A Commonwealth Court panel ruled 6-1 that the auditor general is authorized by the state constitution and state law to examine how the State Employees’ Retirement Board (SERS) and Public School Employees’ Retirement Board (PSERS) oversee the more than $72 billion they control, the Associated Press reported. The two plans cover nearly 600,000 government workers, teachers and retirees.
Casey said Friday the audit will address compliance with rules regarding which investments are permissible and how assets must be allocated. He said he also is interested in “the efficiency and effectiveness of the funds’ current organizational structure and resources.”
The official said he hopes the funds will soon cooperate with his investigators. “I think both pension funds will be better for it, because people will no longer suspect that they’re trying to hide something – which is the impression conveyed when you’re resisting an audit, a public agency resisting an audit by a publicly elected watchdog,” Casey told reporters.
Casey’s sometimes bitter battle dates back to January 2003 when he sued the funds to conduct performance audits after the agencies did not comply with his original subpoenas (See PA Auditor General Subpoenas Public Pension Funds ). The funds insist they maintain exclusive control over fund-assets management and accuse Casey of being motivated by politics, which he denies. Casey said he wants to review how PSERS and SERS select and monitor about 150 firms paid about $250 million annually to help them determine how to invest.
Edward Mannino, a lawyer for the funds, told the court during a June hearing that Casey wanted to “look into the political juicy stuff.” Mannino said having an outside auditor with experience evaluating pension funds, rather than Casey’s office, would be preferable.
Both SERS spokesman Sean Sanderson and PSERS spokeswoman Evelyn Tatkovski told the Associated Press that their respective agencies were reviewing the latest court opinion.
PSERS had $48.3 billion in assets as of June 30 and a membership comprising more than 391,000 active school employees and retirees. SERS had $24.5 billion in assets as of mid-September and a membership of about 200,000 active workers and retirees.