Ohio Teachers’ Retirement Fund Unveils New Investment Strategy Amidst Management Controversy
The State Teachers’ Retirement System of Ohio, currently facing allegations of fund mismanagement, has laid out a comprehensive plan to reorganize its alternative assets investment program and set new private equity targets for the upcoming fiscal year. These developments come on the heels of a significant management overhaul, highlighting the pension fund’s commitment to strategic reforms.
New Executive Director Appointed
In a critical move, Ohio Teachers’ Retirement System (STRS) voted to appoint Steven Toole as its new executive director, replacing interim executive director Aaron Hood. Toole previously served as the executive director of North Carolina’s state pension system. This appointment follows the consecutive resignations of former interim executive director Lynn Hoover and chief investment officer Matt Worley in September, with Hoover’s resignation becoming effective in December and Worley’s departure finalized on March 31.
Reorganizing Investments
During its June 11 investment committee meeting, the pension approved the reorganization plan, which includes creating a new private equity asset class with a planned allocation of 9.5 percent—just above the 9 percent target. Additionally, private credit and liquid alternatives will maintain 9.6 percent and 0.8 percent, respectively.
According to Callan, the retirement system’s investment advisers, the private equity portfolio was previously overweight but has since been redistributed due to dispersal activity and the improved performance of other fund segments compared to private equity.
Shifting Focus in Private Equity
The new strategy aims to concentrate on direct investments and co-investments in private equity, while also maintaining strategic partnerships with existing general partners (GPs). The recategorization includes converting previous domestic and international private equity classifications into buyouts and growth equity, thereby distributing buyouts to 58 percent, growth equity to 16 percent, and rounding out the rest with venture capital.
Liquidity and Risk Management
Ohio Teachers aims to boost its liquid alternatives allocation over the next few years, targeting a rate of 2.75 percent by the end of 2026 and a long-term objective of 7 percent, which will reduce exposure to domestic public equities. The 2026 pacing for liquid alternatives is set at $1.8 billion.
The primary focus for the liquid alternatives asset class will be to enhance liquidity for rebalancing the fund’s asset allocation and paying out member benefits.
Addressing Cash Flow Issues
Ohio STRS faces a challenging annual cash flow deficit of $4 billion, which has been partially mitigated by the alternative assets portfolio. In 2025, private equity assets generated a positive cashflow of $542 million, showing improvement from $369 million in 2024.
Past Controversies and Future Goals
The pension fund’s recent turmoil stemmed from its decision to cut cost-of-living allowances (COLA) from its benefits program in 2023, leading to internal strife and accusations of mismanagement. This series of events prompted the departure of several high-ranking members, including Hoover and Worley.
As part of its efforts to navigate these controversial waters, Ohio Teachers aims to increase its liquidity options and diversify equity risk through strategic investment reforms.
