The Pennsylvania Public School Employees’ Retirement System (PSERS), which announced in August its investment performance for the fiscal year ended in June, reported its first positive returns the system has posted since the 1999-2000 year. However, the $42 billion retirement system was short of its overall goal.
The fund’s return on investment was a positive 12% for the quarter and a 2.7% gain for the fiscal year ended in June. The fund’s goal was to have an 8.5% gain for the fiscal year. Rising stock market prices are credited with buoying the system’s returns.
PSERS officials, Chairwoman and Pennsylvania Treasurer Barbara Hafer as well as Chief Investment Officer Alan Van Noord, credited its diversified portfolio and confidence in its strategic asset allocation.
Both PSERS and the Pennsylvania State Employees’ Retirement System (SERS), lost about $20 billion over the last two years. The losses led to the PSERS board voting to raise its subsidy from individual school districts to make up for the losses.
This increase may lead to higher property taxes in some school districts. And the losses touched off the ongoing political and legal battle with Pennsylvania’s Auditor General Robert Casey, Jr. Casey is seeking to perform a special performance audit on PSERS and SERS.
Casey, the son of former Pennsylvania Gov. Robert P. Casey, Sr., is seeking to perform a special performance audit on PSERS and SERS. Hafer, who in addition to her posts on PSERS sits on the SERS board, has said the audit amounts to political maneuvering for a run for the office of State Treasurer.
Casey initially sought to conduct an audit last August over the retirement systems’ use of 150 outside consultants and investment advisors.
The tally for those services adds up to more than $250 million. Meanwhile, the two pension funds have had to scramble for cash infusions totaling $200 million this year to pay pensioners.
The funds manage a combined $70 billion in assets. PSERS is the larger of the two, handling nearly $50 billion in its portfolio and is the 13th largest public pension fund nationwide.
The protracted battle between the auditor general and the two funds over the proposed audit has had both sides trading public accusations and claiming to be on the right side of the law.
The two sides are scheduled to meet in court during the week of Sept. 8.
PSERS has about 9% of its assets invested in venture capital and private equity. The retirement system is an investor in Franklin Venture Capital, Spectrum Equity Investors, Heritage Partners, Madison Dearborn Partners and Landmark Partners.
SERS’ portfolio includes New Enterprise Associates, Summit Partners, Blackstone Capital Partners, Lexington Partners, HarbourVest Partners and Apax Partners & Cie.
Email Matthew Sheahan