It happened like clockwork, but one year apart.
Right before an election outcome is announced for a seat on Ohio’s teacher pension board, Governor DeWine swoops in with a big, chaotic announcement.
Last year, it was to replace one board member with another (based on an after-the-fact assertion of too many missed meetings…which meeting minutes proved to be false).
This year (last week), DeWine made an even more charged accusation, based on an anonymous memo, that has now drawn in the Ohio Attorney General.
And wouldn’t you know it?
Almost days after each of these dramatic announcements and shakeups, election results are announced that the “reform” candidate in the election—the one demanding more transparency—won.
It’s almost as if DeWine is getting a heads up on the election outcome in advance, and is then taking dramatic action to negate the outcome—nullifying the votes of teachers and retirees. Hmmm.
And when I say “dramatic,” that includes illegal. Because two courts (a magistrate, then an appellate court) ruled that DeWine violated Ohio law in how he terminated the member last year, which is why that board member was reinstated (which led to a bizarrely cancelled meeting).
There’s much to say about all this drama. For one really informed conversation, let me recommend this Podcast from Cleveland.Com, which included the following quotes:
"Mike DeWine asked everybody and their brother to investigate. But this isn't a scandal that requires that type of treatment…." [DP: some might call this an abuse of power]
"The teachers don't like what's been happening. The fund managers have been collecting gigantic sums of money and huge bonuses for really, quite poor performance. Every other pension system in the state has had annual cost of living increases but the teachers haven't….”
"Mike DeWine broke the law...the only person has broken the law is Mike DeWine. And now he is using the power of his office to launch every possible investigation you can think of….” [DP: some might call this an abuse of power]
"Their seems to be a real problem here with the staff saying this is problematic because it's really about them just keeping their jobs, their big salaries and their bonuses…The people managing the fund are terrible. They don't get a good return (on investments) and they make boatloads more money than the retired teachers do."
And much more.
Or read the Toledo Blade editorial here: “Gov. Mike DeWine sees a “red flag” in the resignation of fiduciary governance adviser Aon at the State Teachers Retirement System of Ohio. The more accurate term, though Mr. DeWine might not agree, is “red herring.”
And TODAY, there will no doubt be drama at the board’s monthly meeting. (My prediction: they will do all they can to keep the meeting from happening—because something about this newly elected “reform” majority is apparently deeply threatening.)
Suggestion: Let’s Center Teachers and Retirees!
But amid this roiling mess, I want to take a different tack today.
Let’s observe the ongoing chaos through the lens of public teachers and retired teachers. Let’s center them in the conversation.
Which is only right, since there are 500,000 of them, and they’re the ones: 1) who spend decades working so hard in the classroom, teaching Ohio’s kids; 2) all while contributing to the system. And of course, they are the ones who spend their retirement years living on the performance of the fund. Which means every aspect of how their fund is managed is central to their lives. And yes—it’s their fund!
One Retiree’s Story
To put you in the right frame of mind for this exercise, let me share an email I received last year from a retired teacher I know.
Here’s what she wrote: “I was born and raised in poverty in the south, left on a scholarship to Ohio, and swore never to be in poverty again. As a young teacher first paying into the [teachers’ pension] system, [I] began to witness my older colleagues and mentors retire[.] I then came to notice that they all lived in poverty after about 5 years of retirement. I didn’t understand that until the campaign began to get the COLA put into place. After it passed, I understood.
So we got that done, and retirees could then keep their heads up and live with dignity. I retired after 35 years in 2012, expecting the same.
[COLAs were frozen several years later—for five years].
The impact: Now I realize how I’ve missed that COLA for 7 years myself; I’m beginning to really miss that nearly $7K that would have been in the family funeral account by now. I had to bury both my parents, and will have to bury all 3 siblings as well, likely within the next few years as they have diabetes, heart problems and COPD- all my family still lives in poverty, I’m the only one who "made it out.” Now I help support their grandchildren. As a Principal, I learned that some of my best teachers came from a similar background of poverty, and were now the heroes, providers and emergency financial back-ups for their extended family members. We all more than earned a dignified retirement, especially, as women…having been paid 1/3 less than men whose training and degrees in other professions were similar.”
For hundreds of thousands of Ohio teachers and retirees, this retiree captured the very real and deeply personal stakes of this years-long battle. With that in mind, let’s look at everything that’s happened through the eyes of this retiree, and others like her.
What They’ve All Endured
Here’s how the past 12 years have looked:
First, know that Ohio teachers pay 14% of their salary into the state teachers’ pension. As a 2021 Wisconsin study found, this is among the highest contribution rates in the nation:
Also know that what Ohio teachers collectively contribute, along with employers, adds up to a massive amount of money—$94 billion. Payments from this enormous sum are distributed all over the state—literally changing the economy of numerous counties and communities. Just look at this map:
For our retiree and her 500,000-plus fellow beneficiaries, these pension payments are of course crucial in sustaining their quality of life. But this is especially so because she and her fellow teachers do not receive Social Security.
