The Ohio AG is launching an investigation into whether teachers’ pension board members should be removed for violating their fiduciary duties

COLUMBUS, Ohio (AP) — Ohio Attorney General Dave Yost has launched an investigation into the activities of the state’s teachers’ pension board and whether he should remove it for breach of fiduciary duty.

Yost is specifically addressing concerns that the board is “exposed to a hostile takeover by private interests,” he said in a statement Thursday.

Yost did not name the private stakeholders or board members who could potentially be removed. But he pointed to a state law that gives him the authority to bring a civil lawsuit against members of the state pension board that breach their fiduciary duty and could lead to their firing.

READ MORE: DeWine raises ‘red flag’ on Ohio teacher pensions after new board takes over and aide leaves office

The $94 billion State Teachers Retirement System board has been in turmoil for years. Most recently, Ohio’s 10th Circuit Court of Appeals ruled that Wade Steen, a board member whom Gov. Mike DeWine removed a year ago, should be reinstated.

Steen, along with several new board members, considered major changes to the pension’s management. Many retirees had turned against the board after failing to receive annual cost-of-living increases between 2017 and 2022, which they said led to difficulties as their pensions were based on their modest classroom salaries. No other state pension has had such strict austerity measures.

But DeWine, who removed Steen from the board last year, announced late Wednesday afternoon that he had forwarded over a dozen documents to Yost and other state officials, including one that said Steen and some other board members appeared to be leaders been influenced by a relatively new company with no experience in pension investing. Such a “hostile takeover by private interests” was referenced in an unsigned memo that was part of these documents.

One of the leaders of the relatively new company, QED, was Seth Metcalf, Ohio’s former deputy treasurer under Ohio Treasurer Josh Mandel.

The company told STRS officials in 2020 that it would use AI investment strategies. According to an anonymous letter, DeWine’s staff believes that several STRS employees sent his office to inform him of problems. The letter is among the documents sent to Yost.

In 2020, Metcalf filed for $25 billion to $45 billion in STRS assets. In 2021, Metcalf and his partner told the STRS CEO and another leader that they needed $65 billion in assets to fully implement their strategy.

This happened during the austerity measures imposed by the board, and board members like Steen sought to restore the annual cost of living increase. The anonymous letter alleged that Steen used QED’s charts of the fund’s performance, which were inaccurate.

Cleveland.com / The Plain Dealer has reached out to Steen for comment.

A group of former retirees called the Ohio Retirement for Teachers Association, which has long criticized STRS’s actions and helped raise money to cover Steen’s legal fees in his fight to reclaim the seat on the STRS board, sources said in a statement Wednesday evening that this fight is about the direction of the pension plan.

With Steen’s return to the STRS board, the majority of the board is made up of reformers, according to Pension & Investments.

“Reformers have won the battle of ideas in the last six elections through a fair and democratic process,” the group’s statement said. “Teachers voted for reform because reform is urgently needed. Our actions in support of reform were legal, ethical and necessary. This anonymous letter is nothing more than sour grapes from those who lost.”

Laura Hancock covers state government and politics for The Plain Dealer and cleveland.com.