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Philadelphia Inquirer investigation reveals PR effort to spin pension fund’s accounting error

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  1. Freedom of Information
RCFP attorneys represented the newspaper in its successful effort to obtain emails from executives of Pennsylvania’s largest pension fund.
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It’s not often that the public gets to peer inside the inboxes of executives of one of the country’s largest pension funds. But that’s exactly what happened last month, when the Philadelphia Inquirer revealed behind-the-scenes conversations among leaders of Pennsylvania’s Public School Employees’ Retirement System as they tried to push back against criticism from a board member.

The Inquirer’s investigation is largely based on emails Reporters Committee attorneys helped the newspaper obtain through successful public records litigation. Using those records, which pension system officials agreed to turn over after reaching a settlement with the newspaper, reporters Craig McCoy and Joseph DiStefano showed how executives “circled the wagons” to undercut former State Treasurer Joe Torsella’s concerns about the fund’s finances.

The emails were “super revealing,” said McCoy, who praised the work of Reporters Committee attorneys to help pry them loose. “And they were extremely newsworthy because they penetrated the PR facade of this place and the real feelings they had toward people raising questions.”

Penetrating ‘a real fortress’

The $70 billion pension fund serves more than half-a-million current and retired public school employees in Pennsylvania. Its problems have been extensively documented by the Inquirer, but McCoy says reporting on the fund is no easy task.

“It’s been a real fortress,” he said. “It’s very difficult to get information out of the place.”

The pension fund is currently the subject of investigations by the FBI and the U.S. Securities and Exchange Commission, including probes into investment return figures that the fund reported in December 2020, numbers that later turned out to be incorrect.

McCoy and DiStefano wanted to know why the accounting error was made — and whether it was a mistake or intentional. As McCoy explains, the error was far from trivial. Had the numbers been reported correctly, he says, it would have triggered a rate increase.

So roughly a year ago, the two reporters submitted requests under Pennsylvania’s Right to Know Law for communications between fund staff members and three consulting firms. If there was an answer to their questions, they thought, it might be found inside those inboxes.

‘We held their feet to the fire’

Accessing those emails wasn’t easy. While fund officials initially turned over some records, they withheld many others, prompting the Inquirer to challenge those withholdings at the state’s Office of Open Records.

Last October, the agency ordered the pension fund to produce some of the requested records. But it concluded that other records could be kept secret. For example, the agency found that some records were exempt from disclosure because they were considered “noncriminal investigative records” while others were exempt because they reveal confidential proprietary information.

The Inquirer reporters asked the Office of Open Records to reconsider its decision. And in an unusual move that suggested the importance of the case and the records at issue, the agency agreed to take another look. That’s when the Reporters Committee stepped in and argued the case to the OOR. Ultimately, however, the agency largely stuck with its original decision.

Still, the Inquirer continued to challenge the withholdings, with free legal support from Paula Knudsen Burke, RCFP’s Local Legal Initiative attorney in Pennsylvania, and Kamesha Laurry, RCFP’s Racial Equity in Journalism Fund Legal Fellow.

In January, the newspaper took the pension fund to Commonwealth Court, asking it to reverse the agency’s decision and order the release of the requested records. But before the case even reached oral argument, fund officials reached a settlement with the Inquirer and agreed to turn over the documents.

“They crumbled,” said McCoy, who praised the “great legal arguments” Burke and Laurry were preparing for briefing to the court. (The case settled before the newspaper filed its principal brief).

“Pushing them made a difference for us,” Burke added. “We held their feet to the fire, and I think eventually they realized this was serious, and they either had to cough up the records or deal with this in court. And once they looked at it, I think they realized that the better choice was to provide the records.”

Key findings

As McCoy and DiStefano reported, the emails obtained through the successful litigation provided important insight into how leaders of the pension fund dealt with a prominent vocal critic of the fund’s performance. Here are a few important takeaways from the Inquirer’s investigation:

  • After Torsella questioned how the fund calculated its investment returns in 2020, PSERS executives, along with outside consultants, spent three weeks trying to figure out how to respond. In one email exchange, the Inquirer reported, executives “asked the team whether it could ‘juice’ up the reply ‘with some official sounding phrases.’”
  • Executives considered including language that addressed Torsella’s concerns about management’s transparency with board members. But they ultimately removed those comments.
  • The fund’s executive director sought the removal of language in a draft reply that “suggests [Torsella] is correct in his criticisms.”
  • Torsella expressed concerns about executives’ obsession with massaging their messages. “I find anything that suggests a concern with spin over substance deeply troubling,” he told the Inquirer. “[A]ny investment culture that is more focused on rebutting perceived ‘critics’ rather than welcoming the healthy dialogue and transparency that is vital to good governance does not serve the beneficiaries.”
  • The message executives ended up sending to Torsella claimed there was no problem with the 2015 investment-return figures the board reported. However, as the Inquirer pointed out, the fund later “admitted its performance numbers were false and too high.”

McCoy says the experience of fighting for these revealing email records taught him an important lesson in investigative reporting: “Be persistent and stay in the game.”

If the newspaper, with the Reporters Committee’s support, hadn’t taken the pension fund to court, these records probably never would have been made public.

“Paula and Kamesha were crucial. They did a great job,” he said. “Obviously it was wonderful because [the legal support] was free. It’s terrific to have this top-level assistance and for [the Reporters Committee] to pick up the bill.”


The Reporters Committee regularly files friend-of-the-court briefs and its attorneys represent journalists and news organizations pro bono in court cases that involve First Amendment freedoms, the newsgathering rights of journalists and access to public information. Stay up-to-date on our work by signing up for our monthly newsletter and following us on Twitter or Instagram.