Legislative Updates: Education issues in Ohio, & Teacher Retirement System

VOUCHERS RULED UNCONSTITUTIONAL - THE BATTLE IS JUST BEGINNING

Ohio's School Voucher Plan was ruled unconstitutional late in June by Franklin County Common Pleas Court Judge Jaiza Page. In her summary judgement, Page wrote "...private schools participating in EdChoice receive substantially more state funding per student than public schools..." Page did not go so far as to order a halt to the voucher program in anticipation of the appeals process she believes (as does everyone) is sure to follow.

The Fair School Funding Plan, a bi-partisan plan to correct the inequity in Ohio's school funding formula, was put in place in 2021. The two-year budget just signed into law by Governor DeWine was supposed to have included the last two years of the six year phase-in of the Funding Plan. Instead of following through on that implementation, the Ohio legislature and DeWine approved alternate funding for public schools roughly $2 billion less over the two year period. The new budget allocates $2.44 billion for vouchers, a dubious record amount in Ohio. Funding for vouchers comes from the same pot as funding for public schools, laying any cost increase at the doorstep of the state's public schools and its property tax payers.

We will keep you informed as the appeals process moves forward.

STRS STILL COMMITTED TO EMPLOYER CONTRIBUTION RATE INCREASE. THE SLOPE JUST GOT SLIPPERIER

STRS continues its efforts to work through the ORSC to win an increase in the employer contribution rate from 14% to 18% in 1/2% increments over an eight year period. The provision would be part of SB 69, the ORSC's bill (yet to be written) intended to reform Ohio's public retirement systems law. The bill's primary sponsor is Sen. Mark Romanchuk (R-Ontario). The path being taken through the ORSC is a strategy that has been endorsed by the STRS Board. Whether that strategy changes as the Board changes in the near future remains to be seen.

One huge obstacle to moving forward with legislation that includes employer contribution increase language is the threat by the Republican controlled legislature to override Governor DeWine's veto of several property tax measures that hamper a district's ability to win taxpayer support. A second roadblock is the failure of the legislature to properly fund the last two years of the six year bi-partisan Fair School Funding Plan which will cost public schools a reported $2 billion over the course of the two-year budget. This while vouchers are being funded at unprecedented levels.

We'll report developments as they happen.

ORTA OPENED THE DOORS WIDE; THE POLITICIANS STEPPED IN

Bill Siegferth - Legislative Chair, My Opinion

The Ohio legislature completely trashed the existing makeup of the STRS Board in its new budget bill, eliminating the seven-member majority held by elected active and retired teachers. When fully phased in (2028), the number of elected teacher members will have shrunk to three, two active and one retired. Media coverage has suggested that legal action may follow, although who might bring that action and the legal basis for it has not been reported.

The outrageous overhaul was proposed by Rep. Adam Bird (R-New Richmond), chairman of the Ohio Retirement Study Council. Ironically, the Council, which oversees the state’s public pension systems, took no vote for or against changing Board membership. Bird and other legislators attributed their support for the change to the “chaos and corruption” that has prevailed at STRS over the last several years.

There’s no denying the chaos. Over the past five years, in this publication and in guest editorials, I’ve reported on the relentless attacks and baseless accusations leveled against STRS staff, consultants and “non-reform" or “status quo" Board members. The lion's share of the complaints and allegations have come from the Ohio Retirement for Teachers Association (ORTA) and its partner social media outlets, the STRS Ohio Watchdogs (founded by Dean Dennis, the ORTA Executive Council Chair) and the Ohio STRS Member Only Forum on Facebook. ORTA Executive Director Robin Rayfield has falsely declared that Ohio teachers have the worst pension system in the country and that retirees don’t get out of their pension what they put into it. Contrary to past and current Ohio law, he claims that when he retired he was promised a 3% COLA for life (not even Dean Dennis’ COLA lawsuit claims that). In 2021, Rayfield reported to a county chapter that “forensic auditor” Ted Siedle filed an SEC whistleblower complaint against STRS and reported his findings to the FBI. The untrue claim remains on ORTA’s YouTube page in spite of my having asked ORTA to remove it because it’s a false statement. In a 2023 Liaison Update, ORTA went so far as to claim a “trail of corruption connects Householder (of First Energy fame), DeWine and STRS.” The list of “grievances” goes on; to continue listing them here would needlessly belabor the point. And the point is that the non-stop attacks have contributed to top leadership leaving the system and two consulting firms voluntarily terminating their service agreements with STRS.

