Last year's rising stock market will bring a little relief to the Pennsylvania taxpayers who help fund the state's school pensions — not because it will lower their taxes — but because it will raise them a little less than expected.

The Public School Employees' Retirement System figured last month it will set next year's pension surcharge at $33.43 on every $100 it pays to teachers, administrators, and other staff at the commonwealth's more than 500 school districts. Not quite the $34.18 it had expected to charge. (PSERS didn't remind us last year's charge was $32.57 per $100, already a record high.) The charge is split by school-property taxpayers, who fund up to half depending on the district, and state income and sales taxpayers.

This year's PSERS surcharge will rise a bit less, thanks to "strong investment returns" on the $48 billion PSERS portfolio, whose profits pay a fraction of retired teachers' pensions. The private management firms PSERS hires, after pocketing $395 million in disclosed fees, gave back profits totaling 10.1 percent, which the system notes is "well above" PSERS' long-term yearly target of 7.25 percent.

That's also well below the 17 percent the S&P 500 index of big-company stocks paid in the same period. But pension funds typically keep some money in bonds, so they won't take too big a hit when the stock market drops. Since bond yields have crept at near historic lows, pension funds have justified buying all kinds of private investments to try to boost returns.

That hasn't worked real well, says the state's elected treasurer, Joe Torsella. He and Gov. Wolf have been pressing PSERS and the smaller State Employees' Retirement System (SERS) to spend less on investment managers, arguing they often don't provide extra value. (PSERS spokeswoman Evelyn Williams said pension managers won't disclose its fee agreements for paying investors like billionaire 76ers owner Josh Harris' Apollo Investment Funds, so we'll have to wait until the dollars PSERS actually spends get reported next year to know if PSERS got a discount for investing up to $250 million in Apollo's Fund IX, compared with SERS, which gave Apollo IX just $100 million.)

"Some of the worst-performing asset classes have generated the most fees," Torsella says. Over 10 years, he says, his staff found the pension plans collected just over 3 percent annual profits on its real estate investments. He says the Treasury analysis shows the pension system could have nearly doubled its returns by firing its pricey real estate managers and purchasing representative real estate investment trust (REIT) stocks instead.

Sometimes, it seems everyone wants a piece of the pensions:

• On Jan. 5, PSERS executive director Glen R. Grell said the state was purchasing eight properties that formerly housed the Patriot-News newspaper, across the tracks from PSERS' 1980s-era brick headquarters. Grell, a former state legislator who more than doubled his pay when he quit his seat to take the top PSERS job, said the pension plan was "pleased to play a supporting role in the redevelopment" of the worn-looking state capital town, and hoped to make money on the property — which could, he hinted, house a new PSERS office.

Wolf called the deal "an important step" in upgrading the area around Harrisburg's train station, served by a much-subsidized Amtrak line that hauls state workers. "We welcome PSERS as a partner" in downtown renewal, added Mayor Eric Papenfuse. PSERS bought the ground from Twenty Lake Holdings, which specializes in liquidating small-town newspaper sites. The firm scored a million-dollar profit, turning the properties in seven months.

Why stop in Harrisburg? Any number of Pennsylvania developers would be glad for PSERS cash. Torsella, a PSERS board member, said that's why he didn't vote for the Patriot-News deal: He worries "a Pandora's box may be opened" if retirement funds are channeled to local development. (PSERS and SERS backed off direct private investments and began hiring outside pros for that work in the 1980s, after they managed to lose a combined $60 million in a Norristown water-bottling factory scheme.)

• In February 2017, SERS hired Phil Greenberg as its new real estate chief. Seven months later, SERS voted to invest $100 million with C-III Recovery Fund III LP, run by a firm where Greenberg used to work.

No conflict, says SERS spokeswoman Pamela Hile: Greenberg left C-III "more than three years" before joining the pension system. "This investment opportunity, like all investment opportunities, went through multiple reviews by diverse parties." she added. "It was approved by the chief investment officer," staff reviewed the firm and the deal, and the state's real estate consultants "conducted their own independent due diligence," before the 11 SERS directors voted to buy the fund, then voted again.

Torsella said he's satisfied the C-III investment "was fully disclosed and fully vetted. My broader question is whether we have too many" private real estate portfolios, and whether this one can be expected to do better than the many that trailed the market.

(Earlier versions of the story misstated the new surcharge as $33.34.)