BGSU articles showcase work of alumni Dennis Leone and Paul Kostyu in exposing shocking spending practices of former STRS Board

Bowling Green State University

Retirees Association Newsletter

November 2005

On board in Columbus

2 BGSU grads bring STRS change

Dr. Dennis Leone is sworn in as one of three new members of the STRS board. Giving the oath at the Sept. 15 meeting is his daughter Lindsay, who is in her first year of teaching in Ohio in the Wyoming School District near Cincinnati. Holding the Bible is Jake Frowine, of Portsmouth, a 95-year-old retiree who made his first STRS payment in 1928. Mr. Frowine carried Dr. Leone’s STRS election petition in four southeast Ohio counties.

They never met on campus – but the two BGSU graduates are tied together by their diligence in fact-finding and devotion to journalism and education. What resulted is the transformation of the State Teachers Retirement System and Ohio’s other four retirement systems.

Dr. Paul E. Kostyu, Copley Newspapers Columbus Bureau chief, a legal specialist in the area of access to records and meetings, and Dr. Dennis Leone, who retired two years ago as superintendent of Chillicothe Schools, were not on the Bowling Green campus at the same time. Dr. Leone graduated from BGSU in 1972 with a bachelor’s degree in journalism and education. Dr. Kostyu worked on his MA in Popular Culture while a reporter at The Advertiser-Tribune in Tiffin, finishing his thesis while working at The Greensboro (N.C.) News & Record. He received the degree in 1981.

Hired by BGSU in 1985 to be editor of The Monitor, Dr. Kostyu received his PhD in Mass Communication in 1990. His bachelor’s degree is from Heidelberg College.

Dr. Leone, in December 2002, as he moved toward retirement with 23 years in school administration in Ohio, began researching STRS spending after hearing rumors of extravagance.

Tired of stone-walling

In writing and in person at STRS Board meetings, Dr. Leone questioned STRS executives, who were unresponsive for months. But they finally caved in to Dr. Leone’s tenacity in seeking public financial information.

What Dr. Leone learned was far worse than he expected: The STRS Board and staff were living in a “financial fantasy land.” In a 13-page report that he presented to the STRS Board in May 2003, Dr. Leone asked for a response in two weeks to his charge that the STRS was spending money in a manner that was “completely foreign to the very members they serve.”

When the STRS continued its stone-walling by refusing to change its policies, Dr. Leone e-mailed his report to all 611 Ohio superintendents and all 923 principals. Many of them, in turn, shared the report with teachers, who shared it with retirees, who shared it with legislators, who shared it with the news media.

On June 8, 2003, The Plain Dealer broke the news.

By 2000, Dr. Kostyu was covering state government for Copley in Columbus after teaching journalism at Ohio Wesleyan University, Delaware. A copy of Dr. Leone’s report was forwarded to him from the Copley newspaper in Canton, The Repository.

By the end of 2003, Dr. Kostyu had written nearly 100 stories about the excesses of the STRS. The result was the firing of the STRS executive director, passage of legislation to reform the state’s five pension systems and an investigation launched by the Ohio Ethics Commission.

Dr. Kostyu’s follow-through of the STRS issues was so highly regarded by The Repository that his series was submitted to the Columbia University Pulitzer Prize committee judging beat reporting.

Although Dr. Kostyu didn’t win a Pulitzer, his series received a first place for investigative reporting from the Associated Press Society of Ohio, a first-place for in-depth reporting from the Association of Capitol Reporters and Editors, and a first place for best use of public records from the Ohio Society of Professional Journalists.

First-Amendment award

Dr. Leone himself received the First Amendment Award from the Central Ohio Chapter of the Society of Professional Journalists. He was praised for his “courage to take on the STRS, alerting the media, and his diligence in pursuing public records requests in the face of many barriers, including widespread criticism from the Ohio Education Association and fellow superintendents.”

It was Dr. Kostyu who nominated Dr. Leone for the award. Dr. Kostyu also discussed his Canton Repository articles [about] the STRS last year during Mass Communication week activities on the BGSU campus.

Last December, upon retiring from the Chillicothe schools, Dr. Leone decided to run for the new retiree seat on the STRS Board (the new seat was created by the General Assembly). A total of nine retirees and active teachers ran for three seats on the Board. The votes were counted last May 7. Dr. Leone was the top vote-getter.

• Jim Gordon compiled stories about Drs. Kostyu and Leone from interviews and emails.

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Bowling Green State University

Retirees Association Newsletter

November 2005

STRS exposé earns Ethics in Government Award

Dr. Dennis Leone receives the Ethics in Government Award from Joy Paolo, Paolo Consulting LLC, sponsor of the award, and John Wahle, Ohio GFOA president.

For “exposing a terrible and arrogant entitlement culture” at the State Teachers Retirement System beginning in 1995, the Government Finance Officers Association presented its 2005 Ethics in Government Award to Dr. Dennis Leone in Cleveland Sept. 14.

In nominating Dr. Leone for the award, members of the association noted that he “acquired proof that the STRS Board and the STRS staff had been spending pension money and taxpayer money on things like booze, parties, concert tickets, Kings Island, baseball games, gifts, paid airfare and paid lodging for STRS visitors, multiple lavish trips to places like Honolulu and Palm Springs (spending $540,000 between 2000, 2001 and 2002), a new office complex that would make Saddam Hussein blush (spending $94.1 million), sculptures and artwork for the new STRS headquarters (spending $869,000), a special child care services center for employees of STRS (spending $818,000 to build and $500,000 on an annual basis to operate), and giant bonus checks for 435 STRS employees (totaling $24.4 million between 1998 and 2003) at a time when total stock market assets at STRS dropped a staggering $12.3 billion.”

STRS, Dr. Leone told the Board, should not stand for “Sculptures, Travel, Retreats and Spending.”

Dr. Leone also found that the staff increased from 414 to 735 and administrative expenses increased 17.4 percent from 2000 to 2002. Continuing research by Dr. Paul E. Kostyu, Columbus bureau chief for Copley Newspapers, disclosed that STRS employees who adopted a child received a $5000 gift from pension money. In another STRS policy reported by Dr. Kostyu, the executive director received a percentage of every staff bonus check he gave.

On June 16, 2004, when Gov. Robert Taft signed into law the pension reform bill with the sweeping changes pushed for by Dr. Leone, the governor presented Dr. Leone with one of the pens he used to sign the bill.

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Bowling Green State University

Retirees Association Newsletter

November 2005

Former director of STRS pleads guilty to ethics violations

The former executive director of the State Teachers Retirement System was found guilty Sept. 1 of accepting golf outings and other gifts from an investment firm that advised the pension fund.

Herb Dyer, 66, pleaded no contest to one charge of failing to report gifts to the Ohio Ethics Commission and was fined $1,000. Suspended was $300 on condition that Dyer pay the amount to the pension fund.

Dyer was forced to resign in August 2003. Of Ohio’s 133 lawmakers, 105 called for Dyer’s resignation after criticism that the STRS spent millions of dollars on bonuses, artwork and travel while assets plunged.

Reporting about STRS activities by Dr. Paul E. Kostyu launched investigations by the Ohio Ethics Commission, which are continuing.

Dyer was the speaker in September 1995 at BGSU Retirees Association’s founding convocation.

• The Associated Press contributed to this story.