"In December 2020, Pennsylvania's largest pension fund adopted a figure for investment profits that its executives insisted was rock solid. 'We did our due diligence,' the chief investment officer of the PSERS fund told its board.
"The number was wrong. In April, the board disavowed the figure, adopting a new, lower number that triggered an increase in pension payments for 100,000 public school employees. The botched calculation is now being probed by the FBI and financial regulators.
"But in a new sworn affidavit, the fund's spokeswoman, Evelyn Williams, says the $73 billion plan had launched a 'detailed review' into the calculation starting in the 'summer 2020.' She detailed months of investigation that involved three outside consultants to make sure the figure was right.
"Yet the launch of that investigation went unmentioned to the board when it voted in December during a public meeting.
"Williams' declaration turned out to have a lot of impact. This week, a hearing officer cited her affidavit to bar the public from seeing any of the fund's communications with consultants about the botched calculation from any time after the summer of 2020.
"The officer, lawyer Erin Burlew, made her ruling Monday on an appeal from The Inquirer in a case brought under Pennsylvania's Right-to-Know law. In her opinion, she agreed with the pension system that it could keep the material secret because the public records law exempts the release of items involved in an investigation.
"Since the fund started such an in-house 'noncriminal ... investigation' in the summer of 2020, she wrote, it could keep documents secret from that point on — through the December meeting when the board endorsed the mistaken figure and through the period when the calculation debate climaxed in the spring with the board's disavowal of the number.
"The Inquirer filed the Right-to-Know request in May. PSERS objected and also alerted the three consultants — Aon, ACA, and Buck Global — that they could join the fund in its opposition.
"AON and Buck did so, saying that any release might reveal trade secrets. The Inquirer countered, and Burlew agreed, that any such information could be redacted.
"In its rebuttal, PSERS cited only its own in-house investigation, not the FBI and SEC probes, to support secrecy. Burlew wrote that this meant PSERS couldn't rely on the existence of these probes as a reason to block the release of information.
"In its legal argument, The Inquirer had pointed out that the PSERS board did not vote to have its audit committee look into the error until March of this year. The first federal grand jury subpoena did not arrive until that month, also.
"The newsroom cited a 2014 state Supreme Court decision involving the Associated Press to argue that PSERS could not restrict information. This decision said the investigative exemption could not be used to seal off routine government documents.
"The paper said checking math was a routine part of the fund's operation and that such activities should always remain public. Burlew did not agree.
"In an interview, Philadelphia-based lawyer Terry Mutchler said that as a general rule, an internal investigation 'does not automatically transform otherwise public records into records that are off the table.'
(Mutchler, a lawyer for PSERS board member and state Sen. Katie Muth (D., Montgomery County) — an in-house critic of PSERS. Mutchler is the former director of the Pennsylvania Office of Open Records.)
"In interviews, other pension experts condemned the secrecy.
"'Public pensions are subject to comprehensive public-records laws,' but have become 'adept at evading disclosure of things that ought to be public information,' said Edward Siedle, a former SEC lawyer who now represents pension-system whistleblowers and retirees in several states.
"In Kentucky, where fees charged by Wall Street managers have become so controversial that state officials have sued firms demanding refunds, 'the mere fact that an investigation is ongoing, open, active, or whatever is not a sufficient basis to deny'a request for public documents, said Amye Bensenhaver, a former state prosecutor who specialized in open-records cases."
