State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.
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Wolf angling to change how PA's two biggest funds are managed

Written by Katie Meyer, Capitol Bureau Chief | Feb 14, 2017 9:46 PM

SERS and PSERS are two of the the state's largest pools of money. (Photo by AP)

(Harrisburg) -- With Pennsylvania facing a multi-billion-dollar structural deficit and legislative majorities firmly against broad-based tax increases, Governor Tom Wolf has resorted to some creative money management in his 2017-18 budget proposal.

One of those accounting tricks is consolidation of the investment offices that oversee two of the commonwealth's biggest funds.

Although the savings won't be huge, the proposal would represent a marked shift in how Pennsylvania manages its money.

The State Employee Retirement System and the Public School Employee Retirement System control about $27 billion, and $52 billion respectively.

Wolf's proposal is fairly broad. He wants to consolidate both funds' investment offices--a move the Office of the Budget says may save around $200 million annually, and 3 billion over the next 30 years.

While the board of each fund would still make independent decisions about how to manage the money, the combined offices would be required to reduce investment management fees.

That would likely mean spending less state money on outside money managers, among other things.

Newly elected state treasurer, Joe Torsella said Wolf's proposal could well be a way to "achieve greater scale and better efficiencies to lower investment and administrative costs."

He added that he's taking similar measures with the treasury's funds.

A spokesperson for the Public School Employee System said they've received little specific information from the governor, but they're open to lowering costs.

She noted, in combining the investment offices, the administration would have to be careful not to violate federal laws, or create any "fiduciary conflicts and concerns."

Wolf would need legislative approval to carry out the consolidation.

Published in News, State House Sound Bites

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