salary reduction. The detailed example on Page 3 shows how to calculate member and employer contributions. (continued at top of Page 3) News MAY

3 Calculating pickup-on-pickup with salary reduction (split plan) continued Calculating member contributions due: To calculate member contributions due (12% of earnings) for an employee with a $70,000 base contract salary, you must first determine earnings for STRS Ohio purposes. Calculate earnings for purposes Base contract amount $70,000 10% pickup-on-pickup plan paid by employer ($70,000 x 10%) + $7,000 Earnings for purposes $77,000 What s ahead Early June 2014 Annual reporting resources are available; visit our website for instructions and more information. Deposit and Service Reports are available for August retirements. Total member contributions due to Earnings for purposes $77,000 x 12% member contribution rate x 12% Total member contributions due to $9,240 Once you have calculated the total member contributions due to STRS Ohio, you can determine the member contribution amounts paid by the employee and the employer. Member contributions due from employee Base contract amount $70,000 x 2% salary reduction x 2% Member contributions due from employee $1,400 Member contributions due from employer Base contract amount $70,000 x 10% member contribution rate x 10% $7, % of the 10% pickup-on-pickup (12% x $7,000) Member contributions due from employer 7,840 Notice the total member contributions due ($1,400 + $7,840 = $9,240) matches the required amount in the Total member contributions due to chart above. Calculating employer contributions due: Remember, pickup-onpickup plans will also affect the employer contribution amount, which is currently 14% of total earnings for purposes. Total employer contributions due to Earnings for purposes $77,000 x 14% employer contribution rate x 14% Total employer contributions due to $10,780 Again, if you calculate pickup-on-pickup using the base contract salary instead of the total earnings for purposes, you must program your payroll system with adjusted percentages to ensure calculations are correct. If you offer a split 10% pickup-on-pickup with 2% salary reduction plan and you calculate contributions using base contract earnings, your system should calculate member contributions paid by the employer at 11.20% and employer contributions at 15.40%. The employee s share of member contributions must be withheld at 2%. June 2 June 13 July 1 Mid-July Aug. 8 Aug. 11 Aug. 27 Late September October Online registration for ESS Training begins. Pay date schedules are due. Last day to register for ESS Training fiscal year begins. Member contribution rate increases to 12% for work performed on or after July 1. Pickup plan updates are due if needed. Annual Reports are available in ESS. ESS Training is offered at. Annual Reports are due. Online registration for the fall K 12 Employer Workshops begins. Service credit verifications are due. Annual account statements are mailed to Defined Benefit and Combined Plan members, as well as reemployed retirees. Estimated annual payroll information is available in ESS for employers participating in the state foundation program. K 12 Employer Workshops are held throughout the state. 3 News MAY 2014

4 ESS Training offered in July If you need help using our Employer Self Service (ESS) online reporting system, please plan to attend one of our hands-on training sessions this summer. This interactive workshop will focus on navigating the system, completing online reports and using the tools available in ESS to assist you with reporting. In-depth instructions of each online process will be provided while you use a computer to actively complete online practice exercises. Three sessions will be offered: Tuesday, July 8 Tuesday, July 15 Thursday, July 17 Each session will be held at from 9 a.m. noon. If you use ESS to submit payroll and annual reporting information, please plan to stay until 1 p.m. for additional instruction. There is no cost to attend the session. Online registration begins Monday, June 2. Additional information will be available on the employer website the day registration opens. Registration closes on Friday, June 13. Due to limited seating in our training facility, registration is offered on a first-come, first-served basis. Please call your employer education coordinator tollfree at with questions. Calamity days may affect June retirements Extreme weather this past winter has caused many schools to exceed the maximum number of calamity days allowable by law. Even with the use of blizzard bags, some schools may still need to extend their school year. As a result, some educator workdays may be extended into June, which can affect June retirements. For example, if your last day of school is originally scheduled on May 30 and the district exceeded the maximum number of calamity days, school will likely be in session on June 2. This poses a problem for members planning to retire effective June 1. These retiring members have several options. 1. They can work in June and retire July 1; or Even with the use of blizzard bags, some schools may still need to extend their school year. 2. Not work in June, give up salary payments and contributions to STRS Ohio for the days not worked, and still retire effective June 1; or 3. Not work in June, give up salary payments for the days not worked, but complete contributions for those days by purchasing calamity days. Purchasing calamity days allows members to complete contributions on their full contract and still retire effective June 1. According to Administrative Code Rule 3307:1-3-06, members can purchase calamity days by remitting member contributions on the salary they would have earned had they worked the extra days. The process of purchasing calamity days is the same as purchasing a current absence or leave during the year in which the absence occurred. There are two ways to report this to : 1. The employer can report and remit the member contributions for the calamity days with any fiscal year payroll report submitted before the member s effective retirement date; or 2. The member can make a check payable to for the member contributions for the calamity days and have the employer forward it with a letter explaining the payment. The letter should include the member s name, Social Security number and a calculation of the member contributions. Under Section of the Revised Code, employers are responsible for remitting the corresponding employer contributions when members purchase calamity days. For more information, please visit our website to review the calamity days fact sheet. News MAY

