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Top investment manager at school employees pension system to retire: report – pennlive.com

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James Grossman, the Public School Employees' Retirement System's chief financial officer, was the highest state government employee earner in Pennsylvania in 2020.
UPDATE: Top managers at Pa. teachers’ pension submit retirements after a year marked by miscalculation and investigation
After a year of miscalculations, investigations and increasing board scrutiny, a key manager at the state’s pension plan for school teachers is leaving his post.
According to a published report in The Wall Street Journal, Jim Grossman, the chief investment officer for the Public School Employees Retirement System, will submit his resignation for retirement purposes to the PSERS board today.
Grossman, 54, and PSERS’ CIO since 2013, is the highest paid employee in state government, making $485,421 a year according to the state’s salary database.
But his aggressive investment strategies have increasingly come into question by the board in recent years as the fund has failed to hit its long-term targets for investment gains in the face of mounting liabilities triggered by a set of lucrative benefit expansions approved by the state legislature and then-Gov. Tom Ridge in 2001.
In addition, he has also been at the center of ongoing federal and internal investigations into issues including the certification of a key rate-of-return error that, late last year, caused the board to miss the fact that it was going to have to start to deduct more money from active teachers’ paychecks under a “shared-risk” policy.
The rate-of-return mistake was uncovered and rectified this spring.
It is not exactly clear what the federal probes have turned up to date. But in a closed-door discussion of an internal investigation earlier this month, a separate attorney hired to lead that examination said that her probe had not turned up criminal wrongdoing.
Matt Haverstick of Kleinbard LLC, an attorney for Grossman, confirmed his client’s plan to retire to The Journal, which reported the news this morning.
In June, six trustees sought the ouster of both Mr. Grossman and Glen Grell, the executive director, in a letter saying the system has paid excessive fees to Wall Street managers on alternative investments such as private equity and hedge funds. The board never voted on the demand though it later pulled back on private equity commitments.
In a last moment of triumph for Grossman, however, the fund reported a net investment gain of $14.8 billion in the fiscal year ending June 30, 2021. Those gains helped push the system’s total net assets up by $13.5 billion to an all-time high of $72.5 billion, according to audited financial statements released in October.
The net investment profits, in turn, lowered its net pension liability by more than $8 billion to about $41 billion as of June 30, 2021. It’s important to note that there is no threat that pension payment owed to retirees will not be paid; but as the unfunded liability grows the onus is one state government and local school districts to keep it solvent, which eats up scarce tax resources that could be used in other areas.
The PSERS board is scheduled to meet in special session this morning.
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