PA teacher pension officials investigated by the feds. Members will pay millions in lawyer fees from their retirement savings.

AFT Pennsylvania president Arthur Steinberg addresses reporters during a press conference in North Philadelphia in March. Steinberg last week called on most PSERS board members to resign.

I’ve posted earlier that federal prosecutors and the FBI are using a grand jury and subpoenas to investigate the Pennsylvania Public School Employees Retirement System’s $3 million in land purchases near Harrisburg, as well as the board’s adoption last year of a figure that falsely exaggerated its investment profits.

The board later abandoned that number in favor of a lesser one, forcing newer school employees to pay more for their retirement.

The PSERS unit involved in the investments is headed by James H. Grossman Jr. who is paid $485,421 yearly, the most in state government and more than double the governor’s pay. Grossman’s two deputies are each paid $399,611.

PSERS executives have hired three law firms, Morgan Lewis, a Philadelphia firm; Womble Bond Dickinson, based in the United States and the United Kingdom; and Pillsbury, a Washington firm.

Womble is to be paid up to $367,500, its contract says. Contracts for Morgan Lewis and Pillsbury have yet to be made public, though they were hired more than seven weeks ago. Documents do show that the lead attorney from Morgan Lewis charged the fund $1,250 an hour for initial work.

The investigation began under a policy that PSERS will pony up $40 million in total legal bills in any one year for agency staff caught up in one investigation.

That $40 million comes from PSERS member’s retirement savings.

“The PSERS board is diverting millions in retirement funds, set aside and intended to pay retirement benefits, to their preferred lawyers to represent them in what may be adversarial to the intended PSERS beneficiaries,” said Arthur Steinberg, president of AFT Pennsylvania, the union for teachers in Philadelphia, Pittsburgh, and some suburban schools.

“This is a classic case of protection for me — the board — but not for thee — the educators who pay into and benefit from the pension.”

3 thoughts on “PA teacher pension officials investigated by the feds. Members will pay millions in lawyer fees from their retirement savings.

  1. Every time I read one of Fred’s blogs regarding other states’ pensions systems I cringe because dominoes are slowly starting to fall nationwide I wonder if and when Illinois’ public pension systems will next because of our politicians who seem to often get themselves involved with corruption, greed, ethics, etc. My dad used to say “pigs get fat but hogs get slaughtered’. That seems to apply to IL legislators who have to be reminded that ‘our’ money is NOT their own personal money. If our legislators can’t pass a long overdue ethics bill with some teeth in it, how does that build public trust? As Madigan et. al., start falling, can our IL pension systems be far behind?

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