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Wall Street critic Gov. Shapiro picks new trustees for Pa. pension boards

The governor appoints six of the 11 SERS trustees, and three of 15 on the PSERS board. The plans invest over $100 billion to pay retirees and require more than $8 billion a year in public funding.

Union president Wendell Young IV at a 2018 rally supporting Acme workers and their then-underfunded pension plan. Gov. Shapiro has nominated Young to the SERS state workers' retirement board and called for a streamlined investment approach. Young heads UFCW Local 1776, which includes 3,500 state liquor store workers.
Union president Wendell Young IV at a 2018 rally supporting Acme workers and their then-underfunded pension plan. Gov. Shapiro has nominated Young to the SERS state workers' retirement board and called for a streamlined investment approach. Young heads UFCW Local 1776, which includes 3,500 state liquor store workers.Read more

Gov. Josh Shapiro has tapped four Philadelphia-area men to replace departing trustees on the unpaid boards that oversee Pennsylvania’s century-old public pension plans. The plans invest over $100 billion to help pay retirees and require more than $8 billion a year in public funding.

For the $35 billion SERS pension system, which finances retirement checks for 250,000 working and retired state troopers, state college staff, elected officials, and other civil servants, the Democratic governor has asked the state Senate to confirm:

  1. Wendell Young IV, president of UFCW Local 1776, which represents 35,000 chain grocery, drugstore, and food factory workers, including 3,500 Pennsylvania state-owned liquor store clerks, and sits on several union pension boards;

  2. Uri Monson, Shapiro’s budget secretary, who was also Shapiro’s chief financial officer when Shapiro headed Montgomery County government and the county fired its private investment managers to replace them with low-fee funds, mostly from Malvern-based Vanguard Group;

  3. Bob Mensch, a former Republican state senator who represented parts of Berks, Chester, and Montgomery Counties.

If approved as expected, the governor’s picks will replace SERS chairman David R. Fillman, who is retiring from his role as leader of AFSCME Council 13, representing 65,000 state workers; Glenn E. Becker, head of the SERS investment committee, a professional investor who engaged in “questionable” conduct — but not wrongdoing — when he pressured pension staff to meet with politically favored investors, according to a 2017 investigation; and Mary A. Soderberg, former Gov. Ed Rendell’s budget secretary.

For the PSERS board, which invests $70 billion on behalf of a half-million retired teachers and school staff, Shapiro wants the state Senate to approve Richard Vague, a former Chase Manhattan Bank credit card executive turned Philadelphia-based investor, philanthropist, and political donor as his personal representative.

Former state treasurer Joe Torsella, a pension reformer, stepped down last winter as former Gov. Wolf’s rep on the board.

The governor appoints six of the 11 SERS trustees and three of 15 on the PSERS board.

Pa.’s next banking secretary?

Besides his recent nominees, Shapiro is already seeking a new candidate for banking secretary, who will serve on both pension boards.

Sarah Hammer, a Wall Street veteran turned University of Pennsylvania private-equity scholar, was Shapiro’s previous choice for banking but has dropped out of the confirmation process. People familiar with her candidacy says she has gone back to work at Penn’s Wharton School, where she headed an “alternative investments” program funded by Sixers owner Josh Harris, a founder of Apollo Global, one of PSERS’ largest money managers. (The governor’s choice for education secretary, Khalid Mumin, also gets a PSERS board seat.)

Neither Shapiro’s office nor Wharton would comment on why Hammer, who had already started attending pension meetings, walked away from her Harrisburg position and the pension boards.

Shapiro vs. the PSERS trustees

Shapiro has said he’d like to see the Pennsylvania funds fire their “Wall Street” managers and cut fees. But sources at PSERS say they expect the board is unlikely to waver much from its current policy, which calls for dumping hedge funds, reducing but continuing to maintain at least 12% of the plan in private-equity investments, and increasing investments in infrastructure construction funds. Shapiro’s three trustees will be outnumbered by five teachers’ union members and five elected officials. (There are also two school board reps.)

Vague, Shapiro’s nominee to represent him on the board, is an architect of the current board investment policy, including the slow elimination of hedge funds and directly held real estate.

Vague joined Torsella and state Treasurer Stacy Garrity in opposition to PSERS’ past staff executives, who stepped down amid federal and internal investigations, effective last year, but he has also cultivated close ties to teachers on that board who had supported those executives.

Looking ahead

Other new faces on the PSERS board include GOP State Sen. Greg Rothman, who represents communities on the western shore of the Susquehanna above Harrisburg.

The new PSERS trustees face a string of thorny issues, including losses from aging private equity funds, unresolved questions from the internal investigation of its own exaggerated returns, and new board leadership after board chairman Chris Santa Maria, a Harriton High School social studies teacher, retires later this year. SERS will also need a new chair.

This article has been updated to correct the name of Josh Harris’ investment company.