Garrity backs Torsella to boost oversight on teachers’ pension fund amid internal investigation
Pennsylvania state Treasurer Stacy Garrity, a Bradford County Republican, holds up a challenge coin made for her inauguration while delivering her first address on Jan. 19, 2021 in Harrisburg. (Capital-Star photo by Stephen Caruso)
Pennsylvania’s newly elected Republican treasurer is advocating for the state Senate to confirm her Democratic predecessor to join her on the state teachers’ pension board.
Stacy Garrity, who beat former treasurer Joe Torsella last year, told the Republican-controlled upper chamber in a letter that she backed Torsella’s nomination by Gov. Tom Wolf to the Public School Employees Retirement System board.
The 15-member board manages the $64 billion system that collects retirement contributions from, and pays out benefits to, 600,000 current and former school employees.
“As I work to bring greater transparency to PSERS and for investment choices that will reduce unnecessary fees, eliminate waste and strengthen the fund, I know that Joe will be a strong ally in my efforts,” Garrity wrote in the March 18 letter viewed by the Capital-Star.
Wolf nominated Torsella for the role in February, according to the Philadelphia Inquirer, and his return would bring back a once lone contrarian voice to a board with a growing anti-establishment faction.
The state treasurer is tasked with cutting checks for the commonwealth, as well as directly or indirectly managing more than $100 billion in state funds, including state-run savings accounts for people with disabilities to the retirement savings for state employees.
Torsella, in particular, made a name for himself with the latter. The treasurer is a board member of both the state employees’ and teachers’ retirement fund boards. Torsella used his membership as a bully pulpit to advocate against investments in Wall Street firms.
The pension funds’ managers have argued that these firms return above market rates, needed to make up for years of underinvestment, as well as bad performances during the 2008 crash.
Torsella countered the firms charge high fees for, at best, average returns.
This record wasn’t enough for Torsella, elected in 2016, to win a second four-year term in 2020. Although Garrity bested him, she’s also taken up the mantle of PSERS dissident.
“It is evident that the default position at PSERS is to reduce, not strengthen, oversight by the Board of Trustees,” Garrity wrote in her letter.
A spokesperson for the pension fund declined to comment on the letter.
The letter also comes as the teachers’ pension fund investigates an error that may have prevented an increase in some teacher’s retirement contributions.
In December 2020, the board certified that pension investment returns were just a few hundredths of a percentage point above a legally required level to prevent an increase in retirement contributions. Torsella and a handful of other naysayers abstained from the vote.
But earlier this month, the board revealed in a closed door meeting to board members that those returns may be incorrect. The fund later officially confirmed the error, and has hired a law firm and outside auditors to investigate the mistake last week.
In a statement, board chair Chris SantaMaria, a suburban Philadelphia social studies teacher and former teacher’s union official, said that the original error was by one of the pensions’ outside consultants. PSERS staff then brought the mistake to the board.
“We do not have any information at this time that anything criminal occurred,” SantaMaria added.
If Torsella is confirmed, he’ll join new status quo skeptics such as Garrity and state Sen. Katie Muth, D-Montgomery, as well as some former allies such as Wolf’s Secretary of Banking and Securities Richard Vague, and state Rep. Frank Ryan, R-Lebanon.
A spokesperson for Senate Majority Leader Kim Ward, R-Westmoreland, said the chamber was waiting for paperwork to proceed with Torsella’s nomination. A spokesperson for Senate Minority Leader Jay Costa, D-Allegheny, said Democrats supported Torsella’s nomination.
The Senate regularly confirms appointees, for offices ranging from high paying oversight boards and cabinet secretaries, to replacements for state and local judges and county row officers.
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