While you were sleeping, a cabal of Ohio's legislators were at work

At the August STRS Ohio public board meeting, I decided to scrap my planned address and go off script. This is why.

As most of you know by now, Ohio House Bill 96, Ohio’s annual operating budget bill, contained a nefarious amendment designed to eliminate the voices of Ohio's teachers.

At 1:30 in the morning, the day when Ohio’s Legislators would vote on the Ohio budget bill, Representative Adam Bird pulled a fast one. The Representative from New Richmond, representing the 66th district, unscrupulously slipped an unrelated amendment into the over 3,000 page HB 96 budget bill. 

The amendment reconfigured the State Teachers Retirement Board by reducing the number of elected teachers from 7 to 3, while increasing the appointed members from 4 to 8. Simply put, appointed bureaucrats would replace the majority of democratically elected members. 

The question many are asking is why?

In the last four annual STRS Board elections, which represent over 500,000 stakeholders of the pension system, members have elected “reform-minded” members. The candidates were elected on the platform of transparency of investments and challenging the fees STRS was paying to Wall Street in the form of opaque private equity (PE) investments. These investments are fraught with non-disclosure agreements. Reform-minded board members pushed the idea that STRS investment managers shouldn’t lose money trying to beat the market and would be better off, in the long run, by just trying to match the market. This implied that a proportion of active management could be replaced by passive management. This signaled a threat to some of the STRS management.  

When seated, the reformers exposed that STRS management was understating investment fees. They exposed benchmarks for staff performance bonuses that were bogus, yet investment staff were being awarded roughly $10 million in performance bonuses annually while failing to beat the market. Reformers also identified, along with their paid consultants, that Ohio’s Legislature was underfunding the pension system. 

Ohio is a non-Social Security State. In non-Social Security States, the average Employer Contribution Rate is approximately 30%. In Ohio, it is 14% and has been this rate for 40 years. This underfunding, along with years of lack of oversight of the pension plan, has resulted in retirees having no inflation protection and active teachers having to work longer. At the same time, the active teacher Employee Contribution rate has increased by 40%.

You would have thought that Ohio’s Legislators would be pleased that the reform board members have identified these problems, but that wasn’t the case. Instead, if you follow the money, our elected board members likely became a threat to certain powerful interest groups within the Legislature.

For starters, it is often thought that money from private equity funds frequently ends up in PACs (political action committees), benefitting political parties. Wall Street derives much of its revenue from public pension systems such as ours. But, in Ohio, that’s not likely the only reason.

More importantly, there is a group of influential Ohio politicians intent on pushing the EdChoice voucher program at the expense of public education and to the detriment of our 500,000 plus STRS members. Governor DeWine, Attorney Dave Yost, House Speaker Matt Huffman, and Senate President Rob McColley all support EdChoice. So, when our Board identifies the need for at least a half billion dollars in the way of an Employer Contribution Rate increase, while the budget for vouchers has set aside approximately $2.4 billion over the next two years, there is a problem.

Sadly, Adam Bird, a retired school superintendent and current Chair of the Ohio Retirement Study Council (ORSC), was used to silence the voice of teachers by reconfiguring the STRS board. This would help pave the way for EdChoice vouchers to steer taxpayer dollars away from public schools and enrich private and religious schools (essentially, schools associated with the Archdiocese). Here is a rough example of how this works. 

A family sends two of their children to a Catholic High School. The tuition is $10,000, so the family spends $20,000 annually. However, in Ohio, under the EdChoice voucher program, the state gives this family $7,500 per student. The family now has $15,000 to use towards their $20,000 bill. So, the $20,000 bill is reduced to $5,000. In many cases, if not most, the family never sent their child to a public school. As you can see, this essentially becomes a monetary gift for the rich paid by Ohio taxpayers. In Ohio, EdChoice is often sold as a vehicle to help impoverished children escape low-achieving schools. The reality is that, from 2023-24 data, 90% of students in Ohio’s voucher programs are not considered low-income. As the EdChoice voucher choice has expanded in Ohio, the percentage of low-income students in Ohio's voucher program has dramatically dropped, in Cleveland from 33% to 7%. 

In 2018, the infamous Electric Classroom of Tomorrow collapsed after scamming Ohio taxpayers out of nearly $189 million. Before this, its founder had donated $1.2 million to politicians. It will be important for Ohioans to start following super PACs like The American Federation for Children by seeing which politicians they are influencing through their financial support. There are also likely to be a slew of PACs that will indirectly support the Archdiocese in its effort through PACs to divert Ohio’s students away from public education.

Ohio STRS is a public pension fund for over half a million teachers. This pension plan has the support of their families and friends, which totals millions. The Adam Bird’s of the Legislature need to be voted out of serving Ohioans. We cannot have 8 of our 11 STRS Board Members serving us when they are being appointed by politicians who receive nefarious PAC monies and want to harm public education. 

Dean Dennis, Founder STRS Ohio Watchdogs