Trustees for the Public School Employees Retirement System (PSERS) and the State Employees Retirement System (SERS) have approved an undisclosed settlement with Auditor General Jack Wagner, according to the Harrisburg Patriot-News. Both funds had originally resisted any audit of their performance – they argued that Wagner and his predecessor, Robert Casey, Jr., has no authority in the matter – but have agreed to go forward with one to end a two-year court battle.
No details will be released until all parties have signed final documents.
Wagner’s predecessor as Auditor General, Casey, had in the past sought court orders allowing the audits in 2003 after trustees of the retirement systems blocked his initial requests for information. Casey had sought the order after the funds had two devastating years of market performance from 2000 to 2002.
From June 2000 to June 2002, the funds’ combined market value dropped 20%, according to the Patriot-News. The overall value fell from $81.5 billion to $65.1 billion in that time; however, the rebounding market of the past two years has brought the market value back up to $78.6 billion.
Sources tell the Patriot-News that the eventual final settlement will allow for the hiring of an independent consultant to conduct a review of the funds’ investment performance.
Meanwhile, Wagner’s office will be allowed to conduct its own audit of various aspects of the funds’ operations, including their use of and criteria for selecting outside investment managers, according to the Patriot News.
The two funds had held out against any audit for quite some time, with a long legal battle engulfing both sides. In October, however, a state court ruled that Wagner’s office did have a legitimate claim to inspect the fund’s investments (See PA Fund Audit Battle Goes to Auditor General ). The decision was expected to be appealed.
PSERS manages pension benefits for nearly 400,000 active and retired public school employees; SERS does the same for 203,000 active and retired state workers.