Officials atop Pennsylvania’s largest public pension system have received subpoenas from federal investigators, although the $64 billion Public School Employees’ Retirement System has yet to publicly discuss the nature or scope of the newly disclosed inquiry.
In addition to giving few details, pension system officials and board members — which includes state lawmakers, two members of Gov. Tom Wolf’s Cabinet and state Treasurer Stacy Garrity — have declined to answer questions publicly about what information federal investigators are seeking.
Garrity told lawmakers at a Senate Appropriations Committee hearing Tuesday that “federal subpoenas have been served on several PSERS management officials.”
Garrity did not say what the subpoenas are seeking or answer follow-up questions to her office. Pension system officials also did not answer questions about Garrity’s statements and the nature of the subpoenas.
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.
However, two people directly briefed on the contents of the subpoenas and another person briefed second-hand on them say federal investigators are requesting information surrounding the pension system’s purchases of adjacent parcels of land in downtown Harrisburg.
One of the three people said the subpoenas also seek information regarding calculations about the fund’s investment performance that help determine the balance of payments into the system by taxpayers and school employees.
All three people spoke on condition of anonymity because the pension system has not publicly disclosed the information.
Buying the parcels, which are across railroad tracks from the state Capitol and the pension system’s current headquarters building, had been pitched by its officials as the site of the agency’s future headquarters. So far, no such construction of a new headquarters has happened.
The system’s 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 and provide guidance “in matters relating to a federal investigation” and any related issues.
The resolution was posted to the system’s website.
The disclosures come less than two weeks after the board said in a brief statement that it is investigating a consultant’s risk-sharing calculation about the fund’s investment performance that is apparently wrong, as well as actions by pension system staff and the consultant.
The system 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.