Minnesota Gov. Tim Walz accused of "cooking the books" of his state's pension funds by vastly underreporting fees

By lauraharris // 2024-08-16

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An independent pension investigator has claimed that a Minnesota retirement system for public school teachers under Gov. Tim Walz is underreporting annual fees paid to Wall Street investment managers and posting implausible gains. As governor, Walz oversees two pension funds for educators in Minnesota: The Teachers Retirement Association (TRA) and the Minnesota State Retirement System. The former provides retirement, disability and survivor benefits for 215,000 active ad retired educations. The latter, which Walz operates as its chairman, oversees $140 billion in funds for state employees, including $28.2 billion for teachers. Both are funded by taxpayer dollars and mandatory salary deductions. (Related: Kamala Harris just made a colossal mistake – Here are 7 things you should know about Tim Walz.) However, the lobbying organization Minnesota Public Educators for Pension Reform has raised concerns about "inequities" and "significantly decreased benefits" for some members. The teachers' advocacy group accused the TRA of allegedly underreporting annual fees paid to Wall Street investment managers and posting near-impossible gains equivalent to a "Madoff miracle." In turn, the group raised $78,373 on GoFundMe to hire Edward Siedle, a former attorney for the Securities and Exchange Commission and an independent pension investigator, to conduct a forensic audit of the TRA's finances. According to Siedle's investigation, which involved filing public records requests with the TRA and the state for investment documents, the TRA has publicly disclosed less than 10 percent of an estimated $2.9 billion spent on fees over the past decade. "A cursory look at the Minnesota Teachers Retirement Association leads to the conclusion they’re either a world-class pension or they're cooking the books," he said in July. "Minnesota reported investment fees on the $26.7 billion teacher pension fund of $24.1 million. The teachers' fund has a $6.6 billion private equity portfolio that would be expected to pay at least $132 million a year to fund managers.” He also pointed out that the TRA reported gains that allegedly beat its custom benchmark over periods of one, five, ten, twenty and thirty years by exactly 0.2 percent is "virtually impossible." Moreover, the TRA's financial statements for fiscal year 2023 revealed that the fund produced an 8.9 percent rate of return. The TRA reported $24.19 million in management fees for that year. But Siedle estimated that the actual amount paid to Wall Street fund managers ranged from $334 million to $467 million or five percent to seven percent of the TRA's private assets. Even if the fees were only one percent, they would total $280 million — more than ten times the disclosed fees. In other words, Siedle's findings suggest that the fund might be concealing mismanagement and its ability to pay retirees their promised benefits. Siedle also noted that the Minnesota attorney general and state auditors, who typically investigate such irregularities, sit on the same state pension board that Walz chairs.

Minnesota officials want to discredit Siedle's investigation

In line with Siedle's investigation, the independent pension investigator also revealed in an article published on his Substack blog that Minnesota officials were already working to discredit the investigation even before he started his audit in April. In March, TRA Executive Director Jay Stoffel warned all TRA Board of Trustees and staff about the independent audit investigation in an email titled "An Important Matter." Stoffel also sent the same email to state legislators and officials, including the offices of Walz, the attorney general and the legislative auditor. "I want to update you on the recent crowdsourcing effort of a group of teachers to raise $75,000 to pay Edward Siedle, a Florida lawyer, to do the following, according to the teacher group's GoFundMe page," Stoffel wrote in the email, along with the detailed problem, solution and goal of the reform program. "As trustees of the TRA Board, it is important for you to be aware of and concerned about risks to the agency and the fund, and this situation poses many serious risks. Specifically, TRA's reputation as a trusted government agency is going to be questioned." Now that Democratic presidential candidate and Vice President Kamala Harris has chosen Walz to be her running mate, this underreporting issue is expected to face more intense and renewed scrutiny in the coming days. Watch this clip from Fox News with Republican National Committee Co-Chair Lara Trump discussing how a Harris-Walz presidency should frighten every American. This video is from the NewsClips channel on Brighteon.com.

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Minnesota officials want to discredit Siedle's investigation

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