NOTE: To find the most current posts, please scroll down to the two big red arrows. You can't miss them.

STRS Ohio Watchdogs: a public Facebook group you can join

STRS OHIO WATCHDOGS

by Cindy Murphy

STRS Ohio Watchdogs monitor the management and investment practices of the State Teachers Retirement System of Ohio.

We advocate for prudent and transparent investments, the restoration of the COLA for retired teachers, and the rollback of additional years of service required for active teachers.

This site will provide you with information about the work that is being done by Ohio's active and retired teachers to preserve our retirement benefits. Check back often for updates.

Join our conversation on Facebook. You don't have to be a member of STRS Ohio to join. Everyone who is interested in learning more about the management and investment practices of STRS Ohio is welcome.

Use this link to join our pack on Facebook:.

https://www.facebook.com/groups/ohiostrswatchdogs 

Have you joined the Ohio STRS Member Only Forum on Facebook?

If you are a member of STRS Ohio and have a Facebook account, you are eligible to join thousands of others who make up the Ohio STRS Member Only Forum. This is a closed group of retirees and actives who are advocating for the return of our COLA, which, as you no doubt know, your STRS Board SUSPENDED on April 20, 2017. Two of our members, Bob Buerkle and Dean Dennis, filed a class action lawsuit against STRS on May 23, 2019 suing for the reinstatement of our COLA. The text of the lawsuit can be found on this blog. You can go here to join the Forum and sign the petition, already signed by more than 20,000 people, for the return of our COLA: Ohio STRS Member Only Forum

Click image to enlarge

Angel of Grief

Garrison Keillor

Items of interest in the Archives: The 2013 STRS Board Election

Many people have been very interested in reading about the irregularities of the 2013 STRS board election. There are many posts related to this topic, beginning the first week of April 2013, after the ballots were mailed to retirees from STRS. You can find them by going to the Archives for this blog, over in the right sidebar, and clicking on dates beginning with April 7, 2013. Dennis Leone announced his candidacy for a retired seat in November, 2012. There is a lot of information about him in the Archives, beginning with November 12, 2012 posts. If you want to read only the best stuff about that infamous election of 2013, go over to the sidebar on the right of where you are now, which is the archives of previous articles on this blog. Scroll down to April 2013. That's where the "interesting" articles begin. You will see many, clear up to the middle of May 2013.5/28/13

.....so what REALLY happened in 2003 that touched off a firestorm at STRS that is still smoldering today? Read it here, from the Cleveland Plain Dealer. (Hint: It ain't over yet!)

More here (Akron Beacon Journal, 2003)

A MUST READ: Dennis Leone Reform Initiatives as an STRS Board Member  Between 2005 and 2009

To find current, day-to-day posts -- pull your scroll bar down a ways, just below the big red arrows (you can't miss them). Thanks.

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Find your state representative and senator here.

http://www.legislature.state.oh.us/

I know, it's weird.........

Many posts that appear "at the top" for a while are eventually moved down, where they can be found under their original posting dates. Also, if you are confused by the postdating, this is done to keep these posts up there; otherwise, they drift down when new posts are added. It's a "blog thing" which I have no other way to control. KB

Handy links: Contacts, information and more (short version)
This is an abbreviated version of the original 'Handy links' post. Click here to view a more complete list. (Some of it is old.)

STRS Board.....STRS website

Board calendar

E-mail contacts at STRS (old, but some may still work)

Map/directions to STRS, 275 E. Broad St. Columbus, OH 43215

STRS "Membership Survey" (spoof)
State legislators.......State of Ohio website

Latest OEA salaries (2011) over 100K; USDL report

Rich DeColibus' PowerPoint presentation STRS' PBI Program; Does it work?: click December 21, 2008 (blog Archive) and scroll down to December 23 posts.

