The State Teachers Retirement System of Ohio is facing “a hostile takeover of a public pension by private interests,” according to a 14-page anonymous memo that surfaced Wednesday.
Gov. Mike DeWine said he forwarded the memo and other documents to the Ohio Ethics Commission, attorney general, state auditor and other state agencies for review and action they deem appropriate.
STRS Ohio, which oversees about $90 billion invested on behalf of 500,000 teachers and retirees, is governed by an 11-member board. The system is facing historic turbulence as control of the board tips toward “reformers,” its executive director is on paid administrative leave and Aon, a national consulting firm, opted to cancel its contract early.
DeWine said in a written statement that Aon severing its contract to provide governance advice “is a huge red flag, calling into question how STRS is operating and providing oversight.”
The anonymous memo walks through how the system got to this point and it raises a number of concerns:
-
Beginning in 2020, QED Systematic Solutions LLC, formed by former state treasurer official Seth Metcalf and Jonathan Tremmel, pitched STRS board members and staff to partner with QED for an investment opportunity.
-
QED worked through former STRS board member Bob Stein, and two current board members, Wade Steen and Rudy Fichtenbaum, and also made pitches to STRS senior staff.
-
QED and its backers wanted to use $65 billion, saying they could generate an extra $4 billion in returns, which would be enough to restore an annual cost of living allowance for retirees and reduce the amount teachers had to pay into the system.
-
STRS investment experts strongly advised against working with QED because it lacked a track record and its strategy was relatively untested.
-
QED aligned with the Ohio Retirement for Teachers Association, ORTA, to then help elect new board members who might be more amenable to the new strategy.
-
In the 2022 and 2023 board elections, organizations that pushed for the election of reform-minded candidates sent mailers and conducted other campaign activities but failed to file campaign finance reports.
-
In May 2023, DeWine removed Steen from the board, prompting ORTA to raise money into a legal defense fund to help Steen successfully return to the board.
-
In November 2023, an anonymous memo accused Executive Director William Neville of misconduct. An independent investigation found the allegations largely without merit. Neville and his top staff had rejected QED’s pitch.
The memo notes instances in which Steen and Fichtenbaum use talking points, charts and data provided by Metcalf or Tremmel. Metadata in documents used by those board members show Metcalf or Tremmel helped create or edit them.
Metcalf did not immediately respond to a request for comment.
The memo also says that ORTA has worked in concert with Metcalf and Tremmel to stage the pension fund takeover.
Since September 2022, STRS has received more than 500 anonymous public records requests for emails, badge swipe data, personnel files, paystub records and more. Some of the records released by STRS ended up being distributed by ORTA-related entities.
DeWine’s comments and the memo come as votes are being tallied for an STRS board election. Voting closed Monday and results are to be announced Saturday.
Given that Steen returned to the STRS board in April, reformers now hold a majority. Results of the current election could strengthen that majority. The candidates are Michelle Flanigan, a government teacher at Brunswick City Schools, and Sandy Smith Fischer, an intervention specialist at Streetsboro City Schools.
Board members are not compensated.
Read the STRS memo here:
STRS summary by jbalmert on Scribd
Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.
This article originally appeared on The Columbus Dispatch: Is Ohio teachers’ pension fund being taken over by private interests?