The chairman of the State Teachers Retirement System board has been removed from that position immediately by a Franklin County judge. The decision comes in a lawsuit filed by the state against two STRS board members in 2024. It's another chapter in the continuing upheaval at the pension fund in recent years.
Franklin County Common Pleas Judge Karen Held Phipps wrote that former STRS board member Wade Steen and board chair Rudy Fichtenbaum had an "admirable" goal in restoring cost of living adjustments for retired teachers, which were suspended for five years. But she wrote they violated their fiduciary duty by acting as agents for the private investment company QED. Phipps agreed that the state's evidence showed they worked secretly with the untested private investment company in an attempt to convince the board to put $65 billion of the fund's $95 billion with QED.
"There can be no reasonable disagreement that reestablishing
annual COLA was and is a worthy goal," Phipps wrote. "A worthy and desirable goal, however, does not allow a fiduciary to violate their duties in attempting to achieve it. In other words, a fiduciary may not employ a by-any-means-necessary approach."
The order bans Fichtenbaum and Steen from serving on the STRS board. Fichtenbaum was elected to the board seat reserved for retired teachers in 2021. Steen's term on the board ended in 2024. Steen had been reappointed to the board in 2020 by Gov. Mike DeWine, who then removed him from the board in 2023, citing poor attendance at STRS meetings. Steen sued, saying DeWine didn't have the authority to remove him, and won back his seat in 2024.
The judge's order is in effect immediately but it can be appealed.
Fichtenbaum and Steen were elected to the board by the Ohio Retirement for Teachers Association, a group of retired teachers who’ve battled with their pension system over transparency, bonuses, investment strategy and cost of living adjustments. (Public employees in Ohio, including teachers, don't receive Social Security.)
ORTA hired former SEC asset management lawyer and forensic investigator Ted Siedle to look into STRS in 2021. His report blasted STRS for a lack of transparency, high fees and underperforming investments. The auditor's office did a special audit based on Siedle's report, which concluded there was no fraud but that lawmakers should require more transparency about the fund’s investment strategy and its performance incentives for investment managers.
Attorney General Dave Yost praised the decision in a written statement.
“Wade Steen and Rudy Fichtenbaum each took a solemn fiduciary oath, promising they would uphold the highest standards of conduct while serving as STRS board members," Yost wrote. "But instead of keeping their promises, they breached their fiduciary duties in a high-stakes scheme that jeopardized the financial security of half a million teachers and retirees. Their actions were deceptive, disruptive and fundamentally incompatible with their fiduciary duties. The court today rightly found that the defendants have forever forfeited any right to serve as members of the STRS board.”
ORTA said in an email that the group "is disappointed in the ruling. We do respect the ruling but worry that this decision may have a chilling effect on people that challenge the retirement system and its operation."
STRS acting board chair Pat Davidson said in a statement: "I want to reassure our 550,000 members that the board will work with all stakeholders to ensure that STRS Ohio will continue its mission of providing Ohio’s educators with a secure and dignified retirement. In addition, the board will continue its focus on responsibly improving the long-term sustainability of the pension fund and restoring benefits. I have complete confidence in our board and Executive Director Steve Toole to continue providing quality service to our members.”
Meanwhile, another lawsuit involving the STRS board goes on. Three unions representing Ohio educators filed suit in September over a provision in the state budget that reduces the number of educator seats on the board from seven to three. Republicans pushed for that change after this lawsuit, as well as executive resignations within STRS and an investigation following an anonymous memo claiming corruption on the board. That action is on hold while the case continues.
