Coming from the private sector where we actually get things done every day, I continue to be baffled as I watch Harrisburg chase its tail over how to pay for the 2017-2018 budget.
Last week the Treasurer told us the state is going to have to borrow more money or Harrisburg will shut down. But is that necessary?
I sat down and did the math, and here is how we should be looking to solve our budget problems:
You would have to be living under a rock to not know that we have a pension crisis in Pennsylvania. On May 25th, the Auditor General completed an audit of the Public School Employees Retirement System (PSERS) pension fund for the 2016 year, and it isn’t pretty. It isn’t pretty at all.
In 2016 the PSERS pension fund saw an astonishingly low return of 1.29% on $49.2 billion in assets. In dollars, the return was $634.6 million — which may look like a lot on paper, until you factor in that PSERS paid $416 million to money managers. It looks like a lot of money until you recognize that in 2016 most 401k retirement programs saw more than an 8% return. It was an exceptional year for everyone except Pennsylvania taxpayers
An 8% return would have yielded an additional $3.3 billion — which is more than enough to solve our budget problems.
PSERS could have put their money in a bank CD and received a better return (1.45%) — but who in the world would do that — and who would pay $416 million to money managers who would yield such a shameful return on investment?
I’ll tell you who would do that. A governor who’s asleep at the wheel, inept, or just doesn’t care.
Tom Wolf’s mismanagement is the biggest sham against honest, hardworking people that there ever was.
Why is Pennsylvania state government so bad at managing its employees’ money? If I were the Governor of Pennsylvania I would demand the answer to that question – but only after I fired the money managers at PSERS.
Where is our Governor? When he was running for election back in 2014, Tom Wolf presented himself as a “brilliant businessman,” and yet here we are paying $416 million for a return that we could have walked into a local bank and gotten ourselves.
PS: It is no secret that the PSEA (Pennsylvania State Education Association) fiercely hates me and has instructed their teacher members to hate me also. Isn’t it ironic that I am criticizing the PSERS pension fund performance demanding better returns so that all of the Pennsylvania teachers get their pensions paid?