Ohio Attorney General Investigates State Teachers Pension Fund Amid Corruption Allegations

Ohio Attorney General Dave Yost launches investigation into State Teachers Retirement System of Ohio amid concerns over $90 billion pension fund management and potential conflicts of interest. The probe follows allegations of collaboration between board members and private investment group QED Systematic Solutions.

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Ohio Attorney General Investigates State Teachers Pension Fund Amid Corruption Allegations

Ohio Attorney General Investigates State Teachers Pension Fund Amid Corruption Allegations

Ohio Attorney General Dave Yost has launched an investigation into the State Teachers Retirement System of Ohio (STRS) amid concerns over the management of its $90 billion pension fund and potential conflicts of interest with private investment group QED Systematic Solutions. The probe was sparked by documents alleging that STRS board members collaborated with QED on an investment proposal, despite previous proposals being rejected.

Why this matters: The investigation into the STRS board's governance and potential conflicts of interest has far-reaching implications for the more than 536,000 STRS members across Ohio, and could set a precedent for pension fund management and oversight nationwide. The outcome of this investigation could also impact the financial security of retired educators, who rely on their pensions as a primary source of income.

The STRS, a public pension system that manages retirement benefits for over 536,000 current, future, and retired teachers in Ohio, has faced controversy in recent years. In 2022, the fund incurred a $5.3 billion loss and a $27 million investment in the failed Silicon Valley Bank. Educators have expressed concerns over the management of the pension fund, citing suspended cost-of-living adjustments (COLAs) for over 150,000 retired Ohio teachers and changes to the qualifying retirement number.

Retirees Kim Stephenson and Tammy Conley, who taught for three decades in Tipp City Schools, rely solely on their monthly state pension benefits as their source of income. "The impact of that benefit is that's my livelihood. That's my money that I have to live on for the rest of my life," Stephenson stated. Conley added, "Considering the fact that both my husband and I are retired teachers and this is our sole income at this point, we rely totally on what we were promised."

Anonymous documents sent to Governor Mike DeWine's office allege that several STRS board members have been doing the bidding of QED Systematic Solutions. The documents claim that QED, founded by former Deputy Treasurer Seth Metcalf and Jonathan JD Tremmel, attempted to convince STRS members to give them $65 billion to allegedly restore COLAs and reduce pensioner contributions. However, the documents state that QED lacked experience and was not registered as a broker-dealer or investment advisor.

The documents accuse board members Bob Stein, Yael Mayerfeld, Wade Steen, and Rudy Fichtenbaum of directly collaborating with QED and using their documents to pitch QED's proposal. After facing roadblocks, QED allegedly changed its strategy, seeking to replace board members and staff with those who would support their proposal. Attorney General Yost has vowed to take whatever action is necessary to protect teachers, stating, "I'll take whatever action is needed to protect teachers against private interests trying to hijack their retirement accounts."

In a statement, STRS Board Chair Dale Price assured that recent audits demonstrate the pension fund is well-run and in a sound financial position, emphasizing that the questions raised involve board governance. However, Stephenson remains skeptical, expressing concerns about whether the board is acting in the best interest of teachers and appropriately managing their hard-earned contributions.

The Attorney General's investigation into the STRS board's governance and potential conflicts of interest has far-reaching implications for the more than 536,000 STRS members across Ohio, roughly a third of whom are currently receiving benefits. As the probe unfolds, the STRS board has pledged to fully cooperate with the Attorney General's office, while retired educators anxiously await the outcome, their financial futures hanging in the balance.