Many of you may not know that PSERS is the 76 BILLION-dollar Pennsylvania Schools Retirement System. Now, that is not to be confused with the SERS which is the State Employees Retirement System. (The one that is a mere 68 BILLION dollars in debt). Unfortunately, PSERES appears to be in debt also to the tune of 49 BILLION dollars. Yes, my taxpayer friends, that is also our liability. Wasn’t this retirement program made self-sustaining by Act 5? In my opinion $49 BILLIION dollars of debt is a far cry from self-sustaining and raises major questions in my mind about the legislative oversight of this massive retirement program. In fact, state lawmakers approved higher pension rates without more employee funding.
I suspect that many of us would have little idea about the extent of financial mismanagement until we read the Spotlight Pa article that revealed that PSERS was under investigation by the FBI and the U.S. Securities and Exchange Commission. When the FBI comes knocking, there is pretty good indication that suspicious activity has occurred. Taxpayers would expect full transparency as tax dollars are ultimately at risk. Unfortunately, that was not to be the case as the board was requesting NDA’s (non-disclosure agreements) from all members regarding all discussions. The board hired the law firm of Womble Bond Dickinson to conduct a parallel investigation spending, to date, $450,000 dollars but they had no subpoena power.
It was stated a false figure for PSERS financial performance was used to calculate contribution rates. It was also rumored some members took improper compensation and gifts. Further, they wanted to look at the 1.6-million-dollar purchase of the former Patriot News building that was purchased by a holding company six months earlier for one-third the price. Certainly, a handsome profit in such a short time period that would raise anyone’s eyebrows. The FBI is specifically looking for evidence of kickbacks or bribery with fund investments.
PSERS has a reputation for the largest and high-paid executive staff and little transparency. The chief executive command a salary of $425,000 annually plus benefits. Salaries of other PSERS executives range from 250K to 360K annually. Approximately 40 plus members travel the world checking on pension funds’ investments. Travel that has been reported to be most expensive. A round-trip fare to London for $15,627. That was just one of eleven trips which the fare was more than $11,000. Hotel charges for an overnight stay in New York for one person of $1,178, $1,144 for an overnight stay in Boston and a $955 stay in Beverly Hills. Staff of PSERS is also being investigated for “improper compensation and gifts from vendors”.
The PSERS investigation was made public on February 1, 2022, by the lawyers with Womble Bond Dickinson, the firm hired by PSERS and paid $484,000 to conduct an internal investigation. The report indicated that Anon Cooperation was responsible for the miscalculation that led to improper contribution rates by the teachers but Anon’s refusal to cooperate with the investigation and the lack of subpoena power made complete investigation difficult. PSERS member were also less the forthcoming. Aon has a $ 750,000 contract with PSERS to provide the proper financial data. Aon stated it was an inadvertent clerical mistake at the data entry level while other leaked documents suggested that the fund erred by using unaudited figures in its calculations. Few other details of the report have been made public. The full and unredacted report MUST be made public. Taxpayers demand transparency. Compensation must be sought for malfeasant work by those parties involved. Employees that have inappropriately received compensation must be charged. Our tax dollars are hard earned and are not to be used inappropriately.
I hope you that the taxpayer can see clearly that the legislature is doing an abysmal job of managing the retirement systems in Pennsylvania as both are in massive debt for BILLION. In each election cycle incumbents tell voters that they are doing a spectacular job of keeping taxes low, but in fact, they are allowing the state to sink deeper and deeper into a massive debt that will relegate PA to a pauper state. Will we allow them to burden our children and grandchildren with this albatross?
Author: Amaury Abreu
