Pennsylvania teacher pension board. Gifts from Wall Street.

For years as an active teacher and then as a retiree I have been part of the fight to protect our pension system from being looted by Illinois politicians.

That fight came to a head when the Illinois Democratic legislature passed a bill in 2013 that gutted the system in the name of pension reform. Democratic Governor signed the bill saying it was what he was put on this earth to do.

We took the state to court. The Illinois Attorney General Lisa Madigan at the time defended the pension theft as tjeir right under the state’s police power. The Illinois Supreme Court rejected that argument and said that the state could not steal our pensions based on a financial crisis they themselves created.

Public pensions are underfunded in states all across the country. Illinois is among the most underfunded. The legislature fails to meet its actuarial obligations every year.

The legislature’s refusal to pay what the actuaries have determined is owes means the board of directors must rely more and more on Wall Street returns to fund the benefits owed to teachers and other public employees after a lifetime of labor.

And Wall Street is a snake pit.

And no part of Wall Street is more of a snake pit than private equity. The operative word being “private”.

What the politicians do by passing bills, PE managers of our money do mostly in secret.

PE investments are done with other people’s money, a lot of it from public pension funds. Fees and returns are often hidden.

Federal laws that were written to protect Wall Street investors were specifically written to exclude public pension investments from that protection.

Google ERISA.

The latest example is Pennsylvania and PSERS, the state’s $64 billion teacher pension fund.

The feds are investigating the fund because of evidence of Wall Street kickbacks and bribery, exaggerated investment returns and millions spent on real estate around the state capital of Harrisburg.

Now the U.S. Securities and Exchange Commission has joined the FBI and subpoenaed records about the PSERS pension board’s adoption of a false figure for its financial performance and improper compensation and gifts to staff.

PSERS relies heavily on paid outside consultants and money managers who charged exorbitant fees.

Meanwhile many Pennsylvania teachers covered by PSERS must pay more into the system when it fails to meet certain financial targets.

I’m betting Pennsylvania is not alone.