FOR IMMEDIATE RELEASE
September 13, 2022
OHIO RETIRED TEACHERS ASSOCIATION CALLS ON AUDITOR KEITH FABER TO DETERMINE WHETHER STRS COOKED THE BOOKS TO ENSURE $10 MILLION IN BONUSES WERE PAID
COLUMBUS, OH – Last month, the State Teachers Retirement System of Ohio (STRS) awarded $10 million in staff bonuses despite reported investment losses of $3 billion last year. STRS justified the bonuses by saying that investment losses could have been billions of dollars worse.
But a new look at STRS records and market performance show that STRS did not report any material loss in the value of its billions of dollars of private equity holdings from January 2022 through June 2022. This glaring omission likely dramatically understated STRS’ losses because public equity stocks lost a quarter of their value during that same time period. As shown in the chart below, market data suggests that STRS may ultimately book a staggering $5.5 billion loss – completely erasing the STRS justification for the bonuses and raising serious questions as to whether private equity losses were intentionally misreported in order to guarantee employee bonuses.
As discussed in The Toledo Blade, STRS’ justification for its “gravity-defying” private equity valuations is an accounting gimmick that conveniently delays losses, seemingly until after the current board could vote to award nearly $10 million in employee bonuses. In stark contrast, the chart above shows that STRS was quick to book gains as public equity markets rose in fiscal year 2021. STRS’ “magic” valuations also appear to conflict with market data from other large public pensions that reported at least a 10% loss on its private equity positions. For example, in July 2022, California Public Employees Retirement System (CalPERS) sold $6 billion of its private equity portfolio at a 10% loss.. Somehow, STRS claims that its private equity portfolio never saw any real reduction in value during the same time period.
“It looks more and more likely that STRS cooked their books and used accounting tricks to ensure they could pay employees their $10 million in bonuses, ” Robin Rayfield, Executive Director of the Ohio Retired Teachers Association said. “On behalf of all retired teachers, we’re calling on State Auditor Keith Faber to get the real numbers STRS won’t show the public and hold STRS accountable.”
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