The massive pension fund made the report public after 11 p.m. Monday, posting it on its website, after a marathon day of closed-door meetings in which the board met for about 15 hours, in two sessions to hear from the law firm that carried out the investigation and discuss its content — and how much to make public.
At the end of it all, the panel reconvened briefly in public, in a webcast meeting, as a succession of board members congratulated themselves on how they had handled the matter before voting unanimously to release the report immediately.
“It’s the kind of transparency that will give the public confidence in our actions,” said state treasurer Stacy Garrity.
State Sen. Katie Muth (D., Montgomery), the most vocal critic of the fund’s handling over the past year, was less optimistic. She noted that the public report had been redacted, saying there could be disagreement over the fund’s actual transparency.
Before weary board members called it a day, several promised to use the survey as a guide for unspecified reforms.
Terrril S. Sanchez, the new acting executive director of the pension plan, chaired the public session. She recently took charge of the agency after its veteran chief, Glen Grell, and its investment czar, James M. Grossman, suddenly announced their retirement in November. Dissidents on the board had been pushing for a leadership reshuffle.
A $484,000 investigation into Pennsylvania’s largest pension fund by a law firm hired by the pension plan has been undermined by a key consultant’s refusal to cooperate, people familiar with the law said Monday. investigation.
Aon Consulting, a Chicago firm that played a crucial role in what turned out to be a botched calculation by PSERS fund officials, did not help the law firm in its attempt to conduct a parallel investigation into matters that have also been the subject of a federal criminal investigation for months, the sources said.
Lawyers for Womble Bond Dickinson, the firm hired by the PSERS council in March to conduct an internal investigation and write a report, spent more than eight hours on Monday briefing the council on their findings, warning that Aon’s refusal had deprived investigators of much of the puzzle. All but one of the fund’s board members attended the session, either in person or remotely.
As of 10:45 p.m., the board was still meeting behind closed doors and had not released Womble’s report.
PSERS — the $73 billion public school employee retirement system — hired Womble in March after learning that federal prosecutors and the FBI had subpoenaed information about the board’s adoption of a calculation false and unduly high for the investment profits of the fund. Womble, like federal investigators, had also reviewed the fund’s $5 million appropriations to purchase real estate near his offices and investigated suggestions that PSERS staff wrongfully accepted gifts from vendors.
In her presentation to the board, made with hundreds of graphics, Womble’s attorney, Claire Rauscher, told the panel that, unlike federal prosecutors, her firm had no subpoena power and therefore could not force Aon to cooperate.
The sloppy calculation was not an academic error. Under state law, the amount teachers and taxpayers contribute to the retirement system depends on investment returns. While the PSERS later corrected the error, its adoption of new, lower figures forced 100,000 practicing teachers and other school staff to put more of their salaries into the system.
While the PSERS has been silent for months on all matters under investigation, The Inquirer and Spotlight PA last year obtained internal documents in which Aon appeared to be largely responsible for the miscalculation, a mathematical exercise he performed with PSERS staff as part of his $750,000 contract with the pension fund.
In a letter of apology to PSERS, Steve Voss, head of Aon Investments for North America, said investment performance data had been corrupted by “unintentional clerical errors in the data entry”.
Other leaked documents suggested the fund erred by using unaudited figures in its initial calculation of performance earnings.
On Monday, an Aon spokesperson said the company would have no comment on the Womble report regardless.
For three months, PSERS board members nervously and cautiously debated when to hear the potentially explosive report, repeatedly pushing back the date to do so.
READ MORE: Board members of Pennsylvania’s largest pension fund asked to sign confidentiality oaths
To keep the report secret, the PSERS asked board members to sign a very detailed four-page nondisclosure agreement that prohibits the disclosure of anything from the review to unauthorized persons or “any member medias”. Signatories must agree that their disclosure of information would cause “irreparable harm” to the board.
Several board members blasted the NDA and said they refused to sign it. Governor Tom Wolf and other political leaders called for the Womble report to be made public. After several days of debate over the NDA, the pension fund clarified that members would not be required to sign it. It was unclear Monday how many council members did.
READ MORE: State lawmakers mull pension reforms as PSERS remains under scrutiny
At least three of the board’s 15 volunteer members — Nathan Mains, executive director of the State School Boards Association, state treasurer Stacy Garrity and state senator Katie Muth (D., Montgomery) — have publicly stated that they will not sign the NDA.
“It is regrettable,” Mains wrote to fellow board members over the weekend, “that the actions of a few have over-complicated a process that should have been simple – to conduct a thorough investigation, present the findings to the full board and allow the public to understand what happened through transparent publication of the report.
“I urge my fellow administrators to act unanimously to direct that the findings of the internal investigation be made available to the public as fully and expeditiously as possible,” Mains added. “Annuitants and the public are entitled to nothing less than immediate and transparent disclosure following the Womble briefing.”
The PSERS hired Womble in March to examine “the circumstances leading up to and following” the “misreporting of investment performance” in a key vote in December 2020. The board incorrectly stated that the return of the agency was just above a target that would have forced 100,000 employees hired over the past decade to pay 8% of their salary to fund the system, up from 7.5% previously.
In April, that’s what happened when the board admitted the number was wrong. It adopted a new lower number that forced an increase in payments for practicing teachers and their colleagues.