Governor's Veto Nixes Ohio STRS Investigations

June 27, 2003 ( - Ohio Gvernor Bob Taft has quelled any further investigations into the State Teachers Retirement System (STRS) by vetoing budget language that would have cleared the way for the state's inspector general to probe practices of the pension fund's board.

Taft said he issued the veto because the retirement systems already are subject to Ohio ethics laws and oversight by the Ohio Retirement Study Council.   Additionally, Taft said he would work with lawmakers to “provide additional, reasonable oversight and enforcement tools” to the council, according to a report by the Columbus Times Reporter.

However, the action was meet with trepidation by state Senator Kirk Schuring (R-Jackson Township) who called the current oversight functions “empty and hollow” and suggested that the governor “better read the statute.”   Schuring had previously asked Inspector General Thomas Charles to investigate STRS in light of reports over the past three weeks about excessive spending on salaries, bonuses, artwork purchases, and travel (See  Ohio Pension Fund Hit for Lavish Spending Practices).  Charles, who had pushed to have the language inserted in the budget, was preparing to start an investigation July 1 when the budget goes into effect.

Going forward, Schuring said he may ask State Auditor Betty Montgomery and Attorney General Jim Petro to conduct investigations of STRS, which oversees pensions for 424,171 teachers and retirees . He also said he will consider legislation to give the retirement study council more power to control pension boards.

However, Dennis Leone – the superintendent of Chillicothe schools who documented many of the STRS and Executive Director Herbert Dyer’s expenses and circulated a memorandum among teachers and retirees across the state – said Montgomery and Petro might face conflicts of interest because both are members of the retirement board.

“Is (Montgomery) going to audit herself,” Leone told the Times Reporter. “How can they deal effectively with an issue on a board they serve?”

Leone was scheduled to meet with Charles next week to brief him on what the he discovered, after he said Charles told him just days ago that he expected Taft to keep the oversight language in the budget bill.


Responding to criticisms of its lavish spending and compensation practices, STRS voted late last week to freeze employee bonuses, while the system’s board members promised a full review of policies on out-of-state travel and fringe benefits.  The immediate effect of suspending bonuses will cost the investment staff, at least for now, discretionary bonuses that were scheduled to be handed out next month. The bonuses – which come in addition to “performance-based” bonuses – totaled $1.75 million in 2000, $2.2 million in 2001, and $1.46 million in 2002 (See  Ohio Fund Wants A Closer Look at Bonuses ).

Additionally, several board members scolded Dyer for making “unacceptable” comments to retirees, to justify all employee hirings since 1998 and fund the system at current levels.   Among the comments that landed Dyer in hot water, was a letter written to one retiree that the teachers’ pension fund belongs to STRS board members “to distribute as they see fit.”

Responding to that statement, STRS board Chairwoman Deborah Scott affirmed to the 100 or so teachers and retirees present at the meeting, “This is not the board’s money. This is STRS money; it is the members’ money.”  The board will begin reviewing hiring and bonus policies at its next meeting, scheduled for August.