Needless to say, this means that to our retiree, every aspect of the pension’s management of their funds matters—how the money is invested, how that investment performs, the cost incurred in making those investments and generating that performance, and how all of that impacts her livelihood—including whether she receives consistent Cost of Living Adjustments amid rising costs.
So in 2013, when STRS reduced the COLA from 3% to 2%, our retiree no doubt felt squeezed. And likely worried if this was the beginning of a trend, especially given what she’d observed as a younger teacher (ie. retirees in poverty). You’d worry too, right?
Then, in 2017, STRS suspended that COLA entirely. For the next five years, through the ups and downs of turbulent times, our retiree had to live without COLAs entirely. As she wrote, out thousands of dollars, and getting worse by the year. Some retirees went a full 10 years with no COLA.
It must’ve only been more maddening to see (as that same Wisconsin study showed) that as they received no increases, public pensions all around them (including in Ohio) kept paying cost of living increases to their members:
As her email above made clear, this freeze led to great angst, frustration and protest from retired teachers—demanding answers as to why they weren’t receiving COLAs, while other pensions continued to pay them, and while STRS staff continued to make high salaries and large bonuses for their performance.
From that frustration, retirees and teachers got organized, and sought answers to their questions.
You would too, wouldn’t you?
They even enlisted an outside expert to do a forensic investigation of the fund to see what was going wrong…
2021: A Scathing Investigation
In 2021, that outside investigation led to a scathing report about the lack of transparency in the governance of their pension fund.
Even in attempting to conduct the report, the expert was forced to go to court to get some of the information he was seeking.
You can access the entire report here. But if you were our retiree, how would you respond to this summary about your fund?
“[O]ur investigation reveals that the State Teachers Retirement System of Ohio (STRS) has long abandoned transparency, choosing instead to collaborate with Wall Street firms to eviscerate Ohio public records laws and avoid accountability to stakeholders. Predictably, billions that could have been used to pay teachers’ retirement benefits have been squandered over time as transparency has ceased to be a priority.”
Your blood would be boiling, wouldn’t it?
Then you’d read this: “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.”
The report also concluded that while Ohio law requires all state public pensions to undergo an “independent fiduciary performance audit and actuarial audit at least every 10 years…, it has been approximately 15 years since the last such audits of STRS.”
The report then explained that lack of transparency around the performance and fees associated with certain alternative investments were especially problematic.
Here was an overall summary of its findings:
Following that report, Ohio’s State Auditor conducted a special audit of STRS. His audit didn’t share many of the conclusions of the above analysis, but did conclude that “lawmakers need to make more the fund’s investment strategy and the performance incentive process more transparent.” The audit agreed that STRS had failed to meet the statutory requirement of an audit every decade. You can read the entire audit here.
Now, frustrated at not receiving COLAs and being told that the fund you paid into all those years has a crisis of unacceptable non-transparency, what would you do?
Teachers Respond — Transparency!
You would demand transparency, that’s what!
And how would you do that? Through the votes you have for the seats on that pension’s board.
You know, democracy! Your most powerful tool.
And the good news for our retirees is that there are seats on the pension board that represent teachers and retirees. In fact, of the 11 seats, five represent current/contributing Ohio teachers (and are voted on via elections of those teachers), and two of those seats represent retired teachers (and are voted on via elections of those retirees).
(Four other seats are appointed by Ohio politicians: the Governor—he now has two thanks to his brutal takeover of the State School Board, the Treasurer, and the Statehouse).
So, using their votes and the democratic process, retirees and teachers began to demand the transparency they were told was lacking, to help them understand if they can get better returns from their fund.
Amid this activism, once a group of pension “reform” members and candidates emerged, the voters in the teachers/retirees elections did exactly what you’d expect. They voted for them! They voted for transparency. And for reform.
Those votes propelled the pro-transparency/reform candidates to win six straight elections. They were so successful it brought them to the brink of becoming the majority of the pension board. On the cusp of getting the transparency they desired.
It looked like the clear will of those “in the system” would finally be represented by the board itself…
In Swoop the Politicians
So it’s within this context that you can understand how appalled our retiree and others are by what’s happened ever since they got so close to the end zone.
In May of last year, they elected the sixth “reform” member, out of 11. And it was a rout…
And that victory should’ve given them the pro-transparency majority they have demanded all this time.
But of course, that’s then Mike DeWine stepped in mid-week (after the votes were in, but before they were announced) and illegally terminated another pro-reform board member. He unilaterally negated the new majority just as it emerged. One man nullified 20,410 votes of teachers paying into the system.
