Retirement at Risk

July is usually a slow month for STRS news, as the STRS Board doesn’t meet, but an unexpected article has drawn attention to our pension.

The article titled “Retirement at Risk: The Political Economy of Public Pension Governance” appeared in the June 2026 Journal of New Finance, a well-respected international peer-reviewed financial journal, as a quarterly article. The authors are Allen Mendenhall from the Heritage Foundation and Dan Sutter from Troy University. 

A synopsis of the article, or white paper, focuses on the 2003-2022 period and reveals that STRS consistently overstated its returns during that period. The article states that investment staff bonuses were granted based on STRS staff self-reported financial numbers. These were consistently higher than the actual STRS audited numbers in 19 of 20 years.  

The white paper also analyzed the Ohio Public Employees Retirement System (OPERS) as a comparison. The research revealed that OPERS overreported its self-reported financial numbers 8 times and underreported them 9 times. The STRS self-reported numbers were $4.8 billion higher than the actual audited numbers.

What does this mean, and why is ORTA sharing this? First, it doesn’t mean we lost $4.8 billion in investments. We never had that money, as the audits show. It does mean bonuses were rewarded on self-reported numbers. 

Second, it doesn’t mean STRS board members were doing anything wrong. They were simply acting on the numbers presented to them and trusting they were accurate. It is also highly unlikely that any board member could identify the mathematics used to derive the bonuses. The authors claimed the stated numbers were a “fiscal illusion.”  

Here is what it does mean. A major respected journal has just used STRS as a case study of a serious pension governance problem. The only path is to address the problem. Simply starting to pay bonuses now on audited numbers is not enough.

The STRS Ohio Watchdogs believe that our Board and new Executive Director had no role in the self-reporting of inflated financial numbers, and that Board members have been consistently misled. We suggest that an outside and independent entity be hired to address this problem and restore credibility to the pension. 

Dean Dennis, Founder STRS Ohio Watchdogs