Toledo Blade: "There is no better illustration of ORSC incompetence than discussion without resolution on $11 million in bonuses, while ignoring $90 billion in unrealized investment gains."

https://www.toledoblade.com/opinion/editorials/2023/05/16/editorial-focus-performance/stories/20230516007?fbclid=IwAR0WivSsOCGqtWBOuRxZpdZvVg1_ybjpOq5vE-_I5d7phPiRKA0g_B96ecc 

Toledo Blade

Published: May 16, 2023

Focus on performance

THE BLADE EDITORIAL BOARD 

Ohio’s Retirement Study Council is supposed to safeguard the retirement assets of the state’s five public pension funds.

Close observation over an extended period leaves us with little confidence they are up to the job.

It’s a critical job. Ohio’s pensions hold over $250 billion for more than 2 million public workers who are currently paying, formerly paid, or are collecting retirement benefits. Because Ohio public workers do not pay Social Security, the state system is all they can count on for retirement income.

On Thursday, the ORSC questioned State Teachers Retirement System leadership on the highly controversial plan to pay performance incentive bonuses totaling more than $11 million to investment staff.

Multiple members, including Sen. Paula Hicks Hudson (D., Toledo), prefaced their questions with admissions of ignorance on investment management. Ideally, such an important oversight body would appoint members with some degree of expertise.

But it takes no expertise whatsoever to understand the key fact on STRS.

State Auditor Keith Faber’s special investigation of STRS featured an easy to understand performance chart.

Since 2009 STRS has underperformed the results of an S&P 500 index by $90 billion. Incredibly, Ohio is paying STRS staff performance bonuses when they have demonstrably destroyed value.

If STRS had no investment staff and put the entire portfolio into an index it would literally have doubled the money it has now, according to Mr. Faber. STRS would also have paid a fraction of the fees they do now.

There is no better illustration of ORSC incompetence than discussion without resolution on $11 million in bonuses, while ignoring $90 billion in unrealized investment gains.

STRS has a $20 billion liability, has frozen cost-of-living-adjustments since 2017 and is pushing legislation to increase the amount school districts — taxpayers — contribute to the pension.

Read the rest of the article here.