Ohio Governor Seeks Investigation into Teachers Retirement System

Last month, Aon resigned as a consultant to the State Teachers Retirement System of Ohio, weeks after controversy over the reappointment of a board member who was removed from the board by Ohio Governor Mike DeWine.

On Wednesday, DeWine called for an investigation into STRS, seeking to find out answers as to why Aon had resigned according to a press release. Ohio Attorney General Dave Yost opened an investigation into the matter at STRS.

“Recently, we learned that Aon is severing its contract with STRS,” DeWine said in the release. “This is a huge red flag, calling into question how STRS is operating and providing oversight. The unstated implication is that the governance issues at STRS are so concerning that Aon could not continue its contract in good faith. STRS may now be out of compliance with portions of audit recommendations due to Aon ending the contract.”

In his statement, DeWine also said “disturbing allegations” have been made against the STRS board. The governor called for an investigation into the matter. In an interview with local outlet NBC 4i, DeWine said that the board of STRS Ohio was under a hostile takeover by private interests, according to an anonymous letter, which can be viewed here.

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“My office has received documents containing some other disturbing allegations regarding the STRS board. I have directed my staff to forward these documents to a number of relevant offices, including the Ohio Ethics Commission, the Ohio Retirement Study Council, Attorney General Yost, Auditor Faber, Treasurer Sprague, Secretary of State LaRose, and relevant members of the Ohio General Assembly. I encourage them to review the document and take any action that may be appropriate under any jurisdiction they may have,” DeWine said in his press release.

Last month, STRS Ohio Board Member Wade Steen was reinstated to the pensions board by a state appeals court. Last year, DeWine had removed Steen from his seat, alleging that Steen had a poor attendance record at the pension’s board meetings. Ohio’s 10th District Court of Appeals had determined that DeWine did not have the authority to remove Steen.

Steen, a certified public accountant, was first appointed to the STRS Ohio board in 2016 by then-Governor Jim Kasich as an investment expert and was reappointed in 2020 by current Governor Mike DeWine. Steen’s term was set to expire in September 2024. In 2023, DeWine announced Steen’s removal from the board, replacing him with G. Brent Bishop, a managing partner at Scioto Capital Partners. The governor appoints one of the 11 members of the board.

When Steen sued seeking his return to the board, DeWine said he agreed with retired teachers who had expressed anger over certain investment and benefits decisions made by STRS.

“I am in favor of retired teachers getting a cost-of-living adjustment from STRS,” DeWine said in May 2023 statement. “I’ve questioned how staff have received raises and bonuses when the retirees they serve got nothing. I believe STRS should consider investment strategies to increase returns. And I believe that changes to investment vendors should be made through a competitive and transparent public process.”

The reappointment of Steen in April resulted in what was reported as a disorderly board meeting, which was quickly adjourned following Steen’s return. “When it became apparent that I was unable to conduct the meeting in an efficient and effective manner, I decided to conduct the necessary business and adjourn the meeting. I plan to have the Retirement Board consider the remaining items from today’s agenda at the regularly scheduled May board meeting,” said Dale Price, board chair of STRS Ohio, in an April press release.

In November, STRS Ohio director Bill Neville was placed on leave following allegations of inappropriate behavior.

“Recent audits demonstrate that STRS Ohio is well-run and that the pension fund is in sound financial position. Questions raised involve board governance. Teachers in the classroom and retired educators should know their pension is safe and secure. STRS Ohio will continue to protect the stability and integrity of the organization and will fully cooperate with all offices in their review of the pension system,” said Price in response to DeWine in a statement provided to CIO this morning.

The STRS Ohio managed $91 billion in assets, as of June 30, 2023, for over 530,000 current and former educators in Ohio.

Aon did not respond to requests for comment.