An independent pension investigator has lodged serious accusations against Minnesota's teacher retirement system, suggesting financial discrepancies under Governor Tim Walz's watch.
Fox News reported that Edward Siedle claims financial misconduct within the state-run Teachers Retirement Association, sparking a whistleblower investigation.
Edward Siedle, known for his work in pension investigation, has raised alarms over the financial practices of the Minnesota State Retirement System, particularly the Teachers Retirement Association (TRA). He alleges that the fund has been understating the fees paid out to investment managers while reporting unlikely financial returns.
As the chairman of the Minnesota State Retirement System since January 2019, Governor Tim Walz oversees a substantial sum, which includes $140 billion in state employee funds. Of this, $28.2 billion is specifically earmarked for the pensions of public school teachers.
Siedle’s investigation suggests that the TRA disclosed only a fraction of the actual fees paid over the past decade. According to his findings, less than 10% of the $2.9 billion in total fees were reported.
He further criticized the pension fund’s performance, noting that the reported annual gains marginally exceed its benchmarks by just 0.2%. Siedle compares these figures to those famously reported by Bernie Madoff, indicating a level of improbability that warrants concern.
For the fiscal year 2023, the TRA reported a return of 8.9% and disclosed $24.19 million in management fees. However, Siedle estimates that the actual fees could range between $334 million and $467 million, a significant discrepancy from the reported figures.
This vast difference prompted Siedle to file whistleblower complaints with both the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) in July.
Concerns about the governance of the fund have been exacerbated by the fact that Minnesota’s attorney general and state auditors, who also serve on the pension board, may face conflicts of interest due to their positions.
Katie Dickerson, a teacher nearing retirement, voiced her concerns before Minnesota’s Legislative Commission on Pensions and Retirement in February. She highlighted the high contribution rates and the severe penalties for early retirement, which she argues have not been accompanied by improvements to the system.
Edward Siedle commented on the oversight of the pension funds by stating, “I don’t know if the man had any pre-existing knowledge of finance or pensions, but as chairman, he should have educated himself.”
He also emphasized the fiduciary responsibilities of pension board members, asserting that they are obligated to monitor fees and ensure the accuracy of investment performance disclosures.
The whistleblower complaints have prompted further scrutiny into how state-run pension funds are managed, particularly under high-ranking political figures. Siedle’s actions suggest potential widespread issues with the transparency and management of pension funds.
The implications of these allegations are significant, potentially affecting thousands of teachers planning for retirement, relying on the integrity of the TRA to manage their pensions responsibly.
While the SEC and FBI have not yet publicly responded to the whistleblower complaints, the outcomes could lead to significant changes in how pension funds are managed and reported in Minnesota.
To summarize, Edward Siedle has accused the Minnesota Teachers Retirement Association of understating fees and overestimating returns under Governor Tim Walz's oversight. This has led to whistleblower complaints to the SEC and FBI, raising concerns about the transparency and management of teacher pensions.
Katie Dickerson's complaints highlight the personal impact on teachers, who face high contribution rates and harsh penalties for early retirement, with no apparent benefit to the pension fund’s stability or their future security.
The situation remains under close watch as further investigations are anticipated to unfold, possibly bringing to light more about the governance and accuracy of financial reporting within the TRA.
