Like Father, Like Son: The next major scandal is reflective of Party ethics set by the State Central Committee
Like Father, Like Son
The next major scandal is reflective of Party ethics set by the State Central Committee
The Republican Reformist
November 20, 2021
THE NEXT BIG OHIO SCANDAL IS BREWING
The Ohio Retirement Study Council was created by the Ohio Legislature to provide legislative oversight of Ohio’s $200 billion-plus statewide public pension systems. Absolutely like the Ohio Republican State Central Committee, for decades, it has epically failed to perform its limited statutorily-mandated duties.
The Ohio Retirement Study Council (ORSC) was created by the Ohio Legislature in 1968 to provide legislative oversight of Ohio’s statewide public pension systems. The five retirement state systems have combined assets of approximately $203 billion with approximately 2 million members, beneficiaries and recipients. The ORSC is comprised of three senators, three representatives and three governor’s appointees.
REPUBLICANS SHOULD NOT BE AFRAID OF AUDITS
The ORSC is statutorily required to have conducted by an independent auditor at least once every ten years a fiduciary performance audit of each of the pension systems and actuarial audits of the pensions. The purpose of a fiduciary performance audit is to critically review and evaluate the organizational design, structure and practices of the systems. An actuarial audit provides an independent review of the systems’ consulting actuary. The ORSC also reviews the annual operating budgets for each of the pensions. In addition, the ORSC hires its own independent investment consultant to perform the statutorily required semi-annual performance review of the policies, objectives and criteria of the systems’ investment programs.
INEXCUSABLE AND UNETHICAL CONDUCT
Despite the statutory requirement of an independent fiduciary performance audit and actuarial audit at least every ten years, it has been approximately 15 years since the last such audits of the $93 billion State Teachers Retirement System (STRS) commissioned by ORSC.
When statutorily mandated, critical audits designed to protect the integrity of a $90 billion retirement plan are not commissioned, and delayed year-after-year, it is inexcusable.
Any mismanagement or malfeasance which could have been exposed years earlier through timely audits has been allowed to persist, potentially resulting in great risk and cost to the plan. Worse still, the last fiduciary performance audit in 2006 revealed multiple serious deficiencies which have never been addressed over the past 15 years.
YOU WON’T SEE ORP (OHIO REPUBLICAN PARTY) CHAIR PUSH FOR AN AUDIT BECAUSE THE PARTY’S OWN BOOKS HAVE NOT BEEN AUDITED FOR 16 YEARS. This is not how a company or a state is supposed to be run. The ORSC’s failure to audit is especially troubling because it indicates a lack of diligent legislative oversight potentially impacting all $200-plus billion in Ohio public pensions and millions of citizens. The fiduciary audit for Ohio Public Employees Retirement System was not performed by an independent auditor (as required under applicable law) and was three years late; the Ohio Police & Fire Pension Fund is only now requesting proposals for the fiduciary audit due 2016; and the actuarial audit of the Ohio State Highway Patrol Retirement System is 21 years overdue.
Clearly, legislative oversight has been compromised for decades.
That’s bad news for Buckeyes.
According to ORSC, “decisions about public pension plans typically involve significant long-term costs, such as 30-year pension obligations. If not made carefully and with foresight, such decisions can seriously threaten the budgetary stability of state and local governments years later when the pension obligations become due. Those decisions can also result in an unfair burden on future generations of taxpayers and adversely affect the credit rating of the state or local government’s debt.”
When asked recently why the audit is already five years late, State Rep. Rick Carfagna, the assistant majority floor leader of the Ohio House and the new chairman of the ORSC said in a statement to NBC News that the delay was due to state pension reform in 2013 and Covid-19.
OHIOANS ARE STANDING UP AND DEMANDING REFORM!
It seems, on the one hand, no one with authority over pensions wants to see improvements and, on the other, participants whose retirement security is at risk have no say as to how their savings are invested.
As Ohio Republicans are banding together to demand better of their State Central Committee, Ohio promises to be the first state where citizen reform may be realized, to end decades of pay-to-play, good ole’ boy backroom sweetheart deals.
Through a grassroots donation campaign that began late last year, the Ohio Retired Teachers Association (ORTA) engaged a forensic auditing firm to conduct an independent expert forensic review of the $90 billion-plus State Teachers Retirement System of Ohio. According to ORTA, the decision to engage in this project was driven by a lack of trust between retirees and those managing their pension system. The investigative findings, The High Cost of Secrecy were released June 2021 and were widely reported in NBC News, Bloomberg and local media. David Sirota’s The Daily Poster hour-long podcast detailed the wealth transfer. The purpose of the high-impact limited forensic review was to readily identify, at a reduced cost, deficiencies which would significantly improve investment management and performance results.
The party in charge cannot be proud that this is the only participant-funded investigations of state pensions ever undertaken. It goes to the unprecedented unethical behavior being exhibited in the Ohio Republican Party - this needs to be fixed.
Ohio STRS (State Teachers Retirement Systems) have some of the highest and outrageous compensation in the nation among public pension employees despite a lower cost of living and private salary competition in the Columbus Ohio area. On top of the highest salaries in the nation is a thoroughly disgusting bonus program, that these overpaid public employees actual help set and control, with little oversight or transparency.
The latest Ohio Checkbook website maintained by the Ohio State Treasurer and Budget office, only shows STRS salaries for 2019. Other Ohio plans have disclosed 2020 salaries. This is a major violation of transparency that should not be tolerated.
The Ohio Retirement Study Council (ORSC) which is supposed to provide legislative oversight has not in this case, but this general lack of accountability is not unusual and is broadly documented in the ORTA Forensic Audit of June 2021.
For 2019 for total compensation STRS had seven investment officers making over $500,000 a year. Another seven made between $400 - $500,000 a year. Sixteen making between $300 - $400k a year. Thirty-five make between $200k-$300k a year. STRS has sixty-five people making over $200 thousand a year which is at the top of US public pensions compensation.
In adjoining states - Michigan has only five investment officers making over $200 thousand a year. Indiana and Kentucky have only two (CIO & ExDir) making over $200 thousand.
STRS 2019 base salaries are much lower but still way above national averages.
posted by Kathie Bracy at 6:57 PM
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