Ohio State Teachers’ Retirement System, Columbus, is losing its senior leadership in the midst of a continuing firestorm of controversy related to the pension fund’s investment management.
Lynn Hoover, acting executive director and chief financial officer, and Matthew Worley, deputy executive director — investments and chief investment officer, have both submitted their resignations to the $97.3 billion pension fund’s board, a pension fund spokesperson confirmed.
Hoover's resignation will be effective Dec. 1, and Worley's resignation will be effective March 31.
In the resignation letters, provided by the spokesperson, both Hoover and Worley cited the dates as representing their 31-year mark with the organization, which makes them eligible for pension benefits. STRS staff members are also participants in the Ohio Public Employees' Retirement System, Columbus, which has $101.8 billion in defined benefit plan assets.
The revelations come days after William Neville, executive director, agreed to retire Dec. 1 by mutual agreement with a $1.65 million buyout, according to a Sept. 23 end-of-employment agreement obtained by Pensions & Investments.
Neville has been on administrative leave since November pending a personnel-related investigation by an outside third party and that local news outlets had said was the result of an anonymous allegation of harassment against STRS employees. Hoover, deputy executive director-finance, has been serving as acting executive director since that time.
At its Sept. 20 meeting, the Ohio STRS board voted to approve an end-of-employment agreement with Neville, and the latest resignations seem to portend an even more chaotic period for a pension fund whose business and investment operations have been rocked by controversy for years.
Reformers campaign
An aggressive social media campaign launched several years ago by the Ohio Retirement for Teachers Association, an advocacy group for the state’s retired teachers, has lambasted the retirement system's investment staff for its compensation structure and investment performance for years, and has led the movement to elect reform-minded trustees to the board who have advocated for a move to all index funds and the elimination of the pension fund’s investment staff.
The root of the conflict is the retirement system's board voting to eliminate the cost-of-living adjustment every year between 2017 and 2022, after previously cutting the COLA to 2% from 3% for five years beginning in 2012.
Prior to 2012, retirees received an automatic COLA of 3%. It was that year when then-Gov. John Kasich signed into law five pension reform bills each covering one of the state's five retirement systems.
For the Ohio State Teachers' Retirement System, employee contributions were raised to 14% from 10% and workers gave its board the authority to change the COLA annually from the previous automatic 3% annual increase. Notably, the employer contribution remained unchanged at 14%, another source of angst among teachers.
Starting in April, a majority of reform-minded trustees control the pension fund’s board.
The 11-member Ohio STRS board consists of seven trustees elected by STRS participants and four trustees appointed by state officials. Of those seven elected trustees, six — all elected since 2021 — are considered to be reformers.
The reformers support restoring a permanent COLA, which would be funded by cost cutting, including a move to passive investing and significant cuts to the STRS investment staff.
Since the reform trustees took over the majority, doing so has proved not to be complex, because a permanent COLA can be approved only by the pension fund’s actuarial consultant — currently Cheiron — if it does not impair the fiscal integrity of the pension fund, according to a 2012 Ohio state pension reform law.
