Keystone State Pension Audit Fray Continues Escalating

January 23, 2003 ( - The escalating battle of wills between Pennsylvania Auditor General Robert Casey, Jr. and Pennsylvania's two major public employee pension funds is getting even more intense.

That’s because Casey has asked a Commonwealth Court judge for a court order affirming what Casey has been arguing – that he has the legal authority to audit the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS).

Casey asked the judge to force PSERS and SERS to “consent to and cooperate with” the Auditor General’s audits and to turn over the documents Casey has demanded. 

Earlier this month, Casey issued subpoenas to PSERS Chair State Treasurer Barbara Hafer and SERS Chair Nicholas Maiale when they refused to provide the Auditor General with crucial documents regarding the Funds’ investment operations (See PA. Auditor General Subpoenas Public Pension Funds ).

Casey’s trip to court comes after the funds told the Auditor General last week that “neither PSERS nor SERS will be producing any documents in response to your invalid subpoenas.”  (See Public Fund Audit Push Heats Up in Keystone State ).The funds agreed to allow Casey to watch as they selected a firm to conduct their own audits.

Fund officials insist that Casey doesn’t have the authority to conduct the audits while Casey contends he has both constitutional and statutory authority for the audits.

In his Commonwealth Court petition, Casey asked the court to impose financial sanctions on the individual members of the PSERS and SERS Boards of Trustees to compensate current and future retirees for losses resulting from the trustees’ failure to exercise “common prudence, caution, and due care” in using fund assets to pay for their own audits.

“The independently-elected Auditor General has the authority to examine how the funds award $250 million a year to outside investment advisers and how they select and monitor the firms that help manage $60 billion in public employees’ retirement assets,” Casey said in a statement.