The entrance to the Ohio State Teachers Retirement System headquarters in Columbus. Photo by Marty Schladen, Ohio Capital Journal.
A board member of the Ohio State Teachers Retirement System and self-professed supporter of Gov. Mike DeWine is now suing over DeWine’s purported firing of him last month. The firing came just as a group seeking big changes at the $90 billion pension fund was poised to achieve a majority on the board.
The board member, Wade Steen, has filed a motion in Ohio’s 10th District Court of Appeals demanding that DeWine’s chosen successor, G. Brent Bishop, show by what right he claims to be sitting on the board. Put simply, Steen is arguing that DeWine failed to follow the law in trying to remove him.
The retirement system, commonly known as STRS, has been the subject of considerable controversy in recent years.
It has a large, highly paid staff — 68 employees made more than $200,000 in 2021 — while it has granted just one, 3% cost-of-living increase since 2017. In July, retirees will get another, 1% increase amid inflation that is down, but is still four times that amount.
Meanwhile, the system has paid out huge bonuses to its staff and billions in fees for “alternative” investments even though those investments have outperformed traditional investments only once since 2009, according to the retirement system.
Retirees were particularly incensed last fall when the board approved $10 million in bonuses just before learning that the system lost $5.2 billion during the previous fiscal year — 77% more than the staff had projected. Apparently unchastened, the staff last month proposed increasing bonuses by 31% for the current fiscal year.
In an interview last month, Steen said he was a DeWine supporter, having been first appointed to the STRS board by former Gov. John Kasich and reappointed by DeWine. That term was to run until September of next year.
But Steen also wants more transparency about how STRS staff is making alternative investments and more information about how much those investments are really worth. Echoing the Ohio Retired Teachers Association, the Toledo Blade in a June 11 editorial said STRS staff is basing asset valuations “solely on the word of the fund managers it’s given capital.” If true, that would be a fundamental conflict of interest.
The push for change had been gaining steam, with the board in February splitting on a vote of no confidence in system Executive Director Bill Neville. Then, last month, reformist candidate Pat Davidson defeated incumbent Arthur Lard by a 20,410-8,853 margin.
That would have given members seeking to change the status quo a one-vote majority on the board. But DeWine stepped in the day before votes were counted and asked Steen to resign. When Steen refused, DeWine tried to fire him the next day.
In the motion filed with the state court of appeals, Steen is demanding that DeWine’s appointee and the board show what legal process was used to remove Steen. He’s also arguing that there wasn’t one, and thus hasn’t been removed.
The law requires that “a written complaint be filed in the Court of Common Pleas in the county in which the board member resides and mandates certain other due process (protections) as defined in that section” of state law in order to remove Steen, the motion says.
Last month, DeWine Press Secretary Dan Tierney said that the governor wanted to remove Steen because Steen’s attendance at board meetings was inadequate. He added that the governor “shared concerns that we need to make sure the money management strategy is the best money management strategy for the long-term health of the fund. And the governor does share concerns that are rightly being brought forward about the cost-of-living adjustments. That’s a very important thing with inflation being as bad as it’s been.”
Asked for comment about Steen’s motion, Tierney on Wednesday responded, “We respectfully decline further comment on the pending litigation beyond my previous comments.”
For Steen’s part, his motion seems to hint at what he thinks is the reason why the governor wants to remove him.
“Mr. Steen’s actions, while on the STRS board, particularly in investigating the financial management and use of STRS funds, have been in compliance with and furtherance of his duties as the governor’s appointed investment expert member of the STRS board,” it says.
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