5 ESS, website and online news What is LiveLook? If you recently logged in to Employer Self Service (ESS), you may have noticed a link to LiveLook at the bottom of each page. LiveLook is a new application that allows an employer education coordinator to view your computer s Internet browser to assist in resolving issues you may have with ESS. As the name implies, the application allows us to take a live look at your ESS screen. With your authorization, we can see exactly what you see. We cannot view any other information on your computer only the ESS screen. So how does it work? If you are logged in to ESS and having difficulty, call an employer education coordinator. Your coordinator will ask you to click the LiveLook link, and you will be taken to a screen where you must click I accept. After you accept, a five-digit pass/access code will be provided. Tell your coordinator the code, which will grant access to your screen. Once the issue is resolved, the session will be terminated, and the coordinator will no longer have access to view your screen. LiveLook is a secure, easy-to-use tool that allows us to provide help when needed. If you have questions or would like more information, please contact an Employer Reporting Education team member. Click I accept LiveLook is a secure, easy-to-use tool that allows to provide help when needed. A LiveLook link is at the bottom of each page in ESS. Updated employer website coming soon will soon launch an updated employer website. Our goal is to provide a user-friendly website with the resources and information you need to successfully meet reporting requirements. We invite you to visit regularly for current news and information. In addition to ESS and secure file upload access, you will easily find many helpful resources: Frequently asked questions (FAQs) Employers Manual eupdates, fact sheets and newsletters Forms Cash remittance submission Calculators for service credit, current fiscal year leave of absence costs and interest on backpostings Workshops and training opportunities Pension legislation updates GASB information Much more The site s Web address will remain and you can still log in to ESS from any page. Here is an exclusive preview of the new home page. We hope you will find the site easy to use and full of the resources you need. 5 Pension reform resources updated The Pension Legislation section of our website has been updated with information about pension plan changes effective July 1, This section provides tips and suggestions to help you prepare for the beginning of the new fiscal year. Visit our home page to access the information. News MAY 2014

6 Fiscal year Annual Reports due Aug. 8 Visit the online Annual Reporting Resource Center in early June for all the information you need to properly complete this year s annual reporting process. An eupdate will be sent when the resource center is available. Your electronic Annual Report for fiscal year is due by Friday, Aug. 8. All schools must submit this report that lists service credit and member contributions on compensation earned by active members and reemployed retirees during the fiscal year (July 1, 2013 June 30, 2014). No extensions will be granted to the deadline, so please plan to have staff available to complete the report or coordinate its submission with your Information Technology Center (ITC). The member contribution rate for the fiscal year is 11%. All member contributions, including accrued contributions, must be reported at the 11% rate. The additional 1% increase in member contributions, effective July 1, 2014, does not affect this year s Annual Report. COMPREHENSIVE Annual Financial Report Annual financial report available This year s Comprehensive Financial Report is available in the publications section of the employer website or by calling s Member Services Center toll-free at The report provides details about s investment activities, plus financial, actuarial and statistical information for the 2013 fiscal year (July 1, 2012 June 30, 2013). Like last year, you can submit your report electronically via FTPS transmission, ESS or the secure file upload application on our website. If you use ESS, your personalized report will be available July 1. You may be asked to verify service credit after you submit your report. encourages you to complete the service credit verification report in ESS. If you received a paper copy last year but prefer to complete the report online, please send an to WebReg@strsoh.org or call us tollfree at to sign up. Thank you for your efforts to complete the required annual reporting processes on time. This information is necessary to update member accounts and prepare actuarial information. If you need assistance, please call your employer education coordinator or report@strsoh.org. Have you sent us your pay dates? In April, employers received an eupdate requesting your pay date schedule. Knowing your school s pay dates helps us track the submission of payroll reports and allows us to alert you when we haven t received an expected report. If you haven t submitted your schedule to, please do so by June 13. A copy of the pay date schedule is available in the forms section of our website under Other. To view the eupdate, visit the publications section of our website. If your pay dates are modified during the year, please remember to send us an updated schedule. Reminder: Cash remittance required Whether you remit payments by check, wire transfer or ACH, you must submit a cash remittance form with all payments to. Cash remittance forms provide specific information about the payment, which allows payments to be matched to the corresponding payroll report or invoice. Without these details, payments cannot be processed properly. Visit our website to submit an online cash remittance or print a copy of the form to mail with your payment. News MAY

