Ohio Retirement Study Council: A Sleepy Watchdog With An Absurd Longgggggggg COVID Excuse
$90 billion Ohio Teachers State Pension statutorily-mandated fiduciary audit 6 years late due to COVID? That's really longggggg COVID.
EDWARD SIEDLE
January 18, 2024
The Ohio Retirement Study Council (ORSC) is supposed to provide oversight of Ohio’s statewide public pension systems. Let’s call it a “sleepy watchdog.”
The Ohio Legislature created the Ohio Retirement Study Council (ORSC) to provide oversight of Ohio’s statewide public pension systems. For more than 50 years, the ORSC has supposedly been the eyes and the ears of the legislature on pension matters. Nevertheless, Ohio has seemingly been perpetually mired in public pension scandals.
The ORSC has the well-deserved reputation for being a “sleepy watchdog.”
ORSC is statutorily required to commission an independent fiduciary performance audit and actuarial audit at least every 10 years of each state pension. Mind you, the ORSC doesn’t ever have to actually perform any pension audits—all they have to do is commission others to do the audits. It’s that simple.
My 2021 forensic investigation of the State Teachers Retirement System of Ohio (STRS), The High Cost of Secrecy, revealed that it had been approximately 15 years since the last such audits of STRS. Somehow, the idiots at the ORSC had forgotten to commission critical audits on the $90 billion fund.
Somehow, the idiots at the ORSC had forgotten to commission
critical audits on the $90 billion fund.
As I wrote in my 2021 forensic findings:
“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. An investigation into the failure to audit by ORSC—as well as STRS’s failure to demand such audit results—is warranted, in our opinion. 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 of STRS revealed multiple serious deficiencies which have never been addressed over the past 15 years.”
I also noted that the ORSC failure to audit was especially troubling because it indicated a lack of diligent legislative oversight potentially impacting all $203 billion in Ohio public pensions and over 2 million citizens.
ORSC’s failure to audit was especially troubling because it
indicated a lack of diligent legislative oversight potentially impacting
all $203 billion in Ohio public pensions
and over 2 million citizens.
Further, 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 was only then (in 2021) requesting proposals for the fiduciary audit due 2016; and the actuarial audit of the Ohio State Highway Patrol Retirement System was 21 years overdue. Clearly, legislative oversight has been compromised for decades, I concluded.
In response to my forensic findings, the pension incredulously stated the following defense of the ORSC. (That’s right—the pension defended the failure of its auditor!)
“The Chair of ORSC has publicly stated that he is committed to getting the audits back on schedule, and that delays have been a result of the multi-year pension reform legistation and the COVID pandemic. A fiduciary audit of each retirement systems often takes several years to complete.”
Let’s unpack what’s being said here. But let’s begin by pointing out what’s not been said. That is, the officials at the pension never demanded that the ORSC commission the audits in compliance with applicable law and the ORSC never performed its statutory duty—until an independent investigator (from out-of-state) uncovered the longstanding violations of Ohio law. Everyone conveniently “forgot” there was an audit requirement for the $90 billion pension!
Everyone conveniently “forgot” there was an audit
requirement for the $90 billion pension!
Next obvious point: the COVID pandemic began in the United States in January 2020—four years after the statutorily mandated fiduciary audit was due. COVID didn’t delay the required audit because no one was pursuing the audit—not even in 2021—until the failure to audit was exposed.
The COVID pandemic began in the United States in January 2020—four years after the statutorily mandated fiduciary audit was due. COVID didn’t delay the required audit because no one was pursuing the audit—not even in 2021—until the failure to audit was exposed.
Finally, the fiduciary audit—contrary to STRS’s claim that it would take several years to complete, was completed in less than a year after my June 2021 forensic findings were released. In May 2022, STRS announced with great fanfare: Funston Advisory Services Issues Final Report on STRS Ohio’s 2022 Fiduciary Performance Audit, Recognizes System’s Operational Excellence.
In conclusion, the abject failure of the ORSC to perform its legal audit duties regarding over $200 billion in public pension assets did not cause any public outcry. No investigation into the causes of the failure was undertaken. No one was held accountable. No remedial action was taken.
Life goes on in Ohio and no one is the wiser.
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