Just after bonus controversy, Ohio teachers pension system to increase them again
Ohio’s retired teachers might have gotten only one 3% cost-of-living increase since 2017, but the staff that’s managing their pension funds is requesting a 31% increase in its already big annual bonuses.
The same staff last year was awarded $10 million in bonuses and then reported $5.3 billion in losses — 77% higher than the employees receiving bonuses estimated.
The bonus request, made at the Ohio State Teachers Retirement System’s April board meeting, has further enraged a group that represents some of the state’s retired teachers.
“STRS leadership has always put their interests ahead of teachers,” Robin Rayfield, executive director of the Ohio Retired Teachers Association, said in a statement. “After a public outcry over $10 million in contrived bonuses after losing $5 billion dollars last year, it’s shameful to ask for a 30% increase in bonuses when STRS has done nothing to provide relief to active and retired teachers.”
Some retired teachers have been critical of a retirement system that has been so stingy increasing benefits while paying big salaries to a staff of nearly 500 employees at the retirement system. More than half made more than $100,000 in the fiscal year ended June 30. Of them, 86 made more than $200,000, 51 made more than $300,000, 21 made more than $400,000, and 15 made more than a half-million.
A spokesman for the system has said that growing numbers of retirees and legislative changes from 2012 have made it difficult for the system to adjust benefits upward to enable retirees to cope with inflation. But retirees have said that the system’s well-paid staff is guilty of mismanaging funds.
Instead of “passive” investing — making and holding investments indexed to, say, the S&P 500 — STRS has a substantial portion of the nearly $90 billion it manages in “alternative” investments. The large staff and outside consultants conduct frequent high-fee transactions in things such as private equity funds and real estate that critics say can be hard to value.
But even if you accept those values, those investments performed three percentage points worse than the system’s traditional investments over the previous decade, a spokesman said last summer. And since 2009, 2022 was the only year that STRS’s alternative investments outperformed its traditional investments.
However, STRS in a statement said that it’s important to reward performance, and “our investment returns exceeded the State Teachers Retirement Board-approved benchmark, net of costs and expenses, and again outperformed the market and preserved around $1.8 billion of teachers’ funds.”
It added, “Performance-based incentives (PBI) are only awarded to eligible associates in the investment department. No associates outside of the investment department, including senior management, receive a PBI. STRS Ohio’s investment benchmarks, the PBI policy and the PBI payouts are approved by the Retirement Board.”
This story was republished from the Ohio Capital Journal under a Creative Commons license.