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  • Cindy Murphy

Ohio's public pensions and "private equity chicanery"

Have you ever wondered why Ohio's pensions are permitted to invest taxpayer money in private equity funds even though it is difficult, if not impossible, for Ohio's pensions to audit those investments, as required by Ohio Revised Code 3307.15 (E)?


"Since Ohio law changed in 1997 to allow the high cost, low liquidity investments STRS and the other Ohio pensions have become overly dependent upon, the S&P 500 has returned an annualized 9.22 percent, well above the assumed rate of return the pensions need to stay on track." - Toledo Blade Editorial Board, June 18, 2024

"It is an outrage that Ohio pensions have the power to put state taxpayers in jeopardy as unacknowledged victims of private equity chicanery." - Toledo Blade Editorial Board, Nov. 6, 2023


Did you know that prior to 1997, there was a list of permitted investments for Ohio's pensions?

Then came Am Sub S.B. 82.

Am Sub S.B. 82 was introduced on February 16, 1995, and was initially designed to create a health care fund for each of the five major state retirement systems.

The Ohio Retirement Study Council (ORSC) completed an Analyis of Am S.B. 82 and voted to recommend that it be approved by the 121st Ohio General Assembly.

Am S.B. 82 underwent significant changes when it went to the Senate Education and Retirement Committee.

Most notable were the expansion of the authority of the retirement systems to make investments, and the removal of the list of types of investments in which the systems were allowed by law to make.

On March 27, 1996, the Senate voted to pass Am S.B. 82. The bill then proceeded to the House Health, Retirement, and Aging Committee on April 11, 1996. While the bill was in the House committee, Terrence Gasper, as chief financial officer of the Ohio Bureau of Workers’ Compensation, testified in favor of the bill’s provisions eliminating the list of authorized investments and retaining the “prudent person” language.


The change to the systems' investment authority [was] intended to provide for greater flexibility in asset allocation and selection of investment vehicles in order to achieve further growth in investment earnings and more diversification of plan assets.- Am S.B. 82, 1997


The finalized version of the legislation was signed by former Governor Voinovich and went into effect on March 7, 1997, expanding the investment authority of the five state retirement systems, the Bureau of Workers' Compensation, and the Ohio Tuition Trust Authority by abolishing the current "legal list" of permissible investments and adopting the "prudent person" rule.

Am S.B. 82 made it possible for Ohio's pension funds to begin investing public money in private equity.

And the private equity chicanery began…



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