Ohio's governor is considering an investigation into the teachers' retirement system

Last month, Aon resigned as an adviser to the State Teachers Retirement System of Ohio, weeks after a controversy over the reappointment of a board member who had been removed from the board by Ohio Gov. Mike DeWine.

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

“We recently learned that Aon is terminating its contract with STRS,” DeWine said in the release. “This is a major red flag that calls into question the operation and oversight of STRS. The unstated conclusion is that the governance issues at STRS are so concerning that Aon could not proceed with its contract in good faith. Due to the termination of the contract by Aon, STRS may no longer comply with parts of the audit recommendations.”

In his statement, DeWine also said that “disturbing allegations” had been made against the STRS board. The governor called for an investigation into the matter. In an interview with local station NBC 4i, DeWine said STRS Ohio’s board is facing a hostile takeover by private interests an anonymous letter.

“My office has received documents containing several other troubling allegations regarding the STRS board. I have directed my staff to forward these documents to a number of relevant entities, including the Ohio Ethics Commission, the Ohio Retirement Study Council, Attorney General Yost, Comptroller Faber, Treasurer Sprague, Secretary LaRose, and relevant members of the Ohio General Assembly. I encourage them to review the document and take whatever action may be appropriate in their respective jurisdictions,” DeWine said in his press release.

Last month, STRS Ohio board member Wade Steen was reinstated to the pension board by a state appeals court. Last year, DeWine removed Steen from his seat, citing poor attendance at the pension’s board meetings. Ohio’s 10thTh The district appeals court had ruled that DeWine did not have the authority to fire Steen.

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

When Steen sued and requested his return to the board, DeWine said he agreed with retired teachers who had expressed displeasure with certain investment and benefit decisions made by STRS.

“I am in favor of retiring STRS teachers receiving a cost of living adjustment,” DeWine said in a May 2023 statement. “I was wondering how the employees received raises and bonuses while the retirees they care for received nothing got. I believe that STRS should consider investment strategies to increase returns. And I believe that changes in investment providers should occur through a competitive and transparent public process.”

Steen’s reappointment in April led to a report disorderly board meeting, which was quickly postponed upon Steen’s return. “When it became apparent that I could not conduct the meeting efficiently and effectively, I decided to conduct necessary business and adjourn the meeting. “I plan to have the Retirement Committee discuss the remaining items on today’s agenda at the regular board meeting in May,” STRS Ohio Board Chairman Dale Price said in an April press release.

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

“Recent audits show that STRS Ohio is well managed and that the pension fund is in sound financial condition. The questions raised concern board leadership. Classroom teachers and retired educators should know that their retirement is safe and secure. STRS Ohio will continue to protect the stability and integrity of the organization and will cooperate fully with all agencies in the review of the pension system,” Price responded to DeWine in a statement to the CIO this morning.

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

Aon did not respond to requests for comment.

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