Minnesota Gov. Tim Walz’s public school teachers’ retirement system “falsified the books” by dramatically under-reporting the annual fees it paid to Wall Street investment managers, posting nearly impossible gains that rivaled the “Madoff miracle,” a top pension investigator said.
The state Teachers Retirement Association has disclosed less than 10 percent of the estimated $2.9 billion it spent on fees over the past decade, according to Edward Siedle, a former Securities and Exchange Commission lawyer and independent pension examiner.
The TRA also made money by claiming to have beaten its own custom benchmarks by just 0.2% over the one-, five-, 10-, 20- and 30-year periods, which Mr. Siedle called “virtually impossible.”
Seidle told The Washington Post that the findings raise questions about whether the fund was covering up mismanagement and, ultimately, whether it had enough money to pay promised benefits to retirees.
“Even Bernie Madoff never claimed to have beaten the market every year, much less by the exact same percentage,” the investigator said, calling TRA’s performance “the Madoff miracle under Waltz.”
Seidl added that the findings also raise questions about the leadership of Walz, who is Democratic presidential nominee Kamala Harris’ running mate.
“I don’t know if this person had any prior knowledge of finance or pensions, but as chairman he should have educated himself,” Seidl said. “Pension committee members have a fiduciary responsibility to monitor fees and ensure that investment performance is accurately disclosed.”
Minnesota teacher advocates concerned about lack of transparency Raised $78,373 on GoFundMe Hire Mr. Siedle to conduct a forensic audit of the TRA, which administers the pensions of 215,000 current and retired teachers. Contributions are funded by taxpayer money and mandatory payroll deductions.
The Minnesota Association of Public Educators for Pension Reform is complaining of “inequities,” including “significant reductions in benefits” for some members.
Katie Dickerson, a 55-year-old teacher, Testimony in February In a letter to the Minnesota Legislative Committee on Pensions and Retirement, he said: “As I approach retirement, I realize that the state has made no improvements to our retirement system. Not only do I contribute higher rates to the State Pension and Retirement System, but I am being forced to work many more years unless I am able to avoid significant penalties.”
Reform groups accused the TRA of “providing misinformation to the public.”
“We have lost faith in a system that is supposed to protect our retirement security,” the group said in a statement.
Since taking office in January 2019, Walz has served as chairman of the Minnesota State Retirement System, which manages $140 billion in funding for all state employees, including $28.2 billion for teachers.
According to TRA’s fiscal 2023 financial statements, the fund generated a return of 8.9%.
TRA reported management fees of $24.19 million in 2023. But Siedle estimates the total amount paid to Wall Street fund managers ranges from $334 million to $467 million, or 5% to 7% of TRA’s personal assets. Even if the fee was only 1%, the total would be $280 million, more than 10 times the reported fees.
As part of his investigation, Seidl said he has requested public records of the investment documents from the TRA and the state government, but the agencies have not yet responded.
In his report, Seidle said the Minnesota Attorney General and state auditor would normally investigate wrongdoing, but those officials sit on the state pension board, which Walz chairs. As a result, Seidle filed a whistleblower complaint with the SEC and FBI last month.
South Carolina Secretary of State Treasury Curtis Loftis, who wrote the foreword to Seidle’s book, “How to Steal Big Money Legally,” told The Washington Post that he supports the investigation.
“Pension fund leaders often seem disconnected from the workers they represent, preferring to prioritize the concerns of Wall Street investment managers and government officials over those of police officers, teachers and firefighters,” Loftis said.
Walz and Harris touted the governor’s 20 years as a social studies teacher.
“Don’t underestimate your teachers” he warned in his maiden speech on Tuesday. as vice presidential candidate.
Waltz and TRA officials did not return messages.