Charts: PBI (bonus) payments

Popular links; click, then scroll down: charts, graphs, investment staff, lists, spreadsheets

$TR$ Inve$tment $taff $$$ (old)

SPECIAL (must read):

Dennis Leone's INVESTIGATIVE REPORT on STRS: May 16, 2003...Who is Dennis Leone?........(PDF version)...More on Dennis Leone .......(PDF version)

Dennis Leone: "Catcher of Thieves"

Dennis Leone's STRS Report to ORTA, March 2007

Dennis Leone's Testimony at the Statehouse 9/5/12
The Plain Dealer article that started it all

Dennis Leone: Factors Driving STRS 30-Year Planning and Revenue Assumptions (with charts)

Historic PBI vote, January 16, 2009

Charts: PBI (bonus) payments

CURRENT POSTS BELOW

Dan MacDonald's report on the October 2026 STRS board meeting

HEALTH CARE BEING ADDRESSED FOR JANUARY 1, 2028

STRS's Committee and Board meetings were held October 21 and 22, 2026. The investment department shared a July return of a negative 0.1%. August was better at a positive 1.6%. Total investment assets ended August at roughly $111.1 billion. Currently the market is flat and certainly not as robust as the opening of FY 2026. As of July 1, we are into FY 2027 with the fund up $900 million. After the financial report, the investment committee went over the revised 14-page "living" investment reporting documents plus, since going to every other month's meeting format, a Board agenda of what will be addressed in meeting months. Outside Meketa consultant commented positively on the new format. The committee elected Alison Falls to be its chair for another year.

The Board was called to order after the investment committee. After approving minutes, the Board had a fiduciary educational training session and received its self-assessment results. Following lunch, guest speaker Keith Brainard addressed the Board. As former research director for the National Association of State Retirement Administrators, Keith Brainard collects, prepares, and distributes news, studies and reports pertinent to public retirement systems. He spoke to the national funding trajectory, STRS position, returns and assumptions, the pressures on our system in relationship to membership, cash flow, contribution rates, and the impact of pension reform. He noted that in Ohio "Members bear a comparatively large share of the cost."

The Human Resources Committee followed Mr. Brainard. They elected Joan Bellner their chair. The committee approved the Executive Director's FY27 Performance Evaluation template.

To me, the most important part of the meeting then began with the Ad Hoc Health Care Committee coming to order. Michelle Flanigan was elected committee chair. The health care fund is in need of money. It was projected to be 123% funded but is now projected to be 114% to 116% funded; liability was added by claims experience plus trend added $1.16 billion. STRS staff and policy recommend changes. Cost saving strategies include further subsidies reduction, plan design changes, and premium increases. Remember that no pension contributions go into the health care fund. These are two separate funds.

Guest speaker, Eric Seiber, PhD., of The Ohio State University College of Public Health, addressed the Board on the healthcare landscape within the USA with comparison to Germany, Canada, UK and the 38 OECD countries [Organization for Economic Co-Operation and Development]. The USA leads in healthcare costs because of pricing, often eliminating competition through consolidation [Columbus had 11 hospitals and now 3 systems], and administrative complexity. Administrative costs range from 15% to over 25% of all U.S. health spending. Administrative expenses for private insurance in the U.S. are 2.5 times higher than public programs. Committee members did live surveying questions like rank premium costs, to accessibility to care, to affordability, to long term availability. Also surveyed the committee member's attitude toward aligning costs with claims, plan designs [think deductibles and co-pay increases], eligibility, further subsidy reduction, pharmaceutical changes [the expense of GLP-1s was brought up.]

For those already on STRS healthcare, you should have received a mailing from Aetna and Silver Script regarding changes for January 1, 2027. If you have not looked over these documents, I suggest you do. Silver Script's annual deduction has increased as well as many co-pays. The discussions happening now at STRS are looking forward to 2028 health plan changes, not those already in effect for the 2027 healthcare plans. There was much Board discussion throughout this presentation.

Thursday morning Board meeting began with the Executive Director's Update, "The 25-year Arc: How Policy & Markets Shaped Our Funding." Toole started in 2000 when STRS was 99% funded with a 13th check, 3-year FSA, 3% annual COLAs, and an 88.5% formula. In 2003 was the dot.com bust, 55.1% funded. 2003-2007 The False Dawn, rebounded to 90% funded. The Break Point 2007-2009, 35.2% funded. Comprehensive Reform 2012-2017 75.3% funded initially on the backs of actives with increases in contribution and years of service and other changes. Then retirees with zero COLAs. In 2025, 84.1% funded. Administration acknowledged actives and retirees' sacrifice. The Board has developed and is using a SBP decision framework for a steady, shared [meaning retirees and actives] and disciplined approach to a fully funded plan for our newest active teacher to our oldest retiree.

