Toledo Blade Editorial: DeWine fails teachers
Toledo Blade
Editorial Board
May 9, 2023
Gov. Mike DeWine has failed the State Teachers Retirement System by removing the one person who was leading the charge for much-needed reform.
STRS has lately been managed more for the benefit of insiders and staffers than Ohio’s retired educators.
Wade Steen, a CPA and Cleveland Metro Parks chief financial officer, was booted from the STRS Board of Trustees by the governor Friday night. The timing coincides with the election to the board of Pat Davidson, a Berea teacher who campaigned with the support of dissident teachers who want reform at STRS.
Mr. Steen was the very first STRS board member to call for reform. His opposition to investment staff bonuses paid despite a freeze on cost-of-living-adjustments for retirees was a lonely crusade when it began.
But with the election of Mr. Davidson, the reformers had apparently taken majority control of STRS, until Mr. DeWine replaced Mr. Steen with University of Toledo Trustee G. Brent Bishop.
Opposition to real estate and private equity investments is the driving force behind the need for reform of STRS. Mr. Bishop is a partner in a real estate investment firm and has spent years helping business owners make private equity deals, according to his UT bio — hardly the background of someone likely to challenge the real estate and private equity industry.
Mr. Steen says his appointment is for a term that ends in 2024, and he’ll go to court to keep his job. But the statute he cites makes it clear the appointment is for service as the governor’s investment expert at STRS. It would be a major upset if Mr. Steen prevails over Mr. DeWine as the law is clear in the intent to make the governor accountable for the pension.
With Mr. Steen as his appointee the governor had no fingerprints on malfeasance in management of $95 billion on behalf of 500,000 Ohio teachers.
When he was Attorney General Mr. DeWine ignored statutes requiring fiduciary and actuarial audits of STRS. Now as governor, Mr. DeWine is using his appointment power to protect a failed investment strategy and self-serving staff. It is a clear breach of fiduciary duty protected from litigation over the huge financial damages suffered by beneficiaries only because the state has sovereign immunity.
The status quo of this pension system trails the results of an S&P 500 index fund by 1.62 percent a year for the last 13 years, according to renowned fund manager Richard Ennis.
Auditor of State Keith Faber’s special investigation revealed underperformance against the market index since 2009 totaling $90 billion, which would have been enough to turn STRS’ $20 billion liability into a $70 billion surplus.
Mr. Steen was asking questions that helped reveal these facts when all other board members and elected officials were accepting STRS’ claims of excellence as true.
The Ohio Retirement for Teachers Association says the governor’s manipulation of the STRS board membership reinforces a broken trust with teachers and has “poured jet fuel on a fire.”
STRS Trustees are set to vote on more than $11 million in performance bonuses for investment staff this month. Mr. Steen was the leader of the opposition to those payments.
STRS management has cost teachers billions, but staff has enriched themselves with bonuses while the fund has declined in value. Mr. Steen was bringing a much-needed spotlight on STRS practices. Mr. DeWine has sided with STRS management over Ohio teachers.
posted by Kathie Bracy at 3:07 PM
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