Toledo Blade Editorial: Shift pension reform target
- ORTA
- Sep 30
- 3 min read
Updated: Oct 1
The Ohio General Assembly and Gov. Mike DeWine have united educators in anger over the attempt to take over the State Teachers Retirement System. It’s a preview of the disgust ahead when taxpayers get asked to put more money in the state pensions.
Ohio’s budget that took effect in July included a last-minute insertion to cut active and retired teachers from seven of 11 seats on the pension board to three.
The Ohio Education Association, Ohio Federation of Teachers, and the Ohio Conference of the American Association of University Professors have combined to sue for reversal.
Judge Andy Miller of Franklin County Common Pleas Court issued a temporary restraining order blocking the takeover while he considers the teachers’ claim that the state takeover is unconstitutional because it was done through the budget and discriminatory because only teachers are reduced to minority status on their state pension board.
The teachers say they are under attack by state government. The politicians responsible for the board makeover say they are protecting taxpayers.
Lawmakers and the governor point to a failed attempt in 2021 to move funds to a Columbus startup investment company as reason for the STRS reform.
But it was only when elected teachers took majority status on the STRS board that the dubious proposed investment was addressed.
Moreover, the idea that the people who appointed and approved the PUCO chairman behind the FirstEnergy bribery scandal, despite knowing that he was paid millions of dollars as a consultant for FirstEnergy, are competen to safeguard the pensions is contemptuous of history and experience.
Ohio’s appointed oversight boards are mostly lobbyists and campaign contributors, selected to follow instructions from the governor. When STRS appointee Wade Steen veered to an independent course he was illegally fired by Governor DeWine.
The reforms promised by the elected STRS board members have never been fully implemented. The move to make teachers a permanent minority on their pension is simply protection against a group that could actually get it done.
The current STRS board just approved bonus payments to their investment staff totaling more than $6.7 million. The benchmark for payments between $7,280 and $354,729 was not a market index but instead an internally created measure that the STRS always seems to beat.
Despite this purported investment success, STRS is one of three Ohio pension funds, along with the Ohio Public Employees Retirement System and the Ohio Police and Fire Pension, asking lawmakers to force taxpayers to contribute more than a billion dollars a year above the current rate.
Rather than worry about the composition of the STRS board, Ohio lawmakers should be forcing reforms that produce better investment returns. The 10-year cumulative return for the S&P 500 is 290.76 percent, more than double STRS’ assumed rate of return.
Additional dollars from taxpayers would not be needed if Ohio was matching market returns, showing where state pension reform should focus.
ORTA stands firm in its assertion that STRS investments must be transparent in their net returns, and the fees paid to achieve the net returns. ORTA stands firm that STRS membership will be best served by a majority asset allocation of passive indexed investments. And most importantly, ORTA stands firm that STRS cannot make up its annual $4 billion dollar deficit by investment improvements alone, and is significantly underfunded by the Ohio legislature.
