Three statewide teacher unions are challenging a change in state law that strips teachers’ power to pick who serves on the powerful State Teachers Retirement System of Ohio board.
The Ohio Education Association, Ohio Federation of Teachers and Ohio Conference of the American Association of University Professors filed a lawsuit Sept. 16 in Franklin County Common Pleas Court.
State lawmakers inserted into the state budget bill a provision to revamp the STRS board. The amendment came in the middle of the night and without public debate.
STRS Ohio is currently governed by an 11-member board of four appointed financial experts, five teachers and two retirees. Under the new law, teachers and retirees will lose their majority, and power will shift to financial experts appointed by politicians.
Glenetta Krause, a Cincinnati Public Schools employee and lead plaintiff, said this is just another attack against educators that includes underfunding public schools and dictating what can and can’t be taught.
“Now they’re taking away our representation on our own retirement board. This lawsuit is about restoring fairness and protecting our fundamental right to have a say in how our retirement is managed,” she said in a written statement.
Three statewide teacher unions are challenging a change in state law that strips teachers’ power to pick who serves on the powerful State Teachers Retirement System of Ohio board.
Under the new setup, the 11-member board will consist of two teachers, one retiree, the chancellor of higher education or their designee, the director of the Department of Education and Workforce or their designee, and financial experts appointed by the governor, two appointees from the state treasurer, and three appointees by the Ohio House speaker and Senate president.
The changes will be phased in between now and 2028. Eventually, teachers and retirees will hold three board seats, down from the current seven. Eight seats will be held by people appointed by elected officials. The appointees will serve at the pleasure of those who put them on the board, not for a fixed term.
Lawmakers didn’t make changes to the boards of the other four public pension systems.
The lawsuit alleges that the law change wasn’t considered over the required number of days and was piggybacked onto the state budget bill, which violates the Ohio constitutional requirement that each bill address a single subject.
What is STRS Ohio?
STRS Ohio, created in 1920, oversees about $95 billion invested on behalf of 500,000 teachers and retirees. STRS has about 500 employees and manages about 70% of the $95 billion portfolio in-house.
The system gets its money through investment returns and employer and employee contributions. Teachers contribute 14% of their paychecks and school districts chip in another 14% to the pension. STRS is lobbying lawmakers to increase the employer contribution rate.
It’s a defined benefit system, which means retirees are guaranteed a monthly pension check based on their final average salaries and years of service.
STRS is one of five public pension systems in Ohio. Combined, the five systems have about $225 billion invested for 655,000 public employees, 486,000 retirees and 1.1 million former government workers.
Public employees in Ohio aren’t in the Social Security system, so the pension funds are their primary retirement money.
Turmoil at STRS leads lawmakers to make changes
The teachers’ pension fund has faced historic turmoil in recent years that has included top manager departures, anonymous memos, multiple lawsuits and an ethics investigation.
A retiree group, Ohio Retirement for Teachers Association, has pushed for increased transparency, lower investment costs and manager performance bonuses and restoration of a regular cost of living allowance for retirees.
Two board members, current Chairman Rudy Fichtenbaum and former member Wade Steen, wanted STRS to consider an investment partnership with QED, a new firm founded by J.D. Tremmel and Seth Metcalf. But STRS staff and the board rejected the pitch, saying the firm lacked a track record.
In May 2023, Gov. Mike DeWine replaced Steen as his appointee to the board. Steen sued and won his seat back, although for just a few months.
Attorney General Dave Yost filed a lawsuit that alleges Steen and Fichtenbaum have “backdoor ties” to QED’s Metcalf and Tremmel and that they’re trying to steer $65 billion to QED. Steen and Fichtenbaum deny the allegations and are fighting the case.
ORTA, the retiree group, has been helping pay Steen and Fichtenbaum’s legal expenses, which prompted an investigation by the Ohio Ethics Commission.
In September, STRS approved a $1.65 million payout to former director Bill Neville. In June, the board voted 6-5 to hire Steven Toole as the new director.
Ohio House Finance Committee Chairman Brian Stewart, R-Ashville, said the myriad of management problems at STRS caused concern among lawmakers.
State government reporter Laura Bischoff can be reached at lbischoff@gannett.com and @lbischoff on X.
This article originally appeared on The Columbus Dispatch: Ohio teacher unions challenge change to STRS board
