By Jordan Gentile
Enquirer Columbus Bureau

COLUMBUS -- Herbert Dyer, the embattled director of the $47 billion State Teachers Retirement System, stepped down Tuesday after months of criticism over his management of public school teachers' pension funds.

"The retirement board and Mr. Dyer agree that the confidence and trust many of our members have placed in (the retirement system) over the years has eroded," said Debbie Scott, chairwoman of the teacher pension board. "This change in leadership is a needed first step in restoring the faith."

Dyer became embroiled in controversy after the teacher pension system gave out $14 million in bonuses to employees over the past three years while the value of the fund declined $12 billion. The pension system also spent hundreds of thousands on travel and artwork for its Columbus office.

Damon Asbury, the board's deputy executive director of administration, will become acting executive director today. Asbury promised to re-examine the way the board hires, spends money and reviews salaries.

Dyer's departure from the system that protects 400,000 active and retired teachers was necessary, said Susan Taylor, president of the Cincinnati Federation of Teachers.

"I do believe this is a good thing," Taylor said. "The crisis of trust between teachers and the retirement system dictates it."

Dyer won't leave empty-handed. The pension system board agreed to pay Dyer's salary through February, an amount that adds up to about $154,000. Payment he has earned for accrued vacation and sick time, as well as other compensation, will bring his total to about $550,000.

The board approved the settlement by a vote of 5-3. Representatives for Auditor Betty Montgomery, Attorney General Jim Petro and State Superintendent of Public Instruction Steven Puckett voted against the settlement, believing his compensation to be too high.

Dyer inflamed the controversy surrounding the teacher retirement system earlier this year by claiming the pension funds belonged to the board, not teachers. He apologized for his remarks last month, but it wasn't enough to extinguish the crisis.

Last month the Ohio Retirement Study Council voted unanimously to begin an audit of the teacher pension system.

Dyer's leadership was also questioned because he received a percentage of all bonuses awarded to retirement system employees, which many thought to present a conflict of interest.

Dyer had a base salary of $236,000 and received a $41,052 bonus in 2002.