How a lobbyist for investment contractors ended up heading the Pa. pension board that hires them

When Pennsylvania Gov. Josh Shapiro took office in January, he affirmed a “complete and total zero-tolerance policy toward lobbyists,” mostly renewing his predecessor’s ban on state employees taking cash, travel, or other gifts from lawyers and others representatives seeking state contracts for their clients.

But earlier this month, Shapiro named Gregory C. Thall, a longtime government official who now works as a lobbyist, as chairman of the $35 billion-asset State Employees’ Retirement System (SERS) pension plan. Thall’s clients include a money management firm that handles millions in state pension money.

Thall previously served as former Gov. Tom Wolf’s last budget secretary, capping 15 years of state government service, including a stint as aide to Sen. Vincent Hughes (D., Phila.), a longtime SERS trustee. Wolf first named Thall to the SERS board in 2019.

After Wolf left office, Thall joined GSL Public Strategies Group, a lobbying and government affairs affiliate of the Reading-based Stevens & Lee law firm, whose partners and affiliated firms pursue a variety of state-related legal and advisory business. GSL has hired a number of former Wolf appointees, including GSL’s managing director, Mike Brunelle, who formerly served as Wolf’s chief of staff. At least five other former senior staffers for Wolf, a Democrat, also serve the firm, alongside prominent Republicans who previously worked in state government.

After registering as a lobbyist, Thall remained on the SERS board, and on Nov. 6, Shapiro named him chairman of the unpaid board of trustees, which oversees pensions for more than 200,000 state workers and retirees. Thall was previously a lobbyist for the Pennsylvania State Education Association, the powerful union representing most suburban and upstate Pennsylvania public school staff.

Thall “has a deep knowledge of SERS and is trusted by members of all parties,” said Will Simons, a spokesperson for Shapiro. He added that the governor expects Thall or any other board member to recuse from matters where agency lawyers see a conflict.

As a GSL lobbyist, Thall disclosed a long list of the firm’s clients that he registered to represent since the start of 2023. They include Lubert-Adler Partners, a Philadelphia firm owned by casino developer, real estate and private equity investment firm founder Ira Lubert and commercial real estate specialist Dean Adler.

Lubert-Adler is one of more than 100 private money managers paid to invest public funds for SERS. From 2004 to 2018, SERS committed $365 million to Lubert-Adler Fund VII and other private-equity and real estate funds started by Lubert and his partners. As a group, Lubert-linked funds are among SERS’s largest outside managers. Lubert-Adler’s best-known investments include a longtime position in Albertsons, owner of Acme Markets and other supermarket chains.

Of the $365 million already invested, SERS has so far gotten back around $250 million, according to SERS’s last annual report; it hopes to get back the rest, plus many millions in net profits, in future years.

SERS paid those funds’ fees totaling more than $8 million for the last three years — not including a share of profits the funds keep for themselves, which can total many times the reported fees. Those funds’ profit sharing, also called “carried interest,” is redacted from SERS’ yearly public expense reports. The PSERS school pension reports show that agency has paid Lubert-related funds over $250 million in fees and profit sharing since the early 2000s.

Other clients listed by the new SERS chairman include Sunoco Pipeline LP and its owners, including Energy Transfer Partners; large public companies whose shares are owned by SERS, including units of Johnson & Johnson, Google, and warehouse giant Prologis; units of the Laborers and Steamfitters unions; Temple University, University of Pittsburgh, and Wills Eye hospitals; and state-subsidized private businesses such as Jeffrey Rotwitt’s Sun Center Studios Corp.

At first view, “this looks like a very clear-cut and straightforward conflict of interest,” said Philip Hensley-Robin, executive director of Common Cause Pennsylvania, a public-interest advocacy group. “I’d be interested to find out what the chairman’s plan is regarding recusal [from discussions that could impact his clients] and how he can carry out these jobs.”

Thall is expected to recuse himself as needed, following pension board policy, said Uri Monson, a SERS trustee who is Shapiro’s budget director and was also the governor’s chief financial officer when Shapiro was Montgomery County’s top elected official a decade ago.

Monson noted that the SERS chairman is barred from serving on the board committee that recommends investments, though the chair still gets a vote on final passage.

“I don’t have concerns,” Monson said.

The governor appoints the majority of SERS’s 11 trustees. Shapiro aides hope the system will work closely with the administration and legislators, avoiding the squabbles that divided trustees of the larger PSERS school pension system in recent years. (In contrast with SERS, the governor appoints only three of 15 PSERS trustees, and the chair sits on the investment committee.)

Shapiro was unable to get support from state Senate leaders for some of his original SERS board candidates, including Wendell Young, head of 40,000-member UFCW Local 1776, which includes state liquor store employees. Young has sparred with Republican leaders over outsourcing liquor work.

The state Senate confirmed two of Shapiro’s choices: J. David Henderson, executive director of the AFSCME Council 13 state workers’ union group, along with insurance broker Donald E. Enders Jr.

In 2013, Shapiro and Monson organized the ouster of Montgomery County’s Wall Street pension managers and put most of its retirement money into Malvern-based Vanguard Group’s low-fee index funds, tying performance more closely to market averages.

Shapiro aides have said the governor doesn’t plan such a sweeping overhaul at SERS, which has already moved away from its former heavier reliance on private investments. SERS still makes billions in private investments, recently totaling nearly a quarter of its assets, compared to almost one-third in U.S. stocks, one-fifth in foreign stocks, and the rest mostly in bonds.

Lubert-Adler staff said the firm hired Stevens & Lee for government-related work over many years and has been represented by GSL people, including Thall, in recent years as it grew into a lobbying and government-relations operation.

SERS officials pointed to the pension’s financial disclosure policy, which says that a trustee “may decide the best course of action is to step aside” and announce before the end of each meeting that they will not debate or vote on business that may affect them personally if it could create a potential conflict of interest.

In state-mandated disclosures, Thall listed no personal investments. SERS officials said Thall would be unavailable for comment before his first meeting as chairman in December.