Ohio teachers’ pension fund loses money, offers ‘performance incentives’ to investment staff

The Ohio State Teachers’ Retirement System has voted to pay nearly $10 million in what it calls “performance incentives” to about 90 investment managers, though the fund has lost billions last year.

Retired teachers are unhappy about the questions they still have about pension fund finances.

The STRS fund lost $3 billion last year, falling from $94.8 billion on June 30, 2021 to $91.8 billion on May 30, 2022. The fund’s spokesperson said that while the fund was losing money, the investment managers had made good choices in a weak market.

Retired teachers at the board meeting booed when board member Jeffrey Rhodes said he wanted to make it clear that these payments are not bonuses.

“It’s not a bonus, it’s one of our most beneficial tools to ensure our staff meet our benchmarks,” Rhodes said. “It’s not a bonus – it’s part of their salary.”

Board member Rudy Fitchenbaum was a no.

“The teachers, the members feel the same way about the promises that were made to them and that those promises were broken,” Fitchenbaum said to applause from the teachers.

And board member Wade Steen said he was also a no: “I believe that until we develop a plan to address the permanent restoration of [cost-of-living adjustments] for the retired Ohio teachers who have sacrificed so much for the children of Ohio, and we owe it to them not to approve the bonuses.”

In March, STRS retirees got their first cost-of-living increase since 2017 – a one-time COLA of 3%. STRS said it suspended those increases to protect the fund’s liability. But teachers noted that other funds kept their COLAs or restored them if they were suspended or lowered.

The state auditor conducts a special audit of STRS after retired teachers raise concerns about investments and expenses. They hired Ted Siedle, a former SEC asset management lawyer and head of a company called Benchmark Financial Services, to look into their concerns. His report castigated the STRS for its lack of transparency and legislative scrutiny and its mismanagement of billions. STRS responded by saying Siedle’s report contained “inaccuracies and unsupported claims” and that the fund has beaten established benchmarks and outperformed the market over the past decade.

There are about 150,000 retired teachers in the fund, and they do not contribute or receive social security.

Dolores W. Simon