Ohio lawmakers are set to significantly reduce the influence of active and retired educators on the state’s retired teachers’ pension fund board as part of the proposed final budget. This move comes amid allegations of corruption that threaten the fund. Under the proposed changes, the number of elected teachers on the board of the State Teachers Retirement System (STRS) will be reduced from seven to three as seats are phased out over several years.
The board currently includes five contributing teachers and two retired educators. In the future, there will be two active educator seats and one retiree seat. Four seats that will no longer be refilled will be replaced by political appointees.
The proposal was made by state Rep. Adam Bird, R-New Richmond, chair of the Ohio Retirement Study Council, who has been addressing the controversy surrounding the fund. Bird emphasized the legislature’s responsibility to ensure the fund’s long-term health and argued that the changes would bring stability and accountability to the board.
Changes to retirement board seats
The changes follow a series of controversies, including allegations of a corruption scandal. A whistleblower memo accused board members of participating in a scheme to steer contracts to a company called QED Technologies, potentially benefiting certain board members.
Attorney General Dave Yost filed a lawsuit to remove board members Wade Steen and current Chair Rudy Fichtenbaum, citing these allegations. Steen and Fichtenbaum have defended their actions, arguing they are part of a reform movement seeking more transparency and a different investment strategy for the fund. This movement is characterized by a debate over the use of actively managed funds versus index funds.
Reform advocates favor index funds for their lower costs and passive management, while others prefer actively managed funds for their potential to outperform the stock market despite higher costs. Educators and others have voiced concerns that removing elected members diminishes democratic representation and could isolate teachers from having a say in their pension fund management. Retired educator Mary Binegar expressed her concerns about removing teachers’ voices from the board.
The legislation is headed to both chambers for a vote, with the budget deadline at the end of June.