Following Toole's presentation, a financial and actuarial overview was presented by the CFO. The FY ended June 30, 2026 with a negative $4.34 billion net cash flow [think contributions in versus benefits out]; net investment income was $13.82 billion; and the investment fund ended June at $111.3 billion, up from $101.82 billion at the end of FY 2025.

Outside actuarial consultant Cheiron presented its actuarial valuation. Key results: Benefit changes impacted $1.32 billion more in costs to the healthcare fund. Assets returned $5.89 billion more than expected on market value. The funding period decreased from 11.8 years to 10.3 years. All exceptionally good. Concern rests with FY 2027 and markets not looking as strong and therefore there is concern of earning a minimum of 7% return for FY 2027.

Outside actuarial consultant Cheiron presented its health care valuation. This report was not strong. Funded ratio fell to 116.6% driven by plan changes, health care experience, and regulation updates. Although investment returns were $349 million more than expected, liabilities were $693 million higher than expected. The Health Care Scorecard is RED which requires the Board to mitigate risks, hence the Ad Hoc Health Care Committee and its work to look at health care plan strategies, which means plan cost savings adjustments. 2027 Health Care Plans are set. The Board is looking at plan changes for January 1, 2028

Six people spoke during Public Participation, all retirees; 5 regarding the lack of COLA. One spoke on the need for health care coverage and the Ohio Retirement Study Council meeting.

Following lunch, the Executive Director thanked ORSC Chair Adam Bird and Vice –Chair Mark Romanchuk and their staff and committee for the ORSC's, along with independent consultants, identifying unsupported conclusions in a recent article questioning STRS's investment practices. The ORSC review was prompted by concerns raised about the management and investment strategies of the pension fund.

Routine Matters followed along with Old/New Business. After the meeting adjourned, the Ad Hoc Health Care Committee met 3 minutes to clarify the required contributions needed per year to support the health care fund.

The next meeting is scheduled for December 9/10, 2026.

Dan MacDonald's comments to STRS board October 22, 2026: Our retirement security has become a political issue but should be a matter of dignity, fairness, and trust. As always, we need to enhance retirement for the actives and return an annual 3 percent COLA to retirees.

PUBLIC PARTICIPATION:  PROMISES KEPT 

Mr. Chair and members of the Board, good morning. I am Dan MacDonald, an STRS retiree with 38 plus years of service and Executive Director of Local 279R, Northeast Ohio AFT retirees, regularly attending Board meetings since 2014.  

STRS teachers spend their careers educating Ohio children, serving Ohio communities, and preparing the next generation for success. Throughout those years, they contribute to this retirement system with the expectation that our benefits will be managed responsibly and that our years of service will be respected. 

Unfortunately, STRS Ohio has faced serious concerns involving transparency, oversight, and cost-of-living adjustments.  

First, transparency must be a priority. When presentations push one story line, and reporting creates another, there is a problem.  Get rid of ACA and GIPS.  Let an outside final end of the year audit determine incentives. Teachers and retirees deserve clear, understandable information, not numbers that change from verification to audit.  

Second, retirement security matters. For retirees living on fixed incomes, inflation is not just a statistic. It means higher grocery bills, gas bills, increased housing costs, and now concerns over health care coverage. When pension increases fail to keep pace with rising costs, retirees lose purchasing power year after year. Serious consideration needs to be given to protecting retirees while maintaining the long-term financial health of the system.  

Third, the retirement system must put its members first. Board members and decisionmakers have a responsibility to act prudently and in the best interests of the people whose retirement security they oversee. The politics of Ohio and the personal interests of STRS need to be removed. 

Finally, as STRS's Director has pointed out, we need constructive cooperation among educators, retirees, board members, staff, and state lawmakers. We cannot afford endless conflict while the people who depend on this system worry about their future. 

Ohio's teachers have kept their promises to our students and communities. Now, we must insist that those responsible for our retirement system honor their responsibilities in return. 

