Ohio

What comes next for Ohio’s teacher pension fund? Prospects of a ‘hostile takeover’ are being probed

Published

1 month ago

May 24, 2024

What comes next for Ohio’s teacher pension fund? Prospects of a ‘hostile takeover’ are being probed

COLUMBUS, Ohio (AP) — A battle is under way for the future of Ohio’s $94 billion teacher pension fund, as would-be reformers’ attempts to deliver long-promised benefits to retirees with the help of an aggressive investment firm touting an untested AI-driven trading strategy face intense scrutiny.

The eyes of Wall Street and the half-million members of the State Teachers Retirement System of Ohio are on the state as the drama unfolds. A special meeting has been called for Thursday of a board nearly paralyzed by infighting whose executive director is on long-term leave over misconduct allegations he denies.

Years of tension at the fund came to a head on May 8, when 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 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.” He followed up with a lawsuit seeking to unseat two reform-minded board members — Wade Steen and Rudy Fichtenbaum — for backing a plan to turn over $65 billion, or roughly 70% of STRS assets, to a fledgling investment firm called QED. The outfit is co-run by two people, one a former deputy Ohio treasurer, out of a condo in suburban Columbus.

“This isn’t monopoly money; it’s hard-earned income that belongs to teachers,” Yost said in launching his probe. “There is a responsibility to act in their best interests.”

The Ohio Retirement for Teachers Association, a retiree watchdog group, says Steen and Fichtenbaum have been unfairly targeted. The group defends reformers’ push for change as a fight against years of opaque management and greed.

Teachers, who are generally ineligible for Social Security and so rely heavily on the fund in retirement, are particularly upset at the dearth of cost-of-living adjustments and market losses that the fund has seen over the years, even as STRS investment professionals have collected large bonuses. They have called for more transparency into the fund’s investment and pay practices.

“We’ve been calling for an investigation for years,” said Robin Rayfield, the association’s executive director. “So our response to them would be, ‘Where you been?’”

Rayfield said public education in Ohio will be “fully politicized” if DeWine and Yost succeed in shutting down STRS reformers. He described it as the third leg of a stool that also includes approval of a universal school voucher program in last year’s state budget and the transfer of K-12 education oversight from Ohio’s independent state school board into DeWine’s Cabinet. An ongoing lawsuit challenges the latter as unconstitutional.

“Governor DeWine has done more to ruin public education than all the other governors combined,” he said.

The nearly $6 trillion U.S. public pension sector has increasingly swapped stocks for riskier actively-managed alternative investments, such as hedge funds and private equities, in recent years — a trend that David Draine, the Pew Charitable Trust’s principal researcher on public sector retirement systems, says demands the type of transparency that the Ohio reformers have sought.

“As public pensions are taking on both risky and complicated assets, it’s important that they’re being transparent about those investments: what the returns are on their performance, what they’re paying for them, and what the risks are,” he said.

However, detractors say putting the shadowy QED in charge of STRS investments brings even greater danger.

Aristotle Hutras, former director of the Ohio Retirement Study Council, a legislative oversight committee, believes the governor is rightly trying to protect STRS from reformers’ rosy AI-fueled visions for improving the fund, which he dubs “magical thinking.”

“STRS has survived a world war, a major depression, a major recession and a worldwide pandemic, and still paid benefits,” said Hutras, a Democrat. “This notion of QED, and essentially steering a contract, in my humble opinion, is the most serious threat to STRS’s solvency in the last 96 years.”

The fund’s then-board chair issued a statement after DeWine’s referral saying that STRS was cooperating, but reassuring beneficiaries that the fund was safe, secure, well-run and in “sound financial position.”

Among claims in the 14-page memo, whose murky origins one board member said should be investigated, is that QED’s Jonathan Tremmel approached STRS in 2020 with assertions that the fund was improperly calculating performance, benchmarks and investment costs. “He also claimed to have AI-based trading strategies that would fix STRS’s ‘problems,’” the memo said.

