THE BLADE EDITORIAL BOARD
March 31, 2024
The wheels of justice are turning so slowly it’s unlikely ousted State Teachers Retirement System of Ohio board member Wade Steen will ever be restored to his position as the governor’s appointed investment expert.
It’s been nearly a year since Gov. Mike DeWine expelled Mr. Steen from his appointed position citing absence from meetings and excessive zeal for a risky investment. Mr. Steen’s appointment expires in September and this case will almost certainly be appealed again, no matter how the 10th District Court of Appeals rules (“Ex-member asks court for override of removal,” Wednesday).
A magistrate for the court has ruled that the governor overstepped his legal authority. A three-judge panel from that court heard arguments Tuesday.
Whatever the Columbus-based court decides it’s important the case goes to the Ohio Supreme Court to establish a clear precedent on the extent of the governor’s power over his appointees to the state’s public pension boards.
Ohio law stipulates a 4-year term of office for the pension board investment expert appointed by the governor. The law has a clear process for removing a pension board member for cause, which begins in Common Pleas Court.
Mr. DeWine acted outside this process and the court must uphold the sanctity of the statutes that govern pension board appointments.
Mr. Steen’s Toledo attorney told the judges, “power corrupts and absolute power corrupts absolutely.” Unsaid but more important is the protection of the fiduciary responsibility as the foremost duty of all pension board members.
The best interests of STRS beneficiaries cannot come first if the governor can replace his appointed board member at will. Mr. Steen’s obligation is to the beneficiaries of the $91-billion fund. Governor DeWine’s action outside the legal process for removal of a board member is a serious threat to the sanctity of the fiduciary duty.
Mr. Steen was the first to criticize STRS for poor investment returns, a high-fee portfolio, and lavish bonuses to investment staff despite a freeze on cost of living adjustments for retirees.
Independent pension expert Richard Ennis, writing in The Blade last March, concluded STRS had underperformed the returns a passive index fund could have provided by 1.62 percent a year for 13 years. Mr. Ennis reported a $12.5 billion shortfall caused by the poor return on investment.
Mr. Steen was right to ask tough questions and seek investment options. But when elections on the STRS board provided a majority to act upon Mr. Steen’s reform agenda, the governor swept him off the board.
Oversight of Ohio’s pensions has been shameful. The state was six years late on the legal deadline for fiduciary audits of the pensions, including STRS.
The attorney general who provided legal advice to the Ohio Retirement Study Council when they ignored their most significant duty was Mr. DeWine.
The Ohio Public Employees Retirement System, Ohio Police & Fire Pension Fund, and STRS all seek legislative approval of increased contributions from taxpayers.
Operating without regard for the laws governing these pensions proves that Ohio cannot be trusted with more money. It is breaking the covenant with beneficiaries from the top on down.
