Group looking to block STRS changes

Budget alters pension board

A group representing some retired teachers says it is exploring its options to try to block a move to replace four elected members on their embattled pension fund board with political appointees.

The language had been added at the last minute by a conference committee to the two-year budget signed into law by Gov. Mike DeWine last week.

The budget would gradually eliminate three of five board members elected to the State Teachers Retirement System board by active teachers and one of two elected by retirees.

Those four elected positions would gradually be replaced over the next three years with appointed representatives of the Chancellor of Higher Education, the Ohio Treasurer, Senate President, and Speaker of the House.

Robin Rayfield, executive director of the Ohio Retirement for Teachers Association, said its members worked within the existing system to elect members and influence board decisions only to see lawmakers and the governor interfere.

“Actives and retired members voted in a board that would listen to their concerns and make reforms to STRS,” he said. “Unfortunately, the elected officials are threatened by having the STRS board led by the very people that pay into the system. A bigger question is, ‘What are the elected officials afraid of?’.”

The budget did not make changes to the makeup of the state’s four other public employee pension boards.

“There’s been pretty widespread concern about some of the management of the State Teachers Retirement System...,” Rep. Brian Stewart (R., Ashville), the conference committee’s chairman, said shortly after the language was added. “We’re trying to respond to that.”

“We are moving toward a system of appointed board members,” he said. “I think it’s not good policy to have investment decisions for a public pension being made by people who are directly benefited by those decisions. That is not sound financial management. We are going to transition to a process where you have investment professionals and people who are not essentially voting on their own benefits package. ...”

Barring some surprise, the transition will begin when this provision takes effect at the end of the September.

The budget would prohibit any member with contributions in the pension fund from serving as board chairman or vice chairman. The newly appointed members could have no such contributions on deposit with the fund.

Mr. DeWine used his line-item veto 67 times before signing the budget into law. But, despite calls for him to do so, he did not target the STRS language. The governor has butted heads with some members of the board in recent years, at one point rescinding his own appointment of investment expert Wade Steen and replacing him, only to see the courts force Mr. Steen’s reinstatement months later. Mr. Steen’s term has since expired.

The board shakeup will roll out even as a civil lawsuit brought by Attorney General Dave Yost against Mr. Steen and the board’s current president, Rudy Fichtenbaum, heads for trial on Oct. 27.

Mr. Yost has accused the two of colluding to convince the STRS board to invest heavily with a “shell company that lacks any indicia of legitimacy and has backdoor ties to Steen and Fichtenbaum themselves.”

Mr. Steen and Mr. Fichtenbaum have denied any wrongdoing and have been fighting the lawsuit.

The precariousness of the current reformist majority was evident in last month’s narrow vote to hire Steven C. Toole — an Ohio State University graduate, former manager of public pension funds in North Carolina, and most recently senior product management for Principal Financial Group in Iowa.

He starts his new job on Monday.

The narrow majority that brought him back to Ohio is destined to weaken as the phaseout of the elected posts begins. Legislative leaders, Mr. DeWine, and Treasurer Robert Sprague had urged the sharply divided board to hold off on filling the position. As of June 30, 2024, STRS managed a $96 billion fund on behalf of nearly 550,000 active, inactive, and retired members. It is among the largest public employee pension funds in the nation.

By Jim Provance Blade Columbus Bureau Chief

Read thie editorial online at https://eblade.toledoblade.com/.pf/showstory/20250709059/1

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STRS Board Timeline

Absent any legal challenges or legislative changes, this is how the STRS Board composition will change over time.

Through August 31, 2025 — 4 appointees and 7 elected (11 total). Elected members: Correthers, Sellers, Jones, Davidson, Flanigan, Fichtenbaum, Harkness,

September 1, 2025 - September 28, 2025 — 4 appointees and 7 elected (11 total). Elected members: Sellers, Jones, Davidson, Flanigan, Fichtenbaum, Harkness, Smith)

September 28, 2025 - August 31, 2026 — 8 appointees and 7 elected (15 total). Elected members: Sellers, Jones, Davidson, Flanigan, Fichtenbaum, Harkness, Smith)

September 1, 2026- August 31, 2027 — 8 appointees and 5 elected (13 total). Elected members: Davidson, Flanigan, Fichtenbaum, Harkness, Smith)

September 1, 2027 - August 31, 2028 — 8 appointees and 4 elected (12 total). Elected members: Flanigan, Fichtenbaum, Harkness, Smith)

September 1, 2028 - August 31, 2029 — 8 appointees and 3 elected (11 total). Elected members: Fichtenbaum, Harkness, Smith)