Leaders rejected Tremmel’s initial pitch because of QED’s lack of professional registrations, clients or track record. His business partner, Seth Metcalf, who served under former Republican Ohio Treasurer Josh Mandel, returned to STRS asking that QED be given a second look.

Around that time, the memo’s authors contend, Steen, Fichtenbaum and two other then-board members began raising almost identical questions about STRS performance to QED’s and started working behind the scenes to get an affiliated company, OhioAI, pension fund business. The metadata on some letters and memos showed they originated with Tremmel or Metcalf.

The Federal Trade Commission began cautioning businesses around that time to proceed cautiously with automated tools that might have biased or discriminatory impacts. Last year, the commission took its warnings further, putting companies on notice that false or unsubstantiated claims about what AI could do for their clients could lead to enforcement actions.

Neither Metcalf nor Tremmel returned calls seeking comment on their statements to STRS. In his lawsuit, Yost told the court, “The owner of this shell company continues to peddle to STRS a secretive and untested investment scheme while his own condominium is in foreclosure.” The attorney general accuses Steen and Fichtenbaum of ”backdoor ties” to QED.

Steen denies Yost’s claims, including that $65 billion was ever on the table. He argues that reaction to his persistent questioning of STRS’s practices proves that he’s struck a nerve.

“He’s hiding behind litigation that’s defamatory, it’s not true,” Steen said after the board’s May 15 meeting. “I thought there was going to be a fair, impartial investigation. I guess this might be the fastest investigation ever done in Ohio history. But we’re going to defend this vigorously. None of it’s true. It’s all false.”

DeWine called it a “huge red flag” when Aon, a nationally respected consulting firm that had been enlisted to help address management and fiscal performance issues, abruptly exited its contract with the pension fund earlier this month.

“The unstated implication is that the governance issues at STRS are so concerning that Aon could not continue its contract in good faith,” DeWine said in a statement. A spokesperson for Aon declined comment.

STRS reformers have not backed down. Now in control of a majority of votes on STRS’s 11-member board, they pushed ahead during the board’s May meeting to oust rival leadership and elect Fichtenbaum, an emeritus Wright State University economics professor, as board chair.

Many of the retired teachers in attendance applauded after the coup. Nearby was a poster with a different STRS acronym: “Stealing Teachers’ Retirement Savings.”

“It’s needed to happen for years,” said Lee Ann Baughman, 82, who taught elementary school in suburban Columbus for 32 years. “It’s been hard for these retirees. A lot of them have a part-time job, and they’re old, and it’s been very hurtful not to get what they were promised.”

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Ohio

He’s an Anomaly: How does Ohio State Commit Tavien St. Clair Compare to Dylan Raiola?

Published

7 hours ago

June 25, 2024

Press Room

He’s an Anomaly: How does Ohio State Commit Tavien St. Clair Compare to Dylan Raiola?

The Ohio State Buckeyes landed arguably their biggest commitment of the 2025 class almost a year ago last summer, when five-star QB Tavien St. Clair committed in June of 2023.

However, at the time, it was unclear exactly what they Buckeyes had just landed.

Upon his commitment, St. Clair ranked as the No. 25 quarterback and the No. 10 player in the state of Ohio in the class of 2025 per 247Sports. Since then, he has shot up the charts, to the point where he now ranks as the No. 2 overall player in the country, the No. 2 QB, and the No. 1 player in the state.

And after an extremely impressive outing against the best of the best at the Elite 11 Finals in Los Angeles, it is clear that he deserves that rankings.

But what caused such a rise in St. Clair’s stock? According to various Elite 11 coaches in a recent interview with The Athletic, he seems to be unlike anything they have ever seen before at the position.

Tavien St. Clair / Photo Credit: Brooks Austin

“He is an anomaly,” Elite 11 coach Yogi Roth said to the Athletic “He’s from an hour away from Ohio State, one of the greatest schools in the history of the game, and he’s never had a personal QB coach. He’s done it in a way I haven’t heard about in, like, 20 years.”

