Circus Clowns Center Ring At Ohio Teachers, Minnesota State Pensions

The clown show continues at these massive state pension circuses... but no one's laughing.

It’s no longer a secret that the financial statements of the State Teachers Retirement System of Ohio, Minnesota State Board of Investments and other public pensions are grossly misleading. So, what happens next?

Thanks to Artificial Intelligence, today the public can get a quick answer to the question of whether the State Teachers Retirement System of Ohio, the Minnesota State Board of Investment, or possibly any other state pension is accurately reporting its financial results. The days when the clowns managing our nation’s state pension funds could massively misrepresent—i.e., underreport—billions in investment fees secretly paid to hedge funds, private equity and other alternative investments are over.

Now that the secret’s out of the bag, the question is whether state pension boards, their investment managers and auditors will continue to mislead the public, or change course, altering disclosure of the fees they pay Wall Street. Either course of action—continue lying or confess to lying for decades—has its risks. To date, state pensions challenged about their fee disclosures have chosen to incrementally increase disclosed fees, so as to not draw public attention to the magnitude and longevity of the underreporting, as they eventually—over several years—get closer to the complete truth. Recall the “frog in boiling water” parable: Gradually turn up the heat so that the frogs, i.e., the public doesn’t freak out.

For example, in Minnesota the state recently disclosed a 400% increase in fees paid to Wall Street, following a forensic investigation funded by participants. Total fees are still not anywhere near fully disclosed. Watch for another 200% increase in subsequent years.

Will state pensions continue to mislead the public, or change course, altering disclosure of the fees they pay Wall Street. Either course of action—continue to lie, or confess to lying for decades—has its risks. To date, state pensions challenged about their fee disclosures have chosen to incrementally increase disclosed fees, so as to not draw public attention to the magnitude and longevity of the underreporting, as they eventually—over several years—get closer to the complete truth. Recall the “frog in boiling water” parable: Gradually turn up the heat so that the frogs, i.e., the public doesn’t freak out.

1. State Teachers Retirement System of Ohio

Ask ChatGPT whether the State Teachers Retirement System of Ohio discloses all the investment fees it pays to Wall Street so that stakeholders can evaluate its management, and here’s the answer you’ll get:

Short answer: No.

It publishes only asset-class-level totals and continues to litigate against releasing fund-by-fund contracts and carried-interest data, so outsiders still cannot reconstruct the true all-in cost of its portfolio.

What is not disclosed?

• Manager‑level detail; a separate line for carried interest and other performance fees;

• Supporting invoices and limited‑partnership account statements;

• Full partnership agreements and fee schedules.

Evidence of gaps:

• STRS Ohio treats private‑equity incentive fees as confidential “trade secrets,” and the state auditor has said that is permissible under Ohio law.

• A 2021 forensic review commissioned by the Ohio Retired Teachers Association (“The High Cost of Secrecy”) said unreported fees could exceed US $100 million a year.

• Stakeholders have had to litigate for underlying documents; in May 2025, the Tenth District Court of Appeals ordered STRS Ohio to release additional investment records.

Bottom line for STRS: The system meets the minimum GASB accounting requirement (aggregate expense disclosure) but does not provide fund‑by‑fund figures or a transparent tally of carried interest. As a result, teachers, taxpayers and legislators cannot independently reconstruct the true all‑in cost of investment management.

While, as noted by ChatGPT, STRS Ohio was recently ordered by the Tenth District Court of Appeals to release the investment records we requested 5 years ago disclosing the true fees, the pension has until June 20th to appeal this decision.

While STRS Ohio was recently ordered by the Tenth District Court of Appeals to release the investment records we requested 5 years ago disclosing the true fees, the pension has until June 20th to appeal this decision.

2. Minnesota State Board of Investment

Ask ChatGPT whether the Minnesota State Board of Investment discloses all the investment fees it pays to Wall Street so that stakeholders can evaluate its management, and here’s the answer you’ll get:

Short answer: Not quite.

The Minnesota State Board of Investment (SBI) publishes a detailed schedule of what it calls “Investment Manager Fees” every year, but the disclosure still leaves out some sizeable cost items—particularly performance-based profit-sharing (carried-interest) and many underlying partnership expenses—so stakeholders cannot see the total cost of running the pension.

What’s not disclosed?

• Carried-interest / performance fees.
  SBI states that private-market returns are reported “net of investment management fees and any profit-sharing arrangements, and SBI continues that practice in the entirety of this report.” In plain English, the report subtracts performance fees before showing returns but does not tell you what those fees were.

• Manager-level break-outs for private assets.
  State law requires SBI to “report … the cost and the investment performance of each investment manager” by January 15 each year. The public-markets tables satisfy that requirement, but the private-markets section does not—the totals are given only by broad asset class, so beneficiaries cannot compare one buy-out or real-estate manager against another.

• Fund-level operating expenses, transaction fees and other pass-through costs that private partnerships charge inside the fund are also netted out of performance and never itemized.

In conclusion, SBI’s fee reporting stops well short of full-cost transparency. Without separate disclosure of carried-interest and other partnership-level expenses, neither beneficiaries nor legislators can calculate the all-in cost of running Minnesota’s $146 billion portfolio or judge whether any given private-market mandate is delivering value for money.

If you need to evaluate management efficiency you will therefore have to:

1. Rely on net-of-fees performance figures;

2. Request additional documents (limited-partner reports or ILPA templates) from SBI staff; or

3. Advocate for statutory or board-policy changes that would require manager-level and performance-fee disclosure for private assets.

So, what happens next? AI certainly can be a game-changer in exposing public pension and investment adviser fraud. But:

1. Does it even matter that for at least two decades our nation’s state pensions have been lying about their financial results?

2. Will public pension boards, investment managers or auditors be held accountable?

3. Will stakeholders, including taxpayers and participants, be left holding the bag?

Maybe those are the next questions to ask AI.