Our retirement security has become a political issue but should be a matter of dignity, fairness, and trust. As always, we need to enhance retirement for the actives and return an annual 3 percent COLA to retirees. 

Cathy Steinhauser reminds the STRS board of their fiduciary duty

Cathy Steinhauser's speech to STRS board

October 22, 2026

Trina Prufer to STRS board: "No public worker should be trapped in a pension system that cannibalizes its own to cover up past institutional mistakes."

Trina Prufer's speech to STRS board

October 22, 2026

The Wealth Extraction Pension - Risk Transfer in a Non Social Security State

STRS Board Speech - 10/22/26

My name is Trina Prufer and I am a retired school psychologist.

For generations, Ohio’s teachers were promised a traditional defined-benefit pension that provided financial security by including a COLA in the design.

In a traditional defined-benefit system, the promise is absolute. The benefit is guaranteed because the employer absorbs the risk and the contribution rate varies based on need. When the math is ignored, the system can accumulate debt, which with interest, can spiral out of control.

Prior to 2012, the State of Ohio assured members that their benefit was secure, sufficient and legally protected. In fact, between 2002 and 2012, the benefit was defined by law as a bracketed inclusive set of 29 statutes (3307.50-3307.79) reiterated 56 times in Chapter 3307 of the Ohio Revised Code.

But lurking in the background was the design flaw that no one had shared with members. In the 1980s, the employer contribution rate had been capped at 14%, which worked in an upswing market but racked up debt in times of stress. Predictably, the system failed, and instead of fixing the model, the system shifted its self-inflicted debt onto members.

What we have today is a bait and switch pension. Members and the districts each contribute 14%, (28% total), for a benefit with a normal cost of only 11%. Members are paying for inflation protection, they are just not receiving it. The current

benefit model, which has no COLA obligation at all, acts as a risk-transfer, non Social Security, wealth-extraction mechanism. It is one of the most dangerous, irresponsible public pension models in the country because it is designed to extract wealth, not fund retirements. If a private corporation did this, it would be considered fraud.

The difference between receiving a simple 3% COLA, and no COLA at all, is 30-35% of the total pension payout. No retiree can survive for 20-30 years on 67% of a teacher’s salary without a dependable COLA or Social Security as a safety net . We are now 14 years into this disgraceful model, and the worst is yet to come.

No public worker should be trapped in a pension system that cannibalizes its own to cover up past institutional mistakes.

Rudy Fichtenbaum: More on STRS v. Passive (Index) Investing

 STRS v. Passive (Index) Investing

By

Rudy Fichtenbaum

            This is the last part of a three-part series. In part 1, “Why it is So Hard to Beat an Index”, I reviewed the literature on index or passive investing v. active investing. In part 2, “Does Active Investing Beat Passive Investing”, I presented evidence that clearly showed that passive or index investing outperforms active investing. This is part three, and it will deal explicitly with STRS’s performance.

            To start, I want to make it clear that a pension needs to have diversified investments. It cannot just invest in the S & P 500. A diversified approach to passive investing would invest in broadly in U.S. equities, international equities, and bonds. Second, the reason it has taken me so long to present the third and concluding part of this series, is that I have struggled with a way to try and present this information in a way that would be both valid and understandable.

What I have come up with is two different methods of comparing STRS’s performance with passive investing strategies.

            Method One is to compare STRS’s performance to a portfolio of three Vanguard Index Funds, namely 56% VFINX (S & P 500), 34% VBMFX (Total Bond Market Index Fund), and 10% VGTSX (Total International Stock Index Fund). I used Vanguard funds because they make quarterly returns for their funds publicly available; that allows for the calculation of fiscal year returns that match STRS’s fiscal years. I started my analysis with 1989, because that was the earliest time when I could find reported returns in STRS’s Annual Comprehensive Financial Reports (ACFR), formerly known as Comprehensive Annual Financial Reports. In other words, I did not cherry pick my data.

