Dave McCormick's business mishandled funds for teachers, first responders

Prior to running for office, Pennsylvania U.S. Senate candidate David McCormick ran a firm that invested billions of dollars for state pension funds. These investments were mismanaged, resulting in higher retirement costs for teachers, firefighters, and police officers.

McCormick first ran for U.S. Senate in 2022 but failed to advance past the Republican primary. This year, he is challenging incumbent Democratic Sen. Bob Casey. McCormick has touted his business experience as an asset on the campaign trail.

“I was a global businessman,” McCormick posted on X. “I did business all around the world … We need strong leaders who understand the economy.”

From 2009 to 2022, McCormick was an executive at Bridgewater Associates, a private equity firm based in Connecticut. Bridgewater invests money on behalf of their clients, promising high returns and sustainability. This is attractive to pension funds, which are often required by law to to fulfill their financial obligations to retirees.

One such client was the Public School Employees’ Retirement System (PSERS), the pension fund for Pennsylvania school teachers. PSERS entrusted Bridgewater with $5 billion during McCormick’s tenure. The New York Times reported in 2022 that middling returns and Bridgewater’s excessive management fees had weakened the fund. 

PSERS moved in 2022 to sell off its Bridgewater holdings, but it was too late to avert disaster. Thousands of Pennsylvania teachers were forced to pay up to an additional $300 each year from their salaries to make up the shortfall.

McCormick said he was not involved in PSERS dealings with Bridgewater. Despite this, he later took personal responsibility for all Bridgewater investments made under his leadership.

“I was the CEO, so whatever we did I’m responsible for,” McCormick told the American Enterprise Institute in 2023.

Between 2007 and 2017, Bridgewater managed up to $133 million in assets for the Dallas Police and Fire Pension System (DPFPS). This accounted for between 3.4% and 4.2% of the pension fund’s total assets. According to publicly available disclosures, Bridgewater collected more than $17 million in management fees from DPFPS during this period.

In 2015, DPFPS faced an insolvency crisis. As with PSERS, excessive management fees and lower-than-expected returns from Bridgewater were contributing factors. According to DPFPS, Bridgewater routinely invested the pension’s funds in high risk assets.

To remedy the crisis, the Texas state legislature passed a bill that cut pension benefits for police and firefighters, eliminated cost of living increases, raised the retirement age from 55 to 58, and required police and firefighters to pay more annually into the pension fund. The changes prompted more than 400 police officers to resign the following year.

In 2018, a new governing board was appointed to ensure the solvency of DPFPS. Their first recommendation was to liquidate the Bridgewater holdings.

The Los Angeles Fire and Police Pensions (LAFPP) paid Bridgewater over $30 million in fees from 2007 to 2022. LAFPP says Bridgewater returns underperformed in 2017, 2019, and 2020. LAFPP fired Bridgewater in 2021.

A McCormick spokesperson did not immediately respond to questions for this story.