- State law allows the attorney general to file a civil suit to remove a public pension board member if the member fails to act in the plan’s best economic interest.
- Last week, Yost launched an investigation into whether some directors breached their fiduciary duties.
- Gov. Mike DeWine sent a letter to Yost and other state officials alleging that Ohio STRS is facing a “hostile takeover” by private interests.
Ohio Attorney General Dave Yost filed a lawsuit Tuesday seeking to remove two directors of the state Teachers’ Retirement System, accusing them of violating their fiduciary duty to protect the pension fund.
Yost filed the lawsuit in Franklin County Common Pleas Court just before the 11-member board began its monthly meeting today.
Yost is calling for the firing of governor’s appointees Wade Steen and former Wright State University economics professor Rudy Fichtenbaum.
In response to the lawsuit, Ohio Retired Persons Association Executive Director Robin Rayfield said, “ORTA believes the AG is on the wrong track on this matter.”
STRS Ohio oversees approximately $90 billion in investments on behalf of 500,000 teachers and retirees. The system is in historic turmoil as the board leans toward reformers, executive officers are placed on paid leave, and state-run consulting firm Aon chooses to terminate its contract early.
Last week, Yost launched an investigation into whether some directors may have breached their fiduciary duties. State law allows the attorney general to bring a civil suit to remove a public pension board member if he or she fails to act in a manner contrary to the best economic interests of the system.
In the new lawsuit, Yost alleges that Steen, Fichtenbaum and two former directors, Joel Meyerfeld and Bob Stein, attacked STRS and defended a relatively new investment firm, QED. claims.
Mr. Yost said in his lawsuit that Mr. Steen and Mr. Fichtenbaum had “backdoor ties” to QE and tried to funnel $65 billion into the program.
Steen questioned Wednesday whether Yost conducted a fair and thorough investigation in the five days between receiving the documents and filing the lawsuit. He also said the lawsuit complaint is full of defamatory statements about him.
An anonymous memo triggers a big decision
Gov. Mike DeWine sent a letter to Yost and other state officials alleging that Ohio STRS is facing a “hostile takeover” by private interests. The records included 14 pages of anonymous memos detailing how several STRS board members have worked with QED and the founders of the Ohio Teacher Retirement Association.
The Retirees Association denounced the anonymous memo as an arrogant and shameful effort by STRS employees to protect their jobs. “For years, Ohio STRS has failed teachers while enriching the STRS workforce. This is not a hostile takeover, but a takeover of teachers through fair and free elections.”
A separate anonymous memo led the board to place the pension fund’s executive director, William Neville, on paid administrative leave in November. Investigators hired by Yost’s office said in February that the charges against Neville were unfounded.
Rather than reinstate Neville, the STRS board postponed the decision until May 17.
STRS hired Neville more than 19 years ago, appointing him chief legal officer in 2018 and managing director in 2020. His contract has him remaining until June 2027.
Neville continued to receive a $318,000 salary and hired civil litigator Rex Elliott.
pension power struggle
In recent years, activists have taken over boards of directors, electing members more sympathetic to their complaints about transparency, bonuses for senior executives and investment staff, and cutting off cost-of-living benefits for retirees.
The Board consists of five teachers and two retired teachers elected by system members, the Governor, the State Treasurer, three investment professionals appointed by the Ohio General Assembly, and the Director of the Department of Education and Workforce. It has been.
Former Republican Gov. John Kasich first appointed Steen. Mr. DeWine reappointed him, but appointed G. Brent Bishop to replace Mr. Steen in May 2023. Mr. Steen filed a lawsuit seeking the return of the post. Bishop resigned for personal reasons. DeWine then appointed Brian Perera. In April, Steen won an appeals court ruling and was reinstated to the board.
Steen’s term ends in September, and DeWine will not reappoint him.
On May 11, another reformer, Michelle Flannigan, easily won the election.
Reformers currently hold a majority of seats and will likely continue to do so when Flannigan begins his term in September.
This story will be updated.
Laura Bischoff is a reporter for USA TODAY Network’s Ohio bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.
