Ohio’s teachers’ pension board is experiencing a significant dispute over the management of its funds, with reform-minded members, such as Steve Foreman, advocating for a shift to index funding, while others prefer active management. Foreman, a member of the State Teachers Retirement System of Ohio (STRS) board representing active educators, resigned early from his position, citing concerns about a proposed investment firm, QED Systematic Solutions, which he believes lacks legitimacy.
The debate revolves around the best way to manage the pension fund’s assets: actively managed funds, which try to outperform the stock market, have more advisors, and are typically more expensive, or index funds, which perform with the stock market, are seen as more passive, and typically cost less.
Foreman, a “reform-minded” member of the board, joined in 2022 and was scheduled to serve until 2026. However, he plans to retire in November after 34 years in education. He was a strong advocate for reducing the number of years teachers had to work to retire and helped push for a reduction from 35 to 34 years, eliminating an age requirement.
A lawsuit filed by Ohio Attorney General Dave Yost in May accuses two members of STRS, Wade Steen and Rudy Fichtenbaum, of participating in a contract steering “scheme” that could benefit them directly. The investigation was prompted by documents prepared by STRS employees alleging collusion between Steen, Fichtenbaum, and QED Systematic Solutions.
The reformers on the board, including Foreman, have been working to address concerns such as the lack of cost of living adjustments (COLAs) for retired teachers. COLAs were suspended for more than 150,000 retired Ohio teachers for five years starting in 2017, but in 2023, STRS approved a 1% COLA for eligible retirees.
Despite the reformers denying it, an archived video meeting shows Fichtenbaum and Steen promoting a $65 billion partnership with an investment firm that, according to Yost’s lawsuit, lacks legitimacy. Foreman, while supportive of change, expressed concerns about QED due to their lack of experience and unproven track record. The reformers believe that QED would help them achieve their goal of providing COLAs for retirees, but critics argue that the firm is not qualified for such a large investment.
The STRS building in downtown Columbus houses more than 400 employees and boasts amenities such as an on-site fitness center, outdoor balcony, and lunchroom with kitchen appliances. The average daily investments include $70 million in liquidity reserves, $65 million in domestic equities, $55 million in fixed income, $30 million in international, and $5 million in real estate.
The lawsuit between Yost and Steen and Fichtenbaum is ongoing, with both parties providing statements in support of their positions. Foreman’s replacement on the board is expected to be a reformer, potentially leading to further changes in the management of the pension fund. Foreman may also run for one of the expiring retired seats in the future.
