State public pension fees deserve deeper look by officials

Any Pennsylvanian not living under a rock the past several years knows that the state’s public pension system is under water.

Under water in this case means billions of dollars less than what is needed to fund the system today and in the coming decades.

One of the reasons the state is drowning in a sea of red ink may be the private equity costs it pays.

Professor Ludovic Phalippon of the University of Oxford last week told a state panel seeking ways to lower those fees that he estimates the systems paid $6 billion in fees over 10 years, including a profit-sharing expense called carried interest.

Gov. Wolf and other state officials have been talking big about reducing those fees.

This should be a bipartisan effort by the administration and both sides of the aisle in the Legislature.

Are these fees really the best the state can do? We understand some of the fee cost is inevitable, but can the state do better?

No one seems to know for sure, which means a deeper dive into the possibilities is necessary.

The state’s public pension system is capable of squeezing the state’s future budgets to the point where human services programs and other necessary parts of the state’s fiscal obligations are shortchanged.

And that can’t happen.

If the state can’t do better than $6 billion in fees over a decade, then someone needs to explain factually why that is so.


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