Ohio STRS Loses 9.52% in 2022, Board Rejects Neville Vote of Confidence

The Ohio State Teachers Retirement System reported a 9.52% investment loss for calendar year 2022; however, it still beat its benchmark’s performance by 138 basis points.

At its most recent board of trustees meeting, Ohio STRS investment consultant Callan provided its quarterly report on the pension fund’s performance, which said its performance ranked in the top 10% of public funds for the three-, five-, seven- and 10-year periods.

Callan also said that when measuring risk versus performance for the past five years, Ohio STRS’ investment return ranked in the top 5% of public funds it reviewed, and that the portfolio that had lower average risk than its peers.

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For December, Ohio STRS’ investment portfolio lost 2.07% to end the first half of fiscal 2023 with a gain of 0.51%. Domestic equity lost 5.7%, while real estate and international equity lost 1.9% and 1.4% respectively.

Although the pension fund closed out 2022 with a loss, it had a strong start to 2023 with a robust 4.03% return in January to end the month with investment assets of approximately $89 billion. International equity investments returned 7.3% during the month, while domestic equity and fixed income returned 6.8% and 2.8% respectively.

At the meeting, the Ohio STRS 11-member board also rejected a motion to declare confidence in Executive Director William Neville. Five voted in favor of the motion, while five voted against, with one abstention. The motion needed the support of six votes to pass.

“We have to have a change at the top,” said board member Julie Sellers, who introduced the motion, according to WCMH-TV. “The problems that have been here have been here for years, and I just feel like we need to have a direction forward.”

In 2021, the Ohio Retired Teachers Association commissioned a forensic audit that found “serious deficiencies” in Ohio STRS’ finances, as well as large bonuses for its investment staff despite teachers’ cost-of-living adjustments being suspended. However, Neville said that a recent special audit of the retirement system by Auditor of State found only two of 29 allegations had merit.

He also cited the auditor’s report, which said Ohio STRS “organizational structure, control environment and operations are suitably designed and well-monitored, both internally and by independent experts.” The report adds that the experts “help assure that STRS follows applicable asset and liability measurement, reporting, investing and cash management laws, professional standards, and best practices.”

In response to the vote, Ohio STRS Board Chair Carol Correthers said that Neville has her complete confidence.

“During the two-and-a-half years Mr. Neville has led STRS, retirees have received a 3% COLA; STRS retiree health care plan enrollees have received premium rebates of $250, $300 and $600, and 95% of enrollees are paying less in premiums in 2023 than they did in 2022,” Correthers said in a statement. “Additionally, active teachers will no longer be required to work to age 60 to receive their pension. Importantly, STRS has maintained strong funding in both the pension fund and health care fund.”