There’s a bill under consideration by state lawmakers that would undo something lawmakers did last year in the budget. And teachers are urging them to pass this change, saying that provision to change the makeup of their pension board should never have added in the first place.
That budget provision changed the composition of the 11-member State Teachers Retirement System board, which oversees the management of $100 billion in investments for Ohio's current and retired teachers. The change would stack the board with four new political appointees and would remove four elected board members at the end of their terms. All of those elected members are teachers; one is retired, and three are still working. That switch would mean the majority of the board would be political appointees, not elected teachers. And it would make it almost impossible for elected members to serve as chair or vice chair.
“This change surfaced literally in the middle of the night during conference committee for the budget, meaning it did not appear in the version of the bill passed by the Senate or the House," said Jeff Wensing, vice president of the Ohio Education Association, the state's largest teachers union. "This also means there was no opportunity for the public to see the language or testify on the provision. It was slipped into the massive state budget and voted on by the legislature with a straight up-or-down vote."
Wensing and teachers say the process was sneaky, noting the provision was slipped into the budget at 2 am during the conference committee process, after the budget had passed the House and Senate. Hours later, the 6,000-page document got final approval and sent to Gov. Mike DeWine, without many lawmakers realizing the change had been made.
Republicans said the change was a response to internal problems and investment controversies at STRS. In February a judge ruled chair Rudy Fichtenbaum and former board member Wade Steen breached their fiduciary duty in acting as agents for the private investment company QED and removed Fichtenbaum from the board. Fichtenbaum had been backed by teachers, who wanted investment changes after the fund lost money but staffers got bonuses, while teachers didn't receive cost-of-living adjustments for years when retirees with other pension funds did. The lawsuit, originally filed by former attorney general Dave Yost, came after an anonymous memo claiming corruption involving Fichtenbaum, Steen and QED. There's been upheaval in the STRS administrative offices as well, with executives exiting and a former executive director placed on leave because of allegations of inappropriate behavior, though he was later cleared.
So far, the change in the board hasn't gone into effect, as a lawsuit has blocked it.
Tamar Gray, a teacher from Cleveland Heights, was just days away from retirement when she heard about the provision.
“I was shocked by the legislature’s takeover of the STRS board. They took something steady and dependable and changed it to something political and precarious," Gray said.
Gray said 75% of teachers in Ohio are women and that makes the sting from the action even worse: “They are telling us they don’t trust us to handle our own business and that we need someone to do it for us.”
Where it goes from here
Rep. Sean Patrick Brennan (D-Parma) is one of a bipartisan group of legislators who are sponsoring House Bill 719, which would revert the board back to the way it was before lawmakers changed it last spring. Brennan said the change might not have passed if it had been properly vetted.
Brennan, a former public school teacher, said teachers should have the majority voice on that board because it is their money, not taxpayer dollars.
“Therefore, we have a right to have a controlling interest in how that money is spent and invested," Brennan said.
Rep. Jim Hoops (R-Napoleon), the main sponsor of the bill, testified in a committee hearing that it is essential that STRS be accountable and transparent to those who depend on it.
"STRS oversees the retirement security of 550,000 Ohio educators and manages over $100 billion in assets. In a system of this size, transparency and accountability are essential--not optional. Elected board members provide a direct line of accountability to system members, answering voters rather than to appointing authorities," Hoops wrote in prepared testimony to the House Public Insurance and Pension Committee meeting on March 25. "Undermining that balance would send the message that the voices of those most affected are secondary."
The bill needs to pass before lawmakers adjourn at the end of this year. Otherwise, it would have to be started all over again in the new General Assembly in 2027. The legislature is on summer break and likely won’t be back until a lame duck session after the election.
Hoops and Brennan said they’ll fight to make this legislation a priority. Brennan said it is important to pass it before a new governor takes over next year.
“I'm just very concerned that our pension system is going to become corrupted by nefarious folks that are really looking forward to getting on that board and having a role in who gets to invest that money and where it gets invested,” Brennan said. “That should really raise the hair on not only public school teachers in Ohio and retirees, but all members of all five pension systems in Ohio, because if they can do it to us, what's to prevent it from happening with PERS or SERS or the Police and Fire pension or the Ohio Highway Patrol pension system?” Brennan asked. ”Where there are millions and millions of dollars to be made, very bad things can happen at the Statehouse.”
