Minnesota teacher pension books under Walz ‘blatantly cooked,’ investigator finds

By Susan Edelman, New York Post – October 5, 2024

A pension investigator has found the books of Minnesota’s state retirement system under Gov. Tim Walz’s oversight “blatantly cooked” and cloaked in secrecy, prompting teachers in his home state to beg the vice-presidential candidate to tell the truth about lackluster investment performance and massive hidden fees.

Edward Siedle, an ex-US Securities and Exchange Commission lawyer privately hired by worried educators, has just published a bombshell 113-page report titled, “Minnesota Mirage: Sleight of Hand.”

“The investment returns have been inflated, and the fees grossly underreported to make the pensions appear to be doing better than they really are,” Siedle said.

As governor, Walz chairs the Minnesota State Retirement System, which manages $146 billion in pension funds for all state employees, including $28.2 billion for teachers.

Walz, a former teacher and beneficiary of the pension system, has never owned a stock or bond, he claims on financial disclosures.

Teachers in the 20,000-member Facebook group Minnesota Educators for Pension Reform say Walz has “not shown any support whatsoever” for their plea to open the pension fund’s tightly-controlled books.

“So far, he has not responded, and I find that disappointing,” said Maggie Temple, who teaches social studies at a high-school near Minneapolis. “But I also recognize that he has been extremely busy running for vice president.”

The group’s GoFundMe campaign raised $75,000 in February to hire Siedle to conduct an independent audit.

“If you’re such an advocate of teachers, why have 20,000 educators in your own state lost trust in the pension system you oversee and commissioned an independent review?” Siedle asked of Walz.

The Teachers Retirement Association, which administers pensions for 215,000 active and retired teachers, has publicly disclosed less than 10% of an estimated $2.9 billion in fees paid to Wall Street fund managers in the past 10 years, Siedle reports.

For instance, in 2023 the TRA disclosed total investment fees of only $24 million. Siedle estimates fees to manage the system’s $6.6 billion in private equity funds alone at $334 million to $467 million, based on industry standards.

The TRA has also posted gains claiming it beat its own benchmark by exactly 0.2% in every period for 30 years—which Siedle calls “virtually impossible.”

The teachers’ pension system has underperformed by $39 billion over the last 30 years, Siedle calculates: “Had the pension fund been prudently managed, it would be worth nearly $60 billion today, providing greater retirement security for participants and saving taxpayers billions,” he said, calling the shortfall “the cost of incompetence.”

Even before Siedle began his audit, state officials launched an “aggressive preemptive attack” in a bid to quash his investigation, he found. They urged teachers in the Facebook group to drop the probe, and held Zoom meetings with pension officials in other states to discuss how to stop “the movement.”

“TRA’s reputation as a trusted government agency is going to be questioned,” Jay Stoffel, TRA’s executive director, warned about Siedle in an email to the board, other state officials and legislators.

When Siedle requested investment records under the Freedom of Information Act, the TRA claimed it had none—a response that shocked the teachers.

TRA referred his inquiries to the State Board of Investment, which has yet to produce any records; “We have received nothing,” Siedle said.

His findings have raised alarm that the TRA has covered up mismanagement. Some veteran educators have complained of “significantly decreased benefits” and unexpected penalties.

The teachers mostly support Kamala Harris for president, Temple said, but complain that her running mate has ignored their pleas for a full accounting of the pension funds.

“Tim Walz is an honorable man,” Temple said. “So I’m hoping that now that this is out, when the governor has some time he can look into it, or assign lieutenant governor Peggy Flanagan to do it.”

Meanwhile, Minnesota news outlets have totally ignored the story, further frustrating the teachers.

“Pension officials were confident there would be no media scrutiny,” Siedle said. “No one has ever questioned them.”

CNN reported Friday that Walz and his aides have repeatedly minimized or dismissed state audits finding waste, fraud, and abuse in government programs, reacting with hostility and contributing to “a culture of unaccountability.”

“The hostility is led by Governor Walz,” state Sen. Mark Koran, a Republican and vice chairman of a bipartisan audit commission, told CNN.

TRA executive director Jay Stoffel and Harris-Walz spokesman Kevin Munoz did not return requests for comment.