The discovery came to light in a trove of documents obtained by reporters that found a tiny discrepancy that boosted the $64 billion Public School Employees Retirement System (PSERS) by a third of a percentage point in April of that year.
The consultant firm hired to review PSERS’ investment returns between 2011 and 2020, ACA Compliance Group, performed limited checks that skipped over the month in question, according to the report. The company that crunched the actual numbers, Aon, blamed the discrepancy on a data entry error.
No matter the fault, the miscalculation unraveled PSERS’ rate of return, dropping it from just above the mandated 6.36% threshold to prevent a contribution increase down to 6.34%. Now, about 100,000 workers who joined the system in 2011 or later will pay more beginning on July 1.
PSERS represents about 500,000 current and former teachers and school workers. With assets valued at $64 billion, it’s the largest public pension system in the state. It’s also carrying a $40 billion deficit, the result of decades of state policy decisions and underperforming investments.
The situation places enormous strain on school district budgets and the taxpayers that help fund them, increasing local contributions $5 billion since the early 2000s.
The decision also comes amid a federal probe of the system’s real estate investments, confirmed by the board in a statement earlier this month. The Inquirer reports that PSERS' $13.5 million purchase of several parcels along Market Street in Harrisburg is at the center of its investigation. It’s unclear if the two incidents are related.