The wheels of justice are moving at such a slow pace that it seems highly unlikely that Wade Steen, the former State Teachers Retirement System of Ohio board member, will ever be reinstated as the governor’s chosen investment expert.
It has been almost a year since Governor Mike DeWine removed Mr. Steen from his appointed position due to his absence from meetings and excessive enthusiasm for a risky investment. Mr. Steen’s appointment is set to expire in September, and regardless of the ruling of the 10th District Court of Appeals, it is highly likely that this case will be appealed once again.
The court magistrate has ruled that the governor exceeded his legal authority. On Tuesday, a three-judge panel from the court heard arguments.
It is crucial for the Ohio Supreme Court to review the case, regardless of the decision made by the Columbus-based court. This would help establish a definitive precedent regarding the governor’s authority over his appointees in the state’s public pension boards.
In Ohio, the law mandates a four-year tenure for the pension board investment expert selected by the governor. If there is a valid reason, the law outlines a specific procedure for removing a pension board member, which initiates in Common Pleas Court.
The actions of Mr. DeWine went against the established process, and it is crucial for the court to uphold the integrity of the laws that regulate appointments to pension boards.
According to Mr. Steen’s attorney in Toledo, power has the potential to corrupt, and absolute power has the potential to corrupt absolutely. However, it is equally important to prioritize the protection of the fiduciary responsibility as the primary duty of all pension board members.
The governor’s ability to replace his appointed board member at will undermines the best interests of STRS beneficiaries. Mr. Steen has a responsibility to the beneficiaries of the $91-billion fund, and Governor DeWine’s action, which bypasses the legal process for removing a board member, poses a significant threat to the integrity of their fiduciary duty.
Mr. Steen took the initiative to voice his criticism against STRS, pointing out their underwhelming investment returns, high-fee portfolio, and excessive bonuses given to investment staff, all while retirees were facing a freeze on cost of living adjustments.
According to an article in The Blade, Richard Ennis, an independent pension expert, found that STRS had underperformed a passive index fund by 1.62 percent per year for 13 years. Ennis reported a $12.5 billion shortfall due to the poor return on investment.
Mr. Steen’s decision to ask challenging questions and explore investment opportunities was justified. However, despite the fact that the STRS board elections resulted in a majority that supported Mr. Steen’s reform agenda, the governor removed him from the board.
Ohio’s oversight of pensions has been nothing short of disgraceful. The state failed to meet the legal deadline for fiduciary audits of the pensions, including STRS, by a staggering six years.
Mr. DeWine served as the attorney general who offered legal advice to the Ohio Retirement Study Council when they chose to neglect their most crucial responsibility.
The Ohio Public Employees Retirement System, Ohio Police & Fire Pension Fund, and STRS are all pushing for legislative approval to increase contributions from taxpayers.
Ohio’s disregard for the pension laws not only demonstrates a lack of trustworthiness but also breaks the covenant with its beneficiaries. From the highest level of authority to the lower ranks, the state’s actions reveal a blatant disregard for the rules governing these pensions.
