The Chicago Teachers Pension Fund says it hired BDO USA, LLP to conduct a so-called forensic audit. While the pension claims to “operate transparently,” in response to an Illinois FOIA request it produced a redacted copy of the contract with BDO which failed to disclose critical information regarding the cost and scope of the forensic investigation. Pension stakeholders, including teachers and taxpayers, deserve to know whether the scope of the investigation includes pension investments because if it doesn’t the investigation is worthless—a complete waste of money.
As I wrote earlier this month, sixteen years after a forensic investigation of the Chicago Teachers’ Pension Fund was first proposed by deeply concerned trustees, as well as lauded in The New York Times
In response to my request for a copy of the contract with BDO, Daniel Hurtado, the Chief Legal Officer for the pension advised me earlier this month that after conferring with BDO (emphasis added), the pension would be producing only a redacted copy of the agreement. Sure enough, the 19-page March 1, 2021 agreement with BDO Hurtado subsequently provided was heavily redacted— all information regarding the cost and scope of services was obscured. Absent such critical information, pension stakeholders cannot possibly determine the value of the services provided by BDO.
The Chicago Teachers Pension Fund’s more than $13 billion in debt is highest among the eight city-related retirement systems and the teachers’ pension is only 45% funded. In short, there has long been ample reason for stakeholders to be concerned regarding its management. Pension overseers should be bending over backwards to assure the public all is kosher, rather than keeping teachers and taxpayers in the dark. Secrecy only arouses suspicions.
Having personally conducted more forensic investigations of public pensions that any person dead or alive—over $1 trillion—there is no need for secrecy here. Public pensions, which are funded by taxpayers and state workers, are supposed to be the most transparent of all pensions. State Freedom of Information Acts are supposed to ensure public scrutiny of these trillions of public monies.
Retired teacher and former longtime pension trustee Jack Silver who proposed a forensic investigation into conflicts of interest and mismanagement in 2005, believes the scope of the BDO forensic investigation should be disclosed immediately. “I don’t see any good reason why the pension should oppose transparency and keep secrets from contributors, such as active and retired teachers and administrators,” Silver said. “This pension sorely needs to build the public’s trust.”