Board members of largest state pension fund asked to sign confidentiality oaths | News, Sports, Jobs
Editor’s Note: Spotlight PA is an independent, nonpartisan newsroom powered by The Philadelphia Inquirer in partnership with PennLive/The Patriot-News, TribLIVE/Pittsburgh Tribune-Review, and WITF Public Media.
HARRISBURG — Leaders of Pennsylvania’s embattled teachers’ pension fund are asking board members to sign an oath of confidentiality before receiving a critical update on the botched investment calculation scandal that has led to multiple federal investigations.
On Thursday morning, the chairman of the board of trustees of the Pennsylvania Public Schools Employees Retirement System told members in an email that they must sign a yet-to-be-drafted nondisclosure agreement to attend a meeting at behind closed doors later this month.
The meeting, scheduled for January 31, is crucial: Board members are set to receive the findings of a taxpayer-funded investigation into an investment miscalculation at the end of 2020 that wrongly saved teachers a potential increase in their pension payments, leaving taxpayers to make up the difference over time. The reckoning was then fixed and teacher payments increased.
The investigation was led by Womble Bond Dickinson, a law firm hired by the council last year to conduct an internal probe into the error as the PSERS faced federal investigations. The system agreed to pay Womble up to $367,600 in fees for his work, with partners earning up to $695 per hour.
Open government advocates have sounded the alarm over PSERS’ latest request, saying it raises free speech concerns. They also wondered if such an agreement made by a government agency could even be enforced.
“There are very significant issues that could arise if a government agency attempted to limit speech,” said Melissa Melewsky, media law counsel at the Pennsylvania NewsMedia Association, of which Spotlight PA is a member. “It’s a matter of public interest, and the people who come to the meeting are often the best — and sometimes the only — people who can speak out against government wrongdoing.”
In an email reviewed by Spotlight PA and The Inquirer, Board Chairman Chris Santa Maria quoted “advice from an outside lawyer” asking board members and anyone else attending the meeting to sign non-disclosure agreements. System lawyers, he wrote, would draft the agreement and distribute it to board members next week.
Santa Maria also asked that people attend the meeting in person unless they have symptoms or test positive for COVID-19, although the email does not explain why the in-person attendance is requested. food and “large quantities of coffee” will be provided, he said.
In a statement Friday, State Treasurer Stacy Garrity, who serves on the PSERS board, said her office suggested the nondisclosure agreements. “as a possible solution to allow board members to participate remotely.”
“Treasury did not push for NDAs to be mandated,” she says.
Garrity and other top elected officials, including Gov. Tom Wolf and key candidates in the race to succeed him, called on the PSERS to release Womble’s full report on the error.
The PSERS did not respond to requests for comment regarding the unusual request for a nondisclosure agreement. The agency also did not respond to questions about what would happen if a board member refused to sign the agreement but demanded to attend the meeting.
It is unclear what authority, if any, the PSERS has to require nondisclosure agreements by its board members. The state’s open meeting law, known as the Sunshine Act, is silent on the issue, Melewsky said.
The law allows public councils to hold closed sessions in certain circumstances, she said, but does not prohibit those who attended from discussing what happened later.
The PSERS Board of Directors is made up of volunteers, including four state legislators, the elected state treasurer, and two school board representatives. Five members are part of the school staff.
Over the past few months, the agency has become increasingly upset with what it perceives as “leaks” on the investigation of the fund’s error and other cases by federal prosecutors and the FBI, as well as a separate investigation by the United States Securities and Exchange Commission.
At a closed-door board meeting last fall, Santa Maria and board member Frank Ryan, a Republican state representative from the Harrisburg area, said they were considering to request an investigation into the disclosures. At the same meeting, they also raised the specter of nondisclosure agreements.
Matt Haverstick, an attorney who represents one of the fund’s senior advisers, said on Friday he thought PSERS’ nondisclosure agreement request was appropriate. He argues that damaging and sometimes inaccurate information was leaked, which harmed the constitutionally protected reputations of people who worked for the agency.
The NDA, said Haverstick, “serves to protect the integrity of a $70 billion public pension fund. This prevents the board from being unfairly criticized. And it protects the reputation of real human beings.
Santa Maria’s request is the first direct indication that the agency is seeking to contain the embarrassing series of disclosures about its internal performance.
This month’s update by Womble Bond Dickinson is expected to provide the first in-depth explanation of how the agency made the investment miscalculation. The fund never offered an explanation, citing federal investigations.
Last fall, Womble’s attorney, Claire J. Rauscher, warned board members that some staffers might view the findings as damaging to their reputations, though she also disclosed that her investigation revealed no criminal act. She did not identify any staff or senior executives named in the report.
It is unclear which part of the Womble report, if any, will ever become public.
State Sen. Katie Muth (D., Montgomery), a PSERS board member and the most outspoken critic of the agency’s secrecy surrounding the error, said Friday she was surprised by the request, since she is “a public board that uses public funds”.
“I have never been asked to sign an NDA in my life,” said Mouth. “Officials should not withhold information from the public.”
Muth last year hired attorney Terry Mutchler to represent her in trying to obtain key PSERS files, including those related to the miscalculation.
In an interview Friday, Mutchler said she would ask the agency’s lawyers to provide a legal basis for their NDA request, which she called problematic and contrary to government transparency.
“Now is the time for PSERS to let the sunlight in, instead of doubling down on secrecy,” she says.