Wade Steen: Strong words for STRS from an STRS Board member

"Ohio Teachers are the only public employees in the country contributing more than their pension is worth and many of our retirees are unable to enjoy a dignified retirement because we’ve broken our promise."

"I am empathetic to the staff’s fears, but at the end of the day, STRS exists to pay teacher retirement benefits. It’s disappointing that it’s come to this, but I have completely lost confidence in the staff’s ability to invest money, and even worse, their willingness to tell us the truth about the results."

From Wade Steen

June 17, 2021

Thousands of our members self-financed as an independent review of STRS that was conducted by the preeminent financial fraud whistleblower in the Unived States – Edward Siedle. The findings of Mr. Siedle’s report are deeply disturbing, but for those paying attention, not all that surprising.

Mr. Siedle has asked anyone with pertinent information regarding the STRS fraud to contact the Federal Bureau of Investigation at (613) 224-1183.

I wish I could say the staff are transparent, but they’re not. Most of my requests for information have been flat out ignored. I asked for the inputs to calculate our benchmarks, that was denied. I asked for the inputs to calculate staff bonuses, that was denied. I finally just asked for our historical returns by asset class, and even that was denied.

The budget being presented today places STRS amongst the top 10 payrolls of all school districts in the State of Ohio. The past ten years we have paid this staff over a billion dollars to underperform investable passive indexes by $4 billion. This cannot continue.

Board Elect and Economist, Dr. Rudy Fichtenbaum, recently sent an analysis to various STRS stakeholder groups:

“Active management has cost STRS approximately $4.1 billion over 10-years which is an average of $410.3 million per year. These numbers are totally unrelated to the question of whether STRS accurately reports its expenses. The returns are STRS’ GIPS returns, so in effect this analysis assumes STRS is accurately reporting all expenses. If the GIPS returns are not net of all expenses, because STRS underestimates its expenses, then the underperformance would be even greater.”

Ohio Teachers are the only public employees in the country contributing more than their pension is worth and many of our retirees are unable to enjoy a dignified retirement because we’ve broken our promise. This is going bad and it’s our job to fix it. Fiduciaries have a duty of loyalty to the beneficiaries, not to the employees which serve at the membership’s pleasure.

A solution exists to restore COLA and lower both employee and employer contributions.

STRS senior staff have gone to great lengths to prevent the board from discussing this solution. The reason for this obstruction is likely because of inherent conflicts of interest – the staff are unwilling to confess their performance failures and recommend a solution which jeopardizes their employment with STRS.

I am empathetic to the staff’s fears, but at the end of the day, STRS exists to pay teacher retirement benefits. It’s disappointing that it’s come to this, but I have completely lost confidence in the staff’s ability to invest money, and even worse, their willingness to tell us the truth about the results.

Sincerely,

Wade Steen, CPA

Member -- Retirement Board