Under FBI investigation, Pennsylvania's $64 billion public school pension fund sought to backtrack on previous disclosures that staffers were working on both sides of real estate dealings.
Spotlight PA
Report: SEC seeks info on possible gifts to pension’s staff
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The Associated Press
Spotlight PA
Under FBI investigation, Pennsylvania's $64 billion public school pension fund sought to backtrack on previous disclosures that staffers were working on both sides of real estate dealings.
(Philadelphia) — The U.S. Securities and Exchange Commission has joined a federal probe of Pennsylvania’s largest pension fund and is seeking among other things records to determine whether improper “compensation and gifts” may have been offered staff, a newspaper reported.
The Philadelphia Inquirer reports that the commission is also seeking records earlier sought by the U.S. attorney’s office about what officials of the $64 billion Public School Employees’ Retirement System have called a mistake in calculating the fund’s long-term investment performance.
The newspaper reported that the subpoena given to the school pension plan Friday was the first indication that investigators are looking into possible presents or money from investment advisers and consultants. State employees are forbidden from accepting such gifts under a ban imposed by Gov. Tom Wolf.
The Securities and Exchange Commission pursues civil rather than criminal complaints and has broad power to impose fines, discipline financial players and order changes. Pension fund system spokesperson Steve Esack said Saturday that the fund had no comment on the SEC action, the newspaper said.
The pension fund board voted nearly unanimously in April to increase contribution rates after revealing in March what it called a consultant’s erroneous calculation about the fund’s long-term investment performance that helps determine the balance of payments into the system by taxpayers and school employees.
System officials in April confirmed that the agency had been served with a grand jury subpoena for documents on the the risk-sharing calculations. Federal investigators also sought information on the fund’s purchases of parcels of land in downtown Harrisburg.
The original calculation — 6.38% growth over the nine years ending last June 30 — was slightly above a 6.36% growth threshold, thus protecting school employees hired after 2011 from seeing a higher risk-sharing contribution rate kick in.
Following a review, the board said the consultant and a separate firm told the board that the actual nine-year performance figure was 6.34%, thus triggering a risk-sharing provision in law that requires employee contribution rates to rise.
The Pennsylvania chapter of the American Federation of Teachers, representing 36,000-plus school workers in 64 local unions, called for the firing of executives and the resignation of board members who joined the board before this year. The union president said many members will see a pay reduction of as much as $30 to $50 a month.
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