Judge issues restraining order halting change to State Teachers Retirement System Board

A Franklin County judge has handed down a temporary restraining order preventing changes to the board overseeing the pension fund for Ohio’s active and retired public educators from taking effect after three teachers’ unions sued.

The order from Franklin County Court of Common Pleas Judge Andy Miller halts, at least for now, provisions to change the board of the State Teachers Retirement System, which lawmakers included in the state’s two-year budget, from taking effect pending a preliminary injunction hearing.

The ruling comes in a lawsuit filed this week by the Ohio Education Association, the Ohio Federation of Teachers, and the Ohio Conference of the American Association of University Professors.

“We applaud Judge Miller’s prudent decision to find merit in our case and press pause on the illegal measures inserted by the Ohio General Assembly in the last moments of the state budget process to eliminate elected educators’ positions on the STRS Board,” OFT President Melissa Cropper, OEA President Jeff Wensing, and OC AAUP Executive Director Sara Kilpatrick said in a joint statement. “Without this temporary restraining order, politicians could begin preparing to pack the board with four more political appointees with the elimination of elected board positions to follow over the next few years.”

‘The Status Quo Needs to Change’

There have been warning signs that the current trajectory of the STRS was untenable.

According to the Equable Institute, Ohio undertook pension reform a decade ago, increasing teacher pension contributions, reducing benefits, and eliminating cost-of-living increases. A report from the group last year found that STRS had roughly $20 billion to $30 billion in pension debt.

“The status quo needs to change and STRS Ohio needs to improve its pension accounting practices while also restoring benefit security to retirees whose incomes are not adequately inflation adjusted,” according to the report. “This means more contributions into STRS are necessary and appropriate — but it is critical that such increases do not lead to budget cuts at school districts.”

Changes Included in the Budget

As part of an amended version of House Bill 96, Buckeye State lawmakers changed the 11-member board’s makeup to reduce the number of elected STRS Board members from seven to three. It would add what the groups say are four politically appointed members.

“We believe the change was needed to provide stable governance to protect the pensions for hardworking teachers, current retirees, and future retirees,” Rep. Adam Bird, R-Cincinnati, chair of the Ohio Retirement Study Council, told State Affairs.

The revised board makeup, which fully takes effect starting Sept. 1, 2028, added an appointment from the chancellor of higher education or their designee. The director of Education and Workforce or their designee will continue to appoint a member.

It also increased the number of state treasurer investment designees from one to two and the number of investment expert members from two to four. Concurrently, it reduced contributing members from five to two and the number of retired teacher members from two to one.

Lawmakers also added ex officio and appointed members to the board.

A Simmering Issue

While retirees have claimed they haven’t received the promised cost-of-living increases and alleged investment staff collect bonuses despite losing billions, Republican Ohio Gov. Mike DeWine has expressed concern about potential corruption at the State Teachers Retirement System. However, he previously told a Cleveland television station the board has overcome “that problem that we’ve had in the past.”

“I don’t think it was unconstitutional, DeWine previously said about the now-contested provision, Statehouse News Bureau reported. “But ultimately that’s a decision that has to be made by the courts.”

More concerns about STRS emerged after the governor received a 14-page memo from an anonymous whistleblower in May 2024. According to reports, the document alleged that a scandal was emerging within the teacher retirement system.

In May 2024, Attorney General Dave Yost filed a lawsuit in the Ohio Court of Common Pleas in Columbus to remove two members from the board. Yost alleged the board members participated in a “scheme” to steer contracts that could benefit them.