We understand that some of our members will object to us reposting this editorial by the Toledo Blade Editorial Board. We believe that it's important to repost all articles, even those that do not necessarily represent our views. Otherwise we will be guilty of presenting only one side of the story, something that we believe has been happening recently in the media. That being said, we want our members to understand that we fully support Dr. Rudy Fichtenbaum and we believe that he will act in the best interests of all members of STRS Ohio.
The Pogo principal — “we have met the enemy and he is us”— has no better example than the State Teachers Retirement System of Ohio Board Chairman Rudy Fichtenbaum.
The ongoing battle between reformers and upholders at the Ohio teachers pension system would provide never-ending material for a comic strip. But in real life there’s nothing funny about the conflict.
STRS Board Chairman Rudy Fichtenbaum gave such a clueless interview to the Ohio Capital Journal that Attorney General Dave Yost could echo Commodore Oliver Hazard Perry’s famous dispatch after defeating the British at Put-in-Bay; “we have met the enemy and they are ours.”
Mr. Yost is seeking a court order to expel Chairman Fichtenbaum and fellow board member Wade Steen for breach of fiduciary duty. The issue is a proposal to invest in Columbus investment startup QED pushing a dubious plan to help Wall Street evade regulations on excess leverage. (“Players in pension plan subpoenaed,” Aug. 24)
QED hoped to be the bridge between STRS and Wall Street, taking a payment every night to swap Ohio-owned T-bills for for a higher risk Wall Street portfolio.
Ohio would earn a return for helping Wall Street cook the books. Incredibly, Mr. Fichtenbaum says he would still consider the proposal.
The reform effort of thousands of Ohio teachers is driven by the first priority of full transparency on STRS investment costs. The board members they’ve elected, including Mr. Fichtenbaum, pledged to make transparency their mission.
Helping Wall Street misrepresent their holdings to elude federal regulation is the antithesis of transparent. Chairman Fichtenbaum has let down thousands of teachers who put their hopes behind him.
A look to Pennsylvania reveals why transparency is so important and why defenders of the status quo in Ohio pensions will go to great lengths to prevent full and clear accounting of investment costs.
The Public School Employees Retirement System of Pennsylvania opened the books following a scandal and the results are illuminating. PSERS paid $1.692 billion to outside fund managers controlling $25.4 billion in alternative investments. STRS claims investment expenses of just $204.8 million paid to fund managers of $27.5 billion in private market investments.
The difference is Ohio shows no profit shares to the investment managers while Pennsylvania reports their fund managers’ take as $1.358 billion. Ohio teachers go ballistic over six-figure bonuses to STRS investment staff. Imagine the eruption if they knew how much Wall Street is really raking off their pension.
Mr. Fichtenbaum and all STRS Board reformers were elected on the premise that transparent investment expense accounting will naturally drive the portfolio into much lower-cost index funds with far more of the earnings flowing to the pension beneficiaries.
But Chairman Fichtenbaum cannot credibly champion transparency while supporting a plan to earn fees for the pension by concealing risk for Wall Street so it can add to its profits.
The Toledo Blade Editorial Board September 4, 2024 9:00 p.m.
STRS Ohio Board members Rudy Fichtenbaum and Wade Steen are incurring legal fees, defending themselves against the lawsuit brought against them by A.G. Dave Yost. ORTA will use donations from the Pension Defense Fund to help them, if needed, pay their legal expenses. They have volunteered their time to support Ohio's teachers. Now it's time for us to show our support for them! Make a donation today to the ORTA Pension Defense Fund