Ohio teachers' pension case moves to appeals court to hash out who should be on board

The fight for control of the State Teachers Retirement System board moved to a courtroom in the 10th District Court of Appeals where judges expressed skepticism about whether the governor had the right to change his appointee with little notice.

In May 2023, Gov. Mike DeWine removed Wade Steen from the STRS board and replaced him with G. Brent Bishop, saying Steen missed too many meetings. The change came just as a board faction was on the verge of gaining a majority.

Steen filed a lawsuit, arguing that DeWine had appointed him to a four-year term and Steen didn't serve at the governor's pleasure.

"The governor does not have the power to make a unilateral removal," said attorney Norman Abood, who represents Steen. Steen's lawsuit also named Bishop, who has since resigned and been replaced by DeWine appointee Brian Perera.

The 11-member board is a combination of elected and appointed members who oversee $90 billion invested for 500,000 teachers and retirees.

Attorney Kevin Murch, who was hired by the Ohio Attorney General to represent Bishop and now Perera, argued that the governor's executive powers are at play in this case. He said that state law doesn't protect an initial appointee to a pension board from removal by the governor, but the law specifies that replacement appointees must serve the remainder of a term.

10th District Court of Appeals Judge David Leland said that would mean the first appointee has protection but the second does not.

"And that's not an absurd result?" 10th District Court of Appeals Judge Carly Edelstein asked.

Edelstein, Leland and Judge Kristin Boggs are expected to decide whether to adopt or reject a magistrate's opinion that the governor didn't have the authority to remove Steen.

Abood asked that a decision be expedited because Steen's term on the board expires in late September. DeWine, who isn't a party to the lawsuit, will likely make another appointment then.

The appeals court hearing marked the latest turn in a long battle for control of the teacher's pension board.

Reformers have been mounting a board takeover, electing board members who are more sympathetic to their complaints about transparency, senior leadership, staff bonuses, and the skimpy cost-of-living allowances for retirees. DeWine replaced Steen, who was seen as aligned with the activists, just as activists were on the verge of gaining a majority on the board.

At its March meeting, the board voted to slightly enhance benefits for teachers approaching retirement, allowing them to get a full retirement after 34 years on the job, instead of 35 years. Those who opt to retire early at a reduced amount could do so after 29 years, instead of 30 years. The board didn't approve a cost-of-living increase for this year, which has been a major complaint among retirees.

Leadership in limbo

In addition to the changes to the board makeup, STRS put its executive director, Bill Neville, on administrative leave in November. An anonymous letter accused Neville of harassment and violent behavior, though his personnel record at STRS for the past 19 years contains no other complaints.

Neville hired civil litigator Rex Elliott, who said the allegations are baseless.

The board named Chief Financial Officer Lynn Hoover as the interim CEO. At its March meeting, the board approved increasing Hoover's pay to $400,000, giving her a one-time lump sum of $40,000 and contributing $43,000 to her deferred compensation account.

As the top financial officer, Hoover made $261,170. Neville, who has been on paid administrative leave since November, makes $318,270 a year.

Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.

This article originally appeared on The Columbus Dispatch: STRS Ohio pension board fight moves to appeals court panel