If STRS was well managed, pension beneficiaries would not need to be militant in the demand for a full accounting of investment costs. The takeover of the STRS board majority by candidates pledging transparency would have prompted management to get out ahead of the issue.
Thursday, the State Teachers Retirement System is holding a town hall meeting in Toledo at the Sanger branch library.
Of course the discussion is most salient to educators reliant on STRS for their retirement security, but because STRS is seeking legislation to increase the taxpayers contribution to the fund, it would be time well spent for any citizen to attend.
The Blade Editorial Board urges participants in the town hall meeting to demand details from STRS leadership on investment management costs and seek a commitment to full transparency.
We have been adamantly opposed to a big tax hike to fund the teachers’ pension without full transparency on the investment management expense. The same demand holds true for the Ohio Public Employee Retirement System and the Ohio Police and Fire Pension Fund, which are also seeking big increases in the taxpayer contribution to their funds.
If STRS was well managed, pension beneficiaries would not need to be militant in the demand for a full accounting of investment costs. The takeover of the STRS board majority by candidates pledging transparency would have prompted management to get out ahead of the issue.
But it’s been business as usual for STRS management, while the new board members have spun their wheels on ancillary issues like a no-confidence vote in STRS Executive Director Lynn Hoover and senior staff.
The STRS board can and should impose the requirement that all expenses, especially the portion of investment profits that flow to their private equity partners be public documents.
Reform board members have wasted too much energy on personnel disputes, like the termination of former pension leader Bill Neville. Mr. Neville’s nearly $2 million exit package is hardly the reform needed at STRS.
The Pennsylvania School Employees Retirement System implemented full expense transparency following a scandal that brought the FBI in to investigate and the results are eye opening.
On a private equity portfolio of $25.4 billion the Pennsylvania pension reports fees of $1.62 billion, including $1.358 billion in profit sharing with the fund managers. On a larger portfolio of $27.5 billion STRS shows investment expenses of just $204.8 million.
That differential is unbelievable. STRS does not report all that is collected by Wall Street, and the town hall in Toledo is a good forum to demand Ohio follow Pennsylvania’s excellent example on investment expense reporting.
The Pew Charitable Trusts project on public sector retirement systems concludes transparency in investment disclosures helps promote effective public pension administration.
This is what the STRS beneficiaries who’ve voted in a majority of reformers seek as their first priority.
Since the board isn’t getting it done, the pension beneficiaries and tax-paying public should take it directly to STRS management beginning at the town hall in Toledo.
The Blade Editorial Board September 25, 2024 9:00 PM
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