COLUMBUS, Ohio (WCMH) – Managers of Ohio’s $90 billion public teacher pension fund are considering a larger round of bonuses for its investment staff despite retired educators’ concerns.
At its monthly meeting on Thursday, the State Teachers Retirement System (STRS) presented to its 11-member board a proposal to set aside $11.1 million of its $115 million budget in 2024 for performance-based bonuses for its investment staff. The allocation – which marks a 30.6% increase from last year’s monetary incentives – accounts for investors beating their benchmarks and keeping the fund’s talent competitive, STRS spokesperson Dan Minnich said.
“Our investment managers actually outperformed the market, and they showed a nearly 30% return on the investments of STRS Ohio,” Minnich said. “That translates into more than $22 billion – with a ‘b’ – in additional funds for the teacher’s retirement fund.”
But Julie Sellers, an STRS board member and retired Cincinnati Public Schools teacher, called the boost in proposed bonuses worrisome for a fund that lost $5.3 billion in returns in fiscal year 2022 and “out of touch with reality of what teachers want:” a reinstatement of their once-guaranteed 3% annual cost-of-living adjustment, or COLA, and a lower retirement age.
“Teachers are feeling burnt down by the system,” Sellers said.
The proposal to raise investors’ incentives is the latest in a tug-of-war battle between the pension fund and the Ohio Retired Teachers Association (ORTA), whose members commissioned an independent audit into the pension fund in 2021, titled “The High Cost of Secrecy: Preliminary Findings of Forensic Investigation of State Teachers Retirement System of Ohio.”
Tasked with investigating STRS was Ted Siedle, a Florida-based pensions forensic auditing expert with a bestselling book called “Who Stole My Pension?” He said he found “serious deficiencies” in STRS’s finances, coupled with lavish bonuses for its investment staff while teachers’ cost-of-living-adjustments, or COLAs, sat stagnant.
Although the pension fund’s board voted to issue retirees a 3%, one-time COLA last year, the annual boost is no longer guaranteed. Minnich, however, said the board can decide whether to reissue the one-time adjustments in future budget discussions.
In December, Ohio Auditor Keith Faber released the findings of his special audit into STRS. He found no evidence of illegality or fraud but suggested the pension fund consider how – and whether – it awards bonuses to investment staff.
Minnich said the incentives proposed in the fund’s fiscal year 2024 budget are on par with investors’ high performance, which allows STRS to offer retirement packages competitive with Social Security and other large public pension funds in Ohio.
“Our board wants to do everything that is prudently possible to improve the benefits that our current retirees receive and also ensure that this current pension fund is in its existence for a long time to come,” Minnich said.
Sellers, however, said she is steadfast in voting no on the budget at next month’s meeting. With a 35-year retirement age, unguaranteed cost-of-living adjustments and teacher burnout at an all-time high, a 30% boost in investors’ performance-based bonuses cannot be justified, she said.
“Can you imagine if, in a school district, a teacher said, ‘I want a 30% raise?’ What would the school board say, what would the public say?” she said. “They wouldn’t say yes.”