July 25, 2016
Pennsylvania Auditor General Eugene DePasquale said Monday that his office will be auditing the state’s two retirement systems that manage nearly $80 billion to make sure they are operating as efficiently as possible.
An area of specific interest to him, DePasquale told reporters, is reviewing the performance of external investment advisers and the fees they are paid, considering that the two funds’ annual investment efforts are falling far short of annual goals.
“We’re paying them a lot of money,” DePasquale said on a conference call with reporters. “What are we getting in return?”
A team of four auditors will probe the Public School Employees Retirement System dating back to July 2013, and the audit of the State Employees Retirement System will start with January 2013.
Final results should be available next year. The two systems handle $78 billion for more than 854,000 state and school district employees and retirees, DePasquale said.
Besides the performance of investment advisers, the audits’ objectives include determining if the systems are following the law when it comes to public employees forfeiting pensions after being convicted of certain crimes, reviewing internal “governance structures” and evaluating the investment portfolios to ensure they are minimizing risk.
DePasquale said the last audit of the systems was done in 2002 under then-Auditor General Bob Casey, now the state’s Democratic U.S. senator.
One of the main cost-drivers in the state’s budget deficit is unfunded pension liabilities, which has also placed enormous pressure on school districts, and DePasquale said the audits would go toward giving officials a clear picture of the problems they face.
“We want to do everything we can to try to help with this situation,” he said.