STRS votes to freeze bonuses for investment staff, 2 years after $5.3 billion loss

Watch an earlier report on the return of a downed STRS board member in the video player above.

COLUMBUS, Ohio (WCMH) – In a move not seen in years for the Ohio State Teachers Retirement System, its board voted narrowly to block bonuses for investment staff.

In a 5-4 vote Friday morning, the reformers who now make up the majority on the STRS board took their first decisive action since a legal battle in which ousted member Wade Steen fought to regain his seat. The board voted to block at least $10 million earmarked for performance-based bonuses for STRS investment staff, according to Robin Rayfield, executive director of the Ohio Teachers Retirement Association.

Investors working for the Ohio Retired Teachers Pension Fund have consistently received annual bonuses ranging from $50,000 to more than $300,000 in the past. The bonuses also came in the fiscal year that ends in June 2022, when the pension fund lost $5.3 billion. In 2023, the board discussed raising the total bonus budget to $11.1 million.

Steen’s return, as well as the election of Michelle Flanigan to succeed him in September, meant that what active and retired Ohio teachers called a “mandate for reform” will have long-term power to make changes at STRS. The group’s demands include transparency on investments, an end to exorbitant bonuses for investment staff and the return of promised cost-of-living increases they have been denied for years.

However, the changes do not come without delay. Board members in favor of the bonuses, including Alison Lanza Falls, expressed concerns before the vote that STRS’ investment staff could resign if they didn’t receive the bonuses.

“When people feel they’re not being treated fairly, and we’re talking about the investment staff here and I understand the issue with the teachers here as well, but when people don’t feel it when they’re performing and below 60 percent, at some point they they will vote with their feet,” Falls said.

Many retired teachers sitting in the audience of the board meeting shouted in response to this statement, including the phrase, “let them go.”

Steen was previously ousted from the board by Gov. Mike DeWine, before appointing G. Brent Bishop to replace him. But in early 2024, an appeals court determined that DeWine exceeded his authority in removing Steen from the position.

However, the governor called for an investigation into the board, alleging that there is hostile control by private interests at STRS. Ohio Attorney General Dave Yost obliged and called for the removal of Steen and Rudy Fichtenbaum from the board in May. In revealing the findings of his investigation, he accused the pair of conspiring to “sell STRS a secret, untested investment scheme” that would ” spell disaster for Ohio’s teachers “—charges both members vehemently deny .

Rayfield noted that the board scheduled a special meeting in July to discuss what to do about the investor bonuses, called PBI, going forward.