Pennsylvania Adversaries Have Day in Court –

An attorney representing Pennsylvania Auditor General Robert Casey Jr. argued in front of the Pennsylvania Commonwealth Court earlier this month that Casey has the right to conduct a performance audit of the state’s two largest public-employee pension funds.

Casey has been fighting for more than a year to audit the performance of Pennsylvania Public School Employees’ Retirement System (PSERS) and State Employees’ Retirement System (SERS), which manage a combined $61 billion in assets.

A panel of seven judges on Pennsylvania Commonwealth Court in Philadelphia heard the arguments. While the court did not set a date for when it would rule, participants expect a decision before the end of the summer.

Casey’s attempt to audit the funds stems from the retirement systems’ use of 150 outside consultants and investment advisors. The tally of those services adds up to more than $250 million. Meanwhile the funds, which represent more than 500,000 workers and retirees, has lost about $20 billion over the last two years.

The losses led to PSERS board to raise its subsidy from individual school districts to make up for the deficit. The increase may lead to higher property taxes in some Pennsylvania school districts.

Casey has been accused of using the audit issue to pursue political objectives. State Treasurer Barbara Hafer is chair of PSERS and sits on the SERS’ board. Casey will be running to replace Hafer in the next election. Hafer’s term expires in January.

Last December, the Commonwealth Court turned down the pension funds’ attempt to have the suit thrown out of court. In the same ruling the court ruled in the funds’ favor and rejected Casey’s assertion of monetary damages against pension board members.

PSERS manages approximately $40 billion and invests in Adams Street Partners, Spectrum Equity Investors, TA Associates, Madison Dearborn Partners and Landmark Partners.

PSERS manages approximately $40 billion and invests in Adams Street Partners, Spectrum Equity Investors, TA Associates, Madison Dearborn Partners and Landmark Partners. SERS manages approximately $22.1 billion and its portfolio includes Apax Partners, New Enterprise Associates, Summit Partners, Blackstone Capital Partners,

Lexington Partners and HarbourVest Partners.