The outgoing head of Ohio's troubled teachers retirement system said that she is leaving the fund in strong fiscal condition, despite the turmoil at the top that her successor will inherit.
In a recent interview with The Associated Press, Acting Executive Director and CFO Lynn Hoover said that the $94 billion State Teachers Retirement System of Ohio's returns over the short term, middle term and long term remain within the top 10% of peer funds around the country.
“We’ve delivered,” said Hoover, who has seen her investment staff denied performance bonuses as part of recent tensions. She retires Sunday after 31 years at STRS, one of the nation’s oldest and largest public pension funds. Its more than 500,000 members include active and inactive public school teachers and retirees.
That doesn't mean the next interim director, Aaron Hood, doesn't have a big job ahead of him, she said.
The U.S. Army veteran and seasoned asset management professional came on board this month and will help lead a nationwide search for a new permanent director to replace Bill Neville, who was let go in September after being placed on leave amid misconduct allegations. Hood also must fill Hoover's role as chief financial officer, hire for a vacancy coming in March for a chief investment officer and find a new head of internal audit.
The top priority "is to get those filled and to get highly capable people in here that can continue this great legacy,” Hoover said.
The staff departures come amid years of tension that boiled over this spring. Would-be reformers on the STRS board took aim at the fund’s internal operations and investment decisions after retirees were angered when the previous board cut their cost-of-living adjustment and then eliminated it for five years to help stabilize the fund. Many have remained dissatisfied with the 3% adjustment they got in 2023 and the 1% adjustment they got in 2024.
In May, Republican Ohio Gov. Mike DeWine announced that he had come into possession of an anonymous 14-page memo and other documents containing “disturbing allegations” about the STRS board and was handing them over to authorities. Republican Ohio Attorney General Dave Yost launched an investigation the next day into what he called the fund’s “susceptibility to a hostile takeover by private interests.” The probe is still ongoing, and lawmakers have since begun considering a proposal to remove elected members from the board.
Yost followed up the launch of his investigation with a lawsuit seeking to unseat two of the reform-minded board members. One of those members Rudy Fichtenbaum, became board chair. The other, Wade Steen, has since left the board. He also filed suit against two other former board members in October, alleging they participated in a “civil conspiracy” that prevented him from uncovering the fund's defects.
When the same whistleblower attorney who examined STRS' performance metrics also turned up in Minnesota to do something similar, The Blade of Toledo reported that records there showed Hoover and others communicated with their counterparts “to undermine the impact of the investigation.”
Hoover said the communications were “par for the course and normal protocol.”
“They simply reached out to us and said would you be able to get on the phone call with us,” she said, calling it “pretty typical” that peer organizations will exchange information on best practices and how they've handled similar issues.
Hoover said she is proud of the staff's professionalism amid all the controversy in recent years.
“The staff have stayed really aligned with the mission and laser-focused on protecting and providing member security," she said.
STRS has paid out more than $4 billion in positive benefit changes to active teachers and retirees over the past three and a half years, she said, which she attributed to sound investment strategies and strong markets.
“Our fund is in a situation where we pay out more in benefits than what we receive in contributions, so the investment returns are critical over the long term,” she said.
At the same time, she acknowledged that members have had to bear the brunt of pension reform changes and high inflation and “it's been hard.”
Hoover said members should be happy that the fund is now reviewing cost-of-living-adjustments annually. She added that STRS is also fighting to increase employers' contributions into the fund. The percentage they pay in Ohio has remained the same for 40 years, she said.
STRS also has hired the global commercial real estate firm CBRE to analyze usage needs for its buildings, which are capital not investment assets, into the future and continues to lobby for fair school funding, she said.
The retirement system is also keeping a close eye on the rollout of Ohio's new universal voucher system, which is open to both public and private school students.
“To the extent that it starts taking kids out of public education, thereby reducing teachers, thereby reducing payroll, that does affect our system,” she said. “We want to support public education, and the public pension model is so valuable for the teacher. They've served and worked and taught our kids and, when they retire, they should have a dependable, reliable, secure monthly pension until they die.”