            For the very early reports from STRS, it is not always clear whether the total returns reported were gross or net. But for purposes of my analysis, I am assuming they are net. If in fact some of the early STRS returns were gross, that would just strengthen my findings. I chose the 56/34/10 mix specified above because over the 28 years (1989-2025) STRS returns had a standard deviation of 9.64%, and the 56/10/34 mix had a standard deviation of 9.65%. The standard deviation is a measure of volatility and indicates the amount of risk that is being taken. In comparing returns, it is important to compare returns relative to the level of risk that is associated with each return, because according to modern portfolio theory, greater risk should lead to greater returns. 

            To repeat what I said above, I constructed my portfolio using three Vanguard index funds. For stocks, I used VFINX (the Vanguard S&P 500 Index Fund for Investors); for bonds, I used VBMFX (the Vanguard Total Bond Market Index for Investors); and for international equities, I used VGTSX (Vanguard International Stock Index Fund for Investors). Investor funds generally have higher expenses than institutional funds, but I used investor funds because the data available for investor funds go back further in time. For example, Vanguard does have a fund for institutional investors (VFFSX) with lower expenses, but annual return data was only available starting in 2017.

Using Portfolio Visualizer Backtest Portfolio Asset Allocation, I calculated the difference in the average annual rate of return VFFSX and VFINX from 2017 to 2024: VFFSX outperformed VFINX by 0.15%, the difference due of course to greater expenses for VFINX. I also looked on Vanguard’s website and found a note stating that the fund’s annualized six-month expense ratios for that period are 0.14% for Investor Shares and 0.01% for Institutional Select Shares. That would suggest the difference was 0.13%. So, I split the difference and adjusted the returns of VFINX by adding 0.14% to them to reflect the fact that STRS, as an institutional investor, would have access to lower cost funds. The expenses for VBMFX were listed as 0.15% and 0.01% for VBMPX; the difference in returns using Portfolio Visualizer Backtest Portfolio Asset Allocation in returns from 2010 to 2024 was 0.14%. In both cases, then, the difference was 0.14%; so, I added 0.14% to the annual returns of VBMFX, again to reflect the lower cost available to STRS. In the case of VGTSX, the investor shares have an expense ratio of 0.17% and institutional plus shares have an expense ratio of 0.05%, so I adjusted the investor returns by 0.12% to reflect the fact that if a pension were purchasing this index fund it would be at a lower cost than an ordinary individual investor.

One last point about the data: I used the S & P 500 Index because Vanguard’s Total U.S. Stock Market Fund, which is probably the equivalent of the Russell 3000, the index STRS uses to benchmark its U.S. stock performance, does not go back to 1989. However, the correlation between the S & P 500 and the Russell 3000 is 0.98.

Over that period, 1989 to 2025, STRS had an average annual return of 8.52%, and my diversified Vanguard portfolio had a return of 9.01%. In a more technical version of this paper, taking into account the interaction between STRS returns and its cash flows, I estimate that STRS would have had an additional $31 billion. That would have given STRS a 95% funding ratio. Of course, $31 billion is just an estimate. But even if it is too big by a factor of two, the lesson remains: STRS would have had many billions more had it pursued index investing. 

Method Two for comparing STRS’s performance with passive investing strategies is to use “return based style analysis” (RBSA), a method developed by Nobel Prize winning economist William F. Sharpe. This is the method that Richard Ennis employed when, in his analysis of STRS returns in 2023, he looked at STRS’s performance. Using RBSA, I have updated his results so that after the update, they apply to the period from 2009 to 2026.

RBSA uses quadratic programing to pick a mix of indices that minimizes the variance between STRS’s actual performance and performance from three indices, the Russell 3000, Bloomberg Barclays U.S. Aggregate (U.S. Bond market), and MSCI ACWI ex-U.S. (Hedged). The latter is a world stock market index that excludes the U.S. The hedged version, chosen by the model, is a version that removes gains and losses from changes in currency valuations. (STRS hedges 50% of its international investments). The model constructed a portfolio that was 58% Russell 3000, 28% Bloomberg Agg, and 14% and MSCI ACWI ex-U.S. (Hedged). 

From 2009 to 2026, STRS’s annualized return was 8.02%, whereas the return from the portfolio constructed by the model from the Russell 3000, Bloomberg Agg, and MSCI-ACWI over the same period was 9.18%.

