Corruption
Ohio seems to be a typical, Mid-West state. Up to a decade ago, politically Ohio was a “swing state”, but with the advent of Donald Trump, the state has made a hard political “right”. Still, even in the 2024 Presidential elections, 44% of the state voted Democratic. But with “malice aforethought”, the Republican Party here in Ohio has designed a gerrymandered legislature, so biased that Democrats are represented by less than 35% of the legislators.
They’ve done it through complete disregard for two different State Constitutional Amendments to end gerrymandering and several rulings of the State Supreme Court. The Republican Party of Ohio today is the party of “how much power, and how much money”. The $60 million bribe that put the former Republican state Speaker of the House and the Party State Chairman in Federal prison is only the tip of the iceberg.
You don’t have to be a Democrat to see what’s going on. Republican candidates know that they won’t face a contest in the “general election” due to the skewed voting districts. So they only worry about the highly biased and divided primary elections in their own Party. And since it’s the most partisan and extreme voters that show up in the primaries, the race is to cater to their right-wing views. We get what we “ask for” in Ohio – an extremist legislature, beholden to the money that gets them re-elected time after time.
The Teaching “Deal”
Here’s a “granular” look at the impact of money on government in this state, one that cuts close to home for me. Teachers in Ohio, like most of the nation, are paid less than others with similar educational backgrounds. They love to teach and they love the impact they have on kids. But teachers also had a “special benefit”. While annual earnings weren’t particularly high, teachers who made it through thirty or more years in the classroom got a “premiere retirement”. Up until 2011, those teachers could retire at 35 years, and get close to 90% of their annual income. They also were guaranteed low cost health insurance, and a 3% cost of living allowance.
You could teach for a career, and retire with dignity. That was the state’s promise. But in 2012, the legislature broke the deal. They gave up their authority to set rates, and turned absolute control over to the State Teacher Retirement Board. Essentially, the legislature “washed their hands” of the matter. Almost immediately the Board, partially elected by active and retired teachers, but including appointed board members by the legislature, the governor, and the state department of education, acted. They ended cost of living adjustments, reduced the annual retirement income available, and raised insurance costs.
Follow the Money
So where did the money go? The State Teacher Retirement System (STRS) took their $100 billion pension fund and invested some in private equity funds. They signed confidentiality contracts with them. No one knew what the money was invested in, how much profit it made, and how much the Fund fees cost. It amounted to almost $10 billion unaccounted for. In addition, STRS put another $10 billion into the more volatile commercial real estate market. Again, there was little transparency in how those funds were spent, or how much profit was made or money lost.
The other 80% was managed in more public funds by the STRS professional staff themselves. They were paid at the “going Wall Street rate” of their counterparts in the private equity firms. Everybody involved was making “good”, except for the teachers and the retirees.
And the private equity firms made substantial contributions to the Ohio politicians who controlled the board. Even the Ohio Education Association (OEA), the teachers’ union, who dominated the elected board members, seemed to be in the “hand-out” line. They weren’t (probably) taking bribes. But they were dependent on politicians to deal with the rest of their education agenda. So not “rocking the boat” at STRS became the OEA mantra.
Meanwhile, teachers were required to work longer, for less retirement income. And retired teachers were forced to live on the same amount, year after year. I’m a retiree who depended on the “deal” for thirty-five years of employment. I’ve lost the over 25% of my spending power in the past decade. There’s been 4 ½ percent cost of living allowance, but inflation has reduced the value of a dollar by over 30%.
Money Talks
Both retirees and active teachers wanted change. Retired teachers organizations led the way to elect Board members to reform the system. They wanted to end private equity “deals”, control real estate losses, and make the entire process both transparent and safer. Over time, and despite the fierce opposition of the OEA, and the Gannett Newspapers, the reformers gained a majority on the Board.
When the Board reached a reform majority, Governor Mike DeWine immediately tried to fire his own representative, Wade Steen (a reformer). He replaced him with a big campaign donor and private equity guy. DeWine violated the law when he removed Steen, but it took almost a year to get him reinstated on the Board. And when elected Reformers regained control of the majority, Ohio Attorney General Dave Yost almost immediately filed to have two removed, using an “anonymous letter”, written by (no surprise) the STRS staff as evidence claiming that the reformers were not “meeting their fiduciary responsibilities”.
Black Hearts
Now it looks like Yost will lose in Court. So the state legislature’s mostly inactive Ohio Retirement Study Council is jumping into action. After ignoring the losses at STRS for a decade, now the “Council” (made up of State legislators) has plans to change STRS governance. They want more financial “experts” on the Board, appointed by – guess who – the State legislature and Governor. They want to out-vote the reform members, and keep them at bay. But what they really want is to keep the private equity money flowing to their campaign coffers.
Who wins if the Legislature changes the Board? The highly paid STRS staff, the private equity firms, and the politicians with their palms greased by private equity contributions. Who loses? Both the teachers now working, looking to retire, and those retirees left empty handed.
Oh, and the children of Ohio lose too. Because what new college graduate is going to want to work in the public schools, if they specifically know their retirement isn’t secure? But, of course, that’s OK with today’s state legislature. They don’t like public education anyway. There’s lots of profit, and campaign donations, to be made in private education.
Ohio, is really the corrupted heart of it all.