Beyond the circumstances above, handing Rep. Bird a convenient excuse to spearhead and justify the change in STRS Board membership is the allegation that two STRS Board members, one of whom currently serves as Chair (Fichtenbaum) and one whose term has expired (Steen), acted illegally in trying to steer business to a company called QED. A lawsuit filed by Attorney General Dave Yost alleges that both men violated their fiduciary duty to the pension system by working to get STRS to invest with the company after efforts by QED in 2020 to sell itself to STRS were rejected, reportedly because they had no clients, no track record and the company was not registered as a broker-dealer. In a 2023 email to Robin Rayfield, I asked if ORTA supported the QED investment strategy. Rayfield responded that ORTA, “…does not support ANY specific strategy suggested by ANY company.” There seems to be some evidence to the contrary. John Damschroder, at the time an editorial writer with the Fremont News-Press and one who had been supportive of ORTA initiatives, wrote in a piece titled Time for the full truth from ORTA, “Fichtenbaum, ORTA and the Ohio teachers who support them can't claim the high ground when they have materially misrepresented this proposal from day one.” He added, “Fichtenbaum and ORTA support a plan that attacks safety checks in both the U.S. and global financial system. Ohio teachers would be delivering financial fentanyl, profiting from deceit, either uncaring or unaware.” In yet another situation suggesting ORTA’s possible involvement with QED, the “Engagement Timeline” in the State Auditor’s investigation of STRS included “Meeting with Seth Metcalf and ORTA representative.” Seth Metcalf is a QED principal; the Auditor’s office identified the “ORTA representative” as Michael Dittoe of High Bridge Consulting. When asked the purpose of Metcalf and Dittoe appearing as its representatives, ORTA replied, “Mr. Dittoe serves in no capacity at ORTA. ORTA did work with High Bridge Consulting for a few months during 2022. There were no fees charged to ORTA and the work on behalf of ORTA by High Bridge was at no cost.”

Perhaps the most contradictory evidence to ORTA’s claim that they do not support QED happened this past April. In an email to the STRS Board, then Interim Executive Director Aaron Hood wrote, "Yesterday afternoon I received a telephone call from Robin Rayfield at ORTA. Robin offered to set up a meeting for me with representatives of QED (including Seth Metcalf) since there is so much “controversy”. I was so taken aback that I stepped out of my office and asked him to acknowledge his request again on speaker phone so that other staff could hear his confirmation of the request. I informed him that I will not meet with anyone related to QED and encouraged him to read the AG’s filings (including exhibits) involving communications from QED to a former board member. To be clear, no STRS staff will be meeting with representatives of QED and I would advise you all as board members to avoid any such meetings as well, especially in light of the pending outside litigation."

A recent column by Laura Bischoff of the Columbus Dispatch stated that, “QED aligned with the Ohio Retirement for Teachers Association to help elect new board members who might be more open to the new strategy.”

As the Attorney General’s lawsuit proceeds, what role ORTA played in the QED scheme, if any, may come to light. ORTA and Rayfield may find themselves in another bind over a separate issue…that of paying the legal fees of Fichtenbaum and Steen to fight the AG’s lawsuit. The Ohio Ethics Commission is supposedly looking into the practice but will not comment on an ongoing investigation according to a representative with whom I spoke. Along the same lines, one of the greatest ironies in my mind in the ongoing battle between ORTA and STRS is that no one has raised any ethical or legal concerns over ORTA’s payment of legal fees to a Board member while at the same time one of its (ORTA’s) highest ranking officers (Dean Dennis) is suing the Board (including the member for whom it is paying legal fees) as a plaintiff in the COLA lawsuit. As a child, my Mom would often remind me that, “Billy, you can’t have it both ways.” I’m not so sure that’s the case anymore.