7 Patty Gordon joins employer education team Williams Defiance Paulding Van Wert Mercer Darke Preble Butler Hamilton Employer Education Coordinator Territory Map Fulton Auglaize Henry Putnam Shelby Miami Montgomery Allen Warren Clermont Champaign Clark Greene Brown Lucas Clinton Hancock Logan Wood Hardin Highland Adams Beth Hohenstein (614) Madison Ottawa Wyandot Union Fayette Sandusky Seneca Marion Crawford Delaware Franklin Pickaway Ross Pike Scioto Erie Morrow Huron Richland Fairfield Hocking Jackson Knox Licking Vinton Lawrence Ashland Gallia Lorain Perry Patty Gordon (614) Coshocton Athens Meigs Medina Wayne Holmes Muskingum Cuyahoga Morgan Summit Guernsey Noble Stark Tuscarawas Washington Lake Geauga Portage Carroll Harrison Belmont Monroe Ashtabula Trumbull Mahoning Columbiana Jefferson Colleges & Universities and Community Schools Kelé Willis (614) Patty Gordon joined the Employer Reporting Education team in February As an employer education coordinator, she will be assisting K 12 employers in the yellow counties on the territory map. Patty has worked at since July Prior to becoming an employer education coordinator, she worked in the Member Benefits Department with new retirement accounts, as well as in the Finance Department with the accounting team. She graduated from The Ohio State University with a bachelor s degree in business administration specializing in human resources. Before joining, Patty worked for more than 10 years in several human resource positions, focusing primarily on benefits administration. Please join us in welcoming Patty to the team. While each school is assigned an employer education coordinator, any coordinator will be happy to assist you. Employer satisfaction survey results are in Last fall, we invited employers to complete an online survey to provide feedback on the Employer Reporting Department s customer service, training materials and available resources. Thank you to the 460 employer representatives who responded to our survey. The results are outlined below and to the right: More than 92% said they were extremely or moderately satisfied with their overall customer service experience. More than 85% indicated information and printed materials from help employers successfully comply with reporting requirements. Nearly 79% indicated training sessions and workshops are extremely or very useful. (Nearly 9% indicated they had never attended a workshop.) The survey also showed approximately 45% of employers have some degree of difficulty finding information on our website. As noted on Page 5, we hope the updated employer website coming soon will better meet your needs. 94% SATISFACTION EMPLOYER Education coordinator helpfulness 98% RESPONSE TIMELY responded to calls and s within 24 hours 80% FEEDBACK POSITIVE Communication and training materials Again, thank you for taking the time to respond to our survey so we can better serve you. We value your feedback. If you have concerns or suggestions, please contact us. 7 News MAY 2014

8 State Teachers Retirement System of Ohio 275 East Broad Street Columbus, OH Resources WEB 24 hours a day report@strsoh.org to CALL Employer Reporting Department (toll-free) (fax) 8 a.m. to 5 p.m. Monday through Friday Newsletter for Reporting Employers WRITE Attn: Employer Reporting 275 E. Broad St. Columbus, OH Update VISIT Downtown Columbus 275 E. Broad St. Columbus, OH Have a question? Ask the Employer Reporting Education team Q: When are Deposit and Service Reports for summer retirements available? How long do I have to complete them? A: After processes a member s retirement application, the Deposit and Service Report will be available to complete in ESS approximately 60 days before the scheduled retirement date. For example, reports for Aug. 1 retirements will be available on June 1. Employers will receive notification when a report is available to complete in ESS. The amounts reported should not be estimates. As a result, Deposit and Service Reports are due as soon as total earnings and contributions can be calculated accurately but no later than two weeks following the member s effective retirement date. Q: Why do I need to complete a Request for Additional Information form? A: The Request for Additional Information form accompanies the Deposit and Service Report. uses it to gather information needed to accurately calculate a member s final average salary. You will be asked to complete the form only if the member has a contract that crosses fiscal years or has had supplemental earnings in the five-year period preceding retirement. If you are not registered to complete these forms in ESS, please contact your employer education coordinator. STATE TEACHERS RETIREMENT BOARD Dale Price, Chair Robert Stein, Vice Chair Retired Teacher Member Craig C. Brooks Appointed Member Carol Correthers Taiyia L. Hayden Mark Hill Yoel Mayerfeld Appointed Member James McGreevy Retired Teacher Member Tim Myers Richard A. Ross Superintendent of Public Instruction Michael J. Nehf, Executive Director G, 4/14/4.6M News MAY