Ohio teachers' pension fund loses money, gives ‘performance incentives’ to investment staff
The State Teachers Retirement System of Ohio has voted to pay nearly $10 million in what it’s calling “performance incentives” to around 90 investment managers, though the fund lost billions last year.
Retired teachers are angry over questions they still have about the pension fund’s finances.
The STRS fund lost $3 billion in the last year, going from $94.8 billion on June 30, 2021 to $91.8 billion on May 30, 2022. The fund's spokesman has said while the fund lost money, investment managers made good choices in a weak market.
Retired teachers at the board meeting hooted when board member Jeffrey Rhodes said he wanted to clarify that these payments aren't bonuses.
"This is not a bonus, this is one of our most beneficial tools for making sure our staff are meeting our benchmarks," Rhodes said. "This is not a bonus - this is part of their salary."
Board member Rudy Fitchenbaum was a no vote.
“Teachers, members feel the same way about the promises that were made to them and that those promises have been broken," Fitchenbaum said as teachers cheered.
And board member Wade Steen said he was also a no: "I believe until we develop a plan to address the permanent restoration of [cost-of-living adjustments] for retired teachers of Ohio who have sacrificed so much for the children of Ohio, and we owe that to them that we should not be approving bonuses."
In March, STRS retirees got their first cost-of-living increase since 2017 – a one time 3% COLA. STRS said it suspended those increases to protect the fund’s liability. But teachers have noted other funds have kept their COLAs or restored them if they were suspended or lowered.
The state auditor is performing a special audit of STRS after retired teachers raised concerns about investments and expenses. They hired Ted Siedle, a former SEC asset management lawyer and head of a firm called Benchmark Financial Services, to look into their concerns. His report blasted STRS for lack of transparency and legislative oversight and mismanagement of billions. STRS responded by saying Siedle's report had "misstatements and allegations not supported by evidence" and that the fund has beat established benchmarks and outperformed the market over the past decade.
There are around 150,000 retired teachers in the fund, and they don't pay into or receive Social Security.