HARRISBURG, Pa. (AP) — A Pennsylvania state senator is suing Pennsylvania’s largest public pension system amid a federal investigation into aspects of the agency's undertakings, saying agency officials have refused to share documents with her, even though she is a board member.
The effort by state Sen. Katie Muth, D-Montgomery, is being opposed by executives at the $64 billion Public School Employees’ Retirement System, but found support from state Treasurer Stacy Garrity and former Treasurer Joe Torsella, both fellow board members.
“Withholding important documents from a trustee is outrageous,” Garrity said in a statement Wednesday.
Much of what Muth has requested are either documents previously provided to board members or documents that are public records, Garrity said.
Torsella said Pennsylvania law is clear that the system's board members "have an absolute right to review documents to perform their fiduciary duty. Every member of the board is entitled to the records Senator Muth is seeking, many of which are also public records.”
The lawsuit was filed Tuesday evening by Muth in Commonwealth Court against the retirement system and its top officials.
“To fulfill her duties, and particularly in light of the allegations of wrongdoing that preceded her appointment to the board, Senator Muth has sought access to documents related to the investment operations and contracts of the board,” Muth's lawsuit said.
Muth's lawsuit said board members are being asked to vote on approximately $1 billion in investments at Thursday's meeting, “yet attempts to obtain information, data and documents that in her view could better inform" those decisions were rejected.
The Associated Press has previously reported that subpoenas from federal investigators center on the pension system’s purchases of parcels of land in downtown Harrisburg and its calculations about the fund’s investment performance that help determine the balance of payments into the system by taxpayers and school employees.
On May 7, Muth emailed a request for documents revolving around the spending of some $12 million that system officials had requested to purchase, excavate and prepare the Harrisburg properties, the lawsuit said.
A system lawyer refused, citing “ongoing internal and criminal investigations,” the lawsuit said.
A system spokesperson released a statement Wednesday calling the lawsuit “meritless."
“This lawsuit diverts valuable time, energy, and resources from what we believe is in the best interests of the beneficiaries, which should be the primary directive as we respond to the investigations,” the system said in the statement.
System officials in April confirmed that the agency had been served with a grand jury subpoena for documents by the U.S. attorney’s office in Philadelphia. Garrity has also said federal subpoenas were served on several PSERS management officials.
The PSERS board in April voted to raise contribution rates for tens of thousands of public school employees, fallout from what system officials have called a mistake in calculating the fund’s long-term investment performance.
The investment performance calculation is the subject of at least one of the federal subpoenas and an internal investigation.
The U.S. attorney’s office in Philadelphia has declined comment.
Besides Muth, board members have largely kept quiet publicly since word of the federal investigation became public.
Last month, the Pennsylvania chapter of the American Federation of Teachers called on all PSERS board members — except for Muth, Garrity and Torsella — to resign.
“With the scant information presently available to the public, it is difficult, if not impossible to have any semblance of confidence in the PSERS Board or staff" to ensure the pensions of AFT members, the organization's president, Arthur Steinberg, wrote.
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