PHILADELPHIA (TNS) — Key Pennsylvania officials are growing impatient with delays by the board of the state’s biggest pension fund in disclosing the results of an internal investigation into the $73 billion plan.
And the call for public disclosure of the probe has become a rare issue on which candidates for governor from both parties agree.
Though the report by an outside law firm was finished two months ago, the pension plan’s board has repeatedly canceled dates set for its release. The panel currently has no date scheduled. At last report, board chairman Chris Santa Maria told his colleagues the report might be unveiled to them during “the first week of February, or the second, or the third.”
At a cost so far of at least $175,000, the pension fund, known as PSERS, hired the law firm to carry out a parallel inquiry into issues that have been the subject of ongoing investigations by the FBI and the U.S. Securities and Exchange Commission: the board’s adoption of a false and exaggerated figure for the fund’s investment profits, its purchase of industrial real estate near its office, and suggestions that fund staff may have pocketed gifts from vendors.
In addition to the federal probes, state Attorney General Josh Shapiro last spring also opened up a staff investigation of the fund, according to documents recently obtained by The Inquirer.
No charges have been brought in connection with any of the probes. For months, the fund has revealed nothing publicly about the matters under investigation, keeping silent even as it accepted the resignations in November of its two top executives.
PSERS — the Public School Employees’ Retirement System — provides $6 billion in pensions to 250,000 retired educators yearly. It is supported by its investment profits, taxpayer money, and payments from working teachers.
In an early November session closed to the public and media, Claire J. Rauscher, the lawyer in charge of the probe for the Womble Bond Dickinson law firm, warned the board that her report was the proverbial hot potato — so much so that she said at one point that she might brief the board only verbally and put nothing in writing, sources said.
She told the panel that some staff at PSERS would find the inquiry damaging, that it contained “derogatory” information and that those identified had a court-mandated right to challenge negative material, said the sources, who added that Rauscher told the board to step carefully, cautioning it that transparency might not be “the right answer.”
Since her presentation, the PSERS board has repeatedly pushed back the date for hearing her report. In the most recent delay, the board canceled a planned Tuesday session to unveil the probe, citing “inclement weather.” The delay took place despite the fact the fund has permitted board members to meet remotely by video since well before the pandemic.
In a round of interviews, candidates seeking their party’s nomination for governor, both Democratic and Republican, said that they backed full disclosure of the report — to the board, as well as the public.
”The findings of PSERS’ internal investigation should be made public without delay,” said Shapiro, who is heavily favored as the likely Democratic nominee.
Along with Shapiro, several Republican candidates called on PSERS to release the report.
”The taxpayers deserve nothing less,” said State Sen. Jake Corman, R-Centre, who leads the GOP majority in the upper chamber. “This would be an important first step by PSERS in restoring the public’s trust.”
He added that he would review the internal investigation should it become public, but he also called for an additional “outside” review to make recommendations directly to state legislators, bypassing the PSERS board.
PSERS “absolutely” should release the report publicly — immediately, said rival candidate State Sen. Doug Mastriano, R-Franklin.
A third GOP gubernatorial candidate, Guy Ciarrocchi, a business leader in Chester County, also called for making the Womble report public.
So did candidate Charles R. Gerow, a Republican political consultant.
”Ordering the internal investigation was the right thing to do. But you have to do it all the way through and that means making the results public,” Gerow said, adding, “Transparency and accountability are the keys.”
Before delaying its Tuesday meeting on the Womble report, PSERS board leaders had discussed presenting their findings in November, then December, before setting, then suspending, the Jan. 18 target date.
Before that suspension, lawyers for the pension fund cited the January date to a Commonwealth Court panel. “On Jan. 18, access [to the internal investigation] will be given to the full board,” Michael Kichline, a partner of the Morgan, Lewis & Bockius firm, told the court.
He was defending the fund from a lawsuit seeking investigation disclosures by one of PSERS’ own board members, state Sen. Katie Muth, D-Montgomery.
Muth’s lawyer, Terry Mutchler, urged the court to order the documents released immediately, noting there were no guarantees board leaders would provide the report by Jan. 18 — as, indeed, they didn’t.
”This board was supposed to have this information presented in November,” Muth protested at a board meeting earlier this month. “This information needs to be presented to the board immediately.”
Amid this criticism, leaders of PSERS and the smaller SERS pension plan for state workers were scheduled to testify during a hearing Thursday in Harrisburg to review a host of pension-reform bills.
