Lack of transparency is usually an element of poor governance, so it’s no surprise that Pennsylvania’s beleaguered public school employee retirement system has become accustomed to secrecy — to the point of trying to impose a gag order on the members of the board of directors and to refuse requests for files from one of them.
According to attorney Terry Mutchler, a nationally recognized public records expert, the PSERS is likely the first public pension plan in the United States to force one of its own board members to sue. legal action to gain access to pension plan records.
The agency is facing a civil investigation by the Securities and Exchange Commission and a criminal investigation by the FBI. The agencies subpoenaed documents regarding PSERS adopting a false figure for its financial performance (which it later corrected), whether PSERS staff accepted outside compensation or gifts from vendors, and the acquisition of real estate in downtown Harrisburg.
Democratic state Sen. Katie Muth of Montgomery County sued for access to records regarding the home purchases. She argued, logically, that she needed access to agency records to fulfill her fiduciary duty as a board member.
On March 15, the state’s Commonwealth Court dealt a blow to transparency when a judicial panel unanimously dismissed PSERS’ seven preliminary objections to Muth’s record application. He ordered the agency to respond to the lawsuit within 30 days.
To their credit, former Democratic State Treasurer Joe Torsella and Republican State Treasurer Stacy Garrity, both PSERS board members, supported Muth’s request for records in a friend of the court request.
The PSERS is a more than $70 billion retirement plan for approximately 500,000 current and former public education employees. Due to egregious malpractice on the part of the legislature, coupled with the agency’s own troubles, 500 school districts have to pay a staggering amount of 35% of their payroll each year. Contributions from schools and state governments total approximately $5.1 billion annually.
The public has a huge interest in the PSERS. Rather than spending more public money to oppose transparency, the agency should allow board members who represent the public to do their job.