Head of Ohio teachers’ pension fund retires, saying fund remains strong despite vacancies – News-Herald

Written by: JULIE CARR Smyth

COLUMBUS, Ohio – Ohio’s outgoing president Troubled teacher retirement system He said his successor left the fund in a strong financial position despite the turmoil at the top he will inherit.

In a recent interview with The Associated Press, Acting Executive Director and CFO Lynn Hoover said the Ohio State Teachers’ Retirement System’s $94 billion in short-term, mid-term and long-term returns remain among the top 10% of peer funds nationwide. .

“We’re doomed,” said Hoover, who has seen investment staff reject performance bonuses as part of recent tensions. He retires Sunday after 31 years at STRS, one of the nation’s oldest and largest public pension funds. Its more than 500,000 members include active and inactive public school teachers and retirees.

That doesn’t mean the next interim director, Aaron Hood, doesn’t have a big job ahead of him, he said.

The U.S. Army veteran asset management expert took office this month and will lead a nationwide search for a new permanent director to replace Bill Neville, who was placed on leave in September amid allegations of misconduct. Hood also must take over as Hoover’s finance chief, be hired for an investment chief position that will open in March, and find a new head of internal audit.

Hoover said the top priority is “to fill them and bring in highly talented people who can continue this great legacy.”

The staff’s departures came this spring amid years of tensions. So-called reformers on the STRS board took aim at the fund’s internal operations and investment decisions after retirees were outraged that the previous board cut cost-of-living adjustments and then repealed it for five years to help stabilize the fund. Many were unhappy with the 3% adjustment they received in 2023 and the 1% adjustment they received in 2024.

In May, Republican Ohio Governor Mike DeWine announced ownership had passed to him. A 14-page anonymous note and was turning over to authorities other documents containing “disturbing allegations” about the STRS board. Republican Ohio Attorney General Dave Yost launched an investigation the next day into what he called the fund’s “susceptibility to hostile takeover by special interests.” The investigation is still ongoing and lawmakers have since begun considering a proposal to remove elected members from the board.

Yost followed up his investigation with a lawsuit seeking to oust two pro-reform board members. One of these members, Rudy Fichtenbaum, became chairman of the board. The other, Wade Steen, later left the board. He also filed a lawsuit in October against two other former board members, alleging they participated in a “civilian conspiracy” that prevented him from uncovering wrongdoings at the fund.

When the same whistleblower lawyer who reviewed STRS’s performance metrics came to Minnesota to do something similar, The Blade of Toledo reported that records there showed Hoover and others communicated with colleagues “to undermine the impact of the investigation.”

Hoover said the communication was “par for the course and normal protocol.”

“They reached out to us and asked if you could get on the phone with us,” he said, calling it “pretty typical” for peer organizations to exchange information on best practices and how they handle similar problems.

Hoover said he was proud of the staff’s professionalism amid all the controversy in recent years.

“The staff remained truly aligned with the mission and focused on protecting and ensuring the safety of members,” he said.

STRS has paid more than $4 billion in positive benefit changes to active teachers and retirees over the past three and a half years, STRS said, attributing this to sound investment strategies and strong markets.

“Our fund is in a situation where we pay out more in benefits than we receive in contributions, so return on investment is critical in the long term,” he said.

He also acknowledged that members had had to bear the brunt of pension reform changes and high inflation and “it’s been tough”.

Hoover said members should be happy that the fund is now reviewing its annual cost-of-living adjustments. He added that STRS was also fighting to increase employers’ contributions to the fund. The percentage they pay in Ohio has remained the same for 40 years, he said.

STRS also said it hired global commercial real estate firm CBRE to analyze the future use needs of its buildings, which are capital, not investment assets, and continues to lobby for fair school funding.

The retirement system is also closely monitoring the rollout of Ohio’s new universal voucher system, which is open to both public and private school students.

“To the extent that it starts taking kids out of public education, which in turn reduces the number of teachers, and therefore reduces the payroll,” he said, “it affects our system.” “We want to support public education, and the public pension model is very valuable for teachers. “They served our children, they worked, they taught, and when they retire they should have a reliable, reliable, secure monthly pension until they die.”

First Publication Date: November 29, 2024, 11:56 EST