However, the Elite 11 coaches didn’t stop there.

They also gave The Athletic a comparison between St. Clair and former Ohio State commit (and now Nebraska QB) Dylan Raiola.

Raiola, of course, was arguably the biggest piece of the Buckeyes 2024 class before his sudden and surprising de-commitment in favor of the Georgia Bulldogs. He then de-committed from Georgia just before the early signing period in favor of the Cornhuskers.

“I think he’s a more gifted passer than Raiola by a little bit,” another coach said about St. Clair. “Dylan was more casual and cool. He looked like a grown man who you could tell had watched hours and hours of (Patrick) Mahomes and was like this big middle infielder slinging it around. Tavien looked more intentional.”

Another coach agreed with that sentiment, going as far to say that not only is St. Clair’s arm more talented than that of Raiola, but he is also coming to Columbus in a much better situation in terms of pressure and expectations than that of Raiola.

In other words, St. Clair is going to have more time to develop himself. Meanwhile, Raiola is about to be thrown straight into the deep end in Lincoln, where he is being counted on as the savior of the Cornhuskers program.

“I think Tavien had the best arm here,” another coach told the Athletic. “I think (his arm’s) a little better than Raiola’s, and he’ll be under less of a microscope in his situation. He can make some mistakes without everyone looking for him to be the savior of the program without a lot of good players around him.”

At the end of the day, only time will tell if St. Clair will be able to live up to the lofty expectations that come with being the starting quarterback for the Ohio State Buckeyes.

In fact, the same holds true for Raiola in Lincoln.

Based on the current talent situation in Columbus, and the fact that he has thrown for over 8,000 yards and has 83 total touchdowns in three seasons at Bellefontaine, however, St. Clair will have as good a chance as any QB in the past to succeed at Ohio State.

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Ohio

Patricia A. Walker, Cortland, Ohio

Published

14 hours ago

June 25, 2024

Press Room

CORTLAND, Ohio (MyValleyTributes) – Patricia A. Walker, 78, of Cortland, Ohio passed away Friday, June 21, 2024, at Warren Health and Rehab.

She was born March 17, 1946, in Ravenna, Ohio, a daughter of the late Leland R. Walker and the late Gertrude Newcomb Walker.

Patricia graduated from Garfield High School in Garresttsville and was employed as a sales clerk with Giant Eagle Grocery for over 20 years.

Surviving are her son, Glen (Rachel) Walker of Cortland, Ohio; eight grandchildren and numerous great-grandchildren. Also surviving is a sister, Kay Synder of Lordstown, Ohio.

In addition to her parents, she was preceded in death by her son, Keoni L. Walker; a sister, Virginia Fackler; and a brother, Robert Mason.

Per her wishes, there will be no calling hours or service.

The arrangements have been entrusted to the Carl W. Hall Funeral Home.

A television tribute will air Wednesday, June 26 at the following approximate times: 7:10 a.m. on FOX, 12:22 p.m. on WKBN, 5:08 p.m. on MyYTV and 7:27 p.m. on WYTV. Video will be posted here the day of airing.

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Ohio

NTSB to discuss cause of fiery Ohio freight train wreck, recommend ways to avert future derailments

Published

22 hours ago

June 25, 2024

Press Room

NTSB to discuss cause of fiery Ohio freight train wreck, recommend ways to avert future derailments

EAST PALESTINE, Ohio (AP) — Residents of an eastern Ohio village will learn more about the fiery wreck of a Norfolk Southern freight train last year that derailed their lives as another hearing gets underway Tuesday in their hometown, with the National Transportation Safety Board set to discuss the ongoing investigation and issue recommendations for averting future disasters.

