Pa.’s $59 billion pension fund chooses a history teacher as new chair

Christopher Santa Maria, former head of the Lower Merion teachers union and a history teacher in that wealthy township’s public schools, is the new chairman of the $59 billion-asset Pennsylvania Public School Employees’ Retirement System (PSERS).

Santa Maria replaces Melva Vogler, a retired teacher from the Wallenpaupack Area School District who had chaired the board since 2007 and served as a trustee since 1994. She remains on the board, which is a mix of teacher and school board reps, elected officials, and members of Gov. Tom Wolf’s administration.

Vogler was reelected to a seat representing school retirees with two-thirds of the vote in mail balloting in the last two elections, 2019 and 2016. In both years, more than 60,000 retirees voted, out of more than 200,000 eligible. Members are unpaid; they go to bimonthly meetings and travel to industry seminars, where they attend presentations by investors who seek state business.

Vogler has been a reliable vote to endorse investments by PSERS staff, who have generally favored hedge funds, private equity, and other private investments in recent years, betting that the long bull market in U.S. stocks will soon slip behind private returns.

That strategy contrasts with the approach at the smaller Pennsylvania State Employees’ Retirement System (SERS), where chairman David Fillman, who heads the AFSCME labor union council that represents many state workers, has sometimes bucked staff investment recommendations.

State Treasurer Joe Torsella has urged the pension funds to avoid high-fee private investment managers, who he says tend not to outperform cheap stock-index investments.

As board vice president, PSERS members elected State Rep. Frank Ryan (R., Lebanon), a certified public accountant and Marine Corps Reserves colonel appointed to the board last year to represent the General Assembly. Ryan asked a lot of questions at his first PSERS board meetings.

Ryan replaces Nathan Mains, a representative of the Pennsylvania School Boards Association.

In a statement, new chairman Santa Maria praised Vogler for what he called “steady leadership through the worst financial crisis of my lifetime, at least,” when PSERS and other pension funds lost billions in the late 2000s. Santa Maria credited Vogler’s leadership for continuing “well-earned retirement benefits to about half a million” current and future retirees.

Since the financial crisis, the pension fund has been funded partly by investment profits but principally by taxpayers, mostly through direct appropriations, partly through payroll contributions from employees. PSERS will require an expected $5 billion in state and local school district funding this year to augment investment profits and help pay current and future pensions.

That taxpayer expense has risen annually, from zero in the early 2000s, and now accounts for 35 cents per dollar spent on staff salaries. The steady increase, which has accelerated with negotiated teacher pay increases, has obliged some Pennsylvania school districts to choose between unpopular tax increases and program cuts.

The cost is expected to start leveling off in the future as new school hires are being granted smaller pension guarantees, along with private-sector style defined-contribution pensions whose values rise and fall with investment markets, under a reform law signed by Gov. Wolf in 2017. But long-serving Pennsylvania school administrators and teachers will continue retiring under the old rules, with pensions plus Social Security enabling them to enjoy retirement incomes close to their former salaries for decades to come.