And since then, of course, our retiree and her fellow beneficiaries have seen two courts declare DeWine’s act illegal. But what haven’t they seen? Any accountability for DeWine having broken the law to deny them their majority. Not a peep from the Attorney General about an illegal act by a sitting governor.
Just as bad, over the past year, our retirees have watched a board “majority” we now know was illegally seated stay in control, including voting to continue bonuses as before.
Then weeks ago, of course, retirees celebrated when a court reinstated the illegally ousted member—only to see the first meeting with that new, legal majority canceled abruptly and improperly, as the chair scurried out of the room over the protest of others. That’s right—meetings of the illegally seated board took place all year, but the board’s meeting was canceled the moment the legal majority was seated.
And then last week, with anticipation building over another opportunity to vote for yet another reform candidate, DeWine makes his mid-week announcement that an anonymous memo from within the pension staff—the very people over which these teachers and retirees want to create more transparency—has cast a cloud over their entire reform effort. And success. A day later, Attorney General Yost—still silent about DeWine’s illegal act—opens an investigation not into DeWine, but into DeWine’s anonymously sourced allegations. A day after that, the Secretary of State LaRose joins in.
Then Saturday, to little surprise, their reform candidate wins with 85% of the vote:
As in a year before, that election victory gives our retirees an even more robust reform majority, positioned to demand transparency and ask questions. But again, the politicians have intervened at the last moment to cast an enormous cloud over their breakthrough victory.
Of Course Teachers and Retirees are Livid
So…can you see it now?
Once you put teachers and retirees at the center of the story—where they have every right to be—it’s truly an outrageous set of actions.
Years with no COLAs, amid other retirees getting their’s.
Big staff bonuses and salaries for “performance.”
Consistent findings of poor transparency of their fund.
Demands for change leading to votes for change.
But then those votes thwarted.
The goalposts moved.
Illegal actions against them not investigated.
But the very person who broke the law demands an investigation (from an anonymous memo from the very staff over which they want more transparency) into the side whose rights he violated, and that lawbreaker’s demand triggers an immediate investigation by two other statewide officials.
More broadly, some probably notice the inconsistency of the Governor’s actions and accusations with his other current scandal—First Energy.
Think about it:
His allegations last week were of a “private takeover” of the pension fund—when DeWine himself handed over the regulation of the PUCO (public utilities commission) to the private industry (First Energy) it’s supposed to regulate; and
He and the Secretary of State are raising the specter of election irregularities in the pension elections—when the Governor and others benefitted from millions in dark money from First Energy only weeks before they agreed to hand PUCO leadership over to First Energy’s hand-picked person, yet DeWine insists that this was all fine; and;
They are tossing around the accusation of a plot to give an inexperienced company control over pension funds (not a good idea, of course)—but as Attorney General, DeWine was once caught handing over lucrative work to a friend who started a company only days before the public bidding process was announced—but his friend and donor’s brand new start-up won the sketchy bid over far more experienced companies.
Add it all up, and his last-minute accusations not only feel hypocritical and not credible (why did he never bring them up before last week, or last year when he fired the first board member?), but leave the distinct impression of PROJECTION about things he’s done, and gotten away with, over the years.
And finally, amid all of this, teacher and retirees paying attention of course are watching DeWine and the statehouse flood the state with universal private school vouchers to prop up the private school system. This will dramatically shrink the teacher contributions into the pension fund—by hundreds of millions of dollars, and more over time. Think about that—spending public funds (closing in on a billion already) in a way that directly undermines the teachers’ pension long term.
So given all this, why would any retiree trust anything this guy says about any of it?!?
Would you?
Enough is Enough
What’s the answer to all this?
Accountability
In the past, I’ve called for accountability. And that’s sorely needed. Everything that led to DeWine’s actions in each of the past two board elections should be investigated, starting with whether he was tipped off to the election results before he took his actions (that’s an easy question any reporter could ask him).
And we already know he broke the law in 2023.
If documents show that this recent explosion of investigations was concocted behind the scenes following the last cancelled meeting, and the knowledge that yet another election was about to be lost, that would be such an egregious abuse of power that DeWine should resign or be removed from office. It’s that bad.
Transparency
But back to the teachers, and retirees.
Once you center teachers and retirees and what they’ve been through, what’s needed at long last is the basic transparency they’ve pleaded for over the decisions that directly impact their lives.
The new “reform” majority will no doubt ask for that transparency. But the other board members should respect the votes of the teachers and retirees enough to also ask for that transparency. The statehouse should demand that transparency, as the State Auditor called for. So should the Governor and the Attorney General.
Enough is enough.
It’s the retirees’ and teachers’ fund, after all. They built it. They rely on it for the rest of their lives. They have spoken clearly and consistently for years.
At long last, let their voices be heard and their votes count.
Let the sun shine in.
Pension Election Denial, Deja Vu