Brandon McGinley: Allegheny County pension plan suffers from too many cooks

Allegheny County’s pension crisis has moved from a quiet concern to the center of public debate. District Attorney Stephen A. Zappala Jr. recently escalated his criticism of the Retirement Board, accusing officials of long-term mismanagement and poor investment choices. Zappala contends that the board, largely comprised of elected officials, cannot be trusted to secure the future for county retirees, suggesting state intervention may be necessary.

Central to the controversy is the sheer number of investment managers handling the county's pension fund. Data reveals that Allegheny County uses 84 separate investment managers, which is three times the number utilized by the City of Pittsburgh. A large portion of these funds are tied up in private-market instruments, such as private equity and debt. These high-risk, non-public assets have underperformed compared to peers while incurring significant fees.

The retirement board structure, which includes executive and council appointees alongside elected members, faces intense scrutiny over whether political motivations interfere with fiduciary duty. While other Pennsylvania counties successfully manage their funds under similar board structures, Allegheny’s track record of underperformance suggests a fundamental flaw in its current strategy. The reliance on private markets and the excessive number of managers are primary factors behind the fund's struggle to keep pace with standard benchmarks.

Finding a path forward will likely require unpopular decisions, including a potential increase in taxpayer contributions. Zappala’s push for state oversight echoes previous successful financial turnarounds in the region, such as those seen under Act 47. Whether or not state intervention happens, the county must confront the reality that its current investment approach has failed to generate expected returns for years, leaving the pension plan in a precarious state.