Ohio's Wildly Unpredictable State "Auditor" Flip-Flops On Critical Pension Transparency

Time for Keith Faber to stop pretending he's an "auditor" and admit he's just a political hack.

In the past two years, Ohio’s State Auditor has massively flip-flopped—granting the State Teachers Retirement System his highest rating for transparency, then citing the pension for lack of transparency in a Special Investigation, and now, once again, giving the secretive retirement plan his highest rating.

In June 2021, when the State Teachers Retirement System of Ohio was facing intense criticism from retired teachers for lack of transparency regarding its riskiest investments, State Auditor Keith Faber came to the embattled pension staff’s rescue—somehow granting the pension his office’s Highest Achievement in Open and Transparent Government Award. Months later, in the midst of a re-election bid and in response to demands from teachers, he agreed to undertake a Special Investigation of the pension, indicating he shared their serious concerns regarding lack of transparency. In late 2022, in a stunning turn of events, Faber finally released—after winning re-election—the findings of his office’s year-long Special Investigation of STRS which recommended the pension end secrecy regarding investments and embrace full transparency. This week, a mere four months later—and in the midst of an election which could determine control of the pension’s board and finally mandate the transparency he previously recommended— Faber is back to playing politics, somehow once again granting the teachers pension his office’s highest transparency rating for yet another year! It’s time for Faber to stop pretending he’s an auditor and admit he’s just another political hack. Wall Street has a lot to lose if public pensions in Ohio are forced to expose their sketchiest dealings and will support anyone who’s willing to oppose public scrutiny.

Last year, I conducted a preliminary forensic investigation of STRS Ohio commissioned by tens of thousands of members of the Ohio Retired Teachers Association. The damning findings of the investigation titled “The High Cost of Secrecy: Preliminary Findings of Forensic Investigation of State Teachers Retirement System of Ohio were released to the public in June 2021. The findings included that the pension had long abandoned transparency regarding its investments. While regulators like my former employer, the U.S. Securities and Exchange Commission, regularly advise investors to “read the prospectus before you invest,” STRS Ohio has long refused to provide pension participants with prospectuses and other documents related to their retirement savings.

It’s their money but teachers are not allowed to see how its invested.

Most disturbing, not a single prospectus or offering document required to be provided to all investors under our nation’s securities laws was provided in response to our public records requests. As a result of the extensive denials of important public records requests, it is impossible for STRS stakeholders to evaluate the investment strategies, performance, fees, risks, and conflicts of interest related to the pension’s investment portfolio. Accordingly, on May 21, 2021, we filed a complaint for writ mandamus with the Supreme Court of Ohio seeking certain STRS public records we had been denied.

For reasons that can only be political, within weeks of the issuance of the ORTA-commissioned forensic investigation chastising the pension for a profound lack of transparency, Ohio Auditor Keith Faber somehow granted STRS Ohio its Highest Achievement in Open and Transparent Government Award for fiscal 2021.

Evidently, Faber either did not read the damning findings in our report issued early June 2021 (and was not aware of our public records lawsuits filed in May, 2021) before issuing his highest transparency award to the pension for 2021, or disagreed—at that moment in time—that withholding fundamental investment information regarding tens of billions in pension assets from public scrutiny was a serious transparency concern.

Months later, in October 2021, Faber informed STRS that his office was launching a Special Audit of the pension after receiving numerous complaints, following the release of the findings of the forensic investigation commissioned by Ohio Retired Teachers Association. Said his office, “The issues being reviewed are of real importance to Ohio teachers and retired teachers: the transparency of the pension system, investment costs and fees, and the impact of cost-of-living adjustments.”

In October 2021, Faber launched a Special Audit of the pension after receiving numerous complaints. Said his office, “The issues being reviewed are of real importance to Ohio teachers and retired teachers: the transparency of the pension system, investment costs and fees, and the impact of cost-of-living adjustments.”

Again, for reasons that can only be political, the investigation by Faber’s staff (who confided with me that they had no pension experience) took over a year to complete. While Faber publicly announced before his re-election that he had “serious concerns” and was “aggressively” pursuing the complaints he received, his office waited until after the election to release its findings.

In late 2022, in a stunning turn of events, Faber finally released the findings of his office’s year-long Special Investigation of STRS which recommended the pension end secrecy regarding its investments and embrace full transparency. While many of the other findings in Faber’s report reflect a poor understanding of complex pension practices—and clearly his inexperienced staff was coached by STRS’s lavishly compensated investment staff and its richly paid Wall Street “experts”—Faber seemingly grasped the primacy of transparency.

As I emphasize in my book Who Stole My Pension?, with full transparency all negligence, mismanagement, fiduciary breaches, abusive industry practices and violations of law will be exposed and can be addressed. As I advised his staff, in response to their question, “Did I find any evidence of fraud or criminal activity,” I admitted I found none. Why?

Because I was denied access to any of the documents which are necessary to prove wrongdoing.

I even offered to assist his staff in reviewing any of the key investment documents I had been denied in my investigation which his office might have been provided by the pension—had they even asked. After being told they would check with their lawyers, I heard nothing. So, it was hardly surprising or persuasive to me when Faber announced he found no evidence of fraud, illegal acts or data manipulation.

Politics and flip-flopping aside, Faber was, in that moment, the first and only state auditor to recommend an end to secrecy and embrace full transparency regarding public pension investments. That was a seemingly huge win for Ohio teachers—a result that only came about due to their efforts to expose mismanagement at the pension and the inexcusable failure of the Ohio Retirement Study Council (which is supposed to provide legislative oversight of state pensions) to commission fiduciary and actuarial audits within the statutorily-mandated periods.

For a brief moment in time, Faber was the first and only state auditor to recommend an end to secrecy and embrace full transparency regarding public pension investments. That was a seemingly huge win for Ohio teachers.

Faber’s action also raised the question of whether STRS Ohio and the other four Ohio massive state pensions—which are equally secretive—would comply with his transparency recommendations.

This week, a mere four months later—and in the midst of an election which could determine control of the pension’s board and finally mandate the transparency he previously recommended— Faber is back to playing politics, somehow once again granting the teachers pension his office’s highest transparency rating for yet another year! It’s time for Faber to stop pretending he’s an auditor and admit he’s just another political hack. Wall Street has a lot to lose if public pensions in Ohio are forced to expose their sketchiest dealings and will support anyone who’s willing to oppose public scrutiny.