Background
Tuesday, I wrote a long piece explaining the controversy and evident corruption involving Ohio’s Governor, Attorney General and the Ohio’s State Teacher Retirement System (STRS) (Crooked Men and Crooked Staffs). If you aren’t familiar with the situation, it would help to read that essay first. The summary is this: STRS controls over $90 Billion of retirement money for teachers. In the past decades, they failed to increase the investment, in fact, losing money, despite the markets climbing steadily, even including the Covid drop (the Market indexes set record highs just yesterday). But private equity investment companies, and the professional investment staff of STRS itself, have made millions.
Both retired and active teachers, frustrated by ongoing cutbacks in retirement benefits, increased teacher retirement costs and longer work-years requirements, moved to change the governing membership of the eleven member retirement board. Since 2021, the elected members of the Board (five by active teachers, two by retired teachers) were altered. Currently five of the seven elected members are “reformers” in support of STRS changes. The other four Board members are appointed by the state government. One of those, the Governor’s appointee Wade Steen, is also a “reformer”, giving them a six to five majority.
In the 2023 election when a reformer won decisively, the Governor tipped the balance of the Board back to the “old Board” by illegally removing Mr. Steen before his term was completed. After several months of litigation, Steen regained his seat. When he took his seat at the April Board Meeting, the Chairman of the Board, Dale Price, (an “old Board” supporter) just walked out, throwing the meeting into the chaos which ultimately ending it. There was no “legal” motion to adjourn.
This Week
This week it was announced that another reformer, Michelle Flanigan, was elected to take Price’s seat in September. Just before that result was announced, the Governor presented an anonymous letter claiming that his representative, Mr. Steen, and another elected reformer, Rudy Fitchembaum, were “colluding” with a private company to make a “hostile takeover” of the Board, in order to invest $60 Billion with that same private company. Steen and Fitchembaum deny this, and the 2021 meeting records also refute parts of that claim. The Governor referred the letter to the State Attorney General for investigation.
All of that got us to Tuesday morning. Tuesday afternoon, the David Yost, Ohio’s Attorney General, conducted his “investigation” in less than a week, and filed a lawsuit demanding the Steen and Fitchembaum be removed from the Board. Wednesday, the STRS Board met, with the reformers in the majority for the first time. The Chairman Price was “ousted”, and Mr. Fitchembaum was put in his place. An “old Board” member was also replaced by a reformer as Vice Chairman.
Today
The Governor continues to rely on the “anonymous letter” (now supposedly authored by a member of the STRS staff legal team). He and the Attorney General are doing whatever they can to prevent the reformers from exercising control of STRS policy, regardless of the fact that they were legally elected by the constituents of the System. My best guess: Yost will seek a temporary injunction to stop the current majority from “acting” until his lawsuit is heard, sometime in the summer of 2025.
He better hurry. Come September, the Board will have a majority of reformers even without Mr. Steen.
But the question remains: why are the state politicians so worried about changes in the STRS? Why aren’t they worried that STRS requires the highest teacher contribution rate (14% of their annual income) in the country, but doesn’t pay the consistent Cost of Living Allowance that they promised up until 2015? (All of the other state retirement funds have annual COLA increases). Why aren’t they concerned about a multi-million dollar investment staff that has managed to lose money in the biggest market gain in history?
My answer is in the title: there are crooked men with crooked staffs who have a vested interest in the “old” Board, and the “old” ways. The “powers”, Governor DeWine and Attorney General Yost, are abusing their authority to protect that interest.
