Editorial: STRS Minnesota meddling

Ohio educators fighting to reform the State Teachers Retirement System are facing concentrated government power to dilute their success.

Since teachers have elected enough board members to gain majority control of STRS, Gov. Mike DeWine and Attorney General Dave Yost have launched a court case to remove two members.

Now a special committee on STRS, created by the Ohio Retirement Study Council, is noodling a plan to combine all state pensions and stack the new board with enough government-appointed members to assure the upper hand permanently.

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The Ohio Retirement for Teachers Association kicked over this beehive by hiring famed whistleblower attorney Edward Siedle to examine STRS documents. Mr. Siedle concluded STRS fees and profit shares to Wall Street fund managers were far higher than reported. Ohio reformers want to transition to low-fee index funds because of that report.

Following the high-profile Ohio reform effort a Minnesota teachers group has hired Mr. Siedle for the same mission. A public records release from Minnesota shows Ohio STRS Acting Executive Director Lynn Hoover and Ohio lawyers and lobbyists communicating with their Minnesota counterparts to undermine the impact of the investigation.

STRS leaders were part of a team from the National Education Association, California’s largest public pension, New York City’s pension, the National Association of State Retirement Administrators, the National Council on Teacher Retirement, the National Conference of Public Employee Retirement Systems, the National Institute on Retirement Security, and a coterie of private public relations advisers.

As Rachel Barth, legal and legislative director of the Minnesota Teachers Retirement Association wrote, “TRA’s reputation as a trusted government agency is going to be questioned.” As shown at STRS, a pension breakdown signals failure across many aspects of government.

A cursory look at the Minnesota Teachers Retirement Association leads to the conclusion they’re either a world class pension or they’re cooking the books. Minnesota reported investment fees on the $26.7 billion teacher pension fund of $24.1 million. The teachers fund has a $6.6 billion private equity portfolio that would be expected to pay at least $132 million a year to fund managers. Moreover, a comprehensive study of 54 public pensions from 2008 to 2023 conducted by investment expert Richard Ennis shows fees average 1 percent of assets under management. By that metric Minnesota Teachers Retirement Association would be expected to pay over a quarter billion dollars a year to fund managers.

The national response from public pension advocacy agencies reflects the crisis these incredibly noteworthy numbers create. Either Minnesota has a special deal with Wall Street paying fees 90 percent under the going rate or an investment board made up of the governor, attorney general, secretary of state, and auditor, has massively massaged the truth.

A long term look at Minnesota’s pension math is just as perplexing. The teachers retirement fund purports to beat a composite index they created by 0.2 percent measured over 1, 5, 10, 20, and 30 years. The odds of that level of consistency over each measure of time are infinitesimal.

STRS’ role in the evolving plan to undermine a Minnesota investigation is just one more example of the need for real reform in Ohio.

Instead, the Ohio political establishment is working to defeat the efforts of beneficiaries attempting to protect their retirement.

It’s shameful but not surprising.