Pennsylvania’s largest public pension system disclosed Tuesday that it is dealing with a federal investigation, although officials atop the $64 billion Public School Employees’ Retirement System have yet to publicly disclose the nature or scope of the inquiry.
In addition, state Treasurer Stacy Garrity, who is on the pension system's board, told lawmakers that top PSERS officials have received federal subpoenas.
The disclosures come less than two weeks after the board said in a brief statement that it is investigating a consultant’s calculation about the fund’s investment performance that is apparently wrong, as well as actions by PSERS’ staff and the consultant.
The board, late Tuesday night, approved a one-sentence resolution after a roughly five-hour, largely closed-door meeting to hire a law firm to represent it “in matters relating to a federal investigation” and any related issues.
The resolution was posted to PSERS' website.
The system has not publicly disclosed how broad the federal investigation is and what it involves. A spokesperson for the U.S. attorney's office in Philadelphia declined comment, saying the office can neither confirm nor deny the existence of an investigation of the system.
Board members — including state lawmakers, two members of Gov. Tom Wolf's Cabinet and Garrity — have not spoken publicly about it, although Garrity told lawmakers at a Senate Appropriations Committee hearing Tuesday that “federal subpoenas have been served on several PSERS management officials."
She did not say what the subpoenas are seeking or whether they are related to the consultant's error.
PSERS has not named the consultant.
The calculation — 6.38% growth over the nine years ending last June 30 — was slightly above a 6.36% growth threshold, thus protecting nearly 100,000 active school employees who are retirement system members from seeing a higher risk-sharing contribution rate kick in next July 1.
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