NewsmakersSeptember 26, 2024

STRS Ohio CIO, Acting Executive Director Resign

Controversy continued at the $92 billion Ohio teachers' pension.

Reported by Matt Toledo

Matt Worley, CIO and deputy executive director of investments of the State Teachers Retirement System of Ohio, and Lynn Hoover, its acting executive director and CFO, both submitted their resignations to the system’s board on Wednesday.

Worley’s and Hoover’s resignations are effective March 31 and December 1, respectively, a spokesperson for STRS Ohio confirmed to CIO.

Hoover was acting in place of Executive Director Bill Neville, who has been on leave since November 2023 amid reports of alleged harassment against employees of the fund. Neville will leave the fund after the board last week approved an end-of-employment agreement that includes a $1.65 million payout to Neville. He will formally leave the pension system, effective December 1.

The staff departures follow the STRS board voting in June to negate any performance-based staff compensation. This week, the board of STRS voted to permanently end the employment of Neville. At a board meeting last week, STRS board members proposed a vote of no confidence in STRS leadership, which failed with a 5-5 vote.

“I am writing to inform the board of my plan to retire on December 1, 2024, as Chief Financial Officer and Acting Executive Director,” Lynn wrote in a letter to the board. “I will have 31 years [of service] by that date, and I am incredibly thankful to have had the opportunity to serve Ohio’s educators over the majority of my career. I had planned to work until June 2025; however, the events of last week have led me to reevaluate and announce my retirement.”

“I am writing to inform you of my decision to retire from my position as Deputy Executive Director, Investments and Chief Investment Officer,” Worley wrote in his resignation letter. “My last day will be March 31, 2025, and my first day of retirement will be April 1, 2025. As I approach 31 years this coming March, I have been reflecting on the honor and privilege to be a part of STRS Ohio’s journey.”

The board of STRS Ohio is mostly controlled by a “reformer” faction, which wants the pension fund to move its investments to index funds and wants to increase cost-of-living adjustments for retired Ohio educators.

The COLA has been a hot-button issue for STRS plan participants and some board members. The fund had suspended COLAs between 2017 and 2022 as a result of significant unfunded liabilities. At the end of fiscal 2022, the pension funding ratio stood at 78.9%. After the COLA was reinstated, it did not include back pay for the years it was suspended.

Members of the reformer faction, including Wade Steen, a board member, who was removed from his position by Ohio Governor Mike DeWine but reinstated by the Ohio Supreme Court, and Rudy Fichtenbaum, chair of the STRS board, consistently pitched an investment management firm called QED to manage tens of billions of the pension funds’ assets.

That became a significant point of contention: Critics of the fund said the QED firm has no investment experience or track record, alleging it is run by individuals with ties to the two board members. Following the reappointment of Steen to the board in May, Ohio Attorney General Dave Yost opened an investigation into the duo, accusing them of breaching their fiduciary duty to the fund and calling for their removal.

In April, Aon, STRS’ consultant, dropped the pension fund as a client after the reappointment of Steen to the board, which resulted in a chaotic April board meeting. In June, Steve Foreman stepped down from the board.

Steen’s term ends on September 27, according to the STRS website.