Minnesota Legislative Auditor Resists Investigating Possible State Pension Ongoing Fraud
For months, Minnesota teachers have requested OLA conduct a Special Review of $150 billion state pensions, in light of damning expert findings and potential ongoing harm. OLA has done nothing.
Minnesota’s Office of the Legislative Auditor has been aware—for nearly a year now—that state teachers were so concerned about potential mismanagement and wrongdoing involving the Teacher Retirement Association (TRA) and the State Board of Investments (SBI) that they were poised to raise money of their own to pay for an independent forensic investigation by an nationally-renowned expert of their choosing. (TRA and SBI are responsible for management of $150 billion set-aside to provide state employees’ retirement security.)
Not only was OLA made aware in early 2024 of the proposed effort to fundraise a participant investigation, emails we received from TRA indicate OLA was part of—or, at a minimum, privy to—an effort by state officials to undermine, or thwart the participant initiative. State officials were so concerned about teacher pension concerns that they wanted to stop any proposed investigation before it even got started.
State officials were so concerned about teacher pension concerns that they wanted to stop any proposed investigation before it even got started.
“As trustees of the TRA Board, it is important for you to be aware of and concerned about risks to the agency and the fund, and this situation poses many serious risks. Specifically, TRA’s reputation as a trusted government agency is going to be questioned,” wrote TRA’s Executive Director early last year before the fundraising was completed.
The damning findings of the independent forensic investigation were publicly released in late September. Key findings included:
Minnesota officials continue to block public access to pension data, as they aggressively target participants demanding transparency. Billions in undisclosed fees to Wall Street were identified, as well as $39 billion in underperformance losses. Performance claims revealed brazen benchmark bias that could have catastrophic tax consequences. Significant private investment and “Zombie” fund risks, as well as pension consultant conflicts of interest were also identified.
As we noted in the conclusions, in Minnesota, the OLA—and not the State Auditor— generally audits state agencies and statewide organizations including TRA. In addition to the financial audits and program evaluations OLA conducts annually, it also conducts a small number of ad hoc special reviews. Special reviews address specific concerns or allegations and, as a result, they typically have a narrower scope than audits and evaluations. According to OLA’s website:
“State law gives OLA the authority to conduct special reviews. They are often triggered by concerns brought to OLA by legislators, other public officials, private individuals, or media reports.”
According to OLA, allegations of misuse of state money, resources or data, can be the basis of a special review. It appeared that pension stakeholders could petition OLA for a special audit.
On December 2, 2024, we formally requested the OLA conduct a special review of the state’s pensions. A copy of the full 113-page expert review was provided to the OLA. Thus, there should be no question that the findings in the independent, expert forensic investigation provide a “reasonable basis” for an in-depth special review.
Since then, numerous members of the Minnesota Educators for Pension Reform Facebook Group have also submitted requests to OLA for a special review.
Nothing has happened.
When OLA—which has authority to investigate possible misuse of tens of billions of money in the states’ pensions, resists—maybe its time to investigate why.