Excerpt from the Dayton Daily News
Outside auditors are recommending that the Ohio Public Employees Retirement System should pick the custodial banks to oversee billions of pension dollars — not the state treasurer — and the system should hire the fund’s lawyers — not the state attorney general.
Such changes would require law changes by the Ohio General Assembly and likely will face push back from state officeholders.
“This proposal introduces risk to Ohio’s pensioners. For more than 80 years, the treasurer’s office has served as the statutory custodian of the public pension funds. We see no reason to change that,” said Brittany Halpin, spokeswoman for state Treasurer Robert Sprague. “Our office serves as an independent and accountable protector of these funds, and we remain committed as ever to ensuring the safety and security of the pensioners’ assets.”
AON Hewitt Investment Consulting said authorizing OPERS to select the custodial bank would save the system $15 million to $20 million in bank fees over five years.
AON also said state law mandating that treasurer make the pick and the bank be located in Ohio means OPERS is paying far more in fees than comparable pensions funds are.
OPERS unsuccessfully pushed back when then state treasurer Josh Mandel ordered a change in custodial banks in 2013.
And a 2010 switch under then state treasurer Kevin Boyce triggered an FBI investigation into how the contract was awarded. The investigation didn’t result in charges over the custodial bank contract but did uncover a separate kickback scheme involving the deputy treasurer, a lobbyist and two other men.