This result is similar to that obtained when I used the Vanguard Funds. Further, the correlation between RBSA (Method Two) and STRS’s actual performance was 96%. In addition, the STRS portfolio had a standard deviation of 0.11 and the index portfolio had a standard deviation of 0.11. So, the index portfolio took the same risk that STRS took with its active management.

The conclusion that I draw from these results is that our members would have been better off if STRS had used passive investments rather than pursuing a strategy of active investing.

August 31, 2026

Dan MacDonald's report on the August 2026 STRS board meeting

From Dan MacDonald

August 23, 2026

FISCAL YEAR ENDS 

August’s STRS Board meeting was a Monday and Tuesday, August 17/18, 2026. It opened with the Investment Committee. June closed the 2026 Fiscal Year [FY]. The net return for June was a positive 0.2%. The total net fund return for the FY was a positive 14.2%. Total investment assets ended June about $110.2 billion, higher by $9.5 billion in FY 2026. Total fund benchmark return was a positive 14.6%. Total fund net return annualized for the past five years was a positive 7.6%. [Note that there is still a $4 billion cash flow concern with actives and employees’ contributions into STRS and benefit payments out from STRS.] A slide pointed out that the Investment Department ‘s aggregate investment net value added over 5 years was $868,138,381 while the aggregate Performance Based Incentive [PBI] was $40,448,435. Ratio to PBI : 21 x. Outside consultants Callan and Meketa then basically praised the department on their excellent quarterly returns with comments like we are “living currently in a streak we may never see again,” ‘Super, super year.” Multiple charts were presented for quarter, year, 3 years, 5 years, and 10 years. The meeting concluded with a review of security compliance policies and procedures.  

The Governance Committee then met. Much time was spent determining the definition of risk for the policy booklet. Consensus was reached on a definition. Following, Executive Director Toole presented language around Board members request to staff and vendors/consultants. He presented language changes as governance, transparency, and cost concerns. Much discussion amongst all Board members and both the AG lawyer and the Board’s lawyer. It became clear that Board members can have discussions with the consultants about clarification, options, suggestions, etc. The conclusion, Board member request process will remain the same. The committee concluded with brainstorming topics for the October Board’s Education and Planning session.

Tuesday began with the Audit Committee meeting. The internal audit team was introduced and closed and open audits were reviewed. Outside consultant ACA then presented its GIPS review of STRS. STRS has been verified by GIPS and in compliance since 2006. GIPS is the “gold” standard in accountancy. Outside consultant Crowe, outside auditors, presented their current audit of STRS which will conclude in December. Crowe was chosen by the Ohio Auditor of State and is in its 1st year of a second 5-year audit contract. A brief executive session concluded the session. 

The actual Board meeting followed. Public Participation had 8 speakers, all retirees. Dean Dennis presented ORC 3307.07 giving copies to the Board members. Dennis asked why a full COLA was not being paid since money was available. Board member Allison responded, VERY UNUSUAL, thanking Dennis for his comments and commitment and reminding Dennis that pending litigation at the STRS meeting is not the correct forum. Lunch followed.

After lunch, the Health Care Committee voted for an ad hoc sub–Health Care Committee over future health care providers and staff doing a study of alternatives to STRS present approach, even mentioning PERS’ HRA program as an example. [I think the Board wants to stay balanced and aware with staff ideas.]  Christina Elliott presented Members’ Benefits Update sighting accomplishments, member experience surveys, health care insights, forces shaping future member benefits and strategic priorities.

The Executive Director's Report was different. It was his 1st anniversary with STRS. He addressed the Heritage Foundation study with his concerns about the state legislature and the STRS Board composition. He warned of Defined Benefit attacks and that actives, retirees, and STRS staff are all in, together. He emphasized strsoh.org website, trust, and verification of facts. He also commented on a national conference he attended with Board member Chad Smith. 

Routine Matters followed. Harkness was voted 2027 Board chair. Davidson was voted 2027 Board Vice-Chair. Bills were paid, and committee reports were given. Under Old/New Business Jones had an expense covered, and Smith gave his report on the national conference.

The next Board meeting will be October 21 and 22; no meeting in September.