Dozens of freight cars derailed Feb. 3, 2023, on the outskirts of East Palestine near the Pennsylvania border, including 11 carrying hazardous materials. Residents evacuated as fears grew about a potential explosion, and officials intentionally released and burned toxic vinyl chloride from five rail cars, sending flames and black smoke into the air despite the potential health effects.

The NTSB said early on that an overheated bearing on one of the railcars that was not caught in time by trackside sensors likely caused the crash. Investigative hearings have since highlighted other possible contributors including widespread rail job cuts and rushed inspections. Investigators also delved into why officials chose to deliberately blow open the vinyl chloride cars and burn that key ingredient for making PVC pipes.

A key point Tuesday will be the expected release of NTSB recommendations for safety improvements. Though NTSB recommendations aren’t binding, it’s possible Congress will be willing to enforce some of them because of the spotlight cast on rail safety by the crash.

More than a year ago, a bipartisan group of lawmakers led by Ohio’s two senators proposed a package of reforms including requiring two-person crews and setting standards for the inspections and detectors that help prevent derailments. But that bill stalled in the Senate under resistance from Republicans and the railroads. GOP leaders in the House have said they didn’t want to consider new rail safety regulations until after the final NTSB report was released.

With limited success, federal regulators also pushed for the railroads to make changes like signing onto an anonymous government hotline to report safety concerns. And the industry responded to the crash by promising to install more trackside detectors, review the way they are used and help first responders improve their handling of derailments with more training and better access to information about the cargo.

For his part, Norfolk Southern’s CEO pledged to “make things right” in East Palestine with more than $100 million in aid to residents and the community. CEO Alan Shaw also hired a consultant from the nuclear power industry to recommend changes and tried to work with labor. Still, critics said Norfolk Southern was too often satisfied in the past with doing only the minimum required for safety and workers reported no big changes in day-to-day operations.

But after the derailment, all the major freight railroads pledged work to improve safety by adding hundreds more trackside sensors to help spot problems like overheating bearings and by re-evaluating how they analyze the data from those detectors. The Association of American Railroads trade group said the industry will review the NTSB report and look for additional ways to improve safety. But so far the industry’s efforts haven’t resulted in a significant boost in its safety record in the Federal Railroad Administration statistics.

Earlier this year, NTSB Chair Jennifer Homendy told Congress that the agency’s investigation had determined that the controversial vent-and-burn operation that prompted evacuations and sent a huge plume of black smoke over the small town wasn’t necessary. Experts from the company that made the vinyl chloride, OxyVinyls, testified at the NTSB hearings they were certain a feared chemical reaction that could have caused those tank cars to explode wasn’t happening.

But Ohio’s governor, first responders and the hazardous materials experts who made that decision have said the information they had that day made them believe an explosion was likely imminent, making the burn their best option despite the risks of unleashing cancer-causing dioxins in the area.

The chemical manufacturer has declined to comment publicly on the situation that is already the subject of lawsuits beyond what its experts testified to last spring.

Norfolk Southern announced last week that it will lead an industrywide examination of how to improve the way vent-and-burn decisions are made in future derailments. That was part of its settlement with the federal government.

The NTSB has also looked at the struggles of first responders who didn’t immediately know exactly what was on the train after 38 cars jumped off the tracks, many spilling their contents and catching fire.

Federal officials finalized a new rule Monday that will require railroads to inform first responders about what is on a train immediately after a derailment. The industry says more than two million first responders now have immediate access to that information via an AskRail app that allows them to look up any train’s cargo.

____

Funk contributed to this story from Omaha, Nebraska, and Krisher from Detroit.

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Joe Biden, Barack Obama And Jimmy Kimmel Warn Of Another Donald Trump Term; Star-Filled L.A. Fundraiser Expected To Raise At Least $30 Million — Update

News1 week ago

Joe Biden, Barack Obama And Jimmy Kimmel Warn Of Another Donald Trump Term; Star-Filled L.A. Fundraiser Expected To Raise At Least $30 Million — Update