DeWine Declares War On Ohio Teachers Pension Transparency Reform
For the second time in a year, the Governor has preemptively acted to overturn a valid election for control of the state teachers pension--thwarting overwhelmingly popular transparency reforms.
This past week Ohio Governor DeWine—for the second time in a year—was in a pickle. The outcome of an election that could shift control of the board of the $90 billion state teachers pension (STRS Ohio) was about to be announced. If reform candidate Michelle Flanigan won and followed through on promises of greater transparency regarding pension investments, potential overcharges and other wrongdoing involving STRS Ohio money managers could be exposed. (Heretofore, the pension has refused to disclose to pension stakeholders, including teachers and taxpayers—or even its own board members—the ugly details of its costly private equity investments.)
All of Wall Street was watching the STRS pension board election closely because, to date, the private equity industry has succeeded in forcing public pensions across the nation to keep secret their private equity dealings. If a single state pension abandoned the industry-mandated secrecy scheme, widespread abuses impacting many other public pensions could be exposed—because the larger funds invest in many of the same deals.
DeWine had successfully thwarted overwhelmingly popular teacher transparency initiatives at the pension before. Exactly a year ago, just as reformers were about to achieve a majority on the STRS Ohio board—the night before election results were to be announced—DeWine terminated a reform member. In other words, before teachers who voted in the board election even knew the outcome, DeWine crushed it.
Before teachers who voted in the board election even knew the outcome, DeWine crushed it.
DeWine said the member, Wade Steen, didn’t attend board meetings regularly enough. Steen countered that the charge was bogus. It seemed secrecy and lack of accountability would continue at the state pension. Wall Street had dodged a bullet—thanks to DeWine.
(Later, the Ohio 10th District Court of Appeals said DeWine’s termination of Steen was unlawful and ordered that Steen be restored to his position.)
With election results scheduled to be announced today (Saturday), DeWine this past Wednesday issued a press release saying that he was alarmed at the news that a consultant for the retirement plan, Aon, was severing its contract.
“This is a huge red flag, calling into question how STRS is operating and providing oversight,” the press release said. “The unstated implication is that the governance issues at STRS are so concerning that Aon could not continue its contract in good faith. STRS may now be out of compliance with portions of audit recommendations due to Aon ending the contract.”
DeWine failed to mention that my independent forensic investigation of the pension commissioned by the reform-minded Ohio Retirement for Teachers Association nearly three years ago revealed, for the first time, that STRS Ohio was 16 years out of compliance with state audit laws. A fiduciary audit hastily commissioned by the Ohio Retirement Security Council in response to this finding in my report reportedly recommended the pension hire an ongoing governance adviser. Remarkably, at the time Aon was hired by STRS Ohio (September 2023), the firm was still under investigation by the SEC and FBI regarding performance reporting errors related to the Pennsylvania Public School Employees Retirement System. In January 2024, Aon and the firm’s former partner entered into an approximately $1.5 million settlement with the SEC for misleading their pension client about the reason for a discrepancy between two different calculations by Aon of PSERS’s investment returns for the same period.
The firm is still being sued by the former public pension client. In my expert opinion, Aon’s hiring raises at least as many “red flags” as its leaving.
Also, note DeWine’s wording, “The unstated implication (emphasis added) is that the governance issues at STRS are so concerning…” A recent public record request to STRS Ohio for any documents regarding Aon’s resignation from the fund merely resulted in a brief letter of resignation, dated April 24th, which failed to disclose any reasons for the departure. It is equally likely, in my opinion, that certain behavior on the part of members of the board who oppose transparency was of concern. Only Aon knows for certain why it resigned.
DeWine’s statement also cited unspecified allegations against members of the pension fund’s board, to which the governor appoints some members.
“Additionally, my office has received documents containing some other disturbing allegations regarding the STRS board,” the statement said. “I have directed my staff to forward these documents to a number of relevant offices, including the Ohio Ethics Commission, the Ohio Retirement Study Council, Attorney General Yost, Auditor Faber, Treasurer Sprague, Secretary of State LaRose, and relevant members of the Ohio General Assembly. I encourage them to review the document and take any action that may be appropriate under any jurisdiction they may have.”
In short, DeWine again intervened to undermine the teacher pension board election—days before the results were announced to teachers who voted. (When the results were announced, Flanigan won by a landslide with 85% of the vote.)
DeWine again intervened to undermine the teacher pension board election—days before the results were announced to teachers who voted.
So, a year ago, the compelling reason DeWine had for undermining a valid election by teachers was a an outspoken board member’s supposed failure to attend a few meetings. Now, says DeWine, he has identified a secret “hostile takeover” of the fund that merits investigation by all. DeWine’s goal: Remove two reform board members to maintain the Wall Street secrecy scheme at STRS Ohio.
DeWine sending pension documents (of unknown origin and credibility) to state officials for investigation is more than a little ironic. In June 2021, the Ohio Retirement for Teachers Assocation sent my 127-page expert forensic investigation detailing actual and potential violations of law related to STRS Ohio to….
… wait for it …
…. the Ohio Ethics Commission, the Ohio Retirement Study Council, Attorney General Yost, Auditor Faber, Treasurer Sprague, Secretary of State LaRose, and relevant members of the Ohio General Assembly. These are very same parties DeWine is now sending his documents of dubious origin. These state officials did nothing in response to my expert findings, demonstrating their complete lack of sophistication regarding pensions.
I also submitted my expert report to the SEC as a whistleblower complaint, in hopes of a better outcome on the federal level since certain matters identified may involve violations of the federal securities laws.
DeWine and other Ohio politicans will do anything to protect their Wall Street donors. Ohio’s pension stakeholders will pay the hefty price until transparency and accountability is restored.
Thank you for all you do, we need you in Rhode Island. Gina Raimondo’s so called pension reform is still rewarding Wall Street and herself.