Blade Editorial: Reform effort over

The reformers elected to the State Teachers Retirement System of Ohio board have thrown in the towel on making the fundamental changes they campaigned on and are turning their attention to taking more dollars out of taxpayers’ pockets.

The STRS board voted to continue a performance bonus incentive program for investment staff, meaning their campaign promise to use index funds which do not require active management and therefore do not provide performance bonus benefits has been forgotten.

It’s a major disappointment since these board members were the beneficiaries of an in-depth study of STRS investments over 13 years by pension performance expert Richard Ennis.

Mr. Ennis’ conclusion, shared exclusively in The Blade, showed investment performance that trailed the results of a low-cost index fund by 1.62 percent annually and cost STRS $12.5 billion in unrealized gains, more than 20 percent of the total portfolio at that time.

But instead of ending staff bonuses and switching to a better performing portfolio plan, as promised to get elected, the STRS reformers want Ohio taxpayers to put a lot more money into the pension.

It’s a big ask. The 10-year average annual return for the broad stock market is 12.5 percent; over 20 years it’s 10.3 percent a year. Over both periods an indexed return is far above the annual assumed rate of return STRS needs to achieve.

The Ohio Police & Fire Fund also wants lawmakers to order an increase from taxpayers, which the Ohio Municipal League opposes as the largest unfunded mandate in the history of the legislature.

This Ohio public pension has pursued a high-risk investment scheme by adding 25 percent to the fund with borrowed money. It obviously hasn’t worked and Ohio citizens may be forced to pay the price.

The state’s largest pension, the Ohio Public Employee Retirement System, is also lobbying lawmakers to hit up taxpayers for more money.

Our once high hopes that STRS reform board members would show the other state pensions the internal improvements they should make before bothering taxpayers have been dashed.

The big Ohio pensions are united in the quest for more money from taxpayers without any significant changes to improve investment performance.

Cities, counties, and school districts will get the bill, or rather the blame, for the extra extractions from their taxpayers.

But the problem is years of multibillion-dollar malperformance ignored by lawmakers and even the pension board members elected with a mandate to make reforms.

The STRS reform board could have been part of the solution. They’ve become part of the problem, like their predecessors.

Toledo Blade Editorial Board June 18, 2025

Read online at https://www.toledoblade.com/opinion/editorials/2025/06/19/editorial-reform-effort-over-strs-pension-ennis-ohio/stories/20250619007

ORTA will continue to advocate for reform. To fix the pension system, two key factors must be implemented. The public and members must see changes in our investment practices. This calls for transparency in investments, which in turn requires an increase in indexed investments. Overriding research suggests that passively managed pension plans yield better investment returns and have lower fees. STRS is a top-heavy, actively managed pension plan. The second factor is that benefits are determined by cashflow. The fixed employer rate contribution has remained the same since 1984. It is long past time for the Ohio Legislature to address this inadequate funding issue. ORTA is well aware that both the public and members need to see change.