For much of the past year, the Pennsylvania Public School Employees’ Retirement System’s opaque strategies, questionable investment decisions, and lax oversight of its gift and travel policies have been the subject of two separate federal investigations.
After years of questions about the fund’s management, scrutiny of the agency — which oversees a $70 billion pension plan for about a half-million working and retired educators — picked up this year with increased calls for more transparency by former State Treasurer Joe Torsella; his successor, Stacy Garrity; and even some members of the system’s own board. Reporting by Joseph N. DiStefano and Craig R. McCoy of The Inquirer, Angela Couloumbis of Spotlight PA, and journalists at other news outlets across the commonwealth was also crucial in helping to shed light on the workings of the system.
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As a result, two of the fund’s leaders, Glen Grell and Jim Grossman — who have each been called on by this board to step aside for the duration of the federal probes into the system — have announced plans to leave the fund.
Still, many questions persist. It remains unclear precisely how the fund ended up so deeply mired in ineffective practices. An investigation by Womble, Bond, and Dickinson, an international law firm headquartered in London, has not been released, despite Gov. Tom Wolf’s recommendation to make those findings public. Releasing the results of that investigation would go a long way in helping us all understand exactly what happened, and who, beyond Grell and Grossman, might be responsible.
The fund’s Board of Trustees, which meets later this week, also faces the task of ratifying the decision to divest from the high-cost hedge funds that led to poor financial returns for the system. While board member Richard Vague, the state’s banking secretary and a key voice in favor of many of the recent reforms, has presented this step as a way to end “newspaper stories,” we would instead encourage the trustees (some of whom have sought to “gag” their dissident colleagues) to embrace public scrutiny as part of their larger responsibility to supervise the fund.
In addition to making the findings of the Womble report public, it’s essential that the fund establish firm guidelines for gifts, investments and other areas that were called into question. While the move to curb travel expenses, recently and wisely emulated by the State Employees’ Retirement System, is a good start, it’s critical that the system consider creating an independent and well-resourced chief integrity officer and ban the use of unaudited estimates. These changes can help protect the fund, taxpayers, retired public school employees, and current workers from the type of financial consequences that the recent mismanagement has enabled.
Vague and other board members have taken some positive steps toward transparency and reform, but it’s vital that they provide the public with the information necessary to answer any lingering questions surrounding the board after all these months.