Retirement system chief doesn’t have confidence of board

By: - February 20, 2023 4:55 am

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Long criticized by members, the executive director of the State Teachers Retirement System of Ohio on Thursday failed to win a confidence vote by the system’s board. The board instead voted 5-5 when they asked if it had confidence in the director, Bill Neville.

Criticisms of the system include big salaries and “alternative” investments that have underperformed the stock market — as well as stagnant benefits for retirees whose $90 billion the system manages. The group that represents retirees, the Ohio Retired Teachers Association, has for years pressed for change over those concerns.

During Thursday’s meeting, frustration seemed to boil over.

“I feel like everything is a battle,” member Julie Sellers said in a video recording provided to the Capital Journal. “We can never really feel like we’re coming to a consensus. I do not believe we can keep on doing what we’re doing and move forward. I feel like we need to have a change at the top. The problems have been here for years and I just feel like we need to have a direction forward.”

She also accused system executives of not responding to member concerns.

“Look at how every comment has been a negative comment except maybe two or three people and nothing is ever addressed,” Sellers said, gesturing to the audience. “It’s just like we get a dog and pony show.”

Among the retirees’ complaints has been that last year they got a 3% cost-of-living increase — their first since 2017. An STRS spokesman has explained that the freeze was due to new rules set down by the legislature in 2012. 

However, retirees are frustrated that so many retirement system employees have salaries that seem lavish compared to Ohio’s average public teacher salary of $67,000.

At least 200 of the retirement system’s 500 employees make more than $100,000 a year. And, with bonuses, in the 2021-2022 fiscal year 33 of the system’s employees made more than $300,000. Nine made more than $500,000.

STRS justifies the salaries by saying that it needs to pay well to attract top talent for its investments. Instead of having all of its money invested in funds indexed to the markets, STRS also makes a number of alternative investments in things like private equity and hedge funds.

Despite paying top dollar for investment savvy, those investments haven’t done as well as the market as a whole. Over the past decade, the market has provided a 14.8% return on investments, while the system’s alternative investments have provided 11.84% once fees are subtracted, an STRS spokesman said last year.

In addition, many retirees were infuriated with the way the STRS board handled staff bonuses last year. In August, it awarded $10 million in bonuses even though it estimated that it would lose $3 billion in an environment that was brutal for investors. 

Two months later, the actual numbers for alternative investments came in and losses were 77% higher than original estimates — $5.3 billion

To be fair, the losses follow $22.3 billion in gains a year earlier, according to the system’s financial statements. But the retired teachers association said bonuses should be based on performance — and not awarded before the results of employees’ most arcane investments come in.

Asked for a reaction to Thursday’s tied confidence vote, an STRS spokesman sent a statement from Chairwoman Carol Correthers.

Bill Neville has my complete confidence,” she said. “During the two-and-a-half years Mr. Neville has led STRS, retirees have received a 3% COLA; STRS retiree health care plan enrollees have received premium rebates of $250, $300 and $600, and 95% of enrollees are paying less in premiums in 2023 than they did in 2022; additionally, active teachers will no longer be required to work to age 60 to receive their pension. Importantly, STRS has maintained strong funding in both the pension fund and health care fund.”

However, Ryan Stubenrauch, a spokesman for the retired teachers association, said Neville can’t be expected to last if he can’t get more than half of his board to express confidence in the job he’s doing.

“Over the past four months we’ve seen piece after piece of information come out,” Stubenrauch said. “We see that the director doesn’t have the support of the board anymore. If he doesn’t have that, he probably won’t last very long.”



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Marty Schladen
Marty Schladen

Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He's won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.