OP&F meets Ohios 30‑year funding test for 2025 but council warns of 2026 risk

The Ohio Retirement Study Council on Dec. 11 reviewed the Ohio Police & Fire (OP&F) triennial actuarial valuation and an independent adequacy study and confirmed that the plan met the states 30‑year funding requirement as of Jan. 1, 2025.

"The headline news is OP and F remains under the 30 year Ohio funding period," Director Foley told the council during the meeting. Linda Bornaville, presenting the ORSC adequacy review, said the replicated funding period for the valuation date was 29.88 years and that "no funding plan will be required at this time."

Why it matters: The 30‑year funding test determines whether a statutory funding plan must be adopted. If the funding period exceeds 30 years on a valuation date, the system and the council would have to consider statutory remedies or funding plans that could change employer or employee contributions.

Bornaville and others emphasized that the result depends strongly on assumptions and recent market performance. She told the council the OP&F valuation reflects a 7.5% long‑term investment return assumption, which is "one of the highest returns of US pensions." Bornaville said reducing that assumption even modestly would have a meaningful adverse effect on the funding period. "A 100 basis point swing, your liabilities are gonna change by about 10 or 11%," she said when asked about sensitivity to returns.

Presenters also explained how asset smoothing affects the statutory result. Bornaville noted market value on the valuation date was lower than the smoothed actuarial value because the plan is still recognizing losses from earlier years; smoothing spreads gains and losses over time and can mask near‑term volatility. Director Foley added that 2025 investment performance through late November had been well above the long‑term assumption and helped keep the 2025 valuation under the 30‑year trigger.

On projections: Bornaville said the councils forward roll‑forward modeling shows a reasonable likelihood the funding period could exceed 30 years by Jan. 1, 2026 under current assumptions. She cautioned that projections do not incorporate some demographic uncertainties and that actual 2025 experience could change outcomes.

Timing and next steps: Council members asked about the timetable for revising the long‑term return assumption. Bornaville and other presenters said the next experience study is expected in 2026 and any change would be reflected in the Jan. 1, 2027 valuation. Director Foley recommended the council continue supporting legislative changes under consideration — she mentioned House Bill 280 and a companion Senate bill as a pathway to actuarial funding for OP&F with employer protections and some employee contribution adjustments.

The council did not adopt any funding plan at the meeting; presenters concluded the statutory test was satisfied for the 01/01/2025 valuation but advised monitoring assumptions, payroll trends and investment performance ahead of the next valuation.