Toledo Blade: Auditor Faber still can't answer simple question after 14 months on STRS case
Toledo Blade
Editorial Board
October 26, 2022
Ohio Auditor of State Keith Faber has made his Special Investigations Unit, the department devoted to public integrity probes, the focal point of his re-election campaign. But Mr. Faber has been silent on the most important case the SIU team is working. Perhaps the investigation has been delayed so as to avoid making it a political issue before the Nov. 8 election.
Since August of 2021, state auditors have been investigating an allegation raised by Wade Steen, State Teacher Retirement System of Ohio trustee, a certified public accountant appointed by Gov. Mike DeWine. Mr. Steen says $7.8 million in performance bonuses paid to STRS investment staff in 2019 was based on unreported investment management expenses of $160 million. Mr. Steen says the shaved expenses improved the five-year investment performance by 0.244 percent, making STRS in-house investment staff eligible for bonuses that would otherwise have fallen short of the benchmark required for the extra pay.
Independent pension expert Edward Siedle, hired by the Ohio Retired Teachers Association to study the STRS records looking for funds to restore the teacher’s cost-of-living-adjustment, first raised the red flag on too-good-to-be-true expenses.
STRS uses CEM Benchmarking, a Toronto-based specialist with 400 clients, to compare their costs to peer-group pension funds. CEM documents cited by Mr. Steen and Mr. Siedle disclosed that STRS-supplied investment costs did not include performance fees paid outside alternative investment funds.
After 14 months on the case, the auditor’s vaunted Special Investigations Unit has failed to answer an elementally simple question; did STRS include all costs for outside investment management when measuring their return on investment? STRS says they did; their external validation firm, with extensive knowledge of what other public pensions pay, will not validate those costs without proof STRS would not supply.
Since Mr. Faber’s SIU began this single-issue probe, STRS has twice paid multimillion-dollar bonuses to investment staff. Ohioans needed a definitive answer to STRS accounting veracity from Mr. Faber before those bonuses were paid.
Instead of putting in the necessary time to do his main job, Mr. Faber has launched an epic election-fraud theory from the safe confines of a Tea Party Republican event that is one of the most irresponsible statements by an Ohio elected official this century.
Mr. Faber told a Westerville group that while election fraud is unlikely in Ohio, election boards in the state could be facilitating ballot fraud in other states.
Mr. Faber detailed how special paper used for voting machines could be sent from Cuyahoga County to locations in other states where it could be used to create fraudulent ballots.
There are multiple safeguards in the election administration process that puts Mr. Faber’s scenario in the lunatic fringe category.
After 14 months on the case, the auditor’s vaunted Special Investigations Unit has failed to answer an elementally simple question; did STRS include all costs for outside investment management when measuring their return on investment? STRS says they did; their external validation firm, with extensive knowledge of what other public pensions pay, will not validate those costs without proof STRS would not supply.
Since Mr. Faber’s SIU began this single-issue probe, STRS has twice paid multimillion-dollar bonuses to investment staff. Ohioans needed a definitive answer to STRS accounting veracity from Mr. Faber before those bonuses were paid.
posted by Kathie Bracy at 